Land value & accessibility through sustainable modes : an exploratoin of land value capture implementation possibilities in Land-use Tranport Integration.

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UNIVERSITY OF AMSTERDAM

GRADUATE SCHOOL OF SOCIAL SCIENCES

MASTER THESIS

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Supervisor: Dr. Luca Bertolini

Master Thesis Urban and Regional Planning

Master’s Urban and Regional Planning

Submitted by: Debayan Deb Address: Stavangerweg 713, 1013 AX Amsterdam. Date: 23 June 2014 Student Number: 10661743

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Declaration

This thesis is submitted at the University of Amsterdam, as part of the Master’s Urban and Regional Planning course.

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Acknowledgements

This thesis research would not have been possible without the support and guidance of my thesis supervisor Dr. Luca Bertolini, University of Amsterdam, whose encouragements and reassurances enabled me to overcome all the obstacles, small and big, on the path to completing this research. I deeply appreciate and shall remain forever grateful for all his efforts in this regard. I am also thankful to everyone who provided their valued opinion on various aspects associated with my research, ranging from appropriate places to find certain data to expert opinion on the accepted practices, protocols and norms of the subjects related to my research to practical advise on conducting a research. In this list of well-wishers, Dr. Hans Koster, Dr. Stan Majoor, Dr. Marco te Brömmelstroet, Dr. Julio Soria Lara, Dr. Richard Ronald, Mr. Ikshit Jain and of course my fellow students from the Masters Urban and Regional Planning programming stand out as the most prominent.

I also remain thankful to all those who made available various data that were essential in my research, the most prominent among whom were the “Dutch Association of Real Estate Brokers and Real Estate Experts NVM”, Central Office of Statistics for the Netherlands (Centraal Bureau voor de Statistiek, CBS) and the UvA Geoportal of the University of Amsterdam (the exact details of the data provided by them are mentioned in the following chapters of this thesis text).

Last but definitely not least, I express my gratitude to my family, my father Mr. Indrajit Deb, my mother Mrs. Nilima Deb and my brother Mr. Dipayan Deb, for always supporting me in all the academic and non-academic endeavors of my life and for always being there for me.

Debayan Deb,

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Abstract

Transport plays a vital role in the functioning and development of cities, and in the sustenance and growth of nations and their economies at large. But the traditional predict and provide approaches of transport planning face a dilemma of sustainability. An integrated approach towards land-use and transport planning provides a possible solution to this dilemma and creates a focus in the station areas and their development. Such developments again face a financial dilemma. Here, land value capture (LVC) mechanisms present an interesting prospect, in augmenting the funds available for public infrastructure developments by capturing the non-direct user benefits. Such mechanisms rely on the incremental land values. But in some examples of developments based on land use transport integration (LUTI), land values are seen to have not increased to the expected levels. Yet again some successful cases of LVC employment hint a favor for facilities aiding car use, like parking. Hence this research sought to investigate the causal effects of accessibility through sustainable modes, as advocated by LUTI, on the land values of residential properties located in station influence areas developing on these principles in the Randstad area of the Netherlands.

This was investigated through a cross-sectional causal research design, employing an embedded multiple case analysis approach, with the individual residential properties as the unit of analysis. This research design was implemented in the three case areas of the station influence areas around the Amsterdam South Axis (Zuidas) Station, The Hague Central Station and the Utrecht Central Station. Here the main research question of this research was answered step wise, through four research steps, where each step catered to a part or component of the overall research and sequentially built on the results of the previous step, with the final step producing the answer for the overall research embodied by the main research question. The first research step identified the benefits of the overall accessibility and the accessibility to particular activities experienced by the residential properties, through a study of existing scientific literature and theory. The second step examined the accessibility experienced by these residential properties both through sustainable and non-sustainable modes, employing a network analysis accessibility model. The third research step identified the land values experienced by these residential properties, through a simple tabulation technique. Finally the fourth research step explored the causal effect of the accessibility through sustainable modes on the land values using hedonic pricing methods.

The first research step found that accessibility provides the benefits of being able to reach locations associated with a diversity of activities that fulfill the working, shopping, seeking entertainment and social interaction needs of the households. The second step involved a sample illustration of the accessibility patterns in the three case areas, which revealed that areas with higher accessibility tend to be concentrated in a more central part of the station influence areas, and accessibility through sustainable modes appear to be more evenly distributed than accessibility through non-sustainable modes. The third step demonstrated the variations observed in the residential property values in the three case areas; while the fourth step revealed that for an appropriate travel time, among others, accessibility to overall employment opportunities, social contact, medical facilities, educational facilities and cultural and entertainment facilities through sustainable modes have a positive effect on house prices, while the same for certain shopping facilities like departmental stores tend to show a negative impact. Finally based on these findings it was concluded that the land value of residential properties in station influence areas in the Randstad, depends on accessibility through sustainable modes to several facilities to varying extents, and accordingly policy recommendations on the employability of LVC mechanisms were drawn.

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1. Introduction

Broader Prospective

Typically a vast and growing list of activities and locations are involved in people’s everyday lives and form an integral part of their lives. These include activities like living, working, shopping, seeking entertainment and social interactions and the locations with which these activities are associated. The same holds for businesses as well, where various segments of the business processes, like production, management, distribution and administration, may occur at different spatial locations (Bertolini, 2012). The importance of roles and functions of transport, in connecting the locations of these various activities that form an integral part of people’s lives and of the activities associated with businesses, hardly need any elaboration. Thus transport plays a vital role not only in the functioning and development of cities and urban settlements but in the sustenance and growth of nations and their economies at large, to such an extent that today cities and economies have become vitally dependent on transport

Context of the Research Topic

Traditionally, motor vehicles and highway development, on the lines of predict and provide ideas, have dominated the planning of transportation systems. However, this presents a dilemma: the lack of sustainability of current mobility practices, let alone in supporting future growth, but even in sustaining the current needs (Bertolini, 2012). An integrated approach towards land-use and transport planning provides a possible solution to this dilemma, through the use of public transport complemented by non-motorized networks and diverse and high-density activity patterns around station areas, to match the advantages of motor vehicles (Bertolini, et al., 2012; Bertolini, 2012). This creates a focus in the station areas and their development that involve a number of dilemmas in themself, one of which being the financing of such developments that is further highlighted in the current economic conditions of financial crisis and neoliberal tendencies (Bertolini, 1996; Bertolini, 1998). Here, land value-capture (LVC) mechanisms, which employ the increased accessibility created in station areas to finance their developments (Mathur & Smith, 2013), present an interesting prospect in the context of land-use transport integration (LUTI).

