From a blog post that originally appeared at the American Planning Association blog, as part of a series published in the run-up to the APA’s National Planning Conference in New York City.
New York City is redeveloping Hudson Yards with the understanding that public actions such as regulatory changes or infrastructure investment can generate large increases in the value of land. Large private development has been made possible by the rezoning of the area, beginning in 2005, from mostly industrial to mixed use. The city also funded the first addition to the New York subway system in 26 years, an extension of the number 7 line to the new 34th Street–Hudson Yards Station, which opened in fall 2015.
These two actions alone are projected to generate billions of dollars in increased land value. Through a policy approach known as land value capture, the city will recover some of the new land value and use it for public benefit — for the subway extension itself, as well as the reconstruction of a street, the development of affordable housing, and the provision of green space.
The project is instructive for cities looking to capitalize on the land value generated by public actions, which often escapes completely as private windfalls.