Value capture offers an innovative option for local governments to harness a portion of the new private property value created by public infrastructure. Adjacent property owners often benefit from the construction of a new or improved transportation facility through higher rents and property values. Project implementers should explore value capture to help fund capital costs associated with new, expanded transportation facilities, including transit service enhancements.

Value capture mechanisms currently available in Illinois include tax increment financing districts, special service areas, impact fees, and business district taxes.{{Chicago Metropolitan Agency for Planning, “Transportation Value Capture Analysis for the CMAP Region,” June 2011, https://cmap.illinois.gov/wp-content/uploads/VC-Final-Report_7-26-11-Executive-Summary.pdf}} Many communities already use these mechanisms for small scale transit and road improvements. For a select set of large projects, the state recently authorized Transit Facility Improvement Area (TFIA) districts that allow use of incremental property tax revenue to fund transit improvements. In addition to an established TFIA for the CTA North Red/Purple Line Modernization Project, other transit projects may also be ripe for the implementation of a value capture district. Adding further projects to the statute and broadening current value capture types at the community level can help provide much-needed local revenues to support the transportation system.

Arterial roadway capacity expansion projects are often implemented by either IDOT or county transportation departments. However, while these projects have regional mobility benefits, the need for expanded arterial capacity is driven partly by local conditions, such as increased retail, office, or industrial development. In addition, a portion of an arterial project’s benefit accrues to the community or communities where the expansion is occurring, in the form of reduced congestion or increased revenues. The Tollway already requires that local governments applying for a new interchange contribute at least half of the project cost. IDOT and the counties could consider similar policies for the cost of additional arterial capacity, which would leverage local benefit to fund the project. Municipalities could utilize value capture districts such as business districts or special service areas to fund contributions or direct general fund revenues for this purpose. These policies should ensure that communities with limited financial resources are not disproportionately burdened for projects affecting multiple jurisdictions. CMAP’s Local Technical Assistance program can provide a model for flexible match requirements in high need communities.

Action 1

Improve TFIA provisions to focus on criteria and need rather than on specific transportation investments.

Implementers

The state

Action 2

Continue to implement and expand value capture for projects with sufficient travel benefits and tax base to support improvement costs.

Implementers

Local governments

Action 3

Evaluate and consider a new policy to require equitable local contributions for major arterial expansions.

Implementers

CMAP, IDOT, and county departments of transit