Land Value Capture as a New Sustainable Financing Mechanism for Public Transit Development in New Cities: Borg El-Arab New City as a Case Study

Abstract

The public transit financing methods in Egypt are mostly dependent on governmental entities, which increase national economic burdens, without any correspondent impact on the quality of service provided nor their provision. An alternative way of financing must be integrated without an increase in fares, and general budget, or dependence on foreign loans, and grants. This funding problem has further become a spectacular challenge, to link the new cities with existing ones. From another perspective, public transit eventually poses economic influences on land values surrounding their context that increase incrementally. Yet, this increment is commonly captured by landowners and private developers, and can be rationally used to cover the initial public transit costs if the construction phase which is preceded by a pre-planned framework to capture this increment in favor of the community through related governmental authorities and decision makers. This mechanism is referred to as “land value capture: LVC.”

From this view, the objective of the study presented in this chapter is to generate a new sustainable funding mechanism for public transit development using land value capture methods in the Egyptian new cities. Accordingly, this will be achieved through the analysis and the review of several relevant international case studies in an attempt to deduce the LVC mechanism criteria and stakeholders’ role that can successfully manage this framework. The deduced criteria will be used to test the applicability of using the land value capture mechanism in Borg El-Arab new city. The chapter results end up with highlighting how the ‘LVC’ methods could serve as a two faceted mechanism that meets the community and low-income groups’ needs, while benefiting from the high-end landowners, and private developers without having the government as the main economic funder.