TRANSPORTATION RESEARCH BOARD,onlinepubs.trb.org/onlinepubs/webinars/170607.pdfStructure viable...

TRB Webinar Program Innovative Financing for Public Transportation:

Value Capture and Small-and Medium-sized Public Private Partnerships

Wednesday, June 7, 2017

2:00-3:30 PM ET

TRANSPORTATION RESEARCH BOARD,

Purpose Discuss TCRP’s Report 190: Guide to Value Capture Financing for Public Transportation Projects, and Report 191: Public Transportation Guidebook for Small- and Medium-sized Public-Private Partnership (P3) Initiatives.

Learning Objectives At the end of this webinar, you will be able to: • Define value capture and public-private partnerships • List examples of U.S. value capture and P3s delivered by U.S. public

transit agencies • Describe success factors in planning and implementing value capture

and P3s, including lessons learned and best practices • Utilize a companion checklist to plan and evaluate a prospective P3

project

https://www.trb.org/Main/Blurbs/175203.aspx

https://www.trb.org/Publications/Blurbs/175901.aspx

Sasha Page, June 7, 2017

Guide to Value Capture Financing for Public Transportation Projects TRB Webinar: Innovative Financing for Public Transportation: Value Capture and Small-and Medium-sized Public Private Partnerships

Guide to Value Capture Financing for Public Transportation Projects

GUIDE TO VALUE CAPTURE: How to leverage this alternative funding source to help fund transit

• U.S. transit agencies are seeking new funding sources for new & rehabilitated facilities

• Successful value capture (VC) can fund 20% to 50% of some projects’ capital costs

• The Guide to Value Capture Financing for Public Transportation

Projects (the Guide) provides practical insight on leveraging VC, including highlighting requirements for: – Successful value creation through transportation

infrastructure investment – Capturing portion of that value through VC mechanisms

1


Value creation is key element of value capture (VC)

2

Value Capture Value Creation

Transit Infrastructure

Investment


Some best practices are required for optimal VC

3



Investment


1. Select appropriate VC tool(s)

2. Pick growing market/corridor

3. Implement appropriate transit-oriented development (TOD) & other plans

4. Bring stakeholders together

5. Develop compelling business case

6. Structure viable financing

4

Best practices are required for optimal VC (cont’d)


Guide presents cases of bus, streetcar, light rail, heavy rail, commuter rail, & intercity rail projects

• Bolded projects covered in this presentation:

– Boston Landing at Allston/Brighton Station (New Balance headquarters)

– Denver Union Station – Hong Kong MTR – Kansas City Streetcar – Portland Streetcar – Dulles Metrorail (Washington, D.C. area)

5


DULLES METRORAIL: Prosperous corridor financed & funded 1/5 of $5.7B project

6

Source: Dulles Corridor Metrorail Project, 2015

1. Market Conditions


$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

1980 1985 1990 1995 2000 2005 2010 2015 2020

Ass

esse

d V

alue

$B

Year

Assessed Valuein $B

Transportation Improvement District (TID) bonds secured by tax revenues, not county • Phase 1 TID bonds were

rated AA, Aa1, & AA by Fitch, Moody’s, & S&P

• Key strengths were: – Corporate

headquarters of five Fortune 500 companies & growing assessed valuation (chart)

– Good debt service coverage of 1.45x on maximum annual debt service

– Tax rate flexibility 7

Source: Fairfax County Economic Development Authority,2016

1. Market Conditions


Optimize transit-induced development by discarding: parking minimums, density maximums, & land use segregation

8

2. Regulation: Development

Source: Comprehensive Plan Amendment, Tysons Corner Urban Center, 2014; http://www.fairfaxcounty.gov/dpz/comprehensiveplan/area2/tysons1.pdf


DULLES METRORAIL: Used TIFIA to finance $598M value capture receipts

9

Source: Dulles Corridor Metrorail Project, 2015

6. Financial Feasibility


10

VC Tool Application Financed On Own

Joint Development (JD)

Development on transit agency property

✓

Naming Rights Private payment for naming station or other assets

?

Negotiated Exactions

Developer payments or in-kind contributions to municipalities

?