Motivating Problems & Research Topic Definition

Thus this research, inspired by social motivations like the applicability of employment of LVC mechanisms to augment the funds involved in development of station areas on the principles of LUTI and scientific motivations such as the dependence of land value of the properties benefiting from the increased accessibility in these station areas on accessibility through sustainable modes, looks into the causal effect of this accessibility through sustainable modes on the land value of the residential properties located in these station areas in the Randstad area of the Netherlands.

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Layout of the Thesis Text

Having introduced the research topic in this first chapter, the next two chapters present the theoretical framework and the research problem and design of the research respectively. The cases being explored in the research are described in the fourth chapter while the chapters five, six, seven and eight each cater to a research step of this research. Ultimately the conclusions and recommendations arising from the research are presented in the final chapter of this thesis text.

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2. Theoretical Framework

Introduction

Transport is an essential component of cities and national economies and a vast amount of literature exists on its roles and functions as well as on the ideas, concepts and activities associated with its provision, management and planning. The importance of roles and functions of transport, in connecting the locations of various activities like living, working, shopping, seeking entertainment and social interactions that form an integral part of people’s lives and of activities such as production, management, distribution and administration associated with businesses, hardly need any elaboration. Similarly the ideas and concepts associated with provision, management and planning of transport systems are also of vital importance and have evolved from the traditional ‘predict and provide’ practices of the Sixties and Seventies (Bertolini, 2012; Owens 1995) to the ‘predict and prevent’ policies of the Eighties and Nineties (Bertolini, 2012; Owens 1995), and in the more recent times, show indications of evolving towards the new emerging approaches of ‘sustainable mobility’ (Bertolini, 2012). This move towards approaches of sustainable mobility is made essential by the dilemma of urban mobility: the dilemma of lack of sustainability of current mobility practices, let alone in supporting future growth, but even in sustaining the current needs (Bertolini, 2012).

Integration of land-use and transport in planning provides an innovative solution to the urban mobility dilemma (Bertolini, 2012). But the current environment of financial crisis and neoliberal tendencies of reduced public subsidies (Bertolini, 1996; Bertolini, 1998) bring to light the social motivation of the research: In conditions of reduced public subsidies and low proportions of public funds involved in station area development projects, can LVC mechanisms be employed to augment the funds available for station area developments undertaken in the framework of LUTI? LVC ideas appear promising as, to function as a financial instrument, they depend on accessibility increment, preferably created through public transport developments (Mathur & Smith, 2013), which is in turn the essential requirement for sustainability as advocated by LUTI (Bertolini, 2012).

LVC works on the principle that this increment in accessibility will reflect in the land values of the benefiting properties (Mathur & Smith, 2013). Hence this concepts caters to the benefits created by the transport development for the non-direct users of the transport system, and thus capture this additional value created by the transport development benefiting the non-direct users, in addition to the existing practices of charging the direct user benefits through tickets and passenger fares and the unrestricted general public benefit through public subsidies and funds in the development and operation of the transport infrastructure (Zhao et al., 2012). This idea is illustrated in Figure 2.1.

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Figure 2.1: LVC mechanisms augmenting infrastructure development funds, in station area developments based on the principles of LUTI.

So such LVC mechanisms proceed by capturing the accessibility benefit as reflected in the land values of the benefiting properties. But station area developments based on the principles of LUTI focus primarily on sustainability (Bertolini, 2012) and not particularly on pushing up the property values, unlike some station area development frameworks in recent history, such as property capitalization and urban mega projects, where the focus was on driving up land values and increasing the attractiveness of neighborhoods and cities (Bertolini, et al., 2012). So, can it be assumed that the accessibility increment created through LUTI intended to boost sustainability of transport systems, will also drive up the land prices? Especially since such processes advocate an increased use of public transport and non-motorized modes over car use; and creation of non-motorized networks to compliment public transport modes in station areas over facilities favoring car usage like abundant car parking spaces (Bertolini, 2012). This is illustrated in the examples of Ørestad, Denmark and Resurgens Plaza in Atlanta, U.S. In the Resurgens Plaza, an office use building connected and adjacent to a public transport station (Lenox MARTA Station) and completed in 1988, the first ten floors out of its total of 27 stories is devoted to car parking (Mathur & Smith, 2013). Such a development will definitely not be advocated under LUTI concepts, which is again highlighted by the fact that in the more recent developments at this Lenox MARTA Station area based on the principles of transit-oriented development (TOD), a framework of station area development advocating LUTI (Bertolini, et al., 2012; Falconer & Richardson, 2010), the parking policy seeks to limit parking in all new developments (Mathur & Smith, 2013). Again in Ørestad in Denmark, a development on the principles of LUTI employed through TOD, the high costs and shortage of car parking deterred investments from some companies like Topdanmark property (Knowles, 2012). However, some studies like the works of Bartholomew and Ewing (2011) do find that market shift towards amenity-based developments of TOD are being capitalized into real estate prices.

Therefore the scientific motivation that surfaces at this point is: In case of station area developments proceeding in the framework of LUTI, to what extent does the land value of the benefiting properties depend on this accessibility created? That is accessibility through sustainable modes, which in the research is defined as, consisting of public transport and non-motorized modes.

