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PUBLIC PRIVATE PARTNERSHIPS
WORKING TOGETHER:PUBLIC/PRIVATE PARTNERSHIPS
Prepared for Prince George’s County Planning Staff
July 18, 2012
• METRO SYSTEM FIRST OPENED IN 1976
• TO DATE, 33 JOINT DEVELOPMENT
PROJECTS AT 27 OF 86 STATIONS
• 20 COMPLETED PROJECTS • CURRENT AVERAGE ANNUAL REVENUE - $15 MILLION
• TOTAL EARNINGS 1976 – 2010 ARE $250 MILLION
JOINT DEVELOPMENT PROJECTSHISTORY AND REVENUE
OFFICE AREA: 237,000 SF
RETAIL/ENTERTAINMENT AREA: 250,000 SF
RESIDENTIAL: 192 UNITS
METRO FACILITIES: BUILT OVER RAIL STATION
METRO JOINT DEVELOPMENT PROGRAM
Gallery Place - Chinatown
OFFICE AREA: 323,000 SF
RETAIL AREA: 41,600 SF
HOTEL: 390 KEYS
METRO FACILITIES: BUILT OVER RAIL AND BUS
STATIONS
ECONOMIC EFFECT:ANCHOR TO
DEVELOPMENT BOOM; NOW A SUBURBAN
DOWNTOWN
METRO JOINT DEVELOPMENT PROGRAM
Bethesda
Dunn Loring
METRO JOINT DEVELOPMENT PROGRAM
RESIDENTIAL: 624 UNITS
RETAIL AREA: 125,000 SF
METRO FACILITIES:
NEW PARKING GARAGE WITH BUS BAYS ON
GROUND LEVEL; 60,000 SF OF RETAIL SPACE FACING THE GARAGE
AND ADJACENT TO IT TO BE
BUILT
White Flint
METRO JOINT DEVELOPMENT PROGRAM
E D
C
PHASES - 8
OFFICE - 3
HOTEL - 1
RESIDENTIAL - 4
RETAIL - 200,000 SF
TOTAL - 2.7M sf
PROVIDE FOR FUTURE TRANSIT NEEDS—BUS AND STATION
NEEDS ASSESSMENT
ENHANCE PEDESTRIAN/BICYCLE CONNECTIVITY
DENSE MIXED USE DEVELOPMENT AS MAY BE
LIMITED BY MARKET & ZONING
CREATE HIGH QUALITY PLACES
ADDITIONAL RIDERSHIP
CAPITAL FUNDS
METRO GOALS
THE OFFERING – ALTERNATE METHODS--RFP
•Selection based on Financial Offer and Qualifications
•Respond with a price
•Best Suited for less complicated sites
•No Zoning or Master Plan Issues to Resolve
THE OFFERING – ALTERNATE METHODS—RFQ
•Selection based on Qualifications
•Benefit: Do Planning First to Resolve Land Use Issues
•Negotiate business terms when planning is near completion
RFQ PITFALLS
•Large $ to Plan
•Developer needs patience and staying power
•Without development rights, developer will want to limit investment
•Public aid for consultant costs
SELECTING A PARTNER
•Financial Strength + Commitment = Staying Power
•Require Experience in each Land Use Category
•It may be best to select a team
• Experience
• Financial Strength
• Commitment to the Project
FINANCIAL STRUCTURES
Align Interests as Much as PossibleKnow Your Public ConstraintsPlan in Advance if Public Facilities will be Required
• Sale
• Lease
• Joint Venture
FINANCIAL STRUCTURES--SALE
Developer likely to Prefer
Ongoing Land Use Requirements Can be Enforced Thru Easements or Covenants
Otherwise More Difficult to Enforce Public Requirements
FINANCIAL STRUCTURES--LEASE
Public Retains Long Term Fee Interest in Land
Provides Mechanism to Enforce Long Term Public Requirements
More Difficult to Finance
Traditional—Annual Payments
Alternative—Capitalized lease payment + Deferred Participation
FINANCIAL STRUCTURES—JOINT VENTURE
Higher Risk--Fee Interest in Land Can Be Lost
Must Provide for Subsequent Capital Investments
Aligns Interests
Public Relies on Developer’s Profit Motive
Must Have Transparent Accounting & Audit Rights
Synthetic Joint Venture
Risk/Reward Continuum
VALUATION
Value Today – Three Appraiser Method
Value Tomorrow – Method and Instructions
Joint Venture