In this paper, the selected methodological approach was tested in a real - world case study: the under construction metro system of Thessaloniki. Thessaloniki is the second-largest city in Greece, the second major economic, industrial, commercial and political center in the country and a transportation hub for southeastern Europe and the Balkans. The metro is an on-going project, started in 2006. After its completion, the basic metro line will run for 9,6 km through the city, having 13 stations.
It is worth mentioning that it is a rather irregular case; the construction of the metro was supposed to be completed years ago (in 2012), but due to several reported issues a large delay on project delivery has occurred. Several completion target - years were announced after that, which came and go with no real reported progress on the project. The issues that caused this delay were of financial nature, in combination with a debate triggered by important archaeological findings, for which it has not been possible yet to reach a consensus among different parties involved on whether they should be moved from their original location to be placed in a museum or they should go through a restoration process and then be exposed on – situ. Some of the disagreements among the Greek State, the organization which is responsible for the construction and future operation of the metro (ATTIKO METRO S.A.) and the concessionaire were even brought to the court. The construction works “froze” several times within these last years; they started again after a period of 2,5 years in January 2016. Nevertheless, there is still ambiguity concerning the expected opening, with the latest available information placing it on the year 2020.
Regarding the existing financing scheme of the project, the basic metro line has a total portfolio of €1,36b and it has been partially financed in the context of National Strategic Reference Framework (NSRF) (2007–2013) and is now one of the projects that are part of the New Programming Period Partnership Agreement (2014–2020). In a recent research by Sapranidis [68], a questionnaire survey with a focus on investigating public’s view regarding this delay was addressed to entrepreneurs within the planned metro line’s buffer zone. Over 90% of the interviewees replied that they consider the state (in the broad sense of the term) as the main responsible for the delay.
All steps of MAMCA for this specific case are addressedFootnote 2 and discussed in this section, except from step 7 (implementation of the results), as it is beyond the scope of the paper. This is a research paper aiming at the examination of a potential introduction of VCF policies in Greece – which is not currently in the agenda of transportation projects’ financing in Greece. Therefore, the main focus of the paper if the process that should be followed prior to the implementation phase in order to select the most suitable financing scheme based on the VCF concept.
The decision problem in this case is the ex-ante assessment of the suitability of various financing mechanisms for urban transportation infrastructure which belong to the value capture family, for implementation in Greece, a country with no previous experience with VCF tools for this purpose. More specifically, the evaluation of potential VCF variants for the partial financing of the construction and/or operation costs of the Thessaloniki metro project is investigated. As described earlier in the literature review section of the paper, there is a great variety of VCF mechanisms and tools worldwide. This paper examines three alternative urban transportation financing scenarios, each one based on one of the three most widely used value capture tools in the context of urban public transport systems. These alternative scenarios are briefly presented below:
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Scenario 1: Betterment tax/Benefit assessment: It refers to a tax/levy on properties which benefit from increased accessibility, by experiencing a rise in their value. Often, but not always, it is applied within a specific geographical zone. It can be directed either to property owners (land - based levy) or businesses (economic prosperity based levy) or both. Moreover, it can be either flat (same for all properties regardless their location) or distance-based [69, 70].
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Scenario 2: Tax Increment Financing (TIF): The term TIF refers to a financial instrument that attempts to remove physical blight and encourage economic development. Its implementation includes the creation of a geographical district, where the tax base (i.e. property values) is “frozen” for a long period of time, usually 10 to 25 years, under the assumption that the area would not develop but for the planned intervention and therefore the creation of the TIF district (known as the “but for” requirement). As investments begin to take place within the TIF area, property values increase, and so is the tax revenue. The new property tax minus the tax on the frozen property values (tax increment) is collected by the TIF authority and used either to repay the capital costs of the investments or to support further development [14, 71].
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Scenario 3: Joint Development: It refers to the establishment of cooperation between public and private entities, usually public transport authorities and real estate developers, in order to develop an urban project under Transit Oriented Development (TOD) principles. The basic principles of this method are that the private entity is responsible for compensating the public entity though payments or cost sharing agreements and that all parties are involved in the process voluntary, although the result is a legally binding agreement. A main difference of joint development, in comparison to betterment tax and TIF, is that it does not require identifying the direct and indirect impact of transportation infrastructure in order to be implemented, as in the case of the two aforementioned mechanisms [7, 72].
