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Ladies and gentlemen. Thank you for standing by. The conference will begin shortly.
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Ladies and gentlemen. Thank you for standing by. Welcome to the Value Capture strategies and Municipal Bonds and Debt conference call. At this time all participants are in listen only mode. Later we will conduct a Q&A session and instruction will be given at that time. If you should require assistance during the call, please press star and then zero. I would like to turn the call over to your host, Charity Coleman. Please go ahead.
Welcome everyone. On behalf of the Federal Highway Administration I would like to welcome everyone to today's exchange, the Value Capture strategies and Municipal Bonds and Debt webinar. My name is Charity Coleman, I am with the U.S. Department of Transportation and will facilitate today's webinar and help address any technical issues that you may have. As you can see on the screen, we have a great set of presenters today who share their experience and expertise on topics of value, sorry, the topic of strategy and municipal bonds. We will introduce them in more detail before each of them makes a presentation. For now I would like to just give a quick [ Indiscernible- muffled ]. In the top left-hand corner of the screen you see the audio call in information. In the lower left corner, the chat box, you use that to submit questions to presenters during the webinar. You can also ask questions by pressing star one on your phone. You will receive more instructions on that later. If you have any technical difficulties, please use the chat pod or window to send a quick and private message to me and start a private conversation with me by clicking on the button in the upper right corner of the chat pod and click on "start chat with host." We are planning to go until 3:00 p.m. today. We will field questions throughout today's presentation. And we will also have time at the end of the webinar for additional questions. The speaker's presentation slides will be available for download at the end of the webinar and there are many people who are unable to take part in today's webinar, so we are recording the session so people can listen to the webinar at a later time. The slides and recording of today's event will be posted on the FHWA website. If you're interested in applying for professional development hours or credits for your participation in today's webinar, we will provide affirmation at the end of the webinar and how to obtain confirmation of the presentation. Before we begin, I would like to ask the participants in today's webinar to fill out a poll. It is very quick. We would just like to know, what type of organization do you work with? And your options are federal agency, state DOT, tribal government, MPO/RPO, local government, transit agency, economic development/chamber of commerce, or other. We will give you a moment or two to respond to the poll.
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Okay, so we will end the poll. And thanks for answering the questions. Before we begin the webinar I would like to introduce our moderator and speaker, Sasha Page. Sasha is a Principal at Rebel Group Americas, from Washington, D.C. He has over two decades of experience advising and infrastructure finance, project development and public private partnership. He has served as a bond underwriter and financial advisor to a variety of different agencies. Including those utilizing Value Capture financing. So for the FHWA Value Capture program, he co-authored the limitation manual and related publications. Sasha, before you introduce the next speaker, what is your reaction to the poll results?
Thank you, Charity. It seems like we have a nice mix of federal agency, state DOT and especially MPO and local governments. They be about 40% of the group are focused on local issues. Than a smattering of folks from other backgrounds. We appreciate having this versatile perspective in this webinar. [ Pause ]
Okay. Great. I am going to start here. So a very welcome to you to attend this webinar on Value Capture strategies and financing. As Charity has said, we look forward to providing you a foundation on how projects can be financed using Value Capture revenues. We plan to go into detail into some of the financial terms, and talk about real estate risks, which are important to this. We hope by the end of this webinar and the resources, that people share, you will have a clear idea of the key issues and risks you need to be aware of, should you become involved in a Value Capture financing. We also hope you will understand the risks inherent in the real estate market and how you can mitigate these risks to ensure smooth anything. As in the past, please feel free to put your questions in the chat box on the lower left. We will do our best to respond to them digitally, or after the session. Or maybe even during the session. And as always we encourage participants to respond to their colleagues if they have the answers to some questions. And as the operator mentioned, if you press star zero on your phone you can also asked the operator to pose questions. So I am very pleased to have an experienced group of analysts with me, including Rick Rosenberg, managing Principal of Development Planning and Financing Group, based in the Texas region. In his capacity Rick provides analysis, funding services in both the project and -- level, with a particular focus with "u" public/private partnerships, as we will discuss today. With munication skills, Rick has over 40 years and extensive real estate planning experience. We will also be joined by Nathan Betnum, with over 40 years of expense as well in public finance. With the last 20 years focused on tax increment financing. Recently retired as managing director at -- a national investment bank. He has served as a lead banker in several billion dollars of bond financing from you estate projects in 12 states and the District of Columbia. I am also joined by my colleague, Christine Shepherd, senior consultant at Rebel Group Americas. She developed the [ Indiscernible- muffled ] with myself and the FHWA webinar series. Previously she was in the World Bank -- department advising emerging policies to attract public investors to if instructor projects. Next slide, please. We will go through roughly eight sections today. And hopefully this will be a strong nation. As I have said, to Value Capture financing. We will look at the link between value capture and financing, we will provide some basic bond definitions. I will take you through the bond issuance process, and we will show you how financing works in two major value capturing finance. Then we will discuss the markets and how they react to value capture financings. And finally we will talk about some structural considerations, providing a checklist of what you should be aware of when you are carrying out Value Capture financing. If we have time we will go through two cases, which would round out your basic education on this topic. Next slide, please. So, I think this chart describes this very well. The issue for many public agencies, developers of new projects, is you have a project that starts on day one, and this project here, is one that needs funding today. But the cash flows are only available over a period of time. In addition, they need traditional funding sources, like Deaf taxes, property taxes, sales taxes, not adequate to pay for needed infrastructure. So, what do sponsors do? They make a layup project, they may be forced to phase it in or may have value captured methods, or sometimes all of the project. Again as this chart shows, even with value capture funding, the resources often occur over many years. So that also creates a challenge as well. In addition, as we will talk about in early years, Value Capture funding is a challenge. May be a challenge because of volatility and uncertainty in the real estate market. So financing allows us to leverage those future revenues, sometimes uncertain, to today and make them useful to build projects today. Next slide, please. So I will talk about some of the key, and excite as well, the key value capture tools. As we discussed in the Value Capture implementation manual, roughly six major categories of mechanisms of Value Capture mechanisms, develop contributions, special taxes, tax increment financing, joint development, special joint utility fees, and naming rights. Ones that we will focus on today are really special taxes and fees, notably special assessment districts or S a D. Nothing sad about them. And sale tax district, as well as tax increment financing. That is what we will focus on. And