Capturing value to sustain our civic commons
All across this country, cities have existing civic assets that were meant to be shared public goods — our parks, libraries, trails and community centers. However, as communities have segmented by income, technology has advanced and priorities have shifted, support for civic assets has declined.
Unfortunately, these assets now fall to the bottom of nearly every municipal budget. They are seen as luxuries, rather than critical for city success. And when budget cuts hit they are often the first on the chopping block.
In fact, while the Great Recession caused a lot of cuts to public services, no service bore the brunt of cuts like parks. Between 2009 and 2013, parks and recreation spending declined by more than 20 percent across the country. A recent study by the National Parks and Recreation Association showed that rather than being viewed as a necessary public service, elected leaders see parks as “fully discretionary” and a “luxury.”
Because of underinvestment and apathy, we have not been able to deliver on the full potential of these places. And yet, at this moment, there are many indications that change is afoot.
City leaders are starting to recognize the latent potential of these public places. Take a look at cities across the country and you’ll find they are reinvesting in their civic assets — New York, Washington, D.C., Dallas, Philadelphia, and Akron, just to name a few. However, new investment often comes in the form of capital dollars, while leaving the long-term financial sustainability of the assets uncertain.
Central to the civic commons approach is the belief that our shared public places are a portfolio of assets that have the power to create value in surrounding communities.
Could the very value that assets deliver to their neighborhoods and cities be a source for sustaining their operations at the level the public demands?
Take the case of the High Line, a public asset project that increased nearby real estate value in a way that it is projected to generate about $1 billion in tax revenues for the city over the next 20 years. It has an annual operating budget of over $11 million, 98% of which is privately fundraised by Friends of the High Line. Despite the value created in the surrounding community, the asset’s own operating funding is not guaranteed. But what if a portion of that value created could be captured and reserved for its continued operations?
Last month, the learning network hosted the Value Capture Forum that brought together a small group of thought leaders and practitioners to consider this question:
If revitalized and connected public places increase the value of nearby real estate, are there financial mechanisms that could be developed to capture a portion of that additional value that could be used to sustain operations and maintenance of public places while advancing residential socioeconomic mixing?
We discussed how existing tools such as Tax Increment Financing, special assessment districts, community land trusts, sale or lease of public land, and air rights, might be used to both support day-to-day operations and advance socioeconomic mixing.
We also discussed less well-known tools such as a municipal tax on excess capital gains on real estate, an ecological system capture that monetizes savings from onsite green infrastructure such as stormwater management and solar energy production, a public upzoning market where FAR increases can be auctioned, land value taxation as a practical way to tax speculation and vacancy while shifting the burden of property taxes in a way that promotes greater affordability, and technology that offers the ability to leverage dynamic pricing.
Along with outlining specific financial mechanisms, throughout the daylong forum we discussed the tensions nested within the framing of the question — the desire for both value creation and affordability, the tools beyond finance such as zoning that can excel or hamper these efforts, the opportunity to expand the notion of value beyond real estate.
With input from experts and practitioners, in the coming months Reimagining the Civic Commons will put forth a brief documenting potential value capture tools for the civic commons, the contexts in which they are most appropriate and the frictions that exist when balancing the outcomes of value creation and socioeconomic mixing. While it won’t be an anthology of every possible mechanism, it will provide tools that civic asset and community leaders may want to consider using to establish financial sustainability as they reimagine their own civic commons.
Reimagining the Civic Commons is a collaboration between The JPB Foundation, the John S. and James L. Knight Foundation, The Kresge Foundation, The Rockefeller Foundation and local partners.
