Leveraging Land Development Returns to Finance Transportation Infrastructure Improvements

The United States faces a crisis in transportation finance. Increasing fuel prices coupled with increasing demand for fuel-efficient cars is driving down fuel consumption, and the associated fuel tax revenues. At the same time, the demand for new transportation infrastructure currently outpaces construction, driving up prices for asphalt, concrete, and steel. This combination of declining revenues and higher costs is causing financing shortfalls for new transportation infrastructure and the maintenance of existing infrastructure. As one effort to bridge this gap, Texas House Bill 3588 authorized the creation of Regional Mobility Authorities (RMAs), which have the ability to apply tax-increment finance (TIF) to capture land development returns associated with land development improvements. This research identified the magnitude of property value increases associated with transportation infrastructure improvements, the assessment levels and investment horizon needed to recapture the costs of transportation infrastructure improvements, and how these revenue streams may be further leveraged to support local and regional investments in transportation infrastructure. Using a quasi experimental design, property values in areas that recently underwent significant transportation infrastructure improvements were compared against nearby control groups. The relative property value increases determine the relative margin of benefit from which TIF revenues may be drawn against the transportation infrastructure capital costs. This study will be used to enhance ongoing efforts at the state level, including a forthcoming professional training course as well as an academic course on public-private partnerships and funding. The course will be offered within Texas A&M University's Master of Science in Land Development Program and will be offered as a course in Texas A&M's interdisciplinary Graduate Certificate in Transportation Planning, developed with University Transportation Center for Mobility™ funding (see Transportation Research Board TRID Accession #01124562 and #01324966 and http://archone.tamu.edu/laup/Programs/CTP_Overview.html).