Funding Sustainable Transport Through an Integrated Land Use and Transport Planning Framework Utilising Value Capture
Many cities globally are dependent on cars to meet their urban transportation needs due to the evolution of their urban form and the nature of their provision of urban mass transit in the period after the Second World War. To stem or reduce their car dependence, city governments are now investing in urban rapid transit, and redeveloping their cities around it. The high cost of the investment in retrofitting rapid transit systems into cities existing urban fabric have seen many major transit projects stuck in financial and economic assessment due to inadequate links between land use, transport and funding planning and policy. This lack of investment in urban rapid transit systems have left most urban transport networks with a transit infrastructure deficit that they need to address to stem car dependence. Therefore the overarching question that is being sought to be addressed by this research PhD is: “Can land and property market value capture fund urban transit in car dependent global cities”?
To address this question, this PhD thesis by publication (five journal papers and a book chapter), focusses on five key research areas:
i.) the causes of car dependence;
ii.) urban transport system and land development planning and policies to respond to these causes;
iii.) quantification of the willingness to pay for transit accessibility in cities’ land and property markets;
iv.) financial modelling of the induced government revenue generated through existing taxes and charges from the transit investment; and
v.) development of an integrated land use and transit value capture framework to fund rapid transit investment to stem cities car dependence.
The research conducted as part of this thesis was multidisciplinary in nature. The econometric analysis conducted in (Journal Paper 1) on the Global Cities Database from 1960 to 2000 established the causes of cities car dependence using structural equation modelling. The results of the structural equation modelling demonstrated that that the two key factors in cities car dependence is their level of provision of transit and the densities of the urban regions which it serves. These results formed the quantitative economic basis for the thesis premise that car dependence can be resolved by investments in transit and urban densification.
The findings of (Journal Paper 1) led to the need to understand the policy and planning solutions to car dependence in global cities in two papers: urban development policy analysis to stem car dependence (Book Chapter 1); and urban transport system planning (Journal Paper 2) to stem car dependence. These papers identified the urban development and transportation network policies and planning required to stem the dominance of cars in cities transport systems and urban land and property markets.
To quantify the economic implications of these policies, hedonic price modelling was used to determine the impact of transit investment on car dependent city land markets for Perth, Western Australia (Journal Paper 3). The results of this hedonic price modelling on urban land value demonstrated that there was a significant willingness to pay for:
i.) access to transit infrastructure and services, and
ii.) land parcels with the capacity for higher development density.
The financial impact on existing land and property taxes and charges of this willingness to pay for transit and urban density in Perth was demonstrated in a value capture financial model (Journal Paper 4). A case study established that the investment in the Mandurah Rail Line in Perth, Western Australia confirmed that significant financial revenue was generated from the investment and if captured, could have significantly defrayed the cost of the investment. To achieve the capture of these land market taxation benefits, a tax increment financing framework is proposed so that this additional revenue source could be used to defray the cost of the infrastructure investment.
Cumulatively, the research outlined above is synthesised to inform the development of a universal value capture framework (Journal Paper 5) to both passively and actively capture some or all of the land and property market benefits to help defray the cost of the transit investment and the regeneration of our cities urban fabric.
The outcomes of this research provide novel contributions to knowledge of the economic causes and solutions to car dependence in cities globally. The Mandurah rail line case study used across Journal Papers 2, 3, 4 and 5 illustrates that when transit and urban densification are integrated around transit stations the passive and active value capture mechanism revenues are sufficient (over a 30-year period in real terms) to pay for the infrastructure investment. This is an unexpected result with great significance for car dependent cities, suggesting that existing economic and financial assessment methodologies have failed to account for these benefits when assessing integrated urban transit and regeneration projects.
The value capture framework proposed in Journal Paper 5 enables a rigorous economic and financial assessment to the development of the urban infrastructure policies and practices to reduce car dependence. As the value capture framework is based on economic analysis and research, this will support more appropriate means of financially assessing the projects by understanding not only the project costs, but all the benefits created as well, and using some or all of these benefits to defray the cost of integrated transit and urban densification projects.