Financing Urban Transport Through Value Capture - Highway and Urban Environment - page 17

Property Tax (IBI)
This tax is paid once a year; the value is established and paid to the city council as
a percentage of the properties official value.
Urban Land Value Increase Tax
It has to be paid by whoever sells urban land, house, apartment, parking space, etc. for
the land value increase it has got while being proprietary. Nonetheless, this tax does
not take into account the reason of that value increase and its objective is not exactly
to contribute to public transport funding. The taxes above, like all taxes in Spain, are
not earmarked. On the other hand, there are as well other mechanisms to collect funds,
such as fees and special contribution that may have self-financing purposes.
Special Contributions
The Spanish law contemplates this tribute as “those tributes where the taxable event
consists in obtaining by the party who executes the event, a benefit or a value
increase in his properties, as a consequence either of public works, or establishment
or extension of public services” [6] . The Highways Law contemplates this financial
mechanism as well, either for physical persons or with corporate identity that
become especially benefited by the property value increase due to the public works
carried out. The problem is how to justify this benefit, the benefit amount and the
impact area. The above has made this tribute difficult to put into practice.
Spanish Experiences
Special contributions are covered in the legislation; however, most of the times are
not used because it might take a long legal process. Nevertheless, there is an initia-
tive to start using them. For example; Parla's light rail, where the city council
invested 87 million euros to finance it. They look forward to recovering part of the
investment by special contributions from private housing developers, around 10%
of the invested [7] .
Other simpler schemes have been put into practice, to fund transport infrastructures,
most of the times through negotiations with developers. This is the case, long time
ago, of the “ Cuatro Caminos” metro station in Madrid. The transport company built
a new neighborhood in order to collect money to construct the infrastructure. The same
happened years latter with line 1 expansion in the “ Ensanche de Vallecas ” zone
where 37% of tunnel total costs were paid by urban developers using the increase