2259 - Funding Transportation for Prosperity Sustainability & Equity

Abstract

Studies have shown that urban sprawl creates auto-dependency, contributes to crash deaths and injuries, sedentary lifestyles and increases per-capita energy consumption and associated air pollution. Sprawl also increases impervious surfaces (roofs, streets, parking lots, driveways, etc.) which exacerbate stormwater runoff and water pollution. Some extol compact development (“smart growth”) as the antidote. But, if smart growth is so “smart,” how come there's so much “dumb growth” – and what can be done about it? Part of the answer lies in the economics of infrastructure. Infrastructure is created to facilitate development. Yet, if it is well-designed and well-executed, resulting increases in nearby land prices can chase development away to cheaper but more remote sites. When infrastructure is extended to these remote sites, the cycle begins again, with development being chased even farther away. Rising land prices also thwart community improvement. Perhaps there's a distressed community that would benefit from better roads or transit. If the improvements are successful, land prices and rents rise. Intended beneficiaries may be displaced. Tax dollars, spent to help the poor, end up enriching affluent landowners instead. The ability of private landowners to appropriate publicly-created land values is the fuel behind land speculation – a parasitic activity that inflates land prices and contributes to these perverse outcomes. This presentation will demonstrate that returning publicly-created land values to the public and recycling them for public purposes reduces land prices. Where this has been tried, infrastructure becomes financially self-sustaining (at least to a greater degree than typical). Additionally, this approach promotes compact infill development, enhancing opportunities for walking, biking, transit and other forms of active transportation. Funding infrastructure from publicly-created land values facilitates reducing taxes on privately-created building values. This tax shift makes both buildings and land more affordable for residents and businesses. The end result is more jobs in construction and related fields, including energy conservation retrofits to existing buildings. This often overlooked and/or misunderstood source of transportation funding has been used successfully in Washington, DC during the 1800s, regarding the first-time paving of streets and the funding of the Connecticut Avenue Streetcar. Other examples of successful implementation include Pittsburgh, Harrisburg and San Francisco after the earthquake of 1906. Hong Kong uses this approach to make its public transit system economically viable. The presentation will briefly discuss the economics of land value creation and recycling, but emphasize real-world success stories whereby land value recycling provides more equitable, resilient, healthy and sustainable development.