Science Parks and Land Value Capture
Some value capture approaches are tailored for specific development projects. For instance, the science park has become a popular form of town-gown partnership used to boost local economic development. Michael I. Luger and Justyna Dabrowska examine the extent to which land value increments created by this type of joint venture can be recouped to defray investment costs. In most cases, universities and public agencies are not investors and thus do not expect to profit from these undertakings. Hence, the developers normally retain the land value increments. Yet cities and universities can benefit indirectly from a science park.
Growth in economic activities and employment stimulated by the park can increase local income and property tax revenues. The authors specifically explain how cities, universities, and private investors successfully shared the increased land value in the Manchester Science Park. The three stakeholders formed a partnership in 1984 that developed the park and leased the office space to private companies. The authors estimated that the economic benefits of the park were capitalized into the land value and increased the value by about 10 percent by 2010. The park tenants pay rent and administrative fees to the managing company, which in turn pays the City of Manchester for the leased land and uses the fees to cover maintenance costs. No government subsidies are needed.
This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2011 and is Chapter 10 of the book Value Capture and Land Policies.