excite, please. Know first talking about special assessment districts, fees charged to property owners within a district whose properties are primary and fisheries of infrastructure improvements. Sometimes they are known as -- districts or public improvement districts as Rick will discuss later today. They could be used to pay for roads and transit, and the bonds that are issued based on these often fund 50% to 100% of the necessary if a structure. The vertical infrastructure, the vertical project assets are financed by other sources. Not only transportation can be funded through the special assessments, but also water and sewer systems and other utilities. The fees are usually assessed based on some type of real estate evaluations. Including property value, parcel size, street frontage and use. But they are typically not property taxes. And the fees also can be tiered, as you see in the schematic here. The properties closer to the improvement, the road in the middle, experienced greater benefits than those that are farther away. Sort of a tiered set of phases. Next slide, please. The second type of mechanism is sales tax districts, what is used. But also important to understand. These are sales taxes that are levied, specific district, specific area, as you sort of see in this chart here. This is a map of the Kansas city streetcar, within a certain zone, the streetcar additional sales taxes were levied, to help with financing of that roughly $100 million project. These are somewhat different than the county-based sale tax financing, very typical for large transportation and new transit projects. These have various names, in Kansas they are known as transportation development districts, and Missouri as well. Next slide, please. The other technique we will talk about and really the focus of this is TIF, tax increment finances. These are incremental property taxes that are captured in a district the fund and finance infrastructure that benefits that district, as shown in the yellow triangle there in that schematic. Also known as tax allocation districts in Georgia or TRZ, transportation reinvestment zones in Texas and other places. And they are used for transit and roads. The challenge for TIF and many real estate projects techniques, especially for TIF, is the early year revenue uncertainty. As you can expect, the TIF start at a low level. And maybe sometimes below the debt service, which it is supposed to support. There is inherent volatility in TIF, since they are incremental and they depend on assessed growth. At the assessed value of the properties go down, by say 5%, that will disproportionally affect the TIF. So therefore, because of the uncertainty, it is very common to establish TIF in conjunction with more creditworthy funding sources, such as a -- from the city, Navy sales tax or a special assessment, as we mentioned. Let's go to the next slide. On this slide, this describes the interaction between a special assessment district, and a TIF. In a TIF, as the previous schematic showed, the base taxes still go to the municipality, but in the kind of purple graph showing, or figure line shows, TIF grows over a period of time. Uncertainty in the early years, and then eventually they will cover the expected debt service, which is in the red line. The uncertainty of course is the early years, startup years. You may not be able to fund the debt service that is acquired and then that is where special assessments come in, as pointed out there in the yellow arrow. Special assessments for many projects are established but not necessarily levied. They are only levied in the case that TIF are not adequate. And then as TIF are adequate, they offset the special assessments. That is very common. You will see two cases which should demonstrate how that works and how it has actually worked in real life, so to speak. That is I think a key concept you want to keep here. We will come back to this model, if you will, in the next slides. Okay, so I think we will stop here. And we will go to Charity and do a small pole.
Okay, so we have a couple of questions here. And the first one is, a key reason to use financing in conjunction with Value Capture for your project is? And you can select all that apply. And then you can also select all that is true. So you have several options there.
[ Poll being conducted ]
And we will give you a couple more moments to respond to the poll question. Okay. I am going to go ahead and end the poll.
Okay. Guys, thank you for responding to that. Yes, Value Capture will provide funding in the future, though your project needs money now. And, also, you have, C is also right, you have predicted stable value capture revenues no other good options to pay for the building project now. It is not really related to whether you do a Value Capture finance or not, that is not really the answer that we were looking for. And a number two, we have not really talked much about this, but yes, revenue bonds are riskier than Geo bonds and really the finance are a bond, and secured by the net operation revenue. And as I mentioned the future taxes or future assessment revenue, that is related to the district. So that is an see, the answers that we were looking for. -- So that is A and C. The answers we were looking for. Thank you. Now with my colleague, Christine, we will talk about specific bond types, specific instruments. Christine?
Thank you, Sasha. So as Sasha has just gone over the goal here is to leverage Value Capture sources for financing. Because using the Value Capture funding sources can enable the project to secure the financing needed to build the project today. This matrix we have here on the sly details about the various funding sources in Orange, as well as the financing instrument in blue. You will see be Value Capture discussed such as TIF and special taxes, are found in the innovative and indirect quadrant with the red circle over them. Of course we do not want to ignore traditional sources such as tolls, such as grants, these are often used in commendation with Value Capture funding sources to secure funding. And finally, the instruments used in conjunction with Value Capture funding are those that are found in the red box. These are non-rated bonds, and instruments, which are the primary finance instruments used in Value Capture financing. And sometimes -- tax bonds are used as well. So each financing instrument has different characteristics that reflect its risks and regulation. I will give a quick overview of what we have here and then I will hand it off to Nate, who will give more detail about tax-exempt bonds. So tax-exempt bonds, here are the things to know that the primary benefits go to the retail investor who have taxable income, or who have bought mutual funds. At the interest paid on these tax-exempt on the federal and often state level. Further, these bonds can be publicly offered, meaning that they are sold to the general investing public, or a select group of investors. Note that all the bonds we discussed today are called revenue bonds, they are bond secured by relative --, a broader base of revenue such as property taxes. Another segment of financing instruments is innovative financing. And as we call it here, it refers to the federal lending program, as well as state infrastructure banks. With these, they come with various eligibility roles, that is one thing to note about them. And on the positive, they often offer longer maturity, lower cost, and repayment flexibility, which means they can be a good resource. On the negative though they often take a longer time to market. In addition to these two instruments discussed, Value Capture finance will often provide equity, which comes from the developer and has higher terms of requirement. And with that overview I want to hand it over to Nate. Can you talk more about non-graded value capture bonds?
Sure. First of all, for a bond to be tax-exempt, and to be issued, it needs to be issued by a government entity. And it needs to be, the purpose has to be for a public use. In this case, public infrastructure. And in those cases, a bond can either be rated or non-rated. As Christine said. But if it is, in either case, it is likely to be issued on the public markets, meaning that they are subject to FCC regulations, with full disclosure and ongoing, continuing disclosure that goes over the Internet. And these bonds will be purchased by an investment banker, and then re-authored to the ultimate buyer. Private placements on the other hand, are just directly placed with an investor. They don't go through an investment banker and they are less liquid, they don't have as much in the way of disclosure requirements. With that, I will turn it back to Christine.
