Webinar: https://connectdot.connectsolutions.com/prqohhj0bovz/
Value Capture
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Good afternoon lived, welcome to the advertising and highway sponsorship conference. At this time all participants are in a listen only mode. If you should need assistance turning today's conference, please press star followed by zero. It's my pleasure to turn the conference over to Pepper Santalucia.
Thank you Lori. Hello everyone. On behalf of the Federal Highway Administration, like to welcome you to today's webinar on Value Capture, Advertising & Naming Right , my name is Pepper Santalucia and I will be moderating today's webinar. As well as helping address any technical problems you may encounter. In the top left corner of the screen you will find the audio: information. Below that is the chat box you can use to submit questions to our presenters during the webinar. You can also ask questions with operator assistance over the phone and we will provide instructions about that at the appropriate time. If you do have technical difficulties during the webinar, please use the chat box to send a private message to me. You can do this by clicking on the button in the lower or upper right corner of the chat pod and selecting start chat with host. Our webinar will run until 3 PM Eastern time today and it will feature three presenters. Thay Bishop Senior Program Advisor with the Federal Highway Administration will feet speak first followed by Jessica Oh, highway sponsorship program director, at Minnesota D.O.T. And then we will hear from Evan Rowe director of revenue for the Massachusetts Bay Transportation Authority. We will allow an opportunity for questions at the end of each presentation. And we anticipate having time at the end of the webinar for additional Q and a. The speakers presentation slides will be available for download on the left side of the screen towards the end of the webinar. If you're interested in applying for professional development hours or credit, for your participation in today's webinar, we will provide information at the end of the webinar on how to obtain confirmation of your participation. Before we begin, I would like to ask participants in today's webinar to fill out the poll questions showing on the screen. These are simply to help us understand your affiliation, how many people are participating at your location, as well as your level of knowledge about the topic of today's webinar.
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Okay. Looks like we have pretty good participation in those polling questions. With that, I'm going to pull up the slides for Thay Bishop and turn the webinar over to her. It's all yours Thay.
Good afternoon and good morning to everyone. Today webinar. I am going to briefly discuss the every day count fifth round innovation. We refer to as EDC-5. I will provide you with an overview of Value Capture Strategies and why there is a need for supplemental revenue sources such as advertising, naming rights or highway sponsorships. We will have a couple of case studies and you will hear from the experts from the office of Minnesota Department of Transportation as well as the Massachusetts Bay Transportation Authority.
The Federal Highway Administration is currently implementing Every Day Count Fifth Round Innovation or EDC-5. EDC is a State–based model that identifies and rapidly deploys proven, yet underutilized innovations to shorten the project delivery process, enhance roadway safety, reduce traffic congestion, and improve environmental sustainability. EDC is two year cycles Federal Highway Administration works with state and local transportation agencies and industry stakeholders to identify a new collection of innovations to champion every two years. 10 Innovations were selected for EDC-5. Value Capture is one of those ten innovations. The EDC-5 Value Capture innovation promotes the value capture as part of funding and Financing strategies to provide reliable and sustainable transportation gap funding to accelerate project delivery, enhance safety, and save time & money.
So what is the Value Capture? Value capture refers to strategies used by public agencies to recover a portion of the value created from transportation infrastructure investment and directing those funds to pay for unfunded or new infrastructure projects or program. When the public sector made an investment in transportation improvements such as transit station or highway interchange, it creates value at the local level. The type of improvements that increase accessibility, enhance safety, reduced travel time can attract new development or economic activities, and increase nearby property values. The increased value accrues to properties near the transportation facility, while the public sector typically paid for the facility, the value accrues to the private property owners in the form of a windfall. Value Capture only seeks to recover a portion of the value accrued to the property owners and returned to the public sector to fund additional transportation projects.
The benefit of Value Capture can provide reliable and sustainable funding to supplement traditional funding sources and can help state & local agencies pay for transportation improvements. Can recover 50% of project cost and can also support multimodal project. Some techniques such as Transportation Utility Fees or Special Assessment can recover up to 100% of the project cost. Can be used in the wide range of settings including urban, suburban, and rural settings. It helps fund capital projects as well as operation and maintenance. Can also be used as promote efficient land use.
Value Capture Categories. We define Value Capture broadly to include land value capture, cost recovery, and revenue generate from publicly owned facilities. So, Land Value Capture is just a subset of Value Capture funding techniques that we defined here
We grouped value capture techniques into seven broad categories. Today, we cover the Advertising and Naming Right as well as Highway Sponsorships to offset operating and maintenance expenses and partnerships with private sector and communities to keep the road clean and free from littering.
