Corridor Reservation: Implications for Recouping a Portion of the "Unearned Increment" Arising from Construction of Transportation Facilities: Final Report

About the report:

This report examines the phenomenon of the unearned increment, which is the often substantial increase in private land values resulting from transportation facility construction, and possible attempts to recoup it to finance transportation projects. The report has four parts. Part I examines when, where, and why the unearned increment is likely to be created. It also gives a review of the history of the increment. Parts II and III break down the types of statutes that can be used to recoup the increment. Part II examines corridor reservation laws that restrict any development within a proposed transportation corridor for a period of time without compensation by the government until acquisition of the land occurs. In return, the affected property owners receive transferable development rights. The report concludes that such a regime might survive legal challenges based on the Takings Clause of the Fifth Amendment. Part III focuses on direct recoupment of the unearned increment from land near a transportation facility that appreciates in value as a result of the construction of the facility. The uses of special assessments, impact fees, proffers, transferable development right receiving areas, and excess condemnation are examined, and analyses of legal ramifications and defects are included. Part IV is intended to present a plethora of policy choices to recoup the unearned increment, not to give specific recommendations for legislative or administrative action. Instead, the legal and policy issues involved for the various reservation and revenue enhancement techniques are included as a list of alternatives for action.

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