What is Value Planning? 

Value Planning is an emerging approach to investment and policy planning designed to help governments identify priorities that will have the most substantive benefits to citizens. Through its three distinct but related stages, Value Planning helps governments of all levels to:

1. identify a plan that will maximize potential economic and social returns on investment using a combination of stakeholder engagement, best practice research, and unique analysis techniques to identify “foundational projects.” We call this Value Creation.
2. calculate the “bankable” economic returns of the value creation strategy on investment with regard to assessment growth and tax benefit. We call this Value Uplift.
3. implement the plan as effectively as possible by tapping a library of best practice approaches, and by identifying and applying the best possible tools for the job. We call this Value Realization.

Three Value Planning Stages:

Value Creation

In 2009, the Institute partnered with the Province of Ontario to develop a new approach for prioritizing infrastructure investments. The purpose of the exercise was to advance a method that would identify which investments would have the most substantial benefits to communities over the long term. Setting priorities means identifying which projects offer not only the greatest returns on investment in their own right, but also those that have the potential to stimulate other projects or actions. The intent is to leverage the development of the tax base by engaging a range of stakeholders in the creation of a strategic investment plan. By coordinating investments in related projects that support each other, government can gain the greatest benefit from its investments.

The prioritization process is closely tied to an analysis of existing community assets as well as the economic performance of the jurisdiction being studied. Through a process of stakeholder engagement, including face to face interviews and workshops, as well as through the development of best practice case studies, a full list of prospective projects and investment opportunities are identified.

Using a relational database designed to capture the results of a pair-by-pair analysis of suggested projects, and the alignment of each with government goals and objectives, foundational opportunities can be identified. These are opportunities that: are valuable in their own right; stimulate productivity and economic competitiveness; offer a clear return on investment; provide a platform for other projects; meet government priorities; and improve quality of place and quality of life in an equitable way for all impacted.

Most importantly the approach used to develop a value creation strategy is intended to build consensus and buy-in for the outcomes. The preparation of case studies and analogues help educate stakeholders about various city-building issues.

The final shortlist of foundational projects includes timeframes for implementation, an indicator of the expected level of traction with the public, and potential project champions and partners. The main deliverable is a strategic, integrated investment plan.

Value Uplift

Value uplift calculation moves the value planning process away from a strategic focus to a tactical focus. Having identified a logical set of investments, how can the potential return on investment be determined?

The purpose of a value uplift study is to provide bankable estimates of property value uplift, that would result from investment in the selected foundational projects. Flowing from the property value uplift is an increase in taxable assessment and ancillary development charges and fees. The CUI value planning approach looks at uplift at a granular scale, modeling on a parcel-by-parcel basis, the likely development impact that would result from public sector investments. In short, this stage seeks to determine the amount of private sector investment that will be provoked by the public sector investment (the “development response”).

Uplift is calculated based on locally assessed land values using the application of what we call “prototypes,” buildings from the community with locally appropriate scale, land use, and architectural characteristics. The value uplift model applies prototypes to individual parcels within the impact area of the investment. Members of the development community bring their expertise to the table, suggesting which combination of investments would trigger new private development, confirming scale and development sequencing. CUI disciplines the process by preparing control totals to respect local and regional market capacities for new development.

Tax benefits from increased property value, development fees and charges, and potentially, income and employment taxes, can be determined over the selected investment horizon.

Value Realization

The final stage in value planning is to determine the best way to implement the value creation strategy so as to realize on its full uplift potential. This stage involves the identification of appropriate implementation tools that can be used to orchestrate a coherent set of actions to expedite the value creation process.

There is a range of tools an structures that can assist – including development corporations, development banks, community improvement plans, performance based zoning, and infrastructure revolving funds. Financing tools, such as tax increment financing, are also evaluated for their applicability during this stage.

To provide guidance based on best practice, the CUI continues to study and catalogue a range of “analogues” based on communities that have successfully combined a range of tools to both create impressive returns on public investments and transform urban environments.

Downloads

Please download our two page value planning information sheet by clicking here.

Please download our article "Value Planning - Powering Up Local Economies Using Strategic Infrastructure Investment Planning", recently published in Municipal World (January 2011) -- click here. 
 

Contact us to learn more about value planning

Please contact Glenn Miller, Vice President, Education and Research, for more information.

Return to CUI's Public Investment Practice.

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