This slide provides you the type of Value Capture Techniques under each category Why are the need for Advertising, Naming Right, or Sponsorships? So here is some of the reasons why the state and local agencies should be interested in consider all the revenue sources including the Value Capture strategy. The state and local are faced with the highway capacity and condition funding crisis. Every five miles of American urban interstate are congested. Cost the country about $160 billion annually in wasted time and fuel. Beyond the congestion problem, the nation highway system is reaching the end of useful lifecycle. One out of every five miles of highway pavement is in poor condition. 47,000 bridges in poor condition and 260,000 or 43% of the nation bridges are over 50 years old. According to the engineers, the majorities of the bridge in the country design life is about 50 years. Significant funding is needed for major rehabilitation or replacement. Currently $836 billion backlog of highway and bridge capital needs. Safety remain a concern at federal, State, and local. Specifically the pedestrian deaths on the US roads have increased 11% since 2015 and 6,000 in 2017. Additional funding is also needed for completed streets to accommodate and ensure safety for all transportation modes. So, don’t wait for Federal come to rescue. Because the major funding source for Federal-aid highway system comes from Highway trust fund and it is unsustainable. In order to keep the highway trust fund solvent. Every year since 2008, Congress has infused general fund money into the highway trust funds, a total of $143.6 billion has transferred to the Highway Trust Fund to date. The gap between revenues and spending continuing widening. According to Congressional Budget Office projection in January 2019, a future five-year reauthorization bill would need to cover a projected $68 billion shortfall, and a six-year bill would need to cover $89 billion shortfall. Keep in mind that the Federal fund only fund 1 million miles of the public roads capital and capital related improvement expenses, not operating and maintenance. The remaining of 3.2 million miles of the nation public roads improvement needs and operating and maintenance of 4.2 million miles will have to come from alternative funding sources. That is why we will continue to seek new funding sources to help pay for infrastructure needs. Value Capture is untap revenue sources available for State and local public agencies to help fund infrastructure needs and meet other objectives. Advertising, Naming Right, & Highway Sponsorships can help offset some of construction, operating & maintenance expenses. For transit, can be used to subsidized transit operating expenses to avoid fare hikes or service cuts The benefit is to offset some of the construction, maintenance and or operational costs by providing an opportunity for private organization and communities to increase name recognition. Can be products, services, or money contribution. Enhance safety by provide convenience and safety to the travel public to use cell phone such as sponsorship program at the rest areas as safe zone for cell phone. Provide opportunities to engage communities to participate in the sponsorship program, which is aimed at beautifying roads throughout the state, keep roads and highway clean and free-litter. And create community ownership of the highway system appearance for state road and bridges So what is advertising? Advertising is when the public agency sells advertising space or media to private company on transit bus and rail car fleet, bus shelters, rail stations, and roadway billboards. Provide opportunities to raise moderate sums of money help offset construction, operating and maintenance expenses. However, the public agency must weigh against the agency’s value and safety concerns and reputational risks. Advertising agreement may be related or unrelated to transportation. Please note, advertising on the public right-of-way is not allowed, except as provided in 23 USC, Rest Areas. For Examples: Ohio Department of Transportation raise as much as $8.7 million over a ten-year by letting State Farm advertise on highway patrol van. Georgia also letting State Farm advertising on Highway Emergency Response Operation Vehicle. Transit Advertising on vehicle fleets and in Transit's stations. According to the American Public Transit Association (APTA). Nationwide, advertising generates nearly a half-billion dollars a year for transit, to put ad revenue in perspective, transit fares generate $15 billion a year. Sales advertising space is not really complicated. It’s a very simple process. It typical facilitate through a partnership with a third-party vendor or contractor. Naming Right is a financial transaction and form of advertising whereby a corporation or other entity purchases the right to name a facility or event, typically for a defined period of time. This is common in transit and sport arena but on in highway. For transit, this is a way to generate revenue to subsidize for operating & Maintenance expense avoid fare hikes and service cuts. Typical naming rights are on transit stations or transit line. For examples: San Francisco-based Salesforce, a software company pays $110 million over 25 years for naming rights at a Transbay Transit Center and park connected to the firm’s skyscraper . The Detroit’s new streetcar was named the QLine, for Quicken Loans, for just $500,000 a year. The Southeastern Pennsylvania Transportation Authority (SEPTA) in Philadelphia earned a total of $9 million for five-year term when it agreed to change the name of couple transit stations. For City or County, Naming Right can be at multi-purpose arena, performing arts venue, or an athletic field. The term ranges from three to 20 years agreements This slide provides additional examples of Transit with Naming Rights. And this slide provides additional examples of Sport Stadium Naming Right. The city and county can use this fund to address complete streets and transportation improvements to ensure safety to all transportation modes. There is significant money on stadium naming right . The city and County's should consider to utilize the sports arena to generate revenue sources. In a lot of cases, the stadiums are owned by the athletic organization. The transit agency should be considered to negotiate to get a source of funding for the special event to provide additional services because it's typical when there is a special event, transit has to provide additional services and they are expensive. So you can see there is additional funding for the potential assistance. All right let's talk about highway sponsorships. That includes the adopt the highway, and sponsor highway. An innovative way to offset the costs of construction, operation and maintenance while providing enhanced services to the public. Both Adopt a Highway and Sponsor a Highway enable State Department of Transportation to save taxpayer money by allows the private corporations, communities and residents provide products, services, or money contributions. Sponsors and DOT both have the same objective, to keep roadways clean. This is a way for Sponsor companies give back to the community they live or located. So this is just the list of the highway sponsorship types. I'm not going to spend time on that. And here is another example where how the sponsorship at the rest area to provide a safe zone for the travel public in about eight states they repurpose the highway rest area is a safe zone for the traveler. And it sponsored by Geico. This was done through Travelers Marketing firm Here is the benefits. A Win-Win to State & Private Organizations. For the State and Local I mentioned earlier can raise moderate sums of money for construction, operating, and maintenance expenses to fund completed street improvements. This type of transactions are usually not complex, as they involve standard procurement processes. Generate new revenues with little public investment. Provide political opportunity for naming rights linked to economic benefits that these transactions create. For Private Organization and Communities. Adopt A Highway is an excellent way to promote the company brand through Corporate Social Responsibility. Provides way to place corporate name and logo on the busiest highways. Also, provides a clean environment, gives civic pride to the community, serves as a reminder not to litter and saves tax-payers money There is challenges that the public agency will have to be considered. The federal highway beautiful Federal Highway beautification act of 1965, the Act was intended to protect natural and scenic beauty along federal-aid highways by, among other things, controlling outdoor advertising in rural, scenic and agricultural areas. The public agency might unable to turn away controversial companies without violating the first amendment. The First Amendment prevents company being