Great, thank you, Nate. So, next we will move on to discuss, sorry, the poll. We had the poll a bit early but everyone performed well. We will discuss the bond issuance process. So here we present a somewhat stylized process for issuing a bond for a Value Capture project. Hours that we have presented here starts with identifying the project and the startup construction. So this entails several steps and has numerous stakeholders involved. The key stakeholders are the public agency, the city or state government, they will issue the bond. The developer or private-sector adjustment that will develop the project. The community, impacted by the project. The project's technical advisors, engineers and environmental assessors and various others who will help to find the project. The financial advisors who will and find -- advise with all matters with the bond issuance. They have a fiduciary duty to the issuer. The rating agency, providing existing obligation if the bond is rated. And the bond counsel, they will provide legal advice based on state, local registration. -- Legislation. And finally, the underwriter or the security that will market the bond, set prices and sell the bond to investors. So I will walk through each step in a little more detail. The first step is to identify a project. And projects may be identified by public agencies, developers, and or community. The goal is to identify projects that meet the needs and ambitions. The project may be identified in long-term planning processes or they may be identified in a shorter period as a result of local economic changes, such as the shutdown of a major factory or institution. As indicated with the shutdown of the GM plant in Atlanta, which is the location of the assembly project, the case that Rick will edify later. This could happen in a matter of months or it could take a matter of years. Once the project has been identified, the second step is to plan for the project. The key stakeholders involved in this will be the public agency, developer, and local community. And as part of this step, the public agency or developer will want to obtain site control, this means they will want to obtain some sort of rights to acquire or use the site to be developed for the project. Furthermore, during this step it might be the time to engage the financial advisor to start sketching out initial financing plan. Rick, I would like to call on you so maybe you can share your experience in working with developers to help plan and shape projects, so they have the best chances winning both community approval and financing.
To I very much, Christine. As everyone is typically aware, all development projects require the need to get local approval for your zoning or entitlement process. When you are dealing with a Value Capture type project, it should involve a public/private partnership and a need for that process gets expanded. And it needs a multitude of different participants, and you are not just demonstrating the validity of the project, you also are showing the overall commitment, discussing the overall community benefits that the general public will see from the public's involvement from the city, county or state's involvement in the particular transaction. Many jurisdictions have specific policies that outline the benefits they are looking for. That makes it a little bit easier for the developer to try to tailor their project. At the same time, if there are nice benefits, and it become sort of a give-and-take between the public and private. A good deal of effort by the developer and their team, is educating the public to reinforce that there is no typical direct financial risk to the jurisdiction and that there are the projected benefits. It could be a time-consuming and expensive process, but it does need to get done because it does require public approval. At many levels. Christine?
Thank you. Once, the next step, that will be to establish the financing program for the project. And this does involve conducting various studies to -- project parameters, to understand the funding needs, driven by the project's design and various repayment sources. As part of this, for example, the project team will examine if Value Capture sources are possible. And what Value Capture sources you need, such as special assessment or TIF district, or combination of those. This also will be when the appointment of the underwriter and the bound -- bond counsel will meet. And then also in this step, stakeholder outreach is a key ingredient underscored by Rick right now. It is important to not only include advisors but the community in shaping the project. So the next step, if the Value Capture solution is chosen, there may be a need to carry out further studies and these are evaluations at the assessed value for the TIF or district. As part of this process, the team will seek the structure of the project and repayment sources is effective from the community and rating agency, with regards to the agency's framework. In regards to credits. Once a has been set the public agency will go ahead to obtain legislative approval and issuing the debt in the respective market. I would like to hand it over to Nate right now. Nate, can you offer insights for the process of financial program to the financial?
Sure. The primary document by which the bonds are authored, is an offering statement and this document can be in some cases, over 1000 pages. Includes the terms of the bond issue, the description of the project, the developer, the local community, it will include an appraisal, market studies, projections, an engineers report, and at least a summary of all of the legal documents. And the investment banking firm would then send out this document to potential investors, and particularly if it is a new project it is going to almost exclusively go to institutional investors, particularly tax-exempt mutual funds. There would then be likely a site visit, and/or a conference call. Then when, after a week or two, the investment banker, after concurring, getting concurrence with the, from the financial advisor, the local government and the developer, they would go out to the investors and provide a tentative interest rate or series of interest rates. They would then be a -- where investors can say yes I am in or I am not in. And then assuming that there is enough interest in the bonds for the investment banker to say yes, we will go ahead and underwrite that issue, at that price, at that interest rates. They will go back to the issuer and tell them the deal is done. Or if there is not enough interest, then they raise the interest rates. Or if there is an overabundance of interest, they will lower the interest rates. And then sign a bond purchase agreement. And then a few weeks later close the bonds. The investment banking firm will be the one that buys the bond, and then redistributes them to the investors. Christine?
Great. Thank you, Nate. Once that process happens, and you have the money, the project can begin construction and throughout, we will continue to hold dialogue in the community. So I think I will send it off to my colleague, Sasha, now. [ Pause ]
Sasha?
Sorry about that. Folks, thank you Christine and Nate. I had myself on mute. We want to just give a chance now if people have any questions, feel free to submit the comments and questions in the chat box in the lower left. Or any comments you may have. An operator, please review the telephone instructions, if people want to call in by the cell phone or regular phone.
Sure. Ladies entitlement, if you wish to ask a question, please press *1 on your telephone, a voice prompt will indicate when your line has been opened. You may remove yourself from the queue at any time by pressing *2, and if using speakerphone, please pick up the handset before pressing any corresponding digits. Once again, press *1 at this time.
Okay. I will read a couple of these questions, Courtney has a question. Are there methodologies to project the potential revenue from a TIF zone or a SAD area? The quick answer is yes. Maybe I will ask my colleague, Rick, if you have comments on that. I know you will talk soon about assembly in which there are methodology used for projections, whether you could say a couple words. Rick?
Thank you, Sasha. Very critical to the exposure of information on any bond issue, the projected economics of the transition. Typically the jurisdictions require an independent third-party market study and appraisal. To estimate what will be the projected TIF revenues, the projected sources of revenue to cover any special assessments. So generally you have a third party market appraisal.
Great. Thank you. Let me ask another question. Nate. Needs, you described the underwriting process with the underwriter playing a key role in negotiating bonds. Any other kinds of bonds that are sold, maybe I think it is called competitive, can you describe differences between those and which apply to Value Capture finance? Nate, you may be on mute.
I am sorry. I was on mute. Yes. General obligation bonds are typically sold through a competitive process. This type of bond is sold on a negotiated basis, almost exclusively. And even many general legation bonds are now sold on a negotiated basis, where on a competitive basis, the investors or different investment banking firms, will submit bids on the bonds. But they will not know if they have buyers for it on a negotiated basis, the investigative banking firm can test the market first and see what demand there is. And therefore not have as big of a risk factor in coming up with the final pricing. So, very often a negotiated price will be lower, the rate will be lower again on a competitive basis. And that is particularly the case where, for a deal like the one they are talking about here, where there is more risk than on a general obligation bond.
