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DEVELOPING A METHODOLOGY TO CAPTURE LAND VALUE UPLIFT AROUND TRANSPORT FACILITIES

2. APPROACH

2.1 Overview

2.1.1 The research was broken-down into four distinct, but inter-related, stages. These are as follows:

• Stage 1: Inception and Literature Review
• Stage 2: Development of Land Value Measurement Method
• Stage 3: Assessment of Funding Methods
• Stage 4: Reporting and Policy Analysis

2.1.2 In broad terms this structure was followed during the project, although there were certain modifications required as the research developed. In particular, the development of the land value measurement work required longer than planned for, due to discussions over the precise focus of investigations and data assembly issues. This involved several stages of refinement to the value measurement method, and subsequent dialogue with the Scottish Executive.

2.1.3 In addition, the focus of the funding method assessment was extended to cover a partial application to actual case study transport schemes. This was felt to make the results more 'concrete'. However, there were difficulties in obtaining appropriate case studies to test the funding methods on. The issues arising from this are discussed later in the report.

2.1.4 It should be noted that detailed data collection - either as part of the land value measurement method or the case study application of funding methods - was not part of the remit of this project. The focus was upon developing a methodology by which such testing and application could be made.

2.2 Approach development

2.2.1 As a general comment on method, the potential ability of transport infrastructure investments to produce transport benefits, such as travel time reductions, is not questioned ¹. The debate is over whether there are additional benefits from these investments, such as land value increases, how to measure them, and then the extent to which these land value increases can be captured by funding mechanisms.

2.2.2 The two basic assumptions need to be understood at the outset:

• Where there is already a well-connected transport infrastructure network of a high quality, further improvement in that infrastructure may not on its own result in any measurable increases in land values. But there may be benefits from an expansion of the infrastructure through network effects, such as increases in the area wide accessibility and the enlargement of catchment areas.
• Any assessment of land value change must recognise the role of complementary and supporting conditions and initiatives in attempting to measure the impact of transport infrastructure investment in any given situation. Transport infrastructure investment acts as a complement to other, more important, underlying conditions, which must also be met if further economic benefits are to take place .

2.2.3 Figure 2.1 provides a conceptual model of the relationship of land value change and transport investment. This illustrates the complex inter-reaction between different factors. The research findings have examined these relationships to ensure that the findings are logically consistent and relevant.

2.2.4 This conceptual diagram is elaborated on in more detail in Section 4 on the T-IMPROVE methodology. Essentially, the approach developed here argues that two main sets of factors are at work.

2.2.5 One relates to the context within which the investment takes place and covers the "external" factors at work - these have been grouped into four separate (but overlapping) categories to cover institutional and organisational factors, economic factors, location factors and the quality of the development. This is essentially saying that similar transport investments in different locations will not have the same effects on property and land values.

2.2.6 The other relates more explicitly to the transport and accessibility related factors and links the property market process with transport changes. It starts at the bottom left where there is a public transport investment, which triggers an accessibility change and this in turn makes some locations more attractive and land/property values rise. This in turn leads to increases in levels of development and transport demand. These are the conventional arguments used in land use and transport analysis.

2.2.7 In addition, it is argued that second round effects take place as the increases in land values and rents lead to more land being made available, and this in turn has a feedback loop in terms of the land and property markets, probably leading to more demand for travel. This is the process that T-IMPROVE tries to capture, having controlled for the contextual conditions in operation within the corridor.

2.2.8 A number of key principles also underlay the development of the research methodology. These are summarised below, along with the agreed research response to each principle.

• Transport mode focus. The overall emphasis of the research was initially to assist in the funding of public transport schemes. However, the role of road funding was also agreed as valuable to examine, and this was included within the research focus.
• Direction of value impacts. Transport infrastructure schemes do not always lead to improvements in land values; indeed there are certain circumstances were there has been a decline in land values (e,g, improving transport in one corridor may reduce values in another corridor, or increased noise or road congestion associated with a specific scheme). This issue of value change (both positive and negative) was considered as part of this research, as it raises important policy issues.
• Robust results. The policy context surrounding the issue of land value capture is sensitive, particularly in the UK. It was therefore vital for the findings of the study to be seen as both robust and mindful of the ultimate objectives of the research. This includes appropriate discussion with private and public sector interests.
• Deliverability. A key focus has been communicating the implications of delivering a land value capture system. Policy makers and politicians need to be adequately informed on this, and this study has been seen as a key means of achieving this.
• Existing mechanisms. Linked to the above is the extent to which existing powers can be used more effectively (e.g. S75s, LGA 1973 agreements etc). This has been considered, although the main focus has been upon examining new forms of taxation associated with uplift values.
• Geographical flexibility. The findings need to be applicable across a variety of geographical situations, e.g. urban and rural, greenfield and regeneration developments. This was included in the development of the value measurement method, and tested in the case study work.
• Scheme type. The findings need to be applicable to the diverse nature of public transport investment and improvements, from new rail lines (e.g. Waverley and Alloa), new stations, LRT schemes, park and ride schemes etc.

2.2.9 The above principles were used to inform the development of the methodology. It should be noted that the approach has involved a combination of quantitative and qualitative strands of investigation, including desk-based reviews, consultations and data interrogation. One of the key strands of desk-based review work, the literature review, is summarised in the next Section.

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