Parking fees District/citywide parking fees ✓ Special Assessments Districts (SAD)

District landowners pay based on assessed value or floor area

✓✓

Tax Increment Financing (TIF)

Tax increments from districts around stations

✓?

Pick appropriate value capture tools 3. Regulation: Value Capture


DENVER UNION STATION (DUS): Combined DDA (TIF) & Metro Districts (SAD) with joint development

11

Source: BATIC Institute at AASHTO Center Excellence

3. Regulation: Value Capture


Recognize links between key stakeholders & need for institutional capacity

12

4. Institutional Capacity


Anticipate that speculation may have captured some/all market value

13

4. Institutional Capacity


BOSTON STATION: New Balance applied TOD premium to pay for new station • New Balance-affiliate paid $25.3M for new commuter rail station

& additional annual O&M costs over next decade • Massachusetts Bay Transportation Authority (MBTA) paid for

$8.8M planned track and some station improvements

14

5. Compelling Business Case

Source: Valante Mechanical, Inc.


New Balance leveraged transit’s (in)- tangible benefits: less parking, employee access, & youthful image • NB Development Group goals:

– Consolidate headquarters employees – Create sports entertainment & wellness center with Boston

Bruins & Boston Celtics training facilities & develop: • 650,000 sq. ft. class A, LEED-certified office space • 175-key boutique hotel • Ground floor restaurant & retail space • 275 residential units

• Developer’s investment may not yield financial return until project is well-established, as return likely consists of: – New Balance’s ability to charge TOD premium – New Balance’s brand association with leading edge &

youthful image, national sports teams, & health/wellness

15



16

Business/Financial Case Element Govern-ment

Dev-eloper

Credit Agency

Transit need ✓✓ ✓ ✓

Planning & regulation compliance ✓ ✓

Potential for value capture ✓✓ ✓

Financial return of TOD ✓ ✓✓

Investment grade financial plan ✓ ✓ ✓ Performance through economic cycles ✓ ✓✓

Strength of pledge (if any) ✓ ✓✓

Structure all-weather business/financial cases for public, developer, transit & credit agencies



DENVER UNION STATION (DUS): Property sales, TIF, & SAD fund over 1/3 of project

Sources Notes

$103M federal, state, regional grants

$51M RTD contributions RTD is Regional Transportation District

$21M property sales Sold by RTD

$146M senior lien TIFIA loan

Sales taxes were principal repayment source

$155M RIFF subordinate loan

Repayment sources/credit: • DDA & Metro district monies • “City Contingent Commitment”

that could be accessed in event of shortfall of pledged revenue for RRIF loan debt service, equal to 50% of maximum annual RRIF debt

17

Source: DUSPA



Consider TIFIA & RRIF financing, secured by sales taxes, VC revenues, & city support

18




Structure public support at 50% of debt service, exposing loan to VC risk like DUS

19




FAST ACT: TIFIA & RRIF can better finance TOD-supportive infrastructure & possible TOD

20


Likely Eligible Projects/Uses TIFIA RRIF • Intercity bus & intercity rail stations &

terminals • Parking garages • Bike/pedestrian infrastructure • Open space • Safety & security equipment & facilities

✓

✓

Commercial & residential development & related infrastructure

✓

• Build America Bureau developing credit guidelines for TOD projects

• FTA developing value capture definitions for grant programs

Source: Build America Bureau, Credit Programs Guide, January, 2017


VC 3 Cs: Capture development, coordinate stakeholders, No “Cs”

21



Investment


22

Contact, Report, & Webinar

• Download Guide at: https://www.nap.edu/download/23682

• Further material is available at: www.IMGRebel.com

Authors

Sasha Page IMG Rebel [email protected] 301-675-3102 Bill Bishop Development, Planning & Financing Group [email protected] (919) 619-4169 Waiching Wong IMG Rebel [email protected] (916) 284-3835

https://www.nap.edu/download/23682

https://www.nap.edu/download/23682

http://www.imgrebel.com/

mailto:[email protected]



TCRP G-15 : P ub lic Transp ortation Guid eb ook for S m all- and M ed ium -S ized P 3 In itiatives

June 8, 2017 Nathan M. Macek Principal Investigator WSP USA

2

— S tud y O b jec tives & D efin itions — C ase S tud ies — B est P rac tic es — P 3 P rojec t S c reening C h ec k list