excluded from naming rights transaction because of its image. The Fourteenth Amendment prevents agency from rejecting bidder based on agency’s politics. There are also concerns over losing historic landmarks; Difficult navigate transport network when name changes. Naming rights can be difficult because it could be confusing for the traveling public with the name change. Let's look at the federal influence in the Value Capture Strategies. Typically in Value Capture, the federal highway administration has limited influence because the land policy is controlled at the local level. And so only when the federal funds that was used to purchase the land or involved in the project. The federal and the state will have direct influence. The revenue generated from the value capture is pretty much controlled at the local level. However, on the highway sponsorship, the federal highway administration had Policy Order on Sponsorships on April 2014. Requires DOT develop policy to govern sponsorship programs and must approved by Federal Highway Administration. Must be consistent with the current Manual on Uniform Traffic Control Devices guidelines. Allows sponsor of highway related services, products, or monetary contributions. For federal aid facilities, the sponsorship money must be used only for highway purposes. For non-Federal-aid facilities, the sponsorship money must be used in accordance with applicable State Law. Must comply with State and Federal laws prohibiting discrimination. Agreements should include provisions for the operations or maintenance of physical elements during the contractual term and removal after the agreement expires or the sponsor withdraws. Should include termination clause in agreement for safety concerns, interference with the free and safe flow of traffic, or a determination that the sponsorship agreement is not in the public interest. FHWA approves sponsorship agreements on Interstates But not to worry, the federal highway assembled a Value Capture implementation team. And you can see the team is very diverse expertise and experience and we certainly going to be able to navigate you through and provide you the assistance of what this requires. The team focuses on communication and outreach. We bring to you the awareness of Value Capture and its applicable to highway projects such as our webinar series and on call support. We provide technical assistance . we are implementing peer program which includes peer training and peer exchanges to those agencies interest in Value Capture Initiative. We partner with the leading state as well as the city, county and tribal government who has successfully implemented Value Capture into the system. We also have an expert consultant that provides technical assistance as well. The also serve the national clearinghouse using a web platform to provide you all the information and Value Capture. Keep in mind, this is evolving. We can only update as the information becomes available to us. You can help us because Value Capture implemented at the local level, there is some value technique implement at the state level. A lot of times we are not aware of what your local implement Value Capture in your organization. If your state, local implement Value Capture, we would love for you to share with us. We will work with you to make it available in order to learn from. With that, that concludes my presentation. I'm happy to answer questions. We do have a Value Capture team standing by to answer question. I will turn it over to Pepper. Thank you Thay. At this point, we have an opportunity for folks to ask questions of Thay about the opening presentation. Lori, could we open up the phone lines for our participants and give them the option to ask by phone. If you have a question at this time, please press star 1 undertake confront. If you are joining us by speakerphone, make sure your mute function is turned off. To allow the signal. Once again start 1 for questions and we will pause for just a moment. [ pause ] We do have one person typing in the chat pod. Give me a second to see if we have a question for you Thay. I don't see it. We could go ahead and move forward. There's a question from Louise Peter about the first amendment issue with naming rights. What if an agency has a naming rights policy that references advertising policy which prohibits something like marijuana? That depends on the state-by-state. By the way. If your state is legalized recreational marijuana. You can take the position that the federal level it is still illegal so you not allow. But I would say, there are quite a few states that had trouble with this. In Georgia, I can give you a good example in 2016, the Supreme Court ruled that the state had to allow the hate group to participate in the program. And there are several hate groups that wanted the right to participate on a similar program. Like Missouri, Kentucky and Oregon. I would say in Colorado, it's another good example where marijuana is legalized in that state. The cannabis business had the right to adopt the highway. So there's about 140 miles in Colorado that was sponsored by the cannabis. So you know, it varies by the states but it's very important to have the policy that you must clearly state your organization policy and value. So maybe you might have something to argue with. Okay. We have another question from Jack. He asks, can naming rights now be applied to federal aid bridges or highways? I don't think so. But John, are you on the line? I think he already mentioned is a question that might be better run to the federal highway administrator in the division office. I mentioned earlier, the federal highway has the field office in every single state and required state has to have the policy to govern the highway sponsorship. But I'm not sure about the naming rights. Okay. I mean there is still a major concern in the highway in terms of naming rights, meaning you sell the right to the private company to name that road and bridges. Can you imagine it would be so confusing for the traveling public if today it's AT&T bridges. In the maybe five year later it becomes Delta airline bridges. So for highway it's very difficult but for transit it's easy because if they name the station, it only impacts the station. For highway I haven't seen that. And certainly something that you might want to discuss with your local federal highway office as well as your state D.O.T. Okay. We do have some written responses from John who is a nimble of the federal highway Value Capture implementation team. John if you do want to speak, you could also press star 1 to signal the offer operator. We do have let's see -- any other questions? Lori, do we have any questions in the phone queue? No questions doesn't look like anyone has singled. Okay. All right. With that I think it would make sense for us to move on. I'm sorry. Maybe this is him. Please go ahead. Your line is open. Are you responding to a question or a comment? I'm not hearing any response there please go ahead. Okay. We will have additional opportunities for question and answer after each presentation. So with that I will turn the webinar over to Jessica. Please go ahead. Great. Thank you so much Pepper. Good afternoon everyone. My name is Jessica Oh and I'm the highway sponsorship director with the Minnesota Department of Transportation. I am a new D.O.T. professional. I come from a housing and community development background. I worked for a national nonprofit for 15 years in DC. I am pleased to share with you a new program we are developing in Minnesota based on a newer statute we think fits within this vision of Value Capture and more of that in kind or other resources being applied to help us improve our outcome. I'm pleased to join you today. I am situated within the office of land management. Within the [ Indiscernible ]. We were challenged by the Commissioner regarding the value of our right away. Out of some of these discussions came a new statute passed in 2017. With a vision of allowing the MnDOT to form direct agreements with business so civic organizations, and even individuals under certain circumstances. The goal of allowing folks to really enhance and maintain the right away in new and innovative ways. This is a shift for MnDOT. Typically for more comfortable and having the infrastructure in place to work with other government agencies. This is allowing us to work with folks in a much deeper way. The goal is to improve highway aesthetics. To support environment all sustainability. To leverage taxpayer dollars and outside resources. To have the ability to help us care for the right away. The direct statute also really allows us to focus on pollinator habitat. Creating the critical issue of pointer habitat it also covers the adopt a highway program. This is allowing us to shift to those innovative uses of right away. Our program currently is really in that phase where we're evaluating proof of