Project Profile: Potomac Yard Metrorail Station

Potomac Yard Metrorail Station - City of Alexandria, Virginia

photo credit: WSP

Location

City of Alexandria, Virginia

Project Sponsor / Borrower

Washington Metropolitan Area Transit Authority (WMATA) / City of Alexandria, Virginia

Program Areas

Project FinanceValue Capture

Mode

Heavy Rail

Description

In the mid-1980s, the City of Alexandria, Virginia began a comprehensive planning effort to support the redevelopment of Potomac Yard, a 295-acre former rail yard near the Potomac River. In 2010, the largest landowner at Potomac Yard approached the City with a request to redevelop a retail shopping center into a 7.5 million square-foot transit-oriented town center including residential, retail, hotel, and office space. The City was well-positioned to negotiate for funding from the developer, securing an exaction of $10 per square foot in developer contributions for all development within ¼-mile of the proposed Potomac Yard Metrorail station on the WMATA heavy rail system's Blue and Yellow Lines. In return, the City approved a rezoning plan that would allow the conversion of the existing 600,000 square-foot "big-box" development into a 7.5 million square-foot mixed-use development. Assuming 4.9 million square-feet of gross floor area, this exaction translates into $49.0 million in developer contributions in 2010 dollars. The contribution is contingent upon selection of a Locally Preferred Alternative (LPA) station location that is nearest the development site.

At the outset of deliberations, the City reiterated a need to fund the station without tapping into the existing tax base and without any capital assistance from WMATA. Given these funding constraints, the City committed to enacting two special assessment districts in the study area: a high-density redevelopment district where a special assessment of $0.20 per $100.00 of assessed value would be levied on commercial properties; and a low-density tax district where a special assessment of $0.10 per $100.00 of assessed value would be levied on all properties. The high-density special assessment was established in 2011 and is currently funding the project's planning costs. The low-density special assessment will be established once the station opens. The City has also dedicated net new tax revenues to the project.

The City is pursuing additional funding for the project, with estimated alternative costs ranging from $209 million to $250 million. The Northern Virginia Transportation Authority (NVTA), which manages approximately $300 million in annual public funds for transportation projects designed to provide congestion relief in Northern Virginia, has been identified as a potential funding source for an estimated $70 million in regional funding.

The City plans to issue up to $275.0 million in general obligation bonds to finance the costs associated with the station. Debt service will be backed by a soft dedication of developer contributions, net new tax revenues, and special assessment revenues. In addition, the City has applied for project financing from the Virginia Transportation Infrastructure Bank. Depending on the selected alternative, developer contributions, with an estimated total of $49 million, will be used during the development ramp up period to cover the upfront gap in net new tax revenues and special assessment revenues.
Cost

Alternative costs range from $209 to $250 million

Funding Sources

Local

  • Net new tax revenue generated by Potomac Yard development (beyond taxes for City and school services)
  • Two special assessment districts

Other

  • Negotiated exactions (developer contributions) - $49 million, depending on selected alternative
In addition to secured sources, the City is pursuing $70 million in regional funding from NVTA.
Project Delivery / Contract Method

TBD

Private Partner None
Project Advisors / Consultants

TBD

Lenders

Virginia Transportation Infrastructure Bank (application pending)

Duration / Status

A draft EIS will be released for public review and comment in 2014. Project costs will be financed through the issuance of City general obligation bonds backed by a soft dedication of developer contributions, net new tax revenues, and special assessment revenues. In addition, the City has applied for project financing from the Virginia Transportation Infrastructure Bank. Federal approval is expected in late 2015, construction is expected to begin in early 2016, and the station is estimated to open in 2018.

Financial Status

TBD

Innovations
  • The City negotiated exactions for developer contributions in return for land rezoning, dedicated net new tax revenues, and created two special assessment districts to fund station project costs. Contingent upon selection of the nearest station location to the development site, developer contributions may amount to one of the largest equity investments for transit station infrastructure in the United States to date.
Related Links / Articles

Potomac Yard EIS Website

City of Alexandria Potomac Yard Metrorail Station Update

Potomac Yard Metrorail Station 2014 EIS Update

Washington Post Article - Alexandria Sights A 2018 Opening of Metro Station at Growing Potomac Yard

North Potomac Yard Small Area Plan

City of Alexandria Transportation Commission Minutes of September 17, 2014 Meeting

Contacts

Mark Jinks
Deputy City Manager, City of Alexandria
mark.jinks@alexandria.gov

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