One of the first definitions of the term “stakeholder” was given by Freeman in his book “Strategic Management: A Stakeholder Approach”, according to which stakeholder is every individual or group of individuals that can be affected by the achievement of the goals of an organization. With a focus on urban transportation issues, stakeholder is everyone who has a specific interest regarding a policy or measure on the field of transportation. At the beginning of each decision – making process, all stakeholders should be identified and determine who will participate in the process, in which stages and to what extent. The involvement of many different stakeholders leads to the maximization of the volume of available information and helps in taking into account every opinion and point of view.
In this step, the stakeholder analysis took place, under the objective of selecting the most suitable stakeholders to be involved in the decision making processes concerning the implementation of innovative financing tools. Following that, their categorization in six groups was accomplished, trying to achieve the maximum possible homogeneity within the groups, regarding the stakeholders’ objectives.
The selection of the six groups of the stakeholders in the context of this methodological framework was based on an extensive and comprehensive literature review (e.g. [73,71,72,73,77]), as well as on authors’ experience and discussions with experts from all over the world during several International Conferences and Workshops in which the authors have participated.
The six groups that were formed are the following (Fig. 2):
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Group A: Government/Local Authorities. The critical decision makers in most cases of ex-ante transportation policies’ evaluation worldwide are the country’s elected government. Even when the policy is directed towards a specific city or area, central government is in charge of making the final key decisions, when facing multidimensional and multidisciplinary issues. Value Capture Finance is certainly a multifaceted issue, and its implementation is usually associated with essential institutional and legal settings. Therefore, it is considered necessary to include in the first stakeholders’ group, governmental actors from three policy levels: country, region, city (municipality).
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Group B: Transport Authorities. The second group comprises transport authorities responsible for the operation of the different transport modes/lines. It is important to record the views of representatives of as many transport authorities as possible, regardless which mode the VCF policy is planned to affect; their feedback could provide the analyst with crucial information regarding potential expansion of the policy to other modes/target groups.
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Group C: Universities/Research Institutions. The literature review has also indicated the importance of including experts with an academic or/and research background in the decision making process for transport-related problems (e.g. see [73, 74, 78, 79]). The inclusion of this stakeholders’ category is also suggested by the EU Guidelines (2013) on Developing and implementing a sustainable urban mobility plan [77]. Based on the complex nature of VCF policies, special attention should be paid on selecting actors with diverse academic/research interests, in order to gain insight in many different dimensions of the problem and, through this interdisciplinary approach, reveal aspects that would not be easily perceived if for instance only transportation engineers took part in the analysis. It is thus suggested to include in the third group, in addition to them, urban and regional planners, transportation economists, land use planners, real-estate experts etc.
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Group D: Private Sector. The fourth group consists of representatives of leading transport companies and consultancies, as well of the banks’ real - estate departments. Private sector has an indisputably major role in the successful implementation of policies based on the value capture notion, as many variants of the existing VCF tools focus on developers and non-residential properties.
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Group E: Society. Society is a very broad term; here it refers to organized social groups formed by a number of citizens who share common interests/aspirations (e.g. cyclists’ community, environmental groups, student associations etc.). In this paper, the approach of the EU Project CH4LLENGE (Addressing the four Key Challenges of Sustainable Urban Mobility Planning) [80] is followed, according to which the term “stakeholders” refers to organized groups and associations and is different from the term “citizens” which correspond to the wider public opinion. In order to investigate the public perception towards the potential introduction of a financing tool based on the VCF concept to partially finance the Thessaloniki Metro project, a Stated Preference (SP) questionnaire survey was designed and addressed to the citizens living/commuting/working in the proximity of planned metro stations. The SP survey was conducted in order to act in a complementary way to the stakeholders’ survey presented herein.
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Group F: Professional Associations. The last group is titled professional associations and includes representatives of associations/chambers of relevant fields such as transportation engineers, civil engineers, urban and regional planners etc.
It might appear rather “peculiar” to the reader that four out of six stakeholders’ groups appear to be well briefed and informed about the topic, which might imply an over-representation of experts in our sample. However, this is not the case in Greece, where the Value Capture concept is still very outside the Greek mentality, even among the experts; this observation is proved by the answers in a question about the degree of familiarization of the interviewee with the VCF concept, which followed the weight elicitation. Only a 3% of the survey’s participants claim to have excellent familiarization, followed by a 14% of respondents who characterized their familiarization with the concept as “good”. The rest responses were as follows: 30% average, 26% fair and 27% poor degree of familiarization. Therefore, in our case, this cannot be considered as a source of bias, as it could possibly be in the case of applying the methodological framework to a country with a long VCF experience.
