What is land-value capture and which of the following is an example?

• A. Property taxes only.
• B. Tax-increment financing (TIF) and development charges.
• C. Sales taxes.
• D. User fees.

Answer: (B)

Land-value capture is about reclaiming the rise in land value that happens when public investments or policy changes (like new infrastructure, improved transit, or favorable zoning) make nearby land more valuable. The idea is to channel a portion of that value increase back into funding the public improvements that created it. An example of this approach is tax-increment financing and development charges.

Tax-increment financing works by identifying a district, freezing the current tax base, and then using the future increases in property tax revenue (the increment) from new development within that district to pay for the infrastructure or improvements in that area. Development charges (often called impact fees) are fees charged to developers to help cover the capital costs of new public services and facilities triggered by growth, effectively capturing some of the uplift in land value generated by the new development and its associated improvements.

In contrast, property taxes, sales taxes, and user fees aren’t mechanisms that specifically capture the land value created by public actions in the same targeted way, so they don’t exemplify land-value capture.