Okay. Thank you.
Sasha?
Yes. Thanks, Nate. I think we will now return to the presentation and of course put any other questions you have in the box and we will try to address those. I will turn to Rick who will give us the first of the two nature case studies on assembly. Rick?
Thank you. Excuse me. As was mentioned earlier, General Motors had a very large and active manufacturing facility in Doraville, Georgia, a suburb of Atlanta. In 2008 they closed the facility, and eventually the property became up for sale and a local developer in Atlanta acquired it in anticipation of use of a redevelopment of a mixed used development. The initial development included a large automobile dealership and new filmmaking studio, taking care of George's major presence in the making in the USA. Other plans included future commercial, residential entertainment. One of the key attractions to the location was it was adjacent across the highway from an existing local transit station in Atlanta and near major highways. It was needed because of the infrastructure, it was agreed a public/private partnership between the city of Doraville, Georgia, and the development, would require. A key objective has shown on the side in front of you, is that the station was convenient, it was not directly walkable from the site and you had to cross over a highway. Experiences with other mixed-use projects in Atlanta and elsewhere, focusing on the facts that tenants and users have a direct connection. To do that it was also estimated that to construct the direct election would be in excess of $50 million. That was the first part of over the $100 million of a structure needed for the project. In order to put together the financing plan to generate the money, to create the connection, to the MARTA, one thing that we looked at, if you look on the next slide, to make sure that it was an economically viable area. Doraville had a history of experience of collecting taxes, not a major issue in that area. And therefore, Doraville could be a good sponsor of this type of financing. Next slide, please. As you can imagine, with a project of this scope we had a very complex structure. We utilized a number of different mechanisms. Sasha mentioned earlier the TIF, and in Georgia it is called tax allocation district. There was an agreement between Doraville and the county, to reimburse the developer for incremental taxes generated by the project. Also Georgia utilizes the C I.D., a community improvement district, for special assessment district. Unique to Georgia compared to other states, this is only usable for commercial projects and not residential and commercial. It is limited in the use for the entire project. In expectations of having that direct connection to MARTA, Serta mattresses agreed to move there corporate headquarters to the site, and there was an agreement to allow them to make a payment to fund the infrastructure, rather than taxes to the community. And finally, when you are relying upon tax incremental financing is a big part of your financing, Sasha mentioned earlier that during the early years, there is the largest risk. The values have not yet been created. So there was an agreement between the developer and the city and project team to create a special servicing district. It had not been done before in Georgia and basically the special services district, they -- to the entire project. Not a guarantee to the city and either way but each year there would be a calculation into what would be generated in the special district would make up with the developer. So we had a 35% tax abatement, we had, the goal was basically the special services, unlimited tax obligation. They have to pay whatever is necessary for the debt service, to ensure that we cover the amount of debt in a 1.1 to 1 level. It was an underwritten deal, but negotiated this one particular investor, who was aggressive on some terms. With higher interest rates but more dollars made available. So in order to, next slide, please, one thing that we needed to point out to the investor is be sensitivity analysis as to what happens under various cases. We created four different operating scenarios. Scenario A, base scenario, which would be the development of the project. Scenario B, no inflation over the course of development of project. Scenario C, when we built the first phase. And then scenario D, so we only built the part that was contracted in phase 1. You can see if you look at the line called special services district taxes, that the scenario C and D, are the downside scenarios. Under that scenario they would [ Indiscernible- muffled ] to make up different, to get to the 4.9 million of the annual debt service requirements. All of this information is disclosed in the offering statement. It was disclosed in the offering statement and it was vetted by the entire team to make sure that people are in agreement as to the location. If you go to the next slide, we will sort of show that visual gaps that could occur. You know, showing the worst-case scenario. And all of the red is related to special services, that has to be paid [ Indiscernible- muffled ] under the scenario. With that I will tell you without a doubt, without the special services district, this project would not have a chance. As a result of that, the connection that was already built, Serta moved their headquarters to the site, unfortunately subsequent to that initial success, the pandemic has had an impact, COVID has had an impact on projects with this major. One of the requirements that is critical in any tax-exempt bond scenario is that there is an ongoing continuing disclosure for the developer and municipality. Typically, very often quarterly, and no less than the annual, you have to tell the investors and public, because there is a public document, what is going on in the project. In 2020, assembly at the developer identified that because of the pandemic, there were going to be a shortfall on some other financing mechanisms and that there was going to be a call on the special services district for $2.8 million. Not that anybody was at fault, not a problem in that regard. It was public information that the developer needed to come up with and pay the additional $2.8 million. Hopefully, as we get through COVID, this will be eliminated as future developments continue on pace. With that I will turn it back to Sasha.
Rick, stay there right now. I want to pose a question to you.
Yeah?
I will actually pose Ken Starr's question. Who is typically doing analysis and how much likability is there in terms of how it can be levied on? And does it skew more toward sidewalks and street improvements and other direct, measurable benefits? Maybe you can take a crack at that. Please.
Sure. Specialist, in this case, the SSD had unlimited tax levy, whatever tax rate was needed, to make sure there was enough money to pay the debt. There was an agreement, the tax rate. But a special assessment district, the goal is to -- your financial public structure, streets, landscaping, public parks, nothing private can be financed. Otherwise you would lose your tax-exempt status. The typical way that we work for developers across the country, I am special assessment district, we look at the ultimate expected buildout of the project. Identify how much the user, whether a homeowner or business, would be willing to pay in annual taxes, including taxes of the city, county, school district and the like, plus additional burden for the assessments. And identified that we have maximized the assessments based on the estimated buildout value and marketable total tax rate. That is our job as the financial advisor to the developer, to propose those assessment occupations. It is typically documented in the form on the report will vary by state. In Georgia it was the assessment methodology report where you layout all costs that are refunded and how you can delete the assessments, how the assessments are modified, if the subdivision or consolidation of poverty. And outlines of procedures, if someone defaults or prepays the assessment. So the key that we will talk about later is that you want everything documented up front, so that it becomes administrative going through the process down the road.
Thank you. [ Indiscernible- overlapping speakers ].
I think there was a question about flexibility.
