Recovering Public Value

When regulatory actions like rezonings increase the value of land, landowners and speculative investors reap a windfall, while residential and commercial tenants are displaced by rising rents. New York City’s land use processes don’t now quantify that increase, disclose its beneficiaries, or require that any of it be invested to meet important public needs.

Using the Gowanus rezoning as a case study, a team led by the Pratt Center and Fifth Avenue Committee found that the total value of likely development sites would increase by as much as $1.3 billion, even after accounting for all development costs and returns to investors.

Pratt Center’s report Public Action, Public Value proposes mechanisms for redirecting a portion of the value that the rezoning would create to address the urgent capital needs of the neighborhood’s 1,800 public housing units. Recognizing that value capture has too often been used to enable development that increases inequality, the report goes on to delineate a set of broadly applicable equity principles for the reclamation of value created by public actions and investments.

Pratt concludes that: “by centering equity and employing innovative tools for public value recovery, policymakers can ensure those most in need benefit from public investment and other public actions.”