Investment in infrastructure three pillars of city resilience

LVC mechanism allows cost-sharing on initial development stages and that way helps reduce /re-distribute development activation costs
INVESTMENT IN INFRASTRUCTURE
Underserved Land
(hazard-prone, blight)
Developer Barriers:

• High risk profile
• Cost-of-carry concerns
• Free-rider problem

Development-ready Land
(desirable, properly zoned, resilient)
Development Enablers:

• Disaster risk reduction
• Slum upgrading
• Hard infrastructure
• Land consolidation / rezoning

Development Timeline
Land Value
PUBLIC UPGRADES
WITH
VALUE
CAPTURE
OPPORTUNITY
Potential for further exponential
value growth
LVC may be structured to either increase or to decrease the infrastructure carrying cost of a private project, depending on the project’s risk-return profile
INVESTMENT IN INFRASTRUCTURE
Cash flow, $
Time periods
Infrastructure windfall: public costs for infrastructure are offloaded to private sector; private partner’s returns are high enough to absorb extra costs and extended payback
Infrastructure bottleneck: upfront infrastructure costs are too high for private sector and are paid by public funds; public costs are later recovered from private partner’s operating revenue
Cash flow with LVC
Cash flow without LVC
LVC is an universal policy tool, which could be implemented in various contexts
INVESTMENT IN INFRASTRUCTURE
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Market
Legal and regulatory systems
Public acceptance

• Most effective in burgeoning real estate market
• Highest land value differential is achieved in areas that are most responsive to infrastructure upgrades (urban core, waterfront, etc.)

• Development may face negative mindset due to displacement, NIMBY, redlining, spatial segregation, social stratification, etc.

• Inadequate land controls, deficient technology and data systems (e.g. land cadaster) may hinder LVC