You know, there is flexibility in terms of what costs you want to pay for. In some cases the city or county will say, we want you to pay, we want the first dollars to go to the standard enhancements. And less money to the base infrastructure. Dollars are fundable, so it does not really matter. All of the dollars go in the same pot. And the amount of the assessment is something that very often in negotiation between the city and the developer. You know, the city does not want to be seen as putting a big burden on property owners. Developers are looking to maximize their financing. So it is usually back-and-forth with that process.
I will also point out at the end of the presentation we have a link to certain official statements. These are the offering documents that Nate discussed that are published as part of the financing of the bonds, the offering of the bonds. And in those you will see a couple of studies and some of the methodologies that Rick has pointed to. While I am here, I will try to answer Abby's question as well. Using sales tax, which we briefly mentioned, you said that it was different than using County tax areas. Can you briefly explain what the differences? The transit system usually very often is about measure. Those are broad taxes. They encompass the entire county and if it is a large county of population, those have fairly good credit statistics. For instance in Los Angeles, the bonds there are rated AA, which we will talk a bit about. And is a fairly high rating. As opposed to the narrow districts, these narrow districts, which really are half a mile long each way and maybe a couple miles, in the case of the Kansas City streetcar, there is much more volatility there, much more uncertainty. It is unclear, maybe there are 30 restaurants, which generate most of the sales taxes, maybe a couple hotels. So there is much more uncertainty there. And so those are not as strong in terms of credit. They are really used to support the financing. In the terms of the streetcar, that is one of the assembly sources. We had parking revenues and special assessments, really to help diversify and make funding to support bonds. Let's move now to the next case study that Nate will provide. Next slide. Nate.
Sure. The Mosaic district is a district in Fairfax County, Virginia. It is a suburb of Washington, DC. And this area of Fairfax was a deteriorating industrial area, very much unlike the rest of the county, which has the second highest average income of any county in the country. The unlike assembly, Mosaic is a road oriented development. And particularly, it is on Lee Highway, a major thoroughfare in the county. And a good part of bond proceeds were used to fund access off of Lee Highway. As well as to provide parking within the district. Another one difference from this project, to assembly, is that while it was initially issued with, or funded with non-rated bonds, as assembly was, this project is now 10 years old and it was, has been refunded or refinanced, since then Mac. At a much lower interest rate. Next page. Like assembly, mosaic had a mixture of issues, of uses. You can see here there was a number of retail establishments, including a Target, a Mom's grocery store, smaller retail outlets, a hotel, a film center, as well as office, multifamily, and single family. Next slide. Here there were, as in assembly, there were multiple projections made. Each of them showed over 400 million incremental value at the end of the development period. In scenario A, based upon what was legally allowable. It assumed a 3% annual growth rate, but actually that was a -0.75 tax rate. So it was another 2 1/4 percent increase. In scenario B, it was what the developer felt they could build, which was a little bit less than what was maximally allowable. In scenario C, they show no growth. Scenario D, that was the market analysts assumptions or feelings which were more aggressive than what was finally used, that the developer was counting on and scenario B. Next slide. In this case, in scenario a and B, there was an expectation of no special assessments. In scenario D, which was the one that the developer got, was most likely, they would be 1.1 or 1.2 million and special assessments that would have to be paid over the course of time. And in scenario C, which was no increase in, as developed with inflation, it would be about a $40 million assessment that we would be paying for. Next slide. And you can see this is scenario C, that where the yellow arrow is, is what would be paid out each year. Where the red exceeds the blue, the blue is the tax increment revenues that would be available. And the black line is debt service. The Blue Line is the potential for special assessment. And everything between the top of the Blue Line and the black line, was special assessments that would have to be paid out. They clearly increased over time. Next slide. But over the course of the 10 years, since the project initially started development, there was a tremendous growth in the district. It was a financial success, and you can see here pictures of the Mosaic district, as it stands now. So in 2020, they looked, they refinanced the bonds, or the bond term is called refunded the bond. Next slide. And you can see here, that the dark line is above, at 2011 projections, which what are shown in the red line. And this is with scenario A. And then for scenarios C and B, they would be even greater difference between projections and actuality. In all cases the greenline exceeds the red line throughout. And so there is no need for any special tax or special assessments to be paid. Next slide. So when they may be projections for the refunding bonds, they had two scenarios. One, based upon current revenues at the end of 2020, showing a 2% increase. With scenario A, and that is a 2% increase in the fixed revenues. And scenario B, they assumed that it would be a 10% drop because of COVID, and that was the main flat for two years, before increasing by 2%. But even in that case, the TIF revenues, or as they call it, the county advanced revenues, they greatly exceeded the red line debt service. And so even though there is a backup special assessment that would be payable, it is pretty clear here that it is highly unlikely that it will ever be needed. Next page. So, mosaics received a rating for Moody's for the refunding issue. Of A2, which is a medium investment grade rating. And Moody's based it upon the fact that there was a moderate moderately sized inherent tax base. It was 673 million in incremental assessed value. As opposed with the 400 or so million that they originally projected. And that it was growing at 6 1/2% per year. There was a strong resident income level in the area, that were approximately twice the national average. There was good debt service coverage, of something like 1 1/2 times. And there was that special assessment backup. The negatives that they cited was that there was above average top 10 taxpayer concentration. That is almost all of the [ Indiscernible- muffled ] were being generated by one property owner, and that was the developer. The rating agency said that they have, a bond has a stable outlook. There could be an upgrade in the ratings in the future, if there was greater diversification or if there was growth in the assessed value leading to growth in that service coverage. There could be a downgrade if there was a reduction in the assessed values. And the debt service coverage. And then I will turn it back to Sasha.
Great, thank you, Nate. I will stop now and see if there are any questions about Nate's presentation, or Rick's. While people think about that, you can type in the chat or press *1. First question from Craig, for the Georgia case study, was the form of the taxing district finished prior to completion of the developer agreement and provision of entitlements? Did the city initiate the creation of the districts? Does the cities have policies and/or practices that they have considered and pursue Value Capture financing prior to or as part of the entitlement process?
Sasha, yeah, in a typical situation, you want to be creating these districts concurrent with the rest of the entitlement process. Once you have obtained the entitlements from a community, it is hard to go back afterwards and then say now I need some financing assistance. Generally it is hard to accomplish that. In the case of the assembly, and most often the requests for financing comes from the developer. Including a parcel outbid, or a less specific project they want, to incur, they are not going to effectively offer a financial option up from. In the assembly case, the basic concept of a tax allocation district was agreed to early on in the entitlement process. As the projects continue down the road towards the financial process, it became evident that additional mechanisms needed to be put in place. And the special services district really put in the month before the bonds close. That was an agreement that all parties have with this project, could not be financed without that special services district. That was created in a short timeframe and fortunately we have that flexibility in Doraville and Georgia in general, to do that. But specifically about these financial mechanisms, I think that the financing components of the overall process, I would urge anyone considering these projects to build it into their effort at that, early on.