concept in working with different types of partners on many types of projects. But are statute does allow for us to develop a Special Revenue Fund to really receive revenue from partnership activities and agreements. At this stage, we have not tested the portion of the [ Indiscernible ]. We will get into that later. We definitely are connected and subject to FHWA order 5160.1a that Thay mentioned. I believe the provision for the statute came out of a desire to be much more responsive to the communities that we serve across the state. With MnDOT I think 30 to 40% of the complaints we receive is of that aesthetic, maintenance nature. There's probably the occasional pothole comments that get static in this category. Generally we receive feedback around litter from vegetation, appearance of the structure. Those elements really do come through clearly within the public. We are seeking to be more responsive to some of those concerns. You know interestingly enough, we are seeking to do a deeper dive into how these issues impact the public and how they impact community. Communities. It became clear through various data sources, they do an omnibus survey that focuses on satisfaction with the roadside ticket was moderate. Not great or terrible. Folks really do you see a role for the D.O.T. to invest in improve pollinator habitat and play a role in really supporting pollinators. In addition, we have specific projects that have been deeper dives with low income communities of color on the appearance of the aesthetics and livability of our infrastructure. The appearance of the right away matters to communities. Whether it's your neighborhood, people care around the six. I think sometimes they get deemphasized given the critical nature of the maintenance backlog and the funding issues we sit we face. As D.O.T. professionals we approach this with a great degree of pragmatism. The public sees the a large amount of resources and have different expectations. Driving this element was helping us shift to the different types of agreements improving our response time with communities. Partners wanted to partner to enhance the right away. Looking at those potential revenue generating opportunities. Reducing liabilities and being more responsive to community requests. I think there's a couple of -- sorry. There's a couple compelling examples of aesthetic investment and partnerships public and private partnerships that are instructive for all of us with communities. Working with communities. One of these is a 501(c)(3) nonprofit in Chicago called Chicago Gateway Green. They maintain nearly 100 gardens around Chicago freeways and expressways with express goal of improving the aesthetics of Chicago. This nonprofit has worked with the D.O.T. to work through the details of access and species and all the maintenance capacity and those elements over the 20 year relationship. They operate freely within the right away installing and maintaining gardens. These gardens are underwritten primarily by corporate philanthropy. Corporate sponsors will pay for contributions towards the gardens that enhance the community and they receive sponsor acknowledgment signs as allowed by FHWA order. Is an innovative way to solve the problem. And certainly they believe they received good outcomes from improving the aesthetics. Another example, it looks like I'm slightly frozen. [ pause ]. Can you see the slides advancing? Obit. Okay. Another project that is compelling is a project that happened in Indianapolis called a greener welcome. This is a major effort by the D.O.T., city, keeping Indianapolis beautiful. Corporate philanthropy, in the way of Eli Lilly and neighborhood groups to do a six mile Gateway project on Interstate 70. They essentially shut I-70 down for a day and used 8000 volunteers to install more than 70,000 plants to really beautify a corridor and improve this critical first impressions of Indianapolis. 10 years from the project, they shared with me, you know they've entered into relationships with businesses adjacent to the interchanges for higher-level maintenance and care. They said around half of the interchanges are maintained in a way that's appropriate. That is the aesthetic advance and improvements. And reduction of maintenance liability. I think there's always challenges with ongoing maintenance piece. It was a way to really invest in a more beautiful entryway for the their city. I think these examples are pretty compelling around leveraging private resources to improve aesthetic outcomes. Okay. So I wanted to give you a little bit of an overview of where this program falls within our spectrum. MnDOT has many programs in areas that help us invest in our it's dedicate an community connection goals. A formal visual process as part of especially large construction prospects we have a program called community right said Lance get partnership program. It's existed for over 20 years. Is a program where MnDOT can reimburse municipalities with the cost of plant material to do enhancement projects. Soil landscape designers work closely with municipalities who have sort of aesthetic and aminal projects they would like to be. This could be Gateway or other enhancements. They pay for the installation and the ongoing maintenance. And MnDOT invests in the reimbursement of plant material. It's a program that's very popular that helps residents to get into the aesthetic Rome. We have and adopt a highway program that has nearly 4000 agreements community-based groups that do litter pickup across the state. We have other instruments we use such as limited use permits, cooperative agreements and other types of leases. And we have our new a highway sponsorship program. Looking for the partner to really propose and underwrite all activities really soup to nuts from concept and design to full installation and most important, maintenance. Maintenance, maintenance, the name of the game is to increase the capacity. And finally the center for community connections. Which is helping us really address the nontraditional requests and exciting partnership opportunities for us to improve how communities connect and how we work with the community and public spaces. So moving right along. The program over time hast kind of parsed into these project types these buckets of activities. Enhance landscaping. Sort of this could be huge rains of types adjacent to businesses, commercial districts and in important locations or special places. It could be simply enhanced maintenance activities. This higher-level maintenance and other elements we don't normally have the capacity to do with our resources. Many types of habitat projects. Supported reduction of invasive species. Support driving environments and habitats in place making something we are considering of how this relates to working with partners who want to do these types of enhancements in the right away. Finally, other special aesthetic initiatives which I will address later in the call. How can these actual highway sponsorship, legal agreements play out we have conceptualize them as highway sponsorship licenses. This many different ways we work with partners within this book as I mentioned, we are looking for the sponsor to propose the activities. And really the project could be the sponsor is the one proposing the activities. Managing the project from start to finish. It could be a project that involves volunteers for philanthropy. It could be they are working with employees. Again, not in certain environments where it would not be appropriate. There are instances where a gardening club is interested in doing an enhancement roadside enhancement, near a commercial district. There could be lots of opportunities for volunteers if the location is safe. It also could be the sponsor or business works with the phone profit partner who has experience in environmental restoration or habitat activities. There really is a whole range of multiply partner projects we seek to improve aesthetic or environmental outcomes. One of the most important elements for the partners is really the sponsor acknowledgment sign. This is Minnesota's sign. It's intended to evoke and celebrate the pride in our state. That really we all have a role in investing in beautiful public places and in our best foot forward as Minnesota. We are abiding by the regulations by the [ Indiscernible ]. Of the signs take President. When we can, acknowledging the investment of the public roadway is explicitly our goal. We have sort of the process there's been interesting ways of leveraging our vision many departments helping save and leverage resources. Some of these concepts are sort of and tested that we are thinking through how we can utilize our statute to improve outcomes in different environments. This could be how are you support scenic byways. This could be invasive planning place making and construction mitigation activities. Was a really thinking through how we can