Massachusetts taking up value capture

The Massachusetts legislature is considering two bills that attempt to deal with the Commonwealth’s lack of transportation funding, according to Metropolitan Artea Planning Comission executive director Marc Dreisen, who endorsed both in an article for The Boston Business Journal. One, proposed by Rep. William Straus, would allow cities and towns to use the property tax revenue they collect to fund transportation projects and another, proposed by Sen. Ben Downing, would allow municipalities to do regional initiatives to raise money

Value capture and local option taxes are popular around the country. According to an MAPC memo on the subject from March of 2013, they take several different forms. In a special assessment district, an extra tax is levied on property owners within a geographic area expected to benefit from the improvement. Tax increment financing, or TIF, calculates the increase in property tax assessments — judging from a Commonwealth Magazine article it would appear that Straus’s proposal is a TIF.

Finally, a development or impact fee is assessed in some jurisdictions, although the memo notes that they are unconstitutional in Massachusetts. This has not stopped the City of Cambridge from charging commercial developers linkage fees of $12 per square foot on non-residential projects of over 30,000 square feet, according to The Cambridge Chronicle, or from floating transportation improvement fees on commercial development in Kendall Square, according to The Boston Globe.

Local option taxes, usually in the form of a local increase in sales taxes, are also common. The Massachusetts Bay Transportation Authority currently receives a percentage of the sales tax collected state wide.

While they’re certainly popular, since they involve communities raising taxes on themselves and not their neighbors, it’s unclear how much the strategies could actually offset projects with multi-billion dollar overruns. Earlier this year, the Cities of Somerville and Cambridge volunteered to contribute funds to save the Green Line Extension, but between them they could only come up with $75 million — and Somerville has already seen investment along the route in anticipation of its construction.

Both proposals allow for funds raised through them to be used on maintenance, which is likely where amounts in the tens of millions of dollars can really make a difference.


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