Therefore this chapter explores the existing literature and theory on this subject based on the guidelines of Bryman (2008): The next section provides a brief overview of the existing literature, while the

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following section explores the relevant theories and concepts. The research methods and research strategies to look into this area, the significant controversies and the inconsistencies in findings are elaborated in the subsequent three sections respectively. The penultimate section describes the unanswered research questions, while the final section presents the conclusions of this theoretical framework chapter.

Existing Literature

In light of the vital role of transport in the functioning and growth of cities and national economies, a dilemma of urban mobility exists due to the lack of sustainability of present mobility practices, which might be addressed by integration of land-use and transport planning activities (Bertolini, 2012; Halden, 2002; Curtis, 2008; Bertolini, et al., 2012). Such processes tend to proceed employing concepts of sustainable accessibility (Bertolini, et al., 2005; Curtis, 2008; Halden, 2002), thus bringing certain accessibility advantages in station areas that may reflect in land prices in the these areas (Debrezion, et al., 2011; Du & Mulley, 2007). Station areas face a financial dilemma: station area development processes require substantial funding, due to the technical challenges and conflicting requirements involved, but are faced with ubiquitous reductions in public expenditures, where reduced public subsidy may lead to trends of compensation through short-term real estate profit (Bertolini, 1996; Bertolini, 1998). LVC mechanisms are employed to augment the funding of public infrastructure by capturing the non-direct user benefits of the incremental accessibility, created by this very same new infrastructure development, usually as reflected in the land values of these benefiting properties and have been used in several cases in various parts of the world (Medda, 2012; Li, et al., 2013; Mathur & Smith, 2013; Roukouni & Medda, 2012). But their applicability and efficiency as a financial instrument depend on several factors like contributing parties, the bargaining process, timing, risk and ownership of infrastructure, administrative coordination and the levels of government involved, affected space and the like (Samsura, et al., 2013; Zhao, et al., 2012).

Relevant Concepts & Theories

As is evident from the previous section several theories and concepts play an important role in this area. They are further elaborated upon in this section.

Land-Use Transport Integration (LUTI)

LUTI seeks to resolve the sustainability dilemma of urban mobility (Bertolini, 2012) by proposing that public transport, when complemented by non-motorized modes and dense diverse activity patterns around station areas, can compete with the advantages of motor vehicles (Bertolini, et al., 2012; Curtis, 2008). Such initiatives attempt to promote the use of more efficient and sustainable forms of transport like public transport and non-motorized modes against car use and facilities favoring car usage like abundant car parking spaces (Halden, 2002; Bertolini, et al., 2012).

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The sustainability dilemma of urban mobility refers to the dilemma of lack of sustainability of current mobility practices, let alone in supporting future growth, but even in sustaining the current needs (Bertolini, 2012). This dilemma arises from the inclination of current mobility practices towards car based travel which provide unique advantages of point to point commuting capabilities that cannot be matched by public transport alone and that of greater speeds compared to non-motorized modes operating on their own. Here the concepts of LUTI suggest developments based on public transport, complimented by high-density mixed uses patterns with provisions for a variety of types of activities concentrated around the public transport stations or nodes, and by the presence of non-motorized (walking and cycling) networks in these areas. Such developments can enable sustainable modes to match the distinct advantages of non-sustainable modes like the car. Therefore these principles also advocate a reduced supply of facilities enabling and easing car use like abundant car parking spaces, in their attempt to induce a shift towards sustainable modes (Bertolini, 2012; Bertolini, et al., 2012; Curtis, 2008; Halden, 2002). Transit Oriented Development (TOD)

TOD is a framework of station area development advocating and based on the principles of LUTI (Bertolini, et al., 2012; Falconer & Richardson, 2010). It is a relatively new approach, with factors like promotion of sustainable urban mobility, transport innovation and spatial dynamics of contemporary society driving a shift towards it (Bertolini, et al., 2012). According to Falconer and Richardson (2010), TODs can be considered walking precincts, marked with a much lower dependency on, and use of car for commutes compared to more traditional developments. Such developments are usually centered around a public transport station (rail or bus) providing opportunities of regional commute through public transport and are usually represented by an area surrounding the station having roughly a radius of about 800m from the station, that is the broad ‘walk able catchment’ area of the station. Thus opportunities exist here for most commutes within the TOD to be made through non-motorized modes (walking and cycling) and these opportunities are further materialized through the construction of dense networks of footpaths and cycle-ways within the TOD. Car use may be permitted on some or most streets but at highly reduced speeds and the general design of the area should cater to safe use and convenience of pedestrians and cyclists. A variable mix and high-density development is encouraged within the TOD to ensure fulfillment of most of the living, working, social, shopping, educational and other needs of the residents within the TOD.

Sustainable Accessibility

LUTI signifies a move towards sustainable accessibility (Curtis, 2008), which while combining economic, social and environmental goals, seeks to maximize accessibility, defined as given a travel time and/or cost, the amount and the diversity of places of activity that can be reached (Bertolini, et al., 2005), through sustainable modes. This implies that such an accessibility measure needs to define the level of opportunity and choice available, considering both the existence of opportunities and the transport options available

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to reach them (Halden, 2002), and thus enabling a comparison between accessibility based on the use of sustainable and non-sustainable modes.

Integration of land-use and transport planning is the core principle that lies at the heart of sustainable accessibility strategies (Curtis, 2008). Such strategies recognize that accessibility improvements can be achieved through transport improvements or through land-use improvements as well as through a combination of both (Bertolini, et al., 2005) and treating urban transport planning in isolation with land-use and environment leads to compromises in the goals of sustainability (Curtis, 2008). Thus sustainable accessibility refers to, in the words of Bertolini, et al. (2005), “accessibility with as little as possible use of non-renewable, or difficult to renew, resources, including land and infrastructure” (p.212). Planning concepts such as ‘Network City’ have emerged based on this concept of sustainable accessibility, which enable transport initiatives’ coordination in the land development context to increase sustainable travel potentials (Curtis, 2008).

