By CPA|CS Nancy Mwacharo Value-Capture and Land-Based Financing for Municipal Growth Urban areas across Kenya and much of the developing world are under intense fiscal pressure. Municipalities must expand infrastructure and services to match rapid urbanization, yet their revenue sources, such as property rates, business permits, and parking fees remain insufficient. Traditional intergovernmental transfers, while critical, are unpredictable and politically sensitive. One underutilized approach is value-capture and land-based financing. These instruments allow municipalities to convert rising land and property values often created by public investment into reliable revenue streams for reinvestment. Value capture is the principle that public actions (such as building a road, expanding water networks, or zoning changes) increase private land values, and that part of this unearned gain should flow back to the public sector to finance further improvements. Rather than raising broad-based taxes, municipalities can structure fees, levies, or joint-development schemes tied directly to the increased value. Global Examples In Bogotá, Colombia, the city introduced a betterment levy. This is a fee charged to landowners when the government builds new roads, transit lines, or other public projects that increase the value of their land. For example, if a new highway is built near someone’s property, that land usually becomes more attractive and worth more money. Instead of letting only the landowner benefit, the city charges a portion of that “extra value” to help pay for the project. Over time, this approach has financed a large share of Bogotá’s Road network. In the United States, many cities use a tool called Tax Increment Financing (TIF). Here’s how it works: when a new development project is planned, the government measures the property tax revenue in that area. That amount is frozen, and any extra tax collected as property values rise is used to pay for the project itself—often through loans