**5. Financing transit oriented development**

The financing of TOD cannot be artificially divorced from the broader issues of financing urban transport and cities. Both planning and economic considerations are important for designing a financing strategy. The approaches to financing of various types of public transport infrastructure, including TOD internationally include the following methods:



*Smart Growth and Transit Oriented Development: Financing and Execution Challenges in India DOI: http://dx.doi.org/10.5772/intechopen.95034*


#### **Table 11.**

*Potential public transport funding options.*

readjustment, town planning scheme, joint development, land monetization including the lease and sale of land and air rights with enhanced Floor Space Index and value-enhancing land use changes in TOD zones, tax increment financing, etc.

• Bullet Bonds and Pooled Finance Fund Scheme.

Land value capture (LVC) instruments take many forms and can be classified into two major types: (i) tax- or fee-based and (ii) non-tax- or non-fee-based, also called "development-based LVC." Tax- or fee-based instruments capture land value increases through, for example, land and property taxes, betterment charges, special assessments, and tax increment financing. In contrast, development-based LVC instruments capture these increments through land-related transactions such as selling or leasing land, development rights and air rights; making land readjustments; and redeveloping urban areas [17]. If adapted well to local contexts, development-based LVC instruments can be an effective finance and planning mechanism for cities in India.

The issues of financing public transit and TOD are intricately connected. However, as Indian cities are struggling to finance the development of mass rapid transit and bus rapid transit systems, not many have focused on TOD funding linked to LVC and non-LVC instruments. Based on international experience, a combination of financing instruments needs to be considered for adoption in India. These have to be suitably customized to fit the context of cities. A summary of various potential options for funding public transport, including transit is presented in the table below (**Table 11**).

International experience suggests that no one size fits all. But it makes clear that public transit and TOD impact on local, regional and national economies and lead to enhanced tax bases of all governments. Thus, if they are financed by borrowed funds with repayment linked to a value creation, capture and recycling strategy, cities in India can hope to get out of their vicious circles and traverse on a path of planned development. Future tax increments can finance current investment programmes which augments tax bases.

### **6. Towards TOD in India: case studies**

Some state governments and urban local bodies in India have resorted to novel initiatives to plan and implement projects aimed at improving urban mobility

following the TOD principle and Smart Growth framework. Some case studies are presented below.