Great. Thank you. I will try to address other questions as well. The next is from Julia. Sorry, this may be a silly question, these cases seem to focus on transportation improvements that go along with the element. Can these instruments be used for transportation improvements where new development is not occurring? I will take a stab at it and then maybe Nate, you can join in with me. In general these projects are associated with development. That is correct. Where there is growing [ Indiscernible- muffled ] is going to create new development. And special assessments, they are really based on the existing property. And so the financing can occur based on the existing tax base. A good example is the Dulles Metrorail in the DC area. A special assessment was created there, and it effectively increases the local property taxes within half a mile of the project by roughly 10 to 15%. So that is existing robbery. But the expectation was, as kind of a quick quid pro quo, there would be additional development and planning for additional development along that Dulles Metrorail cord or. Nate, anymore comments on that?
The one comment I would make is in regards to TIF, it is tax increment financing and the increment in value that gets taxed or the tax is generated from the incremental value, is what is available to support the bond issue. So it generally has to go along with new development.
Thank you. Another question from Ken. As was the case this past year with the Georgia project and the need for utilizing the SST backstop, how is the pandemic impacting other TIF projects? Are shortfalls occurring? Rick, do you want to answer that ornate, if you have examples?
Thank you. We have seen certainly TIF revenues decline for certain land uses. That we have not seen a humongous decrease because there has not been a significant, and I will use [ Indiscernible- muffled ] we are economically pretty strong down here but there has not been a reduction in assessed value for many properties yet. You may see that in the next year or two, as they, the businesses go and close down and then brings down the property value. We did not see a big decline of these values during the first year of the pandemic. And also in many cases you have multiple land uses and some have actually gone up. Residential is incredibly strong in our markets. And so you may have a decline in retail but have an increase in residential. Which is why a lot of the TIF projects work so well in a mixed-use project, to mitigate that risk.
Okay. Thank you.
I would agree. [ Indiscernible- muffled ] I would agree with what he said.
I would say that if you have a sales tax based district and you are a retail focused project, there will be more challenges. Quite frankly that is one of the reasons why many of these projects require a special assistant district backstop. Because the TIF can be variable, and investors like more certainty. And the special assessment districts give them the certainty that makes them comfortable.
Yes. Let's do one more question here. Luis has a question. Is there a minimum cost for a bonded project? Nate, did you want to address that?
Yes, there is no hard number. Although, because of the various costs involved with putting together a deal, I would say it is somewhere around the order of $7 million-$10 million, which probably is what is economically required. Unless there is something that can be done through some kind of state bank, or something like that.
We have seen in our special assessment districts here in Texas, they generally go down to about 2 1/2 million or $3 million before becomes cost-effective for the transaction. But what we have seen also is if you have a smaller project, it is still beneficial to create that special assessment district, even if [ Indiscernible- muffled ] income string. And I can to be monetized through a private investment or transaction. We see more of that as well.
Okay. Good. Thank you. Okay, these are great questions, please keep them coming. I will continue now on the presentation. Talking a little bit about rating agency frameworks. Next slide, please. So as Nate was saying, talking about that project, it was first unrated and then refinanced and received the A2 rating from Moody's. And you see that is the upper medium grade category. As you probably know, the higher the letter, from AA, or AA plus, that is the higher-quality of the investment. So these are the scales for SNP, Moody's, and Fitch. There are others as well, but they rate mutual bonds, not all of them but many will have a rating for one or more of the agencies. In general, bonds above the triple B- or B Aa3, are considered investment grade. And then those below that are below investment grade. The majority of medicinal bonds are rated at, if rated at investment grade, they are sold to retail investors. As my colleague was saying, that is the vast majority of the market. The projects we have been talking about, made be investment grade often not rated or non-rated initially. They are probably at that non-rated investment grade speculative level. But may increase, like the mosaic, or stay on as bonds. In the same category. But with the category of those bonds being enhanced. So even though the weight the agencies do not rate a lot of these value capture finances initially, I think that their framework is helpful for you who is starting out in looking at how the bonds are accepted by the marketplace and the rating agencies. The criteria that the agencies use are similar to what the developers and banks use as well. I will go through some major categories here and share with you. The next five you will see a key statistic used is the debt service coverage ratio. That is available debt service, available for debt service after paying for operating costs, divided by debt service. Is a critical ratio. Is there enough funding in that period, a year or happier, to pay the debt service. So of course you want the regio to be over one. Go to the next light here. And in the case of the assembly example, being scenario A, the base case, the ratio was over one, it was 2.11 or 211%. The second scenario was 1.59 or 159%. More than enough cash to pay the debt service. However, as Rick discussed, scenario C and D, the ratios were below one. Is that problematic if you cannot pay your debt service? Then it very soon to become a bankruptcy, if you will, for that project. Of course we want to avoid that and indeed as Rick said, he indicates some assembly additional revenues are available through the special district services, to lift it to 1.1, just the requirement in that case. So in general, the higher ratios are better but you also have to understand what goes into the assumptions. Some of the ratios are based on projections. In the case of assembly. Which lead to be more speculative. A more reliant if -- reliable revenue source. Take the water fees, pay the water bonds, they are much more reliable. They are basically A+ history and because of that that service code ratio, those would be lawyer -- lower. Often 1.1 or 1.2. Often acceptable because a lot of people do pay their water bills and therefore the revenue stream is extremely reliable. There is not a need to have all of that coverage. Go to the next light. Another key statistic, if you value to bond, value to LI EN ratio. Divided by the amount of bonds. This is an important ratio for special assessments and kind of a rule of thumb, 321. The assessed value should be at least three times or more than the assessed value. 3 to 1. There are some examples in the mosaic case with that. The next light is a compensate of the key rating criteria for TIF bonds and special assessment district bonds. This is based on Moody's criteria. This is a checklist for you if you're thinking about these types of financing. Here are the key issues that are really critical. Of course things like taxpayer concentration as Nate discussed with mosaic. Is important. Leverage, value ratio, income level, places where these are done are typically prosperous areas. This is just some of the right area and as we mentioned at the end of the presentation we have a link to the Moody's criteria. This makes a lot of sense but they are helpful to help you frame what is necessary to do these finances. Next slide, please. I wanted to discuss some other structuring considerations. Next five. That financiers use to make their finances more attractive and feasible. We will go into a lot of detail here but I think it is important to understand what else are the techniques that are used? What is to restructure or structure the unique payment function. So to push back the repayment of principal towards later years in the project. To alleviate the pressure in the early years, where there is more uncertainty. I will show an example of that. Capitalized interest is another way, as essentially the bank or the bondholders will not pay you for the early years and capitalize interest that is due. And that will pay essentially in later years as well. You can also take take out financing, that replaces construction in the early-stage financing with later stage financing, once revenues are more stable. Go to the next light. A visual illustration of an amortization. This is for assembly, a leveled debt service, that you can see on the far right column, the service is fairly level after a couple years and that is typical in mortgage amortization, mortgage for your house. However, in mosaic, they use to back load it. You see the debt service increases by 2% per year, kind of roughly corresponding with the increases in assessed value of that project. And therefore pushing back some of the repayment towards later years. I think we will have time to talk briefly about another project, in which there is upfront payments. Special mandatory redemptions, which the repayments are made earlier, in the case that the cash flow is greater than expected. That is an additional enticement for the investor, and a way to alleviate risk. I think we can show that as well. Good. I think I am going to conclude there and have my colleague wrap this part up. And I think we will probably have time to carry out a little bit of some of the cases we had as well. Christine?