work with communities and artists to support businesses that are impacted by construction activities. Our statute allows us to work on trails and those trail organizations who perform important maintenance activities. We are thinking as well around bridge environments and areas where communities want to see investment for greater safety and crossing and other elements that support vibrant communities. These are couple of the things we are working through we also have other folks who have developed proposed doing nose wall maintenance. We have discussed how they can abide by our specs and regulations in hiring vendors, DBE and others to really support enhanced maintenance activities for noise well. A scenario we haven't tested but we are figuring out how can we leverage resources. It also could be complementary to our other rule traffic calming with Gateway landscaping, boulevard treatments and other interventions that could really help support rural communities. Thinking through how we support our wildlife vision. We have threatened turtle species that have high roadside mortality. How can we save turtles? We work with conservation to underwrite full animal exclusionary fencing. And things like interpretive panels with our byways. We see quite a bit of uses for how we can work with community partners. So really the benefits are super clear here. I think it's a clear way in my book to help us remove some of our maintenance liabilities. To improve partnership with communities and how we work with communities. It helps leverage our investments. In a we have the stories of plant material that has died due to lack of maintenance capacity. This is a way for us to really think proactively and strategically around how we engage partners that can really help protect how we use taxpayer dollars investing in. This can generate revenue but it's not quite as important as the partnerships we have with communities that support livability and quality of life. Creating and having spaces that people want to be and are comfortable. Plant material and art play a significant role in livability and quality of life that really has a direct line to healthy communities and creating spaces that people feel safe in biking and walking. I think there's quite a bit of connection too many elements here. For those who like to geek out on the fine print I wanted to share about the nuts and bolts of how we conceptualize the program. We really are aiming for a very ambitious -- I was told when I started in 90 days, nothing occurs in 90 days. That was an interesting learning experience for me. 90 days goes go quickly in the D.O.T. environment. Trying to really increase our responsiveness to those partners that want to enhance the right away. The process starts with a partner submitting a concept. At that stage, we sort of do a concept routing and say are we willing to entertain this concept from a safety, furniture construction impacts? All those elements. Are we willing to entertain it? If we are willing to entertain it, we provide the initial feedback to the partner. The partners required to submit a full proposal that has quite a bit of detail around their ability to observe statutes in various areas. The ability to do the maintenance, handle installation, how they can work safely in the right away and all those elements are required as part of the proposal. The proposal and all the various attachments are shared through a formal routing process. We make adjustments based on their plan into a formal highway sponsorship agreement with our chief counsel and legal team. We move into the execution phase and we will meet with the partners on an annual basis to really have a much higher level touch of are they meeting requirements? Being safe and are they really performing at the higher level of maintenance ability as we would expect. It should be ideally a higher touch process and what we do with our government partners. Reroute projects and take all the demands on the right-of-way very seriously. These projects of course standard D.O.T. process go through all the various teams of cultural review and the various types of vegetation and how we use herbicides and everything we can do to really ensure these groups who really have perhaps a limited understanding of our statutory responsibilities and elements, we can help them work safely with the right away. We have many folks who participate in this process but it's really typically handled through the permitting or planning function at the district level. My next three slides are a couple of examples of projects we have got moving in the hopper. The first is really a project with Anderson Corporation in Bayport, Minnesota. Highway 95. The city of Bayport requested the Corporation Anderson windows and doors, for the industrial facility, they wanted to see screening and landscaping to do a bit of mitigation with the industrial facility. In the important corridor. Anderson was happy to do the project from soup to nuts and it made sense to test this out of really doing the investment in the right-of-way. It has been a good project so far and an opportunity for us to partner you know both enhance the relationship with the city and partner with a corporate entity. There was an additional project that was much more maintenance focused in a suburban community in the Twin Cities. This is the area the developer is investing in an office park. They requested doing enhanced maintenance activity in the right away. This involves tree trimming and mowing and other general maintenance activities in this fairly big section of right away. And we brought our arborist out and spoke about tree species and went tree by tree and help educate them on some of our expectations around the care for vegetation and it led to an enhanced aesthetic environment aligned with the city's additional investment in this entire area of this community. The next project we are excited of that will happen in the summer and spring of next year. This is a large corridor that's in the Metro Twin Cities area but a bit on the outskirts heading towards more world communities. It's on a highway that has quite a bit of a culture in the corner. In this quarter, there's a nonprofit called the Hmong American farmers Association. HAFA is their academic they have 155 acre farm where members are given plots. One acre to five acre plots. And fhwa.dot.gov/innovation helps them bring products to market. HAFA came to MnDOT requesting the ability to install a significant pollinator project around 2015. Didn't have the statutory authority to allow them to do this project. When the statute was passed, I met with them and they said they still want to do the project to support the success of farms and vision. Another nonprofit partner was able to secure immediately resources to do a fairly large pollinator project. So we are really pleased at all the different partners that can be activated to do the pollinator project and to maintain it going forward. MnDOT as we've kind of dove deeper into these issues, we are trying to expand our knowledge base and think holistically about public and private partnerships with community connections and how we work with communities. I will be sharing a little bit of results of a recent market research project we did. It's underscoring the needs for these activities. We are pleased to be one of two states working with a pilot with Smart growth America to pilot embedding artists in residence at MnDOT. The title of our artist in residence is community vitality fellow. His role is to help us approach our mission differently and look at a fresh way to solve problems in a fresh way to take a look at our work. Excited about that program an opportunity helping us think through our partnership with communities perhaps differently. Finally, we are thinking through really updating our approach with litter. MnDOT hasn't done formal litter research since 1990. Celebrating the 30th anniversary of our adopt a highway program next year. It's a natural time for us to think around how to update and refresh our strategy around litter and communities given the increasing severity of you know mobile meth supplies with encampments issues. Plastics and waterways, abandon containers with groundwater. Our approach has become so much more rigorous with litter and those elements within the right away. We believe we can think through how we work with external partners on litter under the adopt a highway program and other opportunities through formal analysis. Just a couple. I couldn't resist sort of sharing digging out on this recent aesthetic market research project we did that really helped us ask additional questions from non-transportation folks. The research project was intended to help us ask tourism, economic development professionals, folks in alts and culture, government and nonprofit leaders. Really around how folks feel about the aesthetics of our system