What is VOP?
The principle of value-oriented planning is as simple as it is logical. If the government uses public resources to make improvements in a particular area, private investors also benefit. Property values increase. So it is not unreasonable for the government to expect a contribution. If the government includes the expected increase in value in the budget during the planning stage for new projects, it becomes possible to make a more realistic cost-benefit analysis.
One problem is that the increase in value is not always attributable to tangible elements. For example, house prices may increase because the locals feel safer or more comfortable. In other words, increases in value are difficult to measure. Nevertheless, a range of systems have now been developed to conduct a ‘community’ cost-benefit analysis for the longer term.
Once the implementation stage of a project starts, how can government earn back the added value?

This value capturing can take place in various ways. ‘Value capturing is actually the essential part of VOP,’ explains Damo Holt, who drafted the document about this planning approach on behalf of Reurba. ‘But we have really been using this approach for a long time. Take parking charges, for example.’
The ReUrbA report makes a distinction between different variants of value capturing.
Damo Holt: 'For example, private developers or contractors can make voluntary contributions when they benefit from the construction of public utilities. As long as the expected return for the investors is high enough, they will be prepared to do this. Public-private projects of this kind mainly bring together regional and local authorities on the one hand and banks, housing corporations, developers and major investors on the other. But there are other possibilities. The government can force the parties into making contributions by imposing certain charges or advances as a condition for participation in given projects. And there is one other approach to value capturing, but that is of a different kind. Developers and contractors can agree to develop less lucrative components as part of a larger plan that will be profitable as a whole.'

There has not yet been a lot of experience in Europe with VOP. Ireland, Germany and Spain have been working with it for longest. For example, in Hamburg and in Madrid, the financing of metro stations and transport interchanges was included in new development projects that benefit directly from public transport facilities. Ireland has even regulated by law that developers have to contribute to the infrastructure if they demonstrably benefit from it.

The most successful form of VOP is tax increment financing (TIF), which is the usual approach in major cities in the USA. When public facilities are built, the government designates an area that benefits from those facilities, a 'TIF zone'. The return from property taxes at a given reference date is then calculated on the assumption that the facilities in question will not be built. Of course, this is done well before the start of a project. All additional income generated after the reference date is considered to be the result of the construction of the facilities and it is pumped back into the financing of the facilities. In this way, about ten billion dollars has been generated in the past five years in cities like Chicago, New York, Detroit and Los Angeles. However, for the time being, it is difficult to get TIF off the ground in Europe because of the tax system here, which is fundamentally different from the American system.