NYU Stern’s Arpit Gupta has written “Value Capture’ is the Infrastructure Pay-for Everyone is Missing,” in The Hill, “How to Upgrade NY’s Infrastructure: Value Capture Can Put Money Where It’s Needed” in the New York Daily News, and “Building in Times of Fiscal Constraint: How New York City Can Capture Value from Transit Projects” for the Manhattan Institute. All three pieces focus on his paper, “Take the Q Train: Value Capture of Public Infrastructure Projects,” with Director of Civic Analytics, Constantine Kontokosta, and Columbia Business School’s Stijn Van Nieuwerburgh. In The Hill he writes:
Tapping into the new value created by infrastructure projects, a funding mechanism called “value capture” should be part of the conversation as federal legislation takes shape.
Expensive transit projects in big cities often demonstrate the promise of value capture most clearly. The Second Avenue subway expansion in New York City, for example, has cost $1.7 billion per kilometer—far more than recent subway construction around the world. I recently found, alongside co-authors Stijn Van Nieuwerburgh of Columbia and Constantine Kontokosta of New York University, that the project lowered commute times and raised the value of local real estate dramatically. In fact, as I detail in a recent policy brief for the Manhattan Institute, the increase in land value alone would have been enough to pay for the entire subway construction.
The problem is that existing government financing methods leave this value largely untouched. We estimate that New York City will recoup less than a third of the real estate value generated, while the rest is a windfall for private developers who just happened to own land in the vicinity of the subway stops. Local governments around the country will find that infrastructure improvements constructed in isolation will cost taxpayers enormous amounts while enriching local property owners.