Yes. Thank you, Sasha. So, to conclude this portion, before we share with you a couple more samples, we will leave you with some considerations for how to use Value Capture funding sources in your own project. So one to consider is to examine your revenue sources. Collect the key data that affects the Value Capture revenues to determine the expected revenues. For example a TIF district, then number of value properties, accepted growth in that value, the property tax rate, and once you collect the data as both Rick and Nate mentioned in their projects, you will need to perform a sensitivity analysis to understand how that revenue is the key variable with certain shocks or risk. Another consideration would be to decide how the revenues are collected or what is the most appropriate Value Capture techniques. Here, very common, shown in these cases, to combine technique and have TIF along special districts, and parking [ Indiscernible- muffled ] . A third would be to check the legislation surrounding, using various Value Capture techniques. So Value Capture monies are used for purposes for local statutes. And generally the money is able to be used for eligible cost for a typical project like landing, design, engineering, among others. But it would be good to double check with the local statutes require. A fourth consideration would be the setup of governance structure. In here the goal would be to streamline and operating structure as much as possible and a part of that is you want to ensure that you provide significant public input. But do so in a way that does not limit the fermentation of a project. -- The implementation of a project. The fifth thing, something Rick was talking about was that you want to manage the transaction and part of that was documenting everything. Or as much as possible, documenting everything up from. There will always be turnover of public and private purchase attempts and you don't want to be in a situation where you are relying on anyone. It is good to minimize the need to go back and get legislative approval. And a final consideration with regards to financing, is to allocate adequate time. These projects always take much longer than expected. So those are some key considerations. I think, Sasha, if you want me to hand it back over to you so we have a couple minutes to talk about the other examples?
Yes. I think that would be great. Thank you, Christine. Of course you can put any questions that you have in the chat box and I want to take a little time here to show two additional smaller cases from Rick and Nate that I think show a slightly different type of project funded by sales taxes. They are actually a TIF only project . Rick, we you take us through Texas?
Sure. Hutto, Texas, is a suburb immediately east of Austin. Principally a bedroom community for Austin, growing rapidly. They have, the city, I remember a couple years ago, they went out and had their major ramp parcel along the main highway cutting into town, that had been vacant and underused, they did an RP for developers and they selected the group to do a mixed use project. And during the course of that discussion the city and the developer identified a structure involving public improvement district, which is Texas's version of special assessment district. $17.4 million. But in order to make that work we needed to have TIF and sales tax revenues to help offset those payments. So if you go to the next light you will see the project, originally anticipated, use of the new City Hall, up and running, 4000 square feet. Hotel, multifamily units, entertainment and restaurant, probably ending up with more multifamily, with market changes. Not sure about the hotel but entertainment is on the way and restaurants have opened. It was a movie theater that unfortunately will not happen. That movie company has actually gone and of business. So next slide, please. We put together a structure that involved both sales taxes and special assessments that we needed to net $13 million of proceeds for the infrastructure construction. And so that turned out to be about a $17 million bond. The balance is capitalized interest, with transaction costs, the city agreed to allocate 60% of the incremental taxes over 35 years. And the County agreed for up to 20 years to do 50% of their incremental taxes. There is also an economic development Corporation within the city that agreed to allocate 50% of the incremental sales taxes from the project over 30 years. All of those monies are not a direct offset of debt service on their bond. There is a different way to use TIF in combined with special assessment. In this case we are using the TIF as an offset for their special assessment. Next slide. Actually, let's go back and I will give it over to Nate.
Rick, a quick question for you. How has the sales taxes fair during the COVID period? That is a question that we have had.
Well with this project it has been slow and quite frankly unfortunately the developer is well capitalized and they have been making the full assessment payments, with the minimal offset of the TIF at this point. You know there is only a few of the uses up and running. And we have not seen the benefit of incremental tax revenues as much as we thought. We do think it will still occur but not yet. With the movie theater, that was a big source of the potential sales tax revenues.
Okay. Nate, will you take us through the other example?
Sure. This is a bond issue in Anne Arundel County, Maryland. Anne Arundel County is the county that includes the city of Annapolis, on this map, Annapolis is to the left and lower left is where the city of Annapolis boundaries are. The purpose of this bond issue was to finance the roads that are shown in orange. Orangeish-red. And the financial, the county sheriff it is also state monies coming in. And I believe some federal money. Showing here as 301, I guess it is both 50 and 301, both are attached to it. This area has been growing quite rapidly and there is a new medical center here. The Anne Arundel Medical Center, there was a new addition to the Westfield Mall. And so there was a lot of traffic congestion being created here. And there also needed to be better access to the hospital. So the county decided to create these additional off ramps and widening of the roads and increasing generally the access to the area up off of 50/301. And they created a taxing district, that was 2.35 square miles, they created that in 1999. They issued the bonds in 2002. It was a total of $8.3 million of bonds. Next page. And you can see by the time they issued the bonds, the amount of revenues, the assessed values had gone from 648 million, up to 735 million. Or and $87 million increase in value over a two year period. And that was based upon under construction, there was substantial additional development that was going to be taking place. And so there was plenty of revenues that were being generated. Next slide. Okay, so in this case, the county wanted to, wanted to pay off the bonds as early as possible. Nonetheless, the protecting, in case the increases did not occur. As Sasha said, there were, this was a case of special mandatory redemptions. Also known as Turbo bonds, or super sinkers. Where, if there is additional revenues generated, those additional revenues need to be used to pay down the bonds ahead of schedule. This is a bond issue that has a final maturity of 2012. So it is a 10 year bond issue. And in the first year there was a scheduled principal payment of 660,000. But they projected revenues of 1.9 million. And so the idea was, the terms of the issue were up to $850 million of extra revenues, would be going towards paying down the bonds. And there would actually be more special redemptions being paid out, then regular scheduled principle. So the bonds could be paid off at least four years, and closer to five years, earlier than the 10 year final maturity. Next slide.