As already mentioned earlier in this paper (in the methodological framework part), one of the main characteristics of the MAMCA methodology is that is uses a different value tree for every stakeholder group, and the criteria comprising each tree should be in line with the objectives and aspirations of that specific group; this is in contrast with the way the criteria are normally formed in typical MCDA methods [32] where the criteria often describe the possible consequences or potential impact of the policy in discussion. In cases when the previous step has been carried out with caution and all the relevant stakeholders have been included in the process, these effects are usually reflected in the stakeholders’ goals [56].
The experience from MAMCA applications so far indicates that there is no common recipe that could be used in all cases regarding the identification of stakeholders’ objectives and their translation into criteria [53]. Munda [81] argues that the formulation of the criteria is preferable to be performed by the analyst(s)/researcher(s), due to the fact that technical issues such as overlapping or linguistic vagueness should be avoided. An initial list with possible criteria could be formed based on the relevant bibliography and the specific decision problem, and then stakeholders could be given the opportunity to express their opinion on these criteria through an interactive process (e.g. telephone interviews, workshops etc.) in order to validate them, or/and suggest different/additional ones [17].
This process is rational when the examined transport policy, the alternatives of whose are going to be evaluated, is familiar to the majority of stakeholders. Even when some of the alternatives are novel, usually the stakeholders have from the beginning a general idea concerning their attitude towards the policy. Therefore, when investigating VCF policies, the following issue arises: In cases where value capture is well-established as a policy option for financing transportation infrastructure in national, regional and/or local level, the approach according to which the initial list of criteria is discussed with representatives from all the stakeholder groups can be adopted. In countries/regions where one or more mechanism(s), belonging to the value capture family, has been or is being currently used for financing transportation infrastructure, obviously there would be many stakeholders who have already been involved more or less in the implementation procedure and even more who, regardless if they have not been directly involved yet, are informed in detail about the VCF concept. Contrary to that, in countries/regions with no tradition in such transportation financing practices, Greece being one of them, it is normal and rather expected, for even key actors, to have limited (or not at all) familiarization with these financing techniques. Hence, in these cases, communicating with stakeholders to ask them to define their targets and correspondingly, criteria, would not offer much help to the researcher; it could even further complicate things. In light of this ascertainment, the objectives/criteria in these cases is desirable to be suggested by the analyst/researcher who, after having studied thoroughly the relevant literature is supposed to have comprehensive knowledge on the topic, and to be familiarized with the international experience. Nevertheless, stakeholders should be given the freedom to express their views on the criteria forming their value tree, because this notion is located in the heart of MAMCA: the substantial participation of stakeholders in all stages of the analysis, and this is done by providing them with the option to suggest additional criteria at the end of the questionnaire.
The different criteria that are selected for each stakeholder group comprise the overall decision value tree, which is illustrated in Fig. 3.
The diagram reveals that Group A (Government/Local Authorities) is the one with the biggest number of identified assessment criteria (15). This is rational, due to the fact that this is the main decision-makers’ group, including actors from all levels of authority, and hence their objectives are multiple as they are supposed to represent the interests of the society as a whole (see also [34, 67]).
A comprehensive questionnaire survey was designed for the purposes of the weight elicitation, based on pairwise comparisons of the criteria, using the 9-point Saaty’s scale. The survey was conducted between October and December, 2015. The preferable method was direct face-to-face interviews with all stakeholders’ groups representatives, after arrangement of an appointment. Only in cases where this could not be an option (due to distance reasons or lack of time caused by the stakeholder’s tight work schedule), the communication took place through telephone interviews and/or e-mails.
Totally, 70 stakeholders from all six groups participated in the survey. The allocation of them among the groups is presented in Fig. 4a. The majority of interviewees belong to Group C “Universities/Research Institutions” (33%), which is rational because people working in an academic/research environment are used to participating in similar questionnaire surveys and as a result they are usually more approachable and they are willing to answer. The next biggest group is the one comprising representatives from the central government and local authorities, covering 1/4 of the sample. The response rates reported are very satisfactory and remarkably high comparing to similar surveys involving stakeholders (Fig. 4b) (e.g. see [81]).
After the collection of the 70 questionnaires, the stakeholders’ answers were used to calculate the geometric means per group, and following that, the weights of the criteria per actors’ group were calculated. The results are presented diagrammatically in Appendix A (Figures I to VI).
The most important criterion among actors of Group A (Government/Local Authorities) appears to be social equity. At the other end are located criteria as the ease of implementation and lack of experience (which could act as an implementation barrier, and they are keen on avoiding that). Low importance was given by this group’s actors to the political cost criterion, which is rather surprising as this category includes amongst others, politicians. It might be explained by an implicit “marketing” strategy; they know that it does not sound very nice to put emphasis on political cost during an interview of any kind and they attempt to shed light on social equity instead. In any case, the motivation behind this result is worth further investigation.