Station Area (Re)development

Station area (re)development processes in Europe are propagated by several driving factors: public policies, technological and institutional change, internationalization and metropolitanisation, property market conjunctures and European integration, and are subject to various dilemmas: spatial, temporal, functional, financial and management (Bertolini, 1998; Bertolini, 1996). Here materialization of dense and mixed-use land-use patterns and non-motorized networks complementing public transport (Bertolini, et al., 2012) has to occur amidst conflicting requirements of various actors involved and technical challenges which make these processes costly, where the ubiquitous reductions in public subsidy available may force compensations to be sought through short-term real estate profit (Bertolini, 1996; Bertolini, 1998). Such station area (re)development processes in Europe have proceeded roughly under three general frames in the recent past: ‘property capitalization’, ‘urban mega-project’, and LUTI advocated by ‘transit oriented development’ (TOD) (Bertolini, et al., 2012).

Property Capitalization

This frame was the dominant approach towards station area (re)development in the 1980s and focused on the station building or street block level. Such approaches were directed towards associating the station area (re)development with cashing in on real estate profits derived from the land in the vicinity of the centrally located station areas, owned by the newly privatized railway companies, who along with the property developers were the main proponents of this frame (Bertolini, et al., 2012).

Urban Mega-Project

This frame came to dominance in the 1990s and was focused on increasing the attractiveness of neighborhoods and cities. Such processes covered the areas surrounding the station interchanges and often the areas included were in the order of several thousand square metres. These processes looked to

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build on the accessibility boost resulting from new high-speed rail connections with the aim of: Catalyzing the transition of the urban economy through development of several new functions at the stations; and of establishing the host city as an attractive location on the global and international map. Such approaches were propagated mainly by local and national governments looking to boost the attractiveness and market position of their concerned cities and neighborhoods (Bertolini, et al., 2012).

The third frame of station area (re)development, the TOD frame, is a more recent development and aims towards redirecting the developments in whole region towards public transport through coherent combinations of ‘ordinary’ transport and urban projects (Bertolini, et al., 2012). This frame has been elaborated more upon in the earlier section on LUTI with the sub-section on TOD.

Land Values around Station Areas

Accessibility created by station areas may have an effect on land and property values in its surroundings (Voith, 1993; Landis et al., 1994; Benjamin & Sirmans, 1996; Cervero & Duncan, 2002; Gatzlaff & Smith, 1993; Lewis-Workman & Brod, 1997; Cervero & Landis, 1997; Mathur, 2008). In general it is considered that, all else being same, property value increases as accessibility increases (Smith, et al., 2010), and property value premiums ranging from 3% to 40% can be induced by transportation investments (Medda, 2012). Usually effect of stations on commercial properties occurs at short distances and within a quarter mile radius commercial properties are 12.2% more expensive than residential properties. Again, values of residential properties increase by 2.4% and of commercial properties by 0.1% for every 250 m closer they get to a station (Debrezion et al., 2007). But results vary on the basis of several factors including: level of urbanization of the area, preference of commuters for the particular station (Debrezion, et al., 2011), land-use and the like. The land values also depend on: the neighborhood features and the characteristics (not due to its accessibility) of the property and the building where the property is located (Debrezion, et al., 2011; Nagai et al., 2000; Andersson et al., 2010; Kong, et al., 2007; Panduro & Veie 2013). However, specialization and service of the real estate agent involved may also have an effect on the price paid (Koster et al., 2014).

Substantial literature also exists on the effect of amenity based and pedestrian oriented developments of TODs and their synergy effects on land prices. Bartholomew and Ewing (2011) quote:

“The literature confirms that the market shift is, indeed, being capitalized into real estate prices and demonstrates that the amenity-based elements of transit-designed development play an important positive role in urban land markets, independent of the accessibility benefits provided by transit.” (p.18)

Land-use literature highlights the benefits of destination accessibility effects on travel behavior in central locations (Bartholomew & Ewing, 2011; Ewing & Cervero, 2001, 2010). But such locations also benefit from higher densities and other co-varying land-use variables (Bartholomew & Ewing, 2011). De Graaff, et al. (2007) used a ‘willingness to pay’ stated preference methodology to establish that employees of the ‘edge city’ of Zuidas, outside Amsterdam find the availability of services such as shopping, day care and

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the like near their places of work to be important. Again it is observed that consumers are willing to pay for higher-than-average densities, a mix of housing types, commercial centers, interconnected streets and prominent public spaces, all characteristic features of New Urbanist developments (Bartholomew & Ewing, 2011; Eppli & Tu 1999, 2002, 2007; Plaut & Boarnet 2003). The work of Bartholomew & Ewing (2011) list several such instances: In Portland area Song and Knaap (2003) find a $24,255 premium for homes in New Urbanist developments compared to conventional suburban neighborhoods; Duncan (2011) finds a $20,000 or 15% price premium for condos located in good pedestrian environments (people serving jobs, connected streets, and flat walk-able terrain) in public transport station areas in San Diego Trolley, however no statistically significant premium is observed in the case of absence of the good pedestrian environment; and Atkinson-Palombo (2010) detects a 6% premium for houses in mixed use neighborhoods due to proximity to light rail in Phoenix, but the proximity effect is insignificant for houses in residential-only neighborhoods. Again for condos here he finds that location within walking distance of public transport stations provides a premium of 16% if the condos are located in mixed-use neighborhoods compared to only 3% if they are located in residential-only neighborhoods. Also location within a TOD zoned area provides an additional 37% price premium for condos in the first case, while the same for the later leads to a 11% depression in it price.