Agenda

Study Ob ject ives & D efin itions

Pub lic Transporta t ion Guidebook for Sm all- and Med ium -Sized P3 In it ia t ives

4

— P rovid e a resourc e for U S p ub lic transit agenc ies to und erstand , evaluate, in itiate, p lan , and im p lem ent sm all- and m ed ium -sized p ub lic -p rivate p artnersh ip (P 3) in itiatives

— S tud y ad d resses: —Why and w hen to consider P3s for sm a ll- and

m ed ium -sized in it ia t ives —Types of in it ia t ives to be undertaken —H ow to effect ively undertake in it ia t ives

Object ive

5

St udy P3 def in it ion

C on trac tual agreem en ts form ed b etw een a p ub lic tran sp ortation p rovid er an d a p rivate sec tor en tity th at:

Transfer som e level of r isk assoc iated w ith ac tivities of th e p ub lic tran sit p rovid er (e.g., d elivery, c ost esc alation , fin an c in g, op eration s, m ain ten an c e, or reven ue) to p rivate sec tor, w ith exp ec tation of return on in vestm en t.

Provide a service (e .g., w ifi, ad vertisin g, fuelin g fac ilities) to th e p ub lic tran sp ortation p rovid er. A relation sh ip solely b ased on a on e-tim e tran sac tion or a fin an c ial tran sfer (e.g., tax in c rem en t fin an c in g) is n ot c on sid ered a servic e.

Cap it al Im p rovem ent s Operat ions and Main t enance (O&M) Real Est at e Sponsorsh ip Innovat ive

Technology

Design Build Transit O&M Concession Joint Development Sponsorship Energy Savings

Design Build Finance Transportation Network Companies (TNCs) Air Rights Naming Rights Fare Payment

Design Build Maintain Maintenance Concession Station Access Advertising Real-Time Information Technology

Design Build Operate Maintain Long-Term Lease Wifi and Wireless

Service

Design Build Finance Operate Maintain Easements

Design Build Finance Maintain Vending and

Retail Concessions

P3 Cat egories

6

Case Stud ies


8

Case St ud ies

9

Sum m ary — N B D evelop m en t C orp . D B F of

$20 M c om m uter ra il station

— Fun d ed 10 0 p erc en t of th e c on struc tion c osts an d first d ec ad e of O &M c osts

— P art of $50 0 M N ew B alan c e h ead q uarters b uild in g an d oth er c om m erc ia l d evelop m en t

Just if icat ion

— S m all c om p ared to U S p eers

— In c lud es c ap ita l an d O &M c ost c om p on en ts

— M B TA w as ap p roac hed b y th e p rivate sec tor

MBTA Bost on Land ing St at ion Bost on, Massachuset t s

10

Ident i f icat ion — N ew B alanc e and N B D evelop m ent

Group ow ner w as c h am p ion

— P ub lic and p rivate stak eh old ers – agreed station w ould serve as a c ata lyst

— Fund ing lim itations from M assD O T and M B TA

In i t iat ion — Letter of intent exec uted in M arc h

20 12

— M O A signed in N ovem b er 20 13 after p lanning p roc ess d ec isions

— M assD O T auth orizes p rojec t, M B TA m anages th e ra ilroad , K eolis op erates c om m uter ra il, and N B D evelop m ent d esigns, c onstruc ts and fund s p rojec t

Plann ing — Lac k of k ey staff m em b ers in

p lanning p roc ess c aused d elays

— C ost w as an unk now n

MBTA Bost on Land ing St at ion

11

Lessons Learned — Act ively engage a ll sta ff m em bers in p roject p rocess — Reeva lua te cont ract m ethod , CMAR — Create a team , from beginning, tha t can facilita te a ll

negot ia t ions — Ident ify and nurture cham p ions from pub lic and p riva te sectors — Develop an agreem ent w ith clear expecta t ions and

responsib ilit ies

MBTA Bost on Land ing St at ion

12

MTA W if i and W ireless Service New York , NY

Sum m ary

— E xp an sion of w ireless voic e, d ata c om m un ic ation , an d w ifi servic es to m ore N Y M TA sub w ay station s

