RV 2014: Value Capture: Myth or Reality? by Nadine Fogarty
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Transcript of RV 2014: Value Capture: Myth or Reality? by Nadine Fogarty
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VALUE CAPTURE STRATEGIES FOR TRANSIT
Nadine Fogarty Principal/Vice President Strategic Economics September 23, 2014
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Q: Value Capture: Myth or Reality? A: Yes.
§ Limited use of value capture to date
§ Success stories thus far: § Streetcars
§ Infill stations
§ Extensions to existing lines
§ Major multimodal projects
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Steps to Develop a Value Capture Strategy
1. Demonstrating Value
2. Identifying Tools
3. Estimating Revenues
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Demonstrating Value
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Property Value Benefits of BART San Francisco Bay Area, CA
BART Station Areas
2%
Land Area
BART Station Areas 13%
Assessed Property Value
EXAMPLE:
§ BART station areas generate $750 million each year in general property tax revenues for local governments; value in these areas is growing faster than the region as a whole
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BART’s Residential Property Value Impacts
§ BART contributes an estimated $17.3 billion in added property value to for-sale residential properties in Alameda, Contra Costa, and San Mateo Counties
15.0%
10.4%
7.4%
1.3%
10.7% 9.6%
5.4% 4.6%
Within 1/2 Mile 1/2 to 1 mile 1 to 2 miles 2 to 5 miles
BART Price Premium Condominiums Single Family
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Downtown/Riverfront Streetcar Project Sacramento and West Sacramento, CA
EXAMPLE:
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Estimated Benefits for Property Owners $1.3 Billion in Additional Property Values by 2035
Growth in Property Values Over Time Existing & New Development within 3 Block Area
(2013 dollars)
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
2013 2018 2023 2028 2033
Bill
ions
Baseline Streetcar Benefit (Midpoint)
Streetcar Opens
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Property Value Benefit by City
Streetcar Benefit to Property Value as of 2035 in 3 Block Area (2013 dollars)
$14M $159M
$560M
$567M
$0
$200
$400
$600
$800
West Sacramento Sacramento
Mill
ions
New Development
Existing Development
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Identifying Tools
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Value Capture Tools: The Devil is in the Details
§ Availability of tools varies from state to state
§ Who has the authority to implement tools, eligible transit uses, ability to issue bonds, etc. also differs
§ Tools are subject to changing laws and shifting legal interpretations
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Potential Central Subway Extension San Francisco, CA
EXAMPLE:
Mechanism Revenue Source Voting Requirements Nexus Requirement? Infrastructure Finance District (IFD)
Increases in revenues from the existing property tax rate (tax increment)
2/3 of property owners or registered voters
No
Mello-Roos Community Facilities District (CFD)
Additional property assessment
2/3 of property owners or registered voters
No
Special Assessment District
Additional assessment (usually of property)
50% plus one of property owners (weighted by amount)
Size of assessment must be proportional to “special benefit” received by property owners
Development Impact Fee
One-time fee on new development
None May only be used to mitigate impacts on transit system caused by the new development
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Estimating Revenues
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Estimated Value Capture Potential (Illustrative, not actual results)
$0
$200
$400
$600
Infrastructure Financing District
Community Facilities District
Special Assessment District
Mill
ions
Total Estimated Revenues (Current $) Estimated Financing
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Estimated Annual Revenues (Illustrative, not Actual Results)
Ann
ual R
even
ues
(Cur
rent
$)
Infrastructure Finance District
Community Facilities District
Special Assessment District
Source: Strategic Economics, 2014.
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Key Takeaways
§ “Making the case” is key for value capture strategies
§ Start with the value proposition for property owners in the specific context, then consider the tools
§ Be realistic about market strength and development potential – timing of revenues is key for financing up front improvements
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Thank you!