Stakeholders from Group B (Transportation Authorities) believe that the risk associated with each VCF financing mechanism should be a prevailing criterion in the assessment process, slightly more important than the estimated revenue for the authority. The promotion of sustainable mobility follows, whereas the development of synergies between different disciplines and authorities is the least important criterion according to them.
The most significant criterion for Group C (Universities/Research Institutions) is the promotion and enhancement of the sustainable city vision. Synergies are placed relatively high in their value tree as well, almost sharing the second place with the employment creation criterion. The least critical criterion for them is innovation, but with a really slight difference from the remaining one, namely research interest.
For the actors of Group D, Private Sector, three criteria are the most powerful: profit, risk, and benefits’ timing, while innovation and corporate social responsibility are weighted as the least important among the seven criteria used. Societal actors would like to be sure that the revenue from the VCF mechanisms will be used for the decided purpose only, and they want to avoid phenomena of corruption or/and improper use of the collected revenue, making the guarantee for proper use their first choice among the criteria. This way of thinking is supported by the fact that the following important criterion according to them is transparency; equity and benefit - to - pay principle come next. The maintenance of their status quo (usually related to the NIMBY (Not In My Backyard) Syndrome) is the least significant criterion for them.
Stakeholders included in the Professional Associations group (Group F) argue that the know-how acquisition is the most crucial criterion, followed by synergies’ creation while employment vacancies’ creation comes next. The dissemination of information is the least important criterion in their view, having only a slight lower weight from innovation.
One of MAMCA strengths is that is can be performed, from the beginning to the end, without using a single quantitative criterion, only with the use of qualitative judgments. This approach might not be preferable when quantitative data is available, however, the possibility offered to draw conclusions even in cases where there is a lack of them, utilizing every kind of available information, is extremely important [32, 52].
In the current analysis, the ratings of the majority of criteria cannot be expressed in quantitative or monetary terms, as VCF policies have a long-term impact and the criteria are of heterogeneous nature. As already mentioned before, Greece is a country which has no experience so far on the topic of financing transportation infrastructure through Value Capture. Due to this fact, the three scenarios that are built for the purposes of this research include hypothetical characteristics – they do not refer to tangible quantities that can be measured in monetary terms. Our aim is to identify the tendency of stakeholders towards the Value Capture in Greece, and more specifically towards the three different types of it that are most widely used worldwide.
Notwithstanding, the suggested methodological framework offers the flexibility to add values to the quantitative criteria and repeat the analysis in case the realization of a VCF financing scheme moves from theory to practice in the Greek context. But in the present research, similarly with the approach followed by Macharis and Crompvoets [33] and Dooms and Macharis [44], the measurement methods related to the selected indicators are all qualitative in nature as the considered alternatives are future situations that have not been implemented yet.
In this step every alternative (from step 1) is evaluated with respect to the different criteria for each stakeholder group (step 2). There are three main approaches by which the evaluation of each scenario on the criteria can take place, namely the analysts’ approach, the experts’ approach and the stakeholders’ approach. Usually, a combination of the first and the second approach is the advisable way to perform the evaluation; the analysts should use their experience on the examined topic and the knowledge obtained by years of relevant research and then discuss their views with a multidisciplinary team of experts; this way, a non-subjective and robust basis for the analysis is provided. The third approach could be a possible source of strategic bias, as the stakeholders have already been given the chance to prioritize their objectives, and an additional inclusion of their opinion on the evaluation of the scenarios, could possibly affect the final outcome in favor of their own interests [17]. The evaluation can be done with the aid of any MCDA method. Usually AHP or PROMETHEE - GDSS are selected, due to the fact that they are both user-friendly and they are supported by robust bibliography in transport-related applications [17].
In this case, similarly to the weight elicitation in step 3, the AHP method is used for the evaluation of the different scenarios. The authors evaluated the different scenarios with the aid of pairwise comparisons on the 9point Saaty’s scale. This evaluation was based on the authors experience based on multi-year research on the topic, and was also supported by key experts’ consultation combined with an in depth literature study (this approach was also followed by [33, 37]).
The multi-actor view which is the global outcome of the MAMCA is illustrated in Fig. 5. The left vertical axis corresponds to the evaluation score of each one of three alternative scenarios, while the six different stakeholders’ groups are displayed in the horizontal axis. The orange line represents Scenario 1 (Betterment tax), while Scenario 2 (TIF) is shown with the blue line and the last one, Scenario 3 (Joint Development), is illustrated using the green line. Scenario 1 appears to have obtained high scores only in Group A, Government/Local Authorities, and its score is lower, but remains quite stable in the other five actors’ groups. In contrast to that, Scenario 2 has the lowest evaluation score among the three alternatives in Group A and the highest in the last group, Professional Associations. Joint Development (Scenario 3) gets its highest score when the Private Sector is concerned (Group D).
