Seven Habits of Highly Successful Value Capture Projects. Sasha Page IMG Rebel, Senior Vice President Bethesda, MD

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1 Seven Habits of Highly Successful Value Capture Projects Sasha Page IMG Rebel, Senior Vice President Bethesda, MD

2 Value capture can help fund a material portion of capital projects Project Source Amount ($ million) Denver Union Station Tax increment finance (TIF), Special assessment district (SAD), land sales, city backing % of Project Dulles Metrorail SAD 1, Hudson Yards TIF, city backing 3, Station, Streets+ Kansas City SAD (sales & property taxes), Streetcar parking Portland Streetcar SAD, TIF, parking Transbay Transit Land sales, TIF *Higher amount includes parking fees Center 2

3 Board members can become glue to make value capture (VC) happen 3

4 Successful VC requires strong market, appropriate regulations, & business case Transit Infrastructure Investment Transit-Induced Value Creation Value Capture 4

5 Seven habits of highly successful value capture projects 1. Pick growing markets/corridors 2. Own/buy land 3. Implement transit-oriented development (TOD) plans 4. Select appropriate value capture tool(s) 5. Make friends w. municipalities & developers 6. Use backstop to address timing issues 7. Seek innovative financing 5

6 1. VC rests on: yield, property types, density, velocity, value premium Element Development Yield Area of Impact Assessed Properties Density of Development Value Premium 6

7 1. Miami Example: Many ways that transit-induced premium may occur Value per Square Foot $320 Example: Office Space in Study Area $310 $300 $290 $298 $301 $286 $303 $292 $306 $298 $290 $308 $305 $301 $311 $280 $280 $280 $270 $269 $260 $250 $259 $249 $249 $249 $249 $249 $249 $240 Year 0 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 No Value Premium 50% of the Value Premium Over 5 Years 80% of Value Premium Over 5 Years 7

8 2. Own/Buy Land, like Transbay Transit Center in San Francisco 8

9 3. As in Dulles Metrorail, foster TOD in land use planning and zoning 9

10 3. Dulles Metrorail: Related development plans require less parking Use Previous* < 1/8 mile Metro Station** 1/8 ¼ mile Metro Station** 1/4 1/2 mile Metro Station** Non- TOD** Townhouse Multifamily (MF) 0-1 bedroom MF 1-2 bedroom MF 3+ bedroom Hotel 1.08 None 1.0 None 1.0 None Office 2.6 None 1.6 None 2.0 None *Per unit or 1,000 square feet. **Minimum - Maximum Source: Comprehensive Plan Amendment, Tysons Corner Urban Center, 2014; 10

11 4. Pick appropriate value capture (VC) tool(s) VC Tool Application Financed On Own Joint Development Development on transit agency (JD) property Naming Rights Private payment for naming station or other assets? Negotiated Exactions Developer payments or in-kind contributions to municipalities Parking fees District/city-wide parking fees Special Assessments VC zone landowners pay based Districts (SAD) on assessed value or floor area Tax Increment Tax increments from districts Financing (TIF) around around stations? 11

12 5. Make friends with developers & municipalities Transit Agency Other PRIVATE SECTOR Interests Other PUBLIC SECTOR Interests Private Developer TOD Local Government Engagement Strategic Partnership Value Benefit 11 Value Creation and Benefit Land Owners 12

13 5. Make friends with developers, as Boston MBTA did with New Balance 13

14 5. Make friends with developers they may have already captured the value 14

15 6. Denver Union Station: Use backstop, like sales taxes, to address timing Lodgers Tax Sales Tax Special District TIF RTD Payment

16 6. Denver Union Station: Forecasts for SAD, TIF, and JD monies realized 16

17 7. Seek innovative financing, like TIFIA TIFIA Principal TIFIA Interest Payable Senior DS Net Cash Flow Available for DS $ Millions

18 VC KC Streetcar opens this week

19 KC Streetcar: VC Kitchen Sink District sales taxes SAD on commercial, residential, city, and non-profit property Parking assessments

20 Value Capture Takeaways 1. Pick growing markets 2. Implement applicable TOD planning 3. Work closely with municipalities & developers, who may provide a financial backstop or SAD/VC funding, respectively 20

21 Contact Information Sasha Page IMG Rebel 4350 East West Highway Suite 950 Bethesda, MD T M SPage@IMGRebel.com John Buttarazzi IMG Rebel 4350 East West Highway Suite 950 Bethesda, MD T , ext M JButtarazzi@IMGRebel.com 21