Outils De Financement De L'urbanisme
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Urban Planning Financing Tools
Financing urban planning projects is a complex undertaking, demanding a diverse range of tools and strategies to secure the necessary capital. These tools vary in their applicability depending on the specific context, the scale of the project, and the prevailing regulatory environment. This overview examines some key urban planning financing mechanisms.
Tax Increment Financing (TIF)
TIF is a common tool used to fund redevelopment projects. It works by designating a specific geographic area as a TIF district. Existing property tax revenues within that district are frozen, forming a "base value." As redevelopment occurs and property values rise, the incremental tax revenue generated above the base value is then dedicated to financing improvements within the TIF district, such as infrastructure upgrades, public amenities, or even private development that supports the overall plan. The increased tax revenue thus pays for the improvements that generated it. TIF is often used in brownfield remediation or areas suffering from economic stagnation.
Special Assessments
Special assessments are charges levied on property owners within a defined area who directly benefit from a specific public improvement. For instance, if a new sidewalk or sewer line is installed, properties directly adjacent to the improvement might be assessed a fee to cover a portion of the project cost. This method ensures that those who reap the immediate benefits contribute proportionally to the expense. The assessment is typically based on the property's frontage or proximity to the improvement.
Development Impact Fees
Development impact fees are one-time charges levied on new development to offset the infrastructure demands generated by that development. These fees are intended to help municipalities keep pace with the increased demands on public services like schools, roads, parks, and water/sewer systems that accompany population growth. The fees are typically calculated based on the type and size of the development, aiming to establish a nexus between the development and its impact on public infrastructure. Development impact fees can be controversial as they can potentially increase the cost of housing and development.
General Obligation (GO) Bonds
General obligation bonds are debt instruments issued by municipalities that are backed by the full faith and credit of the issuing government. This means that the municipality pledges its taxing power to repay the bondholders. GO bonds are typically used to finance large-scale capital projects, such as new schools, public libraries, or transportation infrastructure. Because they are backed by the municipality's overall financial health, GO bonds generally offer lower interest rates than other types of bonds.
Revenue Bonds
Unlike GO bonds, revenue bonds are secured by the revenue generated from a specific project or facility. For example, a toll road might be financed using revenue bonds, with the toll revenue used to repay the bondholders. This type of financing is suitable for projects that are expected to generate a consistent stream of revenue. The risk associated with revenue bonds is generally higher than GO bonds, as repayment depends on the success of the specific project. Consequently, revenue bonds typically carry higher interest rates.
Public-Private Partnerships (PPPs)
PPPs involve collaboration between public sector entities and private sector companies to finance, develop, and operate infrastructure or public service projects. PPPs can bring private sector expertise, efficiency, and capital to projects that might otherwise be difficult or impossible for the public sector to undertake alone. PPPs can take many forms, ranging from design-build contracts to long-term concessions where the private partner is responsible for financing, building, operating, and maintaining the project for a specified period.
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