and the aesthetics and maintenance of our highway roadsides. A couple of interesting things came out about around you know some of it was a bit Captain obvious reporting for duty. Others the visual appearance of amenities as part of quality of life. Fix it that seriously. Of course pavement condition is number one but aesthetics really do matter the condition of our system, very much impacts the public and stakeholders view of whether the vitality of the community. Is there economic strength? Is it blighted, depressed, where the investment? Some of these things came through. Even the perception of safety. Some of these elements are definitely connected to the care and maintenance of our roadsides. We had some interesting moments around the world communities underscoring to us the need for long timelines. They are going to use a state highway project -- if our state highway project is to be catalytic for the rural community, they want to think through how they can work through aesthetic investment and finance and fund that and activate partners. We learned quite a bit around that especially in rural environments. Scenic byways in the importance of the scenic quality of roads to communities, to roll communities. There are huge opportunities with these aging roads to really evaluate the intention with view to do for vegetation removal to restore original view sheds an interesting things happening in places like Oregon. In general, the scenic elements are important part of tourism and economic development. There were exclusive discussions about gateways and many types and the ability for us to work with partners on activate Gateway. Restoration or Gateway improvement projects. Minnesotan certainly show a high preference for gorgeous pollinator habitat. We passed the research and it tells the story of the state in the prairie in our history. One of the things that came through loudly and clearly was really the importance of our transportation infrastructure reflecting a sense of place which was new to us. So. Thinking around how can we, how can we really elevate a sense of place in transportation infrastructure. It's a question we are evaluating moving forward. But many folks in partners and advocates we had CEOs in the room who emphasized the need for us to be sensitive to the human environment. And really the connection between plant material and art and those place making elements in creating environments that support healthy communities. And safe communities. It was underscored very clearly to us. And finally, the report challenge us to think more broadly opportunities to engage big essences and partnerships with arts and cultural organizations. To figure out how we can better work with those partners locally. So overall, as I get to the closing, the lessons we learned right off the bat, folks really want to see MnDOT have skin in the game. The projects we have resources are particularly compelling. In the future as we think through how we can leverage investments creating matching funds for community benefit investment. I think are quite compelling. We really community based organizations and nonprofits don't have the capacity to navigate our bureaucracy. So creating ways we can make it easy for them while still being rigorous with our statutory obligations I think is the challenge. But there's an opportunity there to streamline things. Certainly as we think through all these elements, there's many partnership opportunities for tourism and economic development the rural development organizations have shown a lot of interest in how this program can benefit their activities. Thinking through the connections with those industries and partners. Which I think is a natural connection to our byways, how we work with street environments. Some of those elements of the future activity areas for the program. And we think you know through these programs, there's an opportunity to articulate your values whether equity, or your vision for working with communities through how we work with Princess -- we think there may be opportunities to recommend of course you know DBE/TGB/Woman/VET-oned even though they are not spending taxpayer dollars on the projects. These are folks who know how to work safely in the right-of-way will underscoring our values in working with small businesses. Lots of opportunities to express and create a better partnership with communities. So some of our future activities moving forward, are to really figure out how we utilize the program as another tool in our toolbox to enhance community connections. To leverage scarce resources. Advance equity vision, support bike and pedestrian and those environments. Encourage multimodal avenues and infrastructure and then we're going out how folks how we partner with communities who want to see the use of the right-of-way's public space improving those environments and supporting vibrant communities. So with that, I will close out and pass it back to you all. Thank you for the opportunity to chair this program and I would like to discuss the program, I am happy to share any resources. Thank you Jessica. I haven't seen any questions in the chat pod. We certainly would welcome any comments or questions from the participants. Either in the chat pod or Lori, we can open up the phone line again and see if anyone wants to ask a question that way. Just a reminder to the audience, it is star 1 if you have a question. [ pause ] Jessica got a compliment from our friends in the bottom of. Thank you for that. Again, the slides will be available towards the end of the webinar for download and also placed on the federal highway website along with the webinar recording. I don't have any phone questions at this time. Okay. Thank you once again Jessica for a really interesting and comprehensive presentation. And now I would like to bring up Evan Rowe slide, the director of revenue at the Massachusetts Bay Transportation Authority. Evan, we look forward to hearing from you. Pepper thank you so much and Jessica thank you for it interesting and enlightening presentation. So I am Evan Rowe director revenue at the Massachusetts Bay Transportation Authority. Hopefully what we have here is useful for folks both on the highway and transit side. I think it skews towards the transit side. But I'm excited to go into a fund case study and take any questions from the group afterwards. So just to give background about the agency and the challenges we are facing. The principles we have tried to apply to the problem, I will walk you through the case study and provide takeaways. So for those who aren't familiar, the MBTA is Boston's region public transfer transit provider. We provide bus, commuter rail, light rail, ferry, paratransit service to 175 cities and towns in Massachusetts. Is the independent state agency. It was founded in 1964 but it goes back to the predecessor companies back to 1894 in some cases before. I mention that because as you all know, you are where you sit will in Fallon's where you stand on some of these questions around jurisdictions and capabilities. I bring that up a something that comes up a lot. The background for this program and a bunch of other work, around 2015 MBTA was facing major operating but budget deficits for the flight presented at a board meeting a few years back. Without auction, the operating budget would reach $400 million by fiscal year 20. Which would've led to difficult choices about curtailing service, reducing or increasing fares substantially. So before we went to do that, our leadership set the objective of achieving $100 million in operating on fair reviews by fiscal year 24. The program I will walk through is one of the pieces to get towards that historically, obviously advertising has been a big piece of this at the MBTA. I think it a lot of other transit around the country. I think the historical model has been advertising is seen on the side of a bus. Is signs within the fleet and on the side of the vehicles. Also in the stations. Is a reasonably consistent revenue stream. But these revenue streams that don't have a huge amount of upside potential. And I think is folks in the chat were noting, they are dependent on policy decisions as one example, alcohol is one that definitely contributes to the bottom line but there is state and municipalities might decide, for reasons of community standards, it might not be something they want to allow. That is a reasonable public policy decision but it does have a revenue implication. We want to get beyond this historical model and move into something more modern. Before we decided what the solution was, I have a sort of embarrassingly simple decision-making model here. It really tried to apply this approach where you first articulate your principles. Want to know what your principles are, then you can set the strategy. Then you implement the strategy but then the implementation will lead you back to different