Value capture is a recognized tool around the world to pay for transit projects without causing economic distortions or drag that usual forms of taxation impose. Value capture is also a benefits-received concept for transit funding. From Australia to Hong Kong to Vancouver, value capture has proven to be reliable source of public revenue that is tied directly to the project itself.
The Commonwealth of Pennsylvania has in the past funded infrastructure and mass transit projects through such vehicles as the gasoline tax, the general fund, and some dedicated special taxes such as a sales tax. I refer to the Allegheny County practice known as the "drink tax." This method of funding transit did not connect the revenue source to project expenditure, leading to much controversy and resentment by a significant sector in the business community.
Value capture on the other hand – if designed correctly – directly ties in the revenue source to project expenditure and finally to the project itself. How? As literally dozens of studies have concluded through empirical research, property values (specifically land values) increase dramatically near transit nodes. The literature on this phenomenon is now nearly 100 years old and counting. Most recently, the University of Minnesota examined various options for funding public transportation/infrastructure and recommend it very highly the concept of land-based value capture to fund projects. One recommendation, the land value tax has been usedextensively in the Commonwealth of Pennsylvania since 1911. We have experience with the land value tax inour state, and it has proved its worth when given the chance.
The link to the study is here: http://www.cts.umn.edu/Publications/ResearchReports/pdfdownload.pl?id=1160
The question will arise: why are land values in particular a a wise public policy option? Again, the answer is cause-and-effect. Most often, the general fund or a gasoline tax will pay for a cloverleaf exchange on a highway. Yet, because of the contribution of hard-working citizens and productive business, the benefit of that cloverleaf go specifically to those landowners who were lucky enough to be in the right place at the right time when the highway exchange was built. In essence, they are enriched at the expense of the public in the Commonwealth.
Similarly, the same effect applies to mass transit. Again, the literature is decades old . When the BART system in San Francisco/Oakland was constructed land values increased dramatically in the particular spots where BART stops were constructed.
The increase in land value can be projected before project approval, and can be measured quite accurately post project completion.