Seven Habits of Highly Successful Value Capture Projects Sasha Page IMG Rebel, Senior Vice President Bethesda, MD SPage@IMGRebel.com
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 327 67 Dulles Metrorail SAD 1,188 21 Hudson Yards TIF, city backing 3,000 100 Station, Streets+ Kansas City SAD (sales & property taxes), 63 55 Streetcar parking Portland Streetcar SAD, TIF, parking 113 45 Transbay Transit Land sales, TIF 600 50 *Higher amount includes parking fees Center 2
Board members can become glue to make value capture (VC) happen 3
Successful VC requires strong market, appropriate regulations, & business case Transit Infrastructure Investment Transit-Induced Value Creation Value Capture 4
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
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
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
2. Own/Buy Land, like Transbay Transit Center in San Francisco 8
3. As in Dulles Metrorail, foster TOD in land use planning and zoning 9
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 2.75 1.75 2.2 1.75 2.2 2.0 2.5 2.0 2.7 Multifamily (MF) 0-1 bedroom MF 1-2 bedroom MF 3+ bedroom 1.6 1.0 1.3 1.0 1.3 1.1 1.4 1.1 1.4 1.6 1.0 1.6 1.0 1.6 1.35 1.7 1.35 1.7 1.6 1.0 1.9 1.0 1.9 1.6 2.0 1.6 2.0 Hotel 1.08 None 1.0 None 1.0 None 1.05 0.85 1.08 Office 2.6 None 1.6 None 2.0 None 2.2 2.0 2.4 *Per unit or 1,000 square feet. **Minimum - Maximum Source: Comprehensive Plan Amendment, Tysons Corner Urban Center, 2014; http://www.fairfaxcounty.gov/dpz/comprehensiveplan/area2/tysons1.pdf 10
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
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
5. Make friends with developers, as Boston MBTA did with New Balance 13
5. Make friends with developers they may have already captured the value 14
6. Denver Union Station: Use backstop, like sales taxes, to address timing 70 60 50 40 30 Lodgers Tax Sales Tax Special District TIF RTD Payment 20 10 0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 15
6. Denver Union Station: Forecasts for SAD, TIF, and JD monies realized 16
7. Seek innovative financing, like TIFIA 300 250 200 TIFIA Principal TIFIA Interest Payable Senior DS Net Cash Flow Available for DS $ Millions 150 100 50 0 2013 2018 2023 2028 2033 2038 2043 17
VC KC Streetcar opens this week
KC Streetcar: VC Kitchen Sink District sales taxes SAD on commercial, residential, city, and non-profit property Parking assessments
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
Contact Information Sasha Page IMG Rebel 4350 East West Highway Suite 950 Bethesda, MD 20814 T 301-280-0155 M 301-675-3102 SPage@IMGRebel.com www.imgrebel.com John Buttarazzi IMG Rebel 4350 East West Highway Suite 950 Bethesda, MD 20814 T 301-637-6765, ext. 3041 M 914-844-1141 JButtarazzi@IMGRebel.com www.imgrebel.com 21