Land Value Capture (LVC) Mechanisms

LVC mechanisms are financial instruments used to augment the capital costs of transport infratsructure by fully or partially capturing the increment in land value brought about by increased accessibility (Medda, 2012; Li et al., 2013; Mathur & Smith, 2013; Samsura et al., 2013). The concept seeks to tap the benefits created by the transport development for the non-direct users of the transport system, for the development and operation of the transport infrastructure. It thus looks to capture this additional value created by the transport development benefiting the non-direct users, as reflected in the land prices of these benefiting properties, in addition to the existing practices of charging: the direct user benefits through tickets and passenger fares; and the unrestricted general public benefit through public subsidies and funds (Zhao et al., 2012). These strategies function usually in cases of development and growth (Roukouni & Medda, 2012) and basically require an increment in accessibility to occur in order to be applicable (Medda, 2012). Principally these mechanisms employ three main methods: betterment tax, accessibility increment contributions (AIC) and financialization or joint development (Medda, 2012). These methods are described in Appendix D. Here it is interesting to note that such mechanisms are usually used to mostly augment the infrastructure development funds and not cover the entire investment, which is evident from the works of Mathur & Smith (2013) who find that in the developments at Contra Costa Center (CCC) Transit Village, Pleasant Hill in U.S. the Tax Increment Financing (TIF) funds, raised through LVC mechanisms, constitute only one-sixth of the entire $366 million project cost. In case of London’s Crossrail £4.1 billion was raised through LVC mechanisms compared to the £14.8 billion planned construction cost of the project at the start (Roukouni & Medda, 2012; Medda 2012). Again in Pearl River Delta in China, the commitment of the provincial government

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and the national government in the $20.85 billion investment on the intercity rail was 50%-50% each. However due to certain developments beyond the provincial government’s control, this split had to be changed to 60%-40% with the provincial government providing the larger share. Additionally operational deficits were also observed, for instance in the range of $0.16 billion in the inaugural Guangzhou-Zhuhai line. Hence LVC mechanisms were used here only to bridge this gap in the provincial government’s initial and final commitments to the investment and also the operational deficits (Li, et al., 2013).

Research Methods & Research Strategies

Several methodologies have been employed to look into this area. These include: developing accessibility measures, including quantitative accessibility analysis using tools such as Geographic Information Systems (GIS) (Halden, 2002; Bertolini, et al., 2005; Shaw & Xin, 2003; Dong, et al., 2006; Icono, et al., 2010; Drew & Rowe, 2010; Greus & van Wee, 2004; van Wee, et al., 2001); employing concepts of game theory to study the dimensions of bargaining in joint development processes (Samsura, et al., 2013); developing hedonic models and using statistical analysis tools to analyze the effect of railway and public transport accessibility on land and property prices (Debrezion, et al., 2011; Du & Mulley, 2007; Andersson et al., 2010); studying activities, actors (Bertolini, 1996) and promotion of sustainable transport and land-use in station areas (Bertolini, et al., 2012); and case studies to understand: role of LVC mechanisms to augment funding of expanding public transport systems, short-term land value impacts of urban rail transit and revenue yield and stability of joint development projects (Du & Mulley, 2007; Li, et al., 2013; Mathur & Smith, 2013).

Significant Controversies

Several controversies exist in this domain such as: In some cases of LVC mechanisms, like betterment taxes, displacement of households rich in assets, that is owning land or real property, but poor in cash, that is not having the ability to pay the betterment levy, have been observed and local authorities may tend to favor those who are able to pay while neglecting other economic sections (Medda, 2012). Again a controversy exists over the station area developments in Zuidas, Amsterdam, an example where LVC mechanisms in the form of joint development have been employed: Here the ambitious proposals of New Urbanity involving more urban environments with attractive public space and incorporating a wide diversity of activities, initially propagated by the local municipality but subsequently supported by the private actors, have only been marginally implemented in the first projects, resulting in development predominantly as an office location in this stage. The subsequent stages are set to be even more dependent on private investors (Majoor, 2008).

Another dilemma is evident from Ørestad, Copenhagen in Denmark, developed on the principles of LUTI employed through TOD: The development here was to be financed by the sale of publicly-owned land along the mini-metro route to developers, but a significant proportion of the revenue is collected from car parking charges (Knowles, 2012). Thus it can be assumed that sufficient increase in the land

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values did not occur as a result of the accessibility increment due to the mini-metro. Again the high costs and shortage of car parking deterred investments from some companies like Topdanmark property here (Knowles, 2012). From this it may also be assumed that the lack of facilities favoring car usage as advocated by LUTI here, may have resulted in the land values not increasing to reflect the accessibility increment created through the transport development. This is in line with findings from certain other cases as well: For instance Koster (n.d.) found only weak evidences of higher office rents near stations in the Netherlands. Again in examples of successful implementation of LVC from the United States, as provided by Mathur and Smith (2013) an emphasis for parking facilities may be observed in the developments as illustrated in Table 2.1.

This last controversy is therefore adapted as the focus of this research: Which shall hence seek to explore the causal relation of accessibility through sustainable modes, as advocated by the principles of LUTI in station areas, with the land values of the properties in these areas, benefiting from the incremental accessibility. Such a research should definitely aid the employment of LVC mechanisms intended to capture the benefits created by the transport development for the non-direct users of the transport system in station areas developing on the principles of LUTI. However, another fact that crystallizes from this controversy is that the research will also have to consider, with heightened importance but among others, the availability of parking and parking costs in the said station areas in the form of control variables in the study of this causal relation, to isolate the causal affect of the accessibility through sustainable modes on the land values.

Project Parking Provision

Contra Costa Center

(CCC) Transit Village, Pleasant Hill, CA. 1550 space TIF-funded parking garage constructed as replacement parking for BART. Bethesda Metro

Joint Development, Bethesda, MD. A 5-story garage with 1305 parking spaces.

Dadeland South Joint Development, Miami, FL. A shared 1100 space parking garage for Metro _riders.

Source: Compiled from the work of Mathur and Smith (2013).

Table 2.1:Successful LVC projects from the U.S. and the parking provisions in them.

Inconsistencies in Findings

Inconsistencies in findings also exist regarding the effect of station areas and the accessibility created by them on land and property values in general and for different land-uses in particular: While Levinson & Istrate (2011) claim investments in public transport lead to increase in accessibility and demand; and Medda (2012) states that land value capture mechanisms prefer increment in accessibility created through public transport development over that created by investments in highway. Li et al. (2013) on the other hand state that the potential to boost property value and municipal revenue through transit investment is endangered by the proliferation of motor vehicle based mobility, which compromises the potential of stations to attract development.