strategic choices. And want to note this at the beginning because I think in the public self sector, all too often, we have to operate in a crisis mentality and we go straight to implementation without having a chance to think through, what are the principles we are trying to apply here? In our case, I think the Value Capture framework is a good one but the way my team likes to talk about this is, creating shared value. And what does that mean? Its value for our customers. Value for the communities we serve.'s value obviously for the MBTA to provide service and deliver what our customers want. That's the first principle. If we are building a program that's going to last and endure, it needs to have shared value for the stakeholders otherwise it's not getting off the ground or it's going to get [ Indiscernible ]. The framework we tried to think through and treatises principle, sustainable stewardship. That is from my perspective providing the resources to run the service and also getting many in the door. As we think about assets, delivering assets that provide value for the MBTA and customers in long-term. We don't want to do something in three or five years will look like a blight on her system. We want to be encouraging sound investments that will have a return long after the program itself is complete. So moving quickly into the digital panel project this is a example of an underground passageway between two of our stations that really tightens up the corridor. With the principles in place that we just mentioned, we can move into the strategy. But we recognized advertising organizations are moving digital very quickly. Out of home advertising which is the subcategory of advertising transferred grows into. It's going nationally. It felt like print or radio which are declining formats. Out of home is growing because it's the kind of format people engage with. A lot of the growth is centered around digital formats because the reduce costs of implementing creative. And the fun and creative possibilities amongst brands with video and other sorts of engaging content. Digital allows for more flexibility in content obviously. It's much more than just a static picture you can do. But from the MBTA's perspective it allows for more flexibility of the information you provide to customers. We will get into some examples later in the presentation. The fact you can use the screens as a tool to grow service in addition for advertising, it really intrigued us. So we shoot a request for proposals in 2016 and initiated a contract with the vendor upfront media in 2016. The contract has a lot of components but it really at a simple level, it requires 700 digital panels at no cost to the T. It's a revenue share model so there's no requirement . Contracts have a commercial party provide a fixed amount to the public agency and that can lead to weird incentives where if there's a down year in advertising industry, they still have to make the same payment that salts our budget problems but it creates strange incentives between us and the contractor. We took on the revenue risk with them. But as a result, we get more of the upside and are incentives are aligned. In terms of the content on the panels, we have a third of the content on the panels and outfront has two thirds. There advertising focus but we made sure there was a really strong shared value component for our customers to provide information and other things they would find valuable. And towards the goal of sustainable stewardship. We own the panels at the end of the contract so we will be able to continue to make use of them after everything is complete. What have we learned through this process? This is a photo background of the insulation at an older station right by the Jan Hancock building. This won't come as a surprise to anyone the culture. The coordination of the 122-year-old system and managing the bureaucracy is difficult. It's working through multiple stakeholders is important because while it adds complexity to the project and there's more people to engage, you learn so much by engaging with them. I just listed a few of the departments that we have really worked to partner with through this project. You might not think that transit police would have's have anything to say but this. You learn across track visibility of stations really matters. You figure out how you can solve people's problems. The end of the day, the operational needs of the most important. We do this to serve the system and make it a better and more pleasant useful experience for customers and revenue to and generate revenue to run the system. In terms of results, when we take it back to the principles, I think we've delivered some really positive things for our customers overall pick in addition to Mehdi, the revenue has grown in the program over time. When we talk about the shared value to the customers, the left picture we have is an example of some real-time service information we can provide. It basically is providing information on winter storms. The use it to indicate diversion information if we do track work on the weekend. In emergency situations, it's incredibly valuable to people to instantly within real-time provide people with information about what is happening on the system. We also have a bunch of aboveground screens to provide us information. It also let you know before you go into the station what the level of service is and when the next train is coming. We've been able to roll out some examples of community content like a program we did with the Institute of contemporary arts here in Boston to feature the short video that wind developing IT and artist. These are the kinds of things that makes people's commutes a little more pleasant and enjoyable. From a sustainable stewardship concept will be seen growth in revenues and utilization of these boards. We are just over 600 right now and we will be at 700 by the end of the year we anticipate. That has led to great revenue growth as well as a stronger base, a stronger base of assets that we will have at the end of the contract. So taking it out further, what have we learned from the project and implementation more generally? One thing the more work you can do upfront the better the result. So you can prioritize what's most important. I think you will find new tools create new needs and desires. We're always I think one of the things you're in the happy position we are in, how do we get the most out of this great system we have? You will have you know a new thing come up and a lot of people want to use it. How can you build a set of processes and internal coordination to make it easy for folks to use? In terms of I think it's also important to think from a contractual standpoint. How you build in the flexibility to adjust to changing circumstances. Of me that's funding, being able to execute projects and take it manage of these things. On the left-hand side, right here you will see some layouts we've been doing to make some really nice, easy and legible bus and subway information screens aboveground. That wasn't something we can complete we envisioned at the beginning of the project. Because we built flexibility around funding, staffing, to do this work -- we're able to execute it and take advantage of the opportunity. There's also the contractual piece which I think is worth mentioning. You can't always predict the future. You don't 100% know everything that's going to happen ahead of time. How to have flexibility to do tests and pilots? And how are you going to respond to what you learn from this? One thing this project has led us to, it's understanding there may be value to the larger format. This is an example of the outdoor information panel above one of the garage doors one of the major commuter garages. On the left-hand side if you look at the number 74, that's the number of spaces available on the garage. On the right, that's when the next train is arriving. This is interesting commuter information. It helps people make a decision to get out of the cars and into the train. Are there other opportunities to do things like this? So the takeaways as I see them. I look forward to hearing your questions and sharing more details if you would like to. One of the principal value shared value provides the framework for Value Capture methods. Focusing on community and stakeholder needs as part of the overall project, we are able to capitalize on capture opportunities. Focusing on providing value makes the project implementation a lot easier. I didn't include them on the slides but, the digital panels we have installed in our stations, are routinely noted on Twitter and other formats as being really helpful for the customers. Building in flexibility allows projects to adapt to changing circumstances especially in dynamic industries like advertising. Where technology and strategy is changing, oftentimes every six months. So thinking flexibly and