Resources

Throughout the world, transport infrastructure is increasingly being funded by charges that more closely target the direct beneficiaries of the infrastructure. One form these charges can take is a levy on land owners or developers – ie value capture mechanisms. In New Zealand there are a number of mechanisms that can be defined as value capture mechanisms: development contributions, financial contributions, targeted rates, and other negotiated mechanisms that sit outside of legislation (ie do not refer to policies contained in a council’s long-term plan).

This report outlines the experience to date in using these mechanisms and highlights a number of limitations with, and barriers to, the current use of them in New Zealand. This research suggests that the current legislative framework for charging land owners and/or developers in New Zealand provides the basis for introducing charges that levy the beneficial ‘value’ obtained from transport infrastructure investments. It suggests a number of improvements to these mechanisms that should be investigated in order to increase the feasibility of these mechanisms, and many of the commonly cited international mechanisms (such as ‘tax increment financing’) could be implemented as variations to existing mechanisms.

Keywords: financing, funding, local government, New Zealand, NZ Transport Agency, transport infrastructure, value capture