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Again while a host of literature suggest that increase in land values are associated with incremental accessibility (Li et al., 2013; Mathur & Smith, 2013; Du & Mulley, 2007; Du & Mulley, 2007; Debrezion et al., 2007) and Bartholomew and Ewing (2011) found market shifts in favor of amenity based developments of TOD that play an important positive role in urban land markets. Koster (n.d.) found only weak evidences of higher office rents near stations in the Netherlands despite his assumption that since people work more from home and to reduce car usage meet at offices with flexible working spaces located close to railway stations, such office locations should have increased in their attractiveness. However, an interesting fact is that some studies indicate that residential properties, specifically residential houses, in certain cases do not show land value uplift on the introduction of new transport infrastructure, as in Sunderland, UK (Du & Mulley, 2007), while on the other hand works such as those of Roukouni and Medda (2012) suggest that a greater emphasis should be placed, in LVC mechanisms, on capturing the incremental value benefiting these residential properties as often residential properties are the only non-taxed area remaining under LVC mechanisms.

Thus the research focuses on this last inconsistency in findings: where a greater emphasis is advocated on capturing the incremental value benefiting the residential properties, often an under-taxed area in LVC mechanisms, despite the fact that these properties in certain cases have been known to not show land value uplift on the introduction of new transport infrastructure. Thus the research opts to explore the causal relationship of accessibility through sustainable modes on land values of residential houses located in station areas. Therefore from here on, the term residential properties in this research shall signify residential houses, unless otherwise specified.

Unanswered Research Questions

Substantial research exists on the role of LUTI in a move towards sustainability (Bertolini, 2012; Bertolini, et al., 2012; Curtis, 2008; Halden, 2002) and the employment of LVC mechanisms to fund public infrastructure in station areas (Medda, 2012; Li et al., 2013; Mathur & Smith, 2013; Samsura et al., 2013; Roukouni & Medda, 2012; Zhao et al., 2012). Research also exists on the effect of introduction of stations (Du & Mulley, 2007) and railway accessibility as measured in terms of the distance to a railway station and as index of quality of railway services provided at the station (Debrezion, et al., 2011) on land values. This work of Debrezion, et al. (2011) comes closest to the idea being explored in this research as it proceeds to analyze the effect of accessibility through rail transport by considering the Euclidean distance of the residential property from the stations and also to facilities, but limited to schools and hospitals, while accounting for competition from car through a road accessibility measure. However it does not account for non motorized modes specifically, nor does it particularly account for the role of the dense diverse activity pattern as advocated by LUTI in station areas, evident in its lack of particular consideration of access of the residential properties to employment areas through sustainable modes. This highlights a more general issue as quoted by Bartholomew and Ewing (2011): “…it is curious that hedonic research did not better reflect land use transportation interactions” (p.30). Hence a lack of research is noticed in the

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area of dependence of the land value on accessibility through sustainable modes, achieved through development of station areas, as a whole, on the principles of LUTI. That is through the introduction of dense diverse activity patterns, as well as non-motorized networks to compliment public transport. This is therefore the unanswered research question that this thesis research seeks to attend and looks to explore this in the context of the Netherlands. Again since LUTI seeks to provide a solution to the urban mobility dilemma, which is expected to be at its most intense form in highly urbanized areas, the research further focuses on the most urbanized area of the Netherlands, the Randstad, which is also one of the largest urban conurbations in Europe.

Conclusions

This chapter set out to establish an understanding of the existing literature on the subject of this research, to explore: the social and scientific relevance and motivations of the research; the aspects that have been theorized and investigated and is known on the subject; the ways the subject has been understood and perceived; and the current ‘state-of-the-art’ on the subject. Hence this chapter looked into the existing literature as well as relevant concepts and strategies concerning: LUTI providing a possible solution for the sustainable urban mobility dilemma and advocating a shift towards sustainable mobility; the driving factors, frames and dilemmas of station area (re)development processes in Europe; the effect of accessibility created by station areas and amenity based and pedestrian oriented developments of TODs and their synergy effects on land prices; and the role of LVC mechanisms in augmenting capital costs of transport infrastructure. Thereby the chapter was able to explore: The controversies observed in the field, the inconsistencies in findings and the unanswered research questions, which played a substantial guiding role in molding and establishing the problem statement and the research question and sub-questions of the research as described in the section on Problem Statement in following Chapter 3.

Thus this chapter presented a brief overview of the existing literature and theoretical knowledge on the subject, while exposing the gaps in understanding, at least some of which this research seeks to bridge. In doing so, this chapter also established the theoretical framework of this research, whose problem statement, analytical framework and methodology is elaborated upon in the following chapter.

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3. Research Problem & Design

Introduction

Any decent research ideally involves the development of a research question, which usually precedes the start of the empirical phase in the research. This research question and problem statement must capture the whole research in a single question (GSSS, 2012-2013). It must also be embedded in relevant theory on the subject and be based on a good inventory of knowledge available on the topic, identified through appropriate literature search and analysis (Wolsink, 2013-2014). Such theories represent the various ways of characterizing the social world when researched (Wolsink, 2013-2014) and the different significant controversies, inconsistencies in findings and unanswered research questions (Bryman, 2008) revealed by such theoretical frameworks mold the problem statement and research question. Once this research question is established, strategies to set up the empirical part of the research must be designed. That is the research design and the methodology to be followed must be made concrete (Wolsink, 2013-2014). These methods represent the various ways of systematically generating and analyzing data about the social world (Wolsink, 2013-2014) and the research design, thus generated, must fit the problem statement. This fitting research design for the research must again be established from a host of fundamentally different research designs available for scientific research, which differ in terms of the purposes they serve as well as the methods applicable within each design (Wolsink, 2013-2014).

This chapter therefore establishes the problem statement and the research question and its sub-questions from the theoretical framework as explored in Chapter 2 and the research design, covering the conceptual framework and the framework of analysis of the research, as demanded by the research question. Thus this chapter looks into the path followed by the research in answering the research question, the cases explored in the research and their selection criteria, the methodology applied in these cases in each step of the research, the aspects the research claims to cover and the aspects that it does not, the data used and the principle limitations, restrictions and assumptions involved in the research.

