Financing new infrastructure by means of land value capturing Stockholm metro extension in particular and a couple other cities in general 2014-06-12 Christian Johansson, Business Strategist, Transport Administration Stockholm County Council COMPANY LOGO, (white on transparent background)
2 Agenda 1 Historical background 2 Stockholm public transport financing 3 Transport infrastructure and housing 4 Case - Stockholm metro extension 5 Case other cities 6 Closing remarks
3 Historical background Private initives in rail traffic in 1800 s and 1900 s Municipalities and private land owners helped finance infrastructure development by capturing land value In the 1960 s a government reform added a new level of government counties/regions The municipalities kept the power to decide on development of land including sales and land capturing. Public transport became the responsibility of the county and founded primarily by county tax and sales revenues (tickets, rents, advertising). One of the effects of this was that financing infrastructure developent through land value capture became more difficult and less common. ESO report 2013:4 fig.2.2
4 1 Historical background 2 Stockholm public transport financing 3 Transport infrastructure and housing 4 Case - Stockholm metro extension 5 Case other cities 6 Closing remarks
5 Stockholm public transport - funding State Large investor in infrastructure Road toll/congestion charge administrator County The Traffic Administration is a part of the county council and responsible for Public Transport and associated infrastructure Municipalities (26 in the region) Sometimes an investor in infrastructure, more importantly they have monopoly on planning and development Private enterprise Sometime investors
6 1 Historical background 2 Stockholm public transport financing 3 Transport infrastructure and housing 4 Case - Stockholm metro extension 5 Case other cities 6 Closing remarks
7 Transport infrastructure development and housing development State National transport infrastructure, rail and road County Regional transport infrastructure Municipality Housing Local roads Source of finance and increased travel Transport infrastructure Housing Improved availability and increased land value
8 1 Historical background 2 Stockholm public transport financing 3 Transport infrastructure and housing 4 Case - Stockholm metro extension 5 Case other cities 6 Closing remarks
9 Stockholm metro extension
10 Financing of metro extension Financing of infrastructure (excl. Vehicles and depot) Billion SEK price level januari 2013 Revenue Sum Congestion charges 9 State funding 3,825 Regional plan 0,825 Municipalities 5,2 - Stockholm 2,95 - Nacka 0,85 - Solna 0,6 - Järfälla 0,8 Stockholm County Council 0,65 Sum revenues 19,5
11 Division of funding
12 Stockholm metro - Land value capturing In metro extension case. National government, county and affected municipalities have signed agreement to extend the metro and to build 78 000 additional apartments until year 2030. Investment in transport infrastructure financed in part by land value capturing for new apartements. However most of the value increase will come to existing housing and so will likely not, to any significant extent, be part of the financing.
13 1 Historical background 2 Stockholm public transport financing 3 Transport infrastructure and housing 4 Case - Stockholm metro extension 5 Case other cities 6 Closing remarks
14 London Crossrails 21 km tunnel through central London. Financing 5,6 billion National governent Department for Transport 7,8 billion The region Greater London Authority 2,5 billion Other TOTAL 15,9 billion Region given authority to set charges and taxes In comparison to Sweden more responsibility and tools given to regional level of government. Property devolopment and sales Business rate supplement Exploitation levys
15 Hong Kong Rail+property Distinct differencies regarding land ownership Far reaching possibilities for the state to give risk and responsibility to private parties
16 1 Historical background 2 Stockholm public transport financing 3 Transport infrastructure and housing 4 Case - Stockholm metro extension 5 Case other cities 6 Closing remarks
17 Closing remarks In the case of Stockholm we can learn a lot from history The challenges of realizing land value capture. The possibilites for land value capture rely on negotiations and voluntary agreements. National government as a negotiator can benefit the end result. We can learn from other countries, but due to different laws and regulations and different public sector structure some solutions are inconceivable in the short term. Long term - Giving responsibility for housing and transport infrastructure to same level of government could improve prospects of land value capturing in the future. Long term - Regional property tax could be a different way of mitigating the problem.