- New Funding Options for Urban Regeneration   450 kb by    Langley, Joe | jlangley@globalskm.com    Short Outline The traditional means of funding urban regeneration are proving to be inadequate as cities struggle to rebuild obsolete infrastructure while responding to changing demographic,housing and employment trends. New funding options are needed which share the value created by the public's investment in urban infrastructure. Abstract Local and State Government urban renewal and transport agencies are struggling to revitalise Australian cities using traditional public funding sources. In order to support sustainable urban growth, these agencies must often rebuild existing obsolete transport infrastructure, amalgamate highly fragmented land ownership patterns, and rejig metropolitan plans to support new, higher density housing and employment developments to respond to shifting demographic, economic and social trends. Not only are these problems difficult and expensive to fix, urban renewal agencies do not have the legislative powers needed to create more equitable revenue generating schemes to supplement traditional funding sources. New funding options are required if Australia’s cities are going to address these problems and compete successfully in tomorrow’s global market place for talented workers. Value capture funding methods have been used to supplement urban renewal projects in North American for over 40 years, and were introduced to the UK urban regeneration program in 2011. Value capture is simply a means of redirecting a portion of the increase in private property value caused by a public infrastructure investment to help fund redevelopment activities and projects. Under these schemes, dedicated revenue streams are hypothecated into a separate fund to underwrite bonds or notes which are then used to pay for the improvements for fixed future periods, paying back the initial borrowings and in many cases generating added revenues for other public purposes. There have been numerous research efforts, pilot projects and technical studies over the past few years which have investigated the application of value capture methods in Australia, but a value capture funding method has yet to be adopted in any jurisdiction. A report by PricewaterhouseCoopers (PwC) for the Property Council of Australia in 2008 recommended that Australian Commonwealth and State Governments develop a Tax Increment Financing (TIF) model[i] “to meet Australian infrastructure funding needs”[ii]. Research into the use of value capture to help fund the City of Perth’s ambitious light rail network demonstrated that many of the legislative tools are in place for this model. However, the report concluded that these mechanisms “have not yet been applied in a co- ordinated and strategic way to achieve the large scale upgrading of Perth’s transit system and the building of its urban activity centre”[iii]. In Melbourne, the Victorian Department of Treasury and Finance recently asked infrastructure and finance specialists to propose value capture and alternative financing options for several major transport and urban renewal projects “using international and national experiences” [iv] , but provided no guidance on how those options might be structured or implemented by government. This paper examines the opportunities and challenges of implementing value capture funding methods to support urban regeneration in Australia. Efforts to establish value capture programs in Perth, Gold Coast, Brisbane and Melbourne are used to highlight some of the hurdles facing proponents and policy-makers. Drawing from successful projects in the US, the paper sets out a framework for an Australian value capture model. Recommendations for Commonwealth and State Government policy makers are advanced for creating and implementing an Australian value capture model. [i] Tax Increment Financing (TIF) is a value capture funding method used throughout the United States. [ii] Tax Increment Financing to fund infrastructure in Australia, PricewaterhouseCoopers for the Property Council of Australia. November 2008 (p.81) [iii] Discussion Paper – Alternative Funding Mechanisms for Public Transport in Perth: The Potential Role of Value Capture, James McIntosh, Curtin University Sustainability Policy Institute, Corview Group, and Committed for Perth. December 2011 (p. 105). [iv] Request for Proposal (Technical Advisor) Infrastructure (Value Capture). Victorian Department of Treasury and Finance. March 2013 Keywords Case Study presented on the ISOCARP Congress 2013: Frontiers of Planning - Evolving and declining models of city planning practice   Click to open the full paper as pdf document   Click to send an email to the author(s) of this paper