Making a case for public-private partnership in developing a sustainable and affordable public transport solution, Pricewaterhouse Coopers, in a report on the sector, has emphasised on tapping variety of benefits that accrue to the users and policy initiatives that need to be taken up to fund urban transportation projects.
Depending on the extent of benefits accrued, the report catgorises the beneficiaries in three groups?direct-use beneficiaries, proximity beneficiaries and indirect beneficiaries.
?Direct user beneficiaries include commuters who will use transport services, businesses using benefit from the assets created and advertisers who may be able to generate revenue by utilising the space on rolling stock, stations, bus stops etc. Proximity beneficiaries are businesses close to the corridor along which the public transportation system will operate. They benefit from increase in customer flow and business activity. Value of land and property owned by residents in these areas will also appreciate due to the better transportation linkages. Indirect beneficiaries include all users who experience less congestion on the roads due to other users using the public transport,? said the report.
?Excessive emphasis is laid on financing the project largely via direct use benefits, user charges, advertising rights etc. The need to keep public transport affordable to the poor results in charges being made so low that even recurring expenses are not met. Currently, there are very limited tools and instruments available for deriving value from proximate benefits. The administrative and implementation needs for capturing these values will be substantial. There are hardly any instruments, even at a conceptual level for making indirect beneficiaries pay for the benefits received from public transport,? it added.
On what types of instruments are necessary for capturing part of the value that accrues to different sets of beneficiaries the report said, ?A substantial benefit from the project is the increase in economic activity along the corridor as well as increase in the value of land and real estate in the proximity of the stations, bus stands and the corridor. There may be multiple instruments that could be used to capture part of this value for funding the project.?
Additional property tax, higher floor space index (FSI), transferable development rights (TDRs) could be some tools for capturing value from proximate beneficiaries, the report pointed out.
?The urban transport project is an amenity that will increase the value of land or property near the stations. One option for the urban local body (ULB) to capture some value from this benefit is to levy a higher rate of property tax on these. The ULB may designate areas/colonies close to the stations as the ?project influence zone? and levy a higher rate of property tax. Similarly, commercial properties close to the stations would be more valuable as they can attract more consumers and should pay additional property tax. This option would only work if the present system of property tax administration and collection is efficient,? it said.
?An alternative to higher property tax is to levy a one-time betterment levy on properties in the proximity zone. This option could help generate upfront resources from beneficiaries for part-funding the capital cost,? it added.
?If the project influence zone is underdeveloped, the potential to generate revenues from the above tools would be limited. In order to incentivise real-estate development in the project influence zone, a higher FSI may be allowed. Buildings used for commercial purposes may be allowed to increase the built-up area in this zone after paying an up-front fee to the ULB. This could also be charged in addition to regular building permission fee as applicable,? it said.