Friday, July 22, 2011

Innovative Infrastructure Financing Mechanisms for Smart Growth

One of the challenges facing local government is to find new ways to pay for infrastructure without rising the general taxation level to much. While the mayors' support of a 2-cent gas tax in an election year is a bold move to pay for transit, there is still more transit that we need and politically I don't see to many more moves like this. We also have other infrastructure issues like upgrading road, water, and sewer systems.

Back in 2008, Smart Growth BC commissioned a study call Innovative Infrastructure Financing Mechanisms for Smart Growth. The report almost seems more timely today than when it was first released. It looks at fairer ways to pay for infrastructure that supports sustainable city building. Right now local governments in BC do not have the authority to use many of the tools presented in the report. The provincial government would need to change the Community Charter. Some of the tools in the report are summarized below.

High Occupancy/Toll Lanes
Unlike standard HOV lanes, HOT lanes are accessible to Single Occupancy Vehicles that pay a toll, while vehicles with two or more occupants continue to use them for free.

Sector and Density Gradient Approach to Development Cost Charges
Development Cost Charges (DCCs) are fees imposed by municipalities to recover the capital costs of the off-site infrastructure required to service new residential or commercial development. Under the sector approach, DCCs are lower in sectors near the urban core and higher in those in the periphery.

Parking Site Tax
A parking site tax is applied to nonresidential parking lots, including parking for shopping centres, offices, and commercial parking lots.

Land Value Taxation
Land Value Taxation (LVT) is a specialized form of property tax. It is a value-based tax that is levied only on land and is independent from the value of any improvement on the land

Stormwater Utility Fee/Credits
Some municipalities have stormwater utilities that collect user fees independently of water and sanitary sewage utilities. Property owners earn stormwater fee credits by implementing stormwater best management practices.

Fuel Tax Transfer
Fuel tax transfers are an example of intergovernmental tax revenue sharing. In Canada, both provincial and federal governments collect fuel tax and in some cases share a portion of the fuel tax revenues with a local government agency.

Tax Increment Financing
Tax increment financing is the name given to the practice of financing capital
projects through the increase in future property tax revenues due to the increased value of property from the infrastructure investment.

Tax Base Sharing
Tax-base sharing is grounded in the idea that communities experiencing growth should
share the benefits with other communities in the same urban region.

Vehicle Registration Surcharges
A vehicle registration surcharge is a tax applied to vehicles registered to addresses within a particular jurisdiction.

Commuter Tax
Commuter taxes are payroll income taxes paid by people employed but not residing in a given jurisdiction. The main idea underlying commuter taxes is that, in their absence, people who work in but live outside a given jurisdiction get a “free ride”.

Tax-Exempt Tax Revenue Bonds
A bond is a type of loan which the borrower promises to repay (including interest) by a specific date. In the case of tax-exempt bonds, the income earned by the bondholder in the form of interest is exempt from federal and/or provincial income taxes.

Local Option Sales Tax
Local-option sales taxes are a special-purpose taxation mechanism. The tax usually takes the form of a small premium (between 0.5% to 1.0%) on top of other sales tax, applied only within a particular local jurisdiction.

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