— B etter exp erien c e to c ustom ers an d ad d ed sec urity

— A d vertiser-sp on sored servic e free to sub w ay rid ers

Just i f icat ion

— P rovid in g a n ew an d in n ovative p assen ger b en efit

— S ign ific an t in volvem en t w ith th e p rivate sec tor

MTA W if i and W ireless Service New York , New York

13

Ident i f icat ion

— C h ose neutral h ost versus c onsortium of c arriers

In i t iat ion

— Transit W ireless p rop osed 50 p erc ent revenue sh are

— P lan to d esign, b uild and d ep loy system

Plann ing

— Internal resistanc e

— Financ ia l c risis in 20 0 8

— 7 p h ases used in agreem ent

Im p lem ent at ion

— D iffic ulties in und erground environm ent

— N egotiation w ith c arriers

Lessons Learned — App ly clearly-defined cont ract tha t sets expecta t ions and

boundaries of p roject — Create environm ent to solid ify rela t ionships betw een partners — Be invent ive as p roject unfolds — Ut ilize a ll levels of pub lic t ransporta t ion p rovider’s resources — Understand p rojects risks and how risks a re a lloca ted — Keep t ransparency betw een partners — Develop rela t ionships betw een both execut ive team s

MTA W if i and W ireless Service New York , New York

14

15

PSTA Direct Connect Pilot Program Pinel las Count y, Florida

Sum m ary — P S TA rem oved b uses from

zone

— B uses th at w ere rem oved c ost $150 K , p ilot p rogram c osts $40 K

— P S TA agreed to p ay h alf of taxi and U b er fare, up to $3 for p assengers

— U b er p rovid es tec h nology, geofenc e

— U b er and taxi p rovid e aggregated d ata eac h m onth

16

Iden t i f icat ion

— S tate legislature in form ed P S TA of U b er’s p artn ersh ip w ith U n iversity of Florid a

— P S TA ap p roac h ed U b er an d Lyft; U n ited Taxi ap p roac h ed P S TA ; Lyft reen gaged after p ub lic ity

In i t iat ion

— 3 m on th n egotiation ; C on trac t is id en tic al for a ll p arties

Plann ing

— P lan n in g p roc ess oc c urred w ith legal team s

Im p lem ent at ion

— U b er - h uge in c rease in rid ersh ip , P S TA – in c rease w eek b y w eek , P S TA sp en t $150 K on b us route vs. $40 K for p artn ersh ip


Lessons Learned — Cont ract crea ted equa l p laying field and appeased the polit ica l

part ies — Data collect has been useful; but w ould p refer m ore specific

da ta from Uber — Successful P3 – reached agreem ent w ith TNC — Opportunit ies – serve other parts of com m unity w ith lim ited

service and para t ransit — Uber’s m arket ing – huge help in ridership , but lack of t ransit

subsidy — Advice – take advantage of new technology and m ob ilit y

m anagers


17

18

Boulder RTD Depot Square Bus St at ion Boulder, Colorado, Colorado Sum m ary

— Issued D B R FP to fac ilitate p rivate d evelop m en t

— O w n ersh ip arran gem en t, an d p rivate p artn er d elivers afford ab le h ousin g an d sells p art of p rop erty to a h otel d evelop er

— P art of 16 0 -ac re, $55M m ixed -use red evelop m en t

Just i f icat ion — S m all join t d evelop m en t of a

b us station

— In itiated an d p ursued b y p rovid er an d C ity of B ould er

19

Iden t i f icat ion

— R TD an d C ity join tly ac q uired lan d in 20 0 4

— R FP released in 20 11; c h ose P ed ersen – afford ab le h ousin g

In i t iat ion

— S elec tion c om m ittee (3 C ity, 2 R TD ) m ad e a ll d ec ision s

Plann ing

— P ub lic -p ub lic -p rivate p artn ersh ip

Im p lem ent at ion

— P roc ess w as q uic k d ue to fun d in g exp irin g (C M A Q )

