Toolkits for Urban Transport Development - UNEP

Annex 6 Financing Options for Implementation of Projects
Funding from Domestic Source at Local Level (ULB)
1. Fare box revenue/Parking Fee /Advertisement Revenue:
The accumulated profit earned from ULB operated/promoted transport system can be used as partial
source of funding urban transport.
Parking fee collected from parking lots located within the jurisdiction of ULB can also be partial
source of funding urban transport.
City authorities charges fee on advertisement on hoarding, billboards etc., within its jurisdiction. The
accumulated fund generated from such source can be used as partial source of funding urban
transport. In case of Public Transport Projects, the rolling stock can also be an excellent medium for
advertising. In addition, stations, en-route stops and the corridor also provide ample space for
advertisements. These rights may be sold on the basis of a fixed fee or even on revenue sharing basis.
In a booming economy the up-side potential from revenue sharing may be quite high while rates may
drop-off precipitously during a downturn. These rights may also be renewed periodically so that the
best option may be chosen depending upon the scenario and competition for the space.
2. Creation of City Level UTF
A dedicated urban transport fund would need to be created at the city level through other sources,
especially land monetization, betterment levy, land value tax, enhanced property tax or grant of
development rights, advertisement, employment tax, congestion, a cess on the sales tax, parking
charges reflecting a true value of the land, traffic challans etc.
Pimpri-Chinchwad Municipal Corporation has already set up a dedicated urban transport fund through
land monetization and advertisement rights. Similarly, Karnataka has set up a dedicated urban
transport fund through MRTS cess on petrol and diesel sold in Bangalore, which is being used to fund
the metro rail projects. The various sources of funding that can be used to set up the urban transport
fund is given below:
i. Anticipated purchase of land
This method involves public authorities buying land before announcing that an infrastructure will be
built or where the route will run. In this way, the purchase can be made at market price without the
infrastructure. The strategy then consists in:
Directly selling the land to private developers including the estimated added value in the sale price,
such as was done in Aguas Claras on the periphery of Brasilia, or in Copenhagen;
Developing the area as part of an urban renewal project and then selling it at market price, as was
done in Copenhagen or in Japan, where rail companies were the first to use this method to finance
their operations
A city can also levy additional stamp duty (5%) on registration of property.
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