The following section presents the problem statement of the research, leading to the research question. The subsequent section elaborates the research design within whose framework the research was conducted, while the last section caters to the conclusions of this chapter.

Problem Statement

The research initiated, inspired with the motivation of exploring the causal relation of accessibility created through sustainable modes, as a result of station area developments based on the principles of LUTI, with the land values of properties in these areas benefiting from this incremental accessibility. The purpose behind this being the capturing of the benefits created by the transport development, for the non-direct

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users of the transport system, through LVC mechanisms to augment the infrastructure development funds. The controversies observed in this field further confirmed the desirability for such a study while the inconsistencies in findings suggested that, while on one hand residential properties have shown a lack of land value uplift on the introduction of new transport infrastructure in certain cases, on the other hand some scholarly works suggest that a greater emphasis should be placed on capturing the incremental value benefiting the residential properties. Thus an appropriate direction to focus the research appeared to be the residential properties located in station areas. Again it was observed that unanswered research questions remained in the field of examining the causal relation of accessibility created through sustainable modes on the principles of LUTI, in station areas, with the land values of the benefiting residential properties here.

Therefore the research looked to study the phenomenon that: As station areas develop under the principles of LUTI, and as dense diverse activity patterns and non-motorized networks to compliment public transport are established on ground over time, the accessibility in the station areas increases. In such a situation, what causal relation exists of this accessibility through sustainable modes with the land value of the residential properties located in these station areas in the Randstad area of the Netherlands? This research, therefore, proceeded to look into this phenomenon though the following research question and its sub-questions:

In which measure does the land value of residential properties in station influence areas in the Randstad depend on accessibility through sustainable modes?

• How can accessibility benefit residential properties?

• What accessibility is experienced by residential properties in station influence areas in the Randstad? • Which land values are experienced by residential properties in station influence areas in the Randstad? • How do the land value of residential properties in station influence areas in the Randstad and their

accessibility through sustainable modes relate to each other?

Conceptual Framework

The research sought to explore the land values of residential properties located in station areas, developing under the framework of LUTI in the Randstad area of the Netherlands, as a function of the accessibility through sustainable modes experienced by them. As defined earlier in the research: Sustainable modes consist of public transport and non-motorized modes; and the term residential property signifies residential houses. These residential properties are accessible through both sustainable and non-sustainable modes. This research sought to explore the dependence of their land values on their accessibility through these sustainable modes while controlling for the effect due to accessibility through non-sustainable modes as well as other effecting factors that may be applicable. This is illustrated in Figure 3.1. Here it is important to note the distinction between the ‘station development area’ or the ‘station project area’, defined as the area to which the projects and actual physical developments

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associated with the station (re)development process as advocated by LUTI remain confined to, and the ‘station influence area’ or the ‘station area’, defined in terms of the area where the influence of the station and the station development area as well as of the physical developments occurring in these two entities may be experienced. Hence the terms ‘station area’ and ‘station influence area’, thus defined in this research, both signify the same meaning and for the sake of simplicity have been referred to as simply the ‘station area’. Thus, strictly considering, in this research wherever the term station area is mentioned, the reference remains to the station influence area, unless otherwise specified.

However, it is also essential to note here that to reduce the computational time of the various models involved, the research limited its analysis to the 90% most concentrated areas within each station area (Cheng & Bertolini, 2013; Cheng, et. al., 2013) on the basis of population density. This was essential and unavoidable considering the practical restrictions of time available to conduct and complete this research and is expected not to result in much significant effects or alterations in the overall results of the research. Therefore the first step in the research was, as established by the first research sub-question, to identify the benefits of the overall accessibility and the accessibility to particular activities experienced by the residential properties, by examining the known theoretical knowledge on the subject, employing a study of the existing scientific literature and theory. This was followed by the second step, embodied in the second research sub-question, which comprised of examining the accessibility experienced by these residential properties both through sustainable and non-sustainable modes. Then followed the third research step, established by the third research sub-question, of identifying the land values experienced by these residential properties. Finally the fourth research step, embodied by the last research sub-question, explored the causal effect of the accessibility through sustainable modes on the land values. The identification of the benefits of overall accessibility and the accessibility to particular activities to the households in the first step enabled better analysis and determination of the causal effect at this stage.

Figure 3.1: Accessibility through sustainable modes effecting land value in station area developments on the

principles of LUTI.

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Research Design

The research, as embodied in the research question, sought to explore the causal effect of the accessibility through sustainable modes on the land values. Therefore a cross-sectional causal research design seemed applicable for the research. A causal research design seeks to explore the variation in one phenomenon, that is the independent variable, having a causal effect on the variation of another phenomenon, the dependent variable, where a causal effect here implies that the variation of the independent variable results in or leads to, on average, in the variation of the dependent variable (USC Libraries, 2014). This research design fit the problem statement perfectly as the research question sought to explore how the variation in accessibility through sustainable modes in the station area leads to change in land value of the residential properties. Further such a causal research design renders a greater confidence in the internal validity of the study as well as in its replication possibilities (USC Libraries, 2014). The cross-sectional term here implied that the research focused on creating a 'snapshot' of the outcome and the characteristics associated with it, at a specific point in time, studying and drawing inferences from existing differences, and focused on finding relationships between the variables at one moment in time (USC Libraries, 2014). This was in consideration of the practical restrictions, of time available to conduct and complete this research, which rendered a longitudinal study involving not just taking multiple measures over an extended period of time (USC Libraries, 2014) but also the construction of separate network analysis accessibility models accounting for the existing transport networks at multiple points of time beyond the scope of this research. Thus this specific point in time to which this research catered was fixed to be the year 2011, since this was the latest year for which a substantially large amount of data of interest in the research was readily available.

