Under the framework of the National Metro Rail Policy 2017, Transit Agencies such as the NCRTC are mandated to explore conventional and innovative sources of non-fare box revenue to enhance financial sustainability. Under this framework, Transit Oriented Development (TOD) is to be implemented so as to facilitate sustainable urban development along the transit corridors. Implementation of Value Capture Financing (VCF) instruments is recommended to capture a part of gains accruing to private landowners due to the implementation of the Transit Project.
Transit Oriented Development
Transit Oriented Development (TOD) is a policy intervention by the Government for the integrated planning of Transit Nodes.
TOD integrates land use and transport planning and aims to develop planned vibrant sustainable urban growth centres, having walkable and liveable communes with high density mixed land-use. Citizens have access to open green and public spaces and at the same time transit facilities are efficiently utilized.
TOD Policies allow for additional development rights in the “Influence Zones” of the Transit project in addition to allowing for a mix of uses. This additional development right in conjunction with integrated planning (focused on public transit usage) increases the ridership of the Transit System.
Source : Sec. (2) National TOD Policy (2017)
Value Capture Financing
Value Capture Financing (VCF) is defined as a public financing method by which governments (a) trigger an increase in land values via regulatory decisions or infrastructure investments, (b) institute a process to share this land value increment by capturing part or all of the change and (c) use these proceeds to finance infrastructure investments (e.g. investments in transit and TOD), any other improvements required to offset impacts related to changes (e.g. densification) and / or implement public policies to promote equity (e.g. affordable housing, etc.)
VCF aims to capture a portion of the unearned / windfall gains accruing to private players owing to Government interventions by imposing new taxes / fees or enhancing existing taxes / fees in the catchment of the project where such revenues accrued are utilized for the financial sustainability infrastructure project.
Source: Sec. (2) National VCF Policy Framework (2017)