Value Capture

Value capture is not one thing but a bundle of tools that raise revenue by capturing the value generated by public infrastructure improvements and/or a strong or strengthening real estate market. Value capture can entail the creation of a new assessment, tax, or fee (such as a special localized tax or development impact fee), the diversion of new revenues generated by an existing tax (as in tax increment financing), or a revenue-sharing agreement that allows a government agency to share in some of the revenues generated by developing publicly owned land (known as joint development).

Redevelopment Tax Increment Financing
Tax increment financing (TIF) works by freezing the property tax revenues that flow from a designated project area to the city, county, school district, and other taxing entities at the “base level” in the current year. Additional tax revenue in future years (the “increment”) is diverted into a separate pool of money, which can be used either to pay for improvements directly or to pay back bonds issued against the anticipated TIF revenue.
 
In California, TIF has historically been used by redevelopment agencies to raise funding for infrastructure improvements, land assembly, housing, and other projects in redevelopment areas. However, redevelopment agencies in California were required by state law to dissolve as of February 1, 2012. Unless the state legislature takes further action, TIF can no longer be used in its traditional form to fund new projects (i.e., by redevelopment agencies). However, cities may still be able to use infrastructure finance districts (IFDs), a more limited form of tax increment financing, in some situations.