A set of independent variables accessibility measure was adopted to operationalize the accessibility element, and the dependent variable house price operationalized the land value of the residential properties. The accessibility measure variables set further contained two sub-sets: those associated with sustainable modes and those associated with sustainable modes. The accessibility measure variables associated with non-sustainable modes were actually included in the control variables in the analysis. The control factors further had to include: the neighborhood features (including availability of parking and parking costs); and the characteristics (not due to accessibility) of the property and the building (again including garage/parking provisions on the property), as indicated by theory on land values (Debrezion, et al., 2011; Nagai et al., 2000; Andersson et al., 2010; Kong, et al., 2007; Panduro & Veie 2013). These were operationalized through the control variables in the study. Again for the purpose of this research it was of interest to distinguish between the effect of accessibility resulting due to the facilities and services, businesses and homes located within the station development area and outside it, to identify the effect of accessibility through sustainable modes in general and due to the developments within the station development area in particular. Thus two duplicate sets of this accessibility measure variables were also created, only the first of these two sets catered exclusively to the facilities and services, businesses and

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homes located within station development area, while the later exclusively to the same located outside this station development area. The entire research analysis framework is illustrated in Figure 3.2.

The accessibility measure variables denoted the accessibility of the residential properties defined as: given a travel time, the amount and the diversity of places of activity that can be reached considering both the existence of opportunities and the transport options available to reach them. The second research step involved a description of this accessibility measure variable for the residential properties. The house price variable denoted the transaction price (sale price) of the house (residential property). Similarly, a description of this variable was included in the third research step and the analyses of the relation between the two variables taking into account the control variables applicable was catered to in the final research step. The identification of the benefits of overall accessibility and accessibility to particular activities experienced by the households in the first step of the research enabled better analysis and determination of the causal effect at this stage.

Cases

The research proceeded with the conduction of the above-described study at three case areas as multiple cases provide the opportunity of extending the external validity of the research through the possibility of direct replication (Yin, 2002). However, the practical restrictions, of time available to conduct and complete this research, prevented the extension of the number of cases beyond three. These three cases were: the station areas around Amsterdam South Axis (Zuidas) Station, The Hague Central Station and Utrecht Central Station. The unit of analysis in these cases was the individual residential properties in the station areas and hence the approach was of an embedded multiple case analysis.

In each of the cases the station area or the station influence area of the station was considered to be the Stadsregio of the city in which the station is located. Here it must be noted that the Stadsregio is an administrative entity while the station influence area is a functional entity and it can be assumed that the former reasonably corresponds to the commuting basin and thereby to the later. This enabled the research to adopt an administratively well-defined area as the station influence area for each of the three cases and hence maintain uniformity in the approach for all three cases. The station development area for each of the three cases is considered to be the actual physical development area covered by the respective station area development projects. Further, case specific elaborations and details of this are presented in Chapter 4 on Case Descriptions.

Case Selection Criteria

The criteria based on which these cases were selected were as follows: All the selected cases had to be from within the Randstad area of the Netherlands as this was the spatial domain to which the research applied as established by the research question. Further these cases had to be fairly recent cases of station area development, which was essential considering LUTI is a fairly recent concept which may hence be best expected to be present in such recent developments. And these initiatives should not have remained

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restricted only to the station itself, but also had to extend to the surrounding station development area as well in which the station is located. Also these station area development processes had to exhibit a fairly continuous nature in the sense that: The case here had to be not that of merely introducing a station in the area or just modifying an existing station at a particular point in time, but that of a continuous visional and planned holistic development of the entire area along with the station, a process that may well span several years or even decades. However, also essential was that substantial progresses under these recent initiatives had already been made in these station area development processes till the date of conduction of the research. Again in all the cases substantial opportunity to access the area through automobiles also had to exist, enabling the conduction of this research in presence of the control role of accessibility through non-sustainable modes. However to draw on the concept of direct replication in different cases, representing the variability within the domain or ‘universe’ of the research, to establish the external validity within the Randstad area of the Netherlands, the cases selected also had to exhibit variety preferably in terms of: scope and ambition, public investment, building program and its composition, location, amount of time into the station area development process and development background. These three particular cases, located in the Randstad area of the Netherlands, were selected primarily because they complied with all the criteria listed above for the selection of cases in this research, substantial evidence for which was found in the works of Majoor and Schuiling (2008) and Majoor (2008). For instance, according to these sources, recent and substantial (re)development processes had been initiated in each of the three selected cases, to a considerable extent aided by the Dutch Cabinet’s New Key Project decision. Further, all the three cases were located in the Randstad area of the Netherlands and yet showed substantial variety in them (Majoor, 2008; Majoor & Schuiling, 2008), as required to establish the external validity in the research. This variety is summarized in Table 4.1 in Chapter 4 and is elaborated in the section on Variety in the Cases in Appendix A.

Methodological Approach

The research proceeded through four distinct steps established by the four research sub-questions in answering the overall research question of the research with each step catering to a part or component of the overall research, sequentially building on the results of the previous step and the final step producing the answer for the overall research embodied by the main research question. Each step followed a distinct methodology that suited the step’s purpose as described below.

First Research Step

The first research step identified the benefits of the overall accessibility and the accessibility to particular activities experienced by the residential properties and their occupying households under consideration in the research. This was done using existing scientific literature and theory on the subject. A substantially vast scientific literature exists on the subject and a good starting point was the papers of Debrezion, et al.

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Acknowledgements

Abstract

Table of Contents

1. Introduction

Broader Prospective

Context of the Research Topic

Motivating Problems & Research Topic Definition

Layout of the Thesis Text

2. Theoretical Framework

Introduction

Existing Literature

Relevant Concepts & Theories

Land-Use Transport Integration (LUTI)

Sustainable Accessibility

Station Area (Re)development

Land Values around Station Areas

Land Value Capture (LVC) Mechanisms

Research Methods & Research Strategies

Significant Controversies

Inconsistencies in Findings

Unanswered Research Questions

Conclusions

3. Research Problem & Design

Introduction

Problem Statement

Conceptual Framework

Research Design

Cases

Methodological Approach