giving yourselves the resources to capitalize on is important. It's important to know your operating need and the needs of your organization. When you engage with the private sector, they are very good at coming up with the deal structures to solve specific problems but they can't read our minds. If your agency for example, has operating budget flexibility but is constrained on the capital side, you can build the RFP that encourages capital investment that can be repaid on the operating side. Conversely, if your capital rich and operating funding for, you can perhaps make sense for the agency to invest the capital money up front to get repaid with the greater revenue share on the back and. If you don't know what you want, you will never get there because industry is trying to respond to a lot of proposals and they can't read our minds. So with that, I'm happy to take any questions and thank you for letting me share about this project. Isand the left-hand side Audrey asked a question about who bears the cost of vandalism and the cost of repairs? This is completely on the vendor. They are responsible for the installation, maintenance, uptime and all of those things. Thank you Evan. I see another participant typing in the chat pod so we will give her a chance to pose her question. At the same time, Lori, we could open up the phone lines if anybody wants to ask a question by phone. Thank you. Just a reminder to the audience, it is star 1 if you have a question. [ pause ] Evan, while we are waiting for the next question, we did have the name naming rights listed in our title of our webinar. I wondered if you could say a little bit about the MBTA consideration of naming rights in the past if you are familiar with that. Absolutely. I think this is something that has come up periodically at the MBTA. There are definitely you know -- I think there are certainly agencies that have found a good deal of success with this program. I know Philadelphia has done a couple of these arrangements. Obviously with the transit center. You know I think often, naming rights specifically around stations is dependent on the extent of your system and the signage and things like that. We found at the MBTA, the replacement saw cost of signage alone can make it difficult for deals to be economically viable. Moreover, I think there's a fair amount of customer and convenience involved when you are renaming a system or a station people have grown accustomed to. That's not to say there's a price at which you couldn't do a deal. But I think the bar is fairly high. Something my team is really interested in exploring and starting to work on, something in the middle. Maybe not quite a station name. But something you could call a strategic partnership. I think the lines of what Jessica was saying and overall program, something short of a station name but an amenity a business or a community group could sponsor to just make the overall station experience better and get consideration that way. But I think I go back to the question of principle in the framework of the principal strategy implementation. If you're going to name the station with name changes. You want to be clear about how that fits in the overall framework you're thinking of. Thank you for that. Evan you can probably see as well as I can the comment from Louise Peter with the Santa Clara Valley Transportation Authority. Has the revenue from your digital program met or exceeded expectations? I would like to say I am never satisfied with the amount of revenue we are getting. We're always trying to deliver the best return we possibly can. That being said, we've seen substantial growth over the last couple of years on our program and the growth is being led by digital. We're seeing well over 10 or 15% animal growth for advertising each year. And that is definitely -- it's definitely been a big driver in terms of helping us meet targets around non-fair revenue growth. [ pause ] Okay thanks Evan. Another participant typing in the chat pod. Lori, if folks don't call in let us know. That's correct. I will let you know. [ pause ] Heavy run into any resistance with me test polities? That's a great question Amber. I think it's worth noting, unlike New York were New York City MTA not the commuter railroads but the city transit one solely within the city boundaries. MBTA even the subway and the bus runs in 50 different cities. The subway runs less than that but more than a dozen. 14 or 16 or 19. It's a great question. I would say we've primarily our initial rollout has been primarily focused with an on stations. That's basically within our own layouts and our own formats. I would say as we have rolled these out within our stations, people have come to us asking, could we put a panel up above the station entrance so we have better information about when the next train is coming? I would say we've actually had really good relationships in places we rolled these out because people see this as a customer amenity. Yes there's advertising on it. But which helps to pay for the system. But it also provides real value to the people writing the system I think at the end of the day, that's what a lot of meets is a polities are interested in, is better service. [ pause ] Thank you. I still see some activity in the chat pod so you'll wait and see if we have additional questions. [ pause ] So Louise asks, to the municipalities have digital signage ordinances that prohibit these displays? This is an issue we deal with. Right so again for our purposes, you're mostly talking about signs within the stations. Those don't apply there. The MBTA I mentioned at the beginning, but with six somewhere between a state agency and a municipality. We are exempt from local on that front. Obviously try to have a collaborative and constructive relationship with municipal partners. To date, it hasn't been an issue locating the screens outside on the streets. We also take great pains to locate them carefully and thoughtfully so you know we are continuing to conform to a all federal guidelines and make sure we are being good neighbors and good partners. [ pause ] The local context matter so much year and every city and state and agency is operating in a different environment. I know there's not necessarily an easy answer. I think what we've tried to do though, is go out of our way to have meetings and conversations and show people really what we are talking about and the value it provides to the people who live in the places where we are proposing to install these items. [ pause ] Okay thank you Evan. I don't see any more activity in the chat pod so I'm going to pull up a couple closing questions we have for our attendees today. I would also like to point out in the new layout, the presentations for you are available in the file share pod on the left side. I just noticed Evan's presentation is not there. I will upload it in just a second. As well as the going here. So folks will be able to download today's presentations and they will also be available on the federal highway website as well a recording of the webinar. So we appreciate your filling in the two poll questions we have on the screen right now. Would like to let you know if you are interested in applying for national development ours or education credits for today's webinar, you can request confirmation of your participation today by sending an email to Value Capture at D.O.T.gov. That's Value Capture all one word at D.O.T.gov. You can see the email address in the upper left corner of the screen. So we encourage you, if you want to see professional development credit, you send us a note. And I also have a set of nine evaluation questions that will allow you to provide feedback on the content of today's webinar. This will help us make improvements in the future webinars. So we meet the needs of the transportation community when it comes to Value Capture. Thay would you like to offer any closing remarks? Yes. I would like to think Jessica Oh the director of Highway sponsorship program for Minnesota Department of Transportation. And Evan Rowe, director of revenue Massachusetts Transportation Authority director. For being our presenters today. We appreciate the use of your valuable time and your innovative programs sharing with our participants today. We also want to thank the web conferencing experts who have provided support to our entire webinar series. I also want to thank you for Pepper and the Value Capture implementation team for standing by to answer the questions. I also wanted to thank all the participants joining us today. This is our final on while you capture webinar series. We will be back in early 2020. So we want to wish you all a great holiday season. Thank you and have a great afternoon. Thank you. Once again, that concludes today's conference. Thank you for joining us today. And thank you for using AT&T teleconference service you may now disconnect. [ Event Concluded ]
