Equity in financing public transport infrastructure: Evaluating funding options

Abstract

Funding of new public transport infrastructure is challenging because of the typically large up front costs. Funding bodies are keen to find new ways of delivering new infrastructure and several funding schemes have been implemented which are based on the way in which better public transport from new infrastructure improves accessibility and raises land values have been implemented. Value capture, the term for a funding mechanism whereby the increase in land value following new infrastructure, has been widely viewed as an alternative funding tool for future public transport infrastructure and has been practiced in a number of forms (e.g., Tax increment financing (TIF)). However, few studies have addressed the equity implications in relation to value capture funding schemes. This study investigates the equity implications using Gold Coast Light Rail Transit (GCLRT) stage one in Gold Coast, Australia as the case study. This case study is used to evaluate four different funding schemes based on previous and existing value capture strategies, such as land value tax, value capture strategies (e.g., TIF and special assessments), and a public transport levy. The paper considers vertical and horizontal equity. There is some evidence of high levy for low income households in the GCLRT catchment areas for value uplift based schemes. The conclusions of the paper contribute to implementation of value capture scheme for many cities in Australia and elsewhere wanting to implement similar funding schemes to fund transport infrastructure.