Group A (Government/Local Authorities) and Group B (Transport Authorities) appear positive towards the implementation of a Betterment levy scheme, which means that according to their opinion it is preferable to share the burden among the citizens (indirect beneficiaries) of the area and not include the developers to the financing scheme of the metro. On the contrary, the following three groups (Universities/Research Institutions, Private Sector and Society) tend to prefer the scenario which calls for a wide developers’ participation. The Professional Associations (Group F) support the Tax Increment Financing, which stands somewhere in between the other two scenarios, as it involves both citizens’ and developers’ engagement. Overall in the global ranking, Scenario 3 (Joint Development) is first, followed by Scenario 2 (Tax Increment Financing – TIF), while Scenario 1 (Betterment tax/levy) is the least preferable solution.
But despite the fact that this multi-actor view allows a clear comparison between the preferences of the stakeholder categories, more important than the overall ranking is to gain insight in the strong and weak aspects of each alternative for the different stakeholder groups. This can be done through the production of single-actor view diagrams [37, 38]. The straight line within each diagram represents the mean value for every scenario, taking into account the score of all the criteria for this specific scenario.
Figure 6 presents the evaluation of the three different scenarios from the view of the governmental and local authorities’ actors. It is noteworthy that Scenario 1 gets a remarkably high score in many criteria that are related to implementation issues (e.g. ease of implementation and the existence of a supportive legal/institutional framework), while at the same time in others such as the political cost and the provision of investment incentives scores particularly low. The score on revenue and risk criteria is also high with regard to Scenario 1. Group A appears to associate more the introduction of TIF mechanism with potential political cost, whereas at the same time the lack of experience on this specific financing tool seem to worry them more, comparing to the other two scenarios. Joint development is considered the financing option which is capable to accelerate the project construction more than the others, while stimulating investment in the area. This is not a surprise as investments’ motivation is inherently connected with the notion of joint development mechanisms. Furthermore, the actors of this group appear to prefer Scenario 3, also in terms of synergies’ promotion; nevertheless, in terms of social equity (which is a particularly important criterion for this group, as revealed by the step 3 of the analysis), this option gets the last place and Scenario 1 has an indisputable precedence.
Actors belonging to the transport authorities’ group (Group B), believe that the introduction of a betterment tax would be capable of bringing more revenue to their treasury, but they do not consider this mechanism very innovative, as a TIF scheme could be. Apart from novelty, TIF policy gets a higher evaluation score on the know-how criterion as well, but it is associated with the highest risk among the three alternatives as well. In terms of sustainable mobility, for this stakeholders’ group, joint development appears to be the VCF policy more likely to achieve it. This might be related to the beneficial role of joint development in supporting TOD, which was mentioned earlier in this paper. In terms of synergies, Scenario 3 is on the first place again, while Scenario 1 scores notably low on this criterion (Fig. 7).
Group C, which includes actors from Universities/Research Institutions, is in favor of Scenario 2, in terms of research interest, innovation and synergies. Scenario 3 appears the most promising regarding potential job vacancies’ creation, and does not have a very low score in none of the criteria. Sustainable city is the criterion with the highest score in Scenario 1, but this seems to be outbalanced by the low scores the other criteria obtain (Fig. 8).
Scenario 3 scores remarkably high in almost all the criteria of Group D, Private Sector, and actors seem to relate joint development policies to a low risk percentage. Scenario 2 presents a more balanced image, with investment incentives and real-estate conditions having the highest values in the evaluation. In contrary, Scenario 1 is considered rather risky and probably as a consequence to that, its score on all remaining criteria is low (Fig. 9).
Societal actors (Group E) appear rather indecisive, as their bar chart (Fig. 10) indicates: There is large divergence among criteria scores regarding all three alternative scenarios. Scenario 1 gets a high score on the benefit - to - pay principle and equity criterion, in reverse with Scenario 3, while Scenario 2 is considered way more transparent.
They think that joint development is more likely to prevent them from drastic changes, as the status quo maintenance criterion gets its higher score in the evaluation of Scenario 3; the least convenient mechanism in terms of this criterion is the betterment tax of Scenario 1. Group F comprises actors from Professional Associations. Figure 11 reveals that they tend to be in favor of Scenario 2, as it comes first in four out of five of the established criteria, with the employment opportunities’ creation being the only exception. The highest score towards this criterion is obtained by Scenario 3 .