Rail mass transit will create billions of dollars in increased land value for properties surrounding the transit stations.

This value is created by the spending of our tax money to develop the rail system, and is over and above the existing value of the land owned by the individual property owners. The increase in value will be due to the development of mass transit, and should be seen as a value to be recovered all or partially as an impact fee, rather than just be given away to the property owners.

The increase in land value should be recovered by the city as the private properties are sold and developed.

One of the major financial benefits of rail transit is a change in zoning and an increase in the value of land within a half-mile of the stations.

Controlling the value created by rail transit would allow the city and all of its residents to share in the increased value of the land, and to use these funds to pay for the transit system and to assure the creation of affordable homes.

What we shouldn’t be doing is giving away all of the values to the private landowners, and then raising the cost of land further by giving zoning bonuses, saying it creates affordable housing but really doing the opposite. Land costs go up with zoning concessions, which increase the cost of housing. Oahu taxpayers are paying all the cost of rail transit but giving away the benefits.

Basically, increased values due to a change in zoning should not be given to the landowners, but retained by the city and sold to the developers or owners as they are ready to develop their lands. It is a fair-share impact fee for development of rail transit.

We need to change how we look at these types of public works projects. The community is advancing the funds to build rail mass transit, but should be recouping some of the costs in impact fees.

If we take the increased value of the land over time, the city would get back billions of dollars to upgrade such things as parks, roads and sewers.

For example, let’s say a residential parcel is now worth $50 a square foot or $500,000. Because of rail, the city would change the zoning to apartment so the land is worth $150 per square foot or $1.5 million for the lot. Then the city could give bonuses on parking and density so another $20 per square foot is added, for a total value of $1.7 million.

The state Department of Education and city Board of Water Supply fees would increase the cost of housing further — let’s say $20 a square foot, bringing it to $1.9 million. Of this value, $500,000 was the landowner’s original value; $1.2 million was created by the community and the taxpayers through building of the rail transit line and a subsequent change in zoning; and $200,000 went for other impact fees.

In effect, the city would not rezone the land unless the impact fee is paid. The landowner sells his lot with the present zoning to a developer who then goes to the city to pay impact fees and get the new zoning. Basically, it is reimbursing the taxpayer. The cost of the land is the same to the developer, but the allocation of land value is different with the community getting compensated for the cost it paid to help create the value. It is fair, it is appropriate, and it is how the city should pay for rail transit.

As it stands, our present structure increases costs of land and housing, but with little or no benefit to the city taxpayer who paid for and created the increase in value.