— P rivate foc uses sh ort-term ; p ub lic foc uses lon g-term

Boulder RTD Depot Square Bus St at ion Boulder, Colorado

Lessons Learned — Making decisions w as d ifficult – tw o pub lic part ies involved — RTD accep ts unsolicited p roposa l — Big success – m ore developm ent com ing to the area — Leadership cont inuit y – stakeholders need to support /com m it to

p roject — Sm all developm ent com pany best for p roject – la rge com pany

w ouldn’t be ab le to hand le d ichotom y betw een RTD and cit y — Transit com ponent w as sm all but intertw ined w ith a ll parts of

developm ent

Boulder RTD Depot Square Bus St at ion Boulder, Colorado

20

Find ings & B est P rac tic es


22

In terview ee w ere ask ed h ow c ritic al th e follow in g are to th e suc c ess of P 3s:

Elem ent s of Success: Find ings

Elements of Success Extremely Critical

Moderately Critical

Somewhat Critical Not Critical

Regular and continuous monitoring

Appropriate contract method

Understanding each entity’s desires/objectives

Communication between stakeholders

Staff competency

Consultant support

Leadership/project champions

Funding/financing

Enabling Legislation

Experience with past P3s

1. Id entify b oth a p ub lic and p rivate c h am p ion early in th e P 3 p roc ess and m ak e sure th ey are c om m unic ating.

2. Leverage assets th at th e p ub lic p artner p ossesses th at c annot b e found elsew h ere w h en struc turing th e P 3.

3. Transfer as m uc h financ ial risk to th e p rivate p artner as th e P 3 w ill a llow .

Best Pract ices Ident if ied

23

4. S et c lear and form al guid elines, ob jec tives, and p erform anc e targets th at m ust b e m et b y eac h p artner.

5 . D raw from your p rivate p artner’s ind ustry exp ertise in th e non-transit c entric asp ec ts of th e P 3, b eginning in th e early stages of th e p artnersh ip .

6 . S elec t th e ap p rop riate c ontrac t m eth od , ta ilored to th e uniq ue typ e of P 3.


24

7. E n gage in tern al staff m em b ers in tegral to th e suc c ess of th e P 3 on c e op eration al d urin g th e in itia l P 3 c on versation s w ith your p rivate p artn er.

8 . C reate a realistic p rojec t sc h ed ule b ased on th e lead tim e of p ub lic an d p rivate ap p rovals in volved in im p lem en tin g th e P 3.

9 . E stab lish a form al m eth od of c om m un ic ation an d p rojec t m on itorin g b etw een th e selec ted p oin ts of c on tac t from th e p ub lic and p rivate p artner d uring im p lem entation and th rough out th e op eration of th e P 3.


25

P3 Project S c reening C h ec k list


—Dynam ic, interact ive tool to assess in it ial viab ilit y of P3 —Prelim inary, qualitat ive screening p rocess —Evaluat ion quest ions define p roject and partnership —Follow -up quest ions docum ent details

P3 Project Screen ing Check l ist

27

—Project Defin it ion —Partnership Defin it ion —Init iat ion —Planning —Im plem entat ion —Benefits —Other Quest ions

P3 Project Screen ing Check l ist - Cat egories

28

P3 Project Screening Check l ist - Exam p le Boulder, Colorado

29


30

P3 Project Screening Check l ist Boulder, Colorado

31


32


33

St udy Mat er ials: h t t p ://w w w .t rb .org/Pub l icat ions/Blurbs/17590 1.aspx Nat han Macek Principal Invest igat or +1 20 2-370 -2912 Nathan.Macek@w sp.com El izabet h Neely Lead Researcher +1 20 2-370 -2930 Elizabeth.Neely@w sp.com El la Claney Researcher +1 20 2-370 -2924 Ella.Claney@w sp.com

Cont act In form at ion

34

http://www.trb.org/Publications/Blurbs/175901.aspx




Panelists Presentations

http://onlinepubs.trb.org/onlinepubs/webinars/170607.pdf

After the webinar, you will receive a follow-up email

containing a link to the recording



Today’s Participants

• Sharon Greene, HDR, [email protected]

• Sasha Page, IMG Rebel, [email protected] • Nate Macek, WSP, [email protected]




Get Involved with TRB • Getting involved is free! • Join a Standing Committee (http://bit.ly/2jYRrF6) • Become a Friend of a Committee

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– Create your account – Update your profile

97th TRB Annual Meeting: January 7-11, 2018

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