I think we are fine and we will stop there Rick. Nate. I want to make sure that we have additional questions. Let me go back here. I think for you, Nate, I believe Carol was asking, where there certain minutes on how soon you could start the TIF district?
No, it depends on state law. And in many jurisdictions, you start the district as soon as the [ Indiscernible ] is adopted in other jurisdictions. It is one year before the other is adopted. Those are the two that I have seen most commonly.
Okay. Thank you. Again, please put in your question to the chat box or hit the *1. Another question that was emailed to us, after working with TIF and bids in South Florida, I see political resistance to SAD unless it applies to a smaller area. Improvements come out of the ground relatively quickly? What is your experience? Rick, do you want to start with that?
Sure. It is correct that jurisdictions want to focus U.S. 80 on specific projects. Very often they have multiple phases and they are pretty strict control to make sure that you are not over leveraging and not going out over your SKUs. We bury much focus on the bond initial phases as each phase is developed and not gaining that far out, exposed. I think everybody learned some lessons about what happened in Florida after the great recession and that is why there have been more standards, more policies, things of that nature, to make sure that things get done weekly. And in fact one of the tax requirements is that the improvements you are funding in the special district need to be completed in a two year time period. So getting everything done as quickly as possible.
Thank you. Nate, did you want to opine on that?
No, I think I am good with what Rick said.
Okay, great. We have a question from Michael Sexton. Did the super sinkers reduce the interest of the bond?
Yeah. Yes it had a mixed effect, I think overall it did reduce the interest rate. Some investors like the certainty of when they will get prepaid. Other investors prefer the fact that it is a shorter-term bond that has a lower interest rate. So reducing the average life of the bonds helps your interest rate, the uncertainty hurts the interest rate. Overall it is probably a slight benefit.
Nate, I just want to ask you, what actually happened in this project? Were they able to retire the bond sooner than expected?
They certainly generated the revenues to do so. Yes.
Okay. Great. All right. Any other questions? On these cases? Or any topics that we have raised here? I think we have a little bit more time. While we are waiting to ask Nate and Rick, you know, in your experience, how did the great recession affect Value Capture financing? Are there any lessons learned from that experience that we can use now is we hopefully go to a post COVID period. Rick, do you want to start?
Sure. I think what we thought was in jurisdictions in the environments where there was strict underwriting criteria, even after the recession, the default rate on special assessment bonds was actually well, one half of 1%. And primarily in those cases, in any location where the developer defaulted on bonds, their lenders kept the bond current, because if the bond was foreclosed on, the lenders would be squeezed out of the deal. With a lot of defaults, we saw some activity where they got too aggressive. And with projects in general they got aggressive. I think what happened during that time period, it was a good selling point for the use of these mechanisms going forward.
I would say with a couple of surrounding states, it was a different story. Florida had community development districts, that actually had it close to 20%. And the problems there were I think twofold. One, these were community development districts that were in charge of issuing the bond, that were controlled by the developers. They then made decisions that benefited the developer, hurt the investors, and led to a number of defaults. While things went fine before the session, -- recession, they were not so fine during the great recession. And the other problem was in Florida, they did not do appraisals. And so someone buying in did not know what the project's worth were worth. And so there were no standards for how much it could be issued in the way of bonds, relative to the value of the property. So I think subsequently Florida cleaned up its act, to a degree. Even though they still have appraisals attached to their bond.
I think what happened in Florida was, reached down a discussion, potential districts, the reason why you did not want developer control activity, you wanted city and County to be issuing to them and have them be involved in the process. So it was not just the developer and based on what they were saying. Florida was an example of what not to do when things go bad. Or when they are really good.
If you were talking today to a policy maker who was looking to jump into a Value Capture financing post COVID, would there be things that you would ask them to pay attention to? Maybe Nate?
Yeah, well, certainly checking on the, how sound the projects are and how sound the developer is. And other, high confidence that the project will be built as projected. With strong third-party studies.
Rick, any thoughts?
I think that is exactly right. Just reinforcing the city, they need to reinforce, or the jurisdiction needs to reinforce that they are not on the hook if something goes wrong. In a revenue bond type situation.
Okay. We have one more question here and if anybody has any other questions we probably can do one more from any participant. There has been a lot of talk about companies employing hybrid work strategies post COVID. Which would entail employees only working part of the time in offices, maybe 50-50. If that becomes the norm, how will that affect projects like those we have mentioned and other ones in which a portion of those projects are commercial real estate office buildings? Rick, want to start?
It positively impacts residential, we are seeing housing go through the roof. And people working from home can live farther out, maybe more affordable homes. I think we will still see people using office space or use it in a different way. More sort of hotel types, where people are in and out, not there all the time, not permanent space for individuals, shared space. But there has been a trend in the office for the past 10 or 15 years of shrinking the amount of square footage for employees. More cubicles. Or use of that kind of density. So now there is going to be more squared out. You may need as much space but less employees and we will see what impact that has on the economics of what people are willing to pay for rent in that situation.
Any thoughts, Nate?
I would say that yeah, just whatever the market, certainly the market studies and the appraisals are not going to be as strong for those types of elements. But that may lead to a smaller issue. But there are other types of uses that may lead to a higher evaluation and higher amount of [ Indiscernible - low volume ] issue.
Okay. Good. Thank you all very much. I am going to turn it over to Charity Coleman to finish up this session. And as mentioned, the presentation you can download at the end. And in the presentation you will see, you should see each of us, I think there is a question about where each of us came from, the presenters. I believe our titles are there and our biographies as well. Charity?
All right, thank you Sasha. Just as a reminder, here are the topics and dates for future Value Capture pair exchanges. The next webinar will be held in May, on May 12, same time, from 1:00 until 3:00 p.m. And the topic of this event will be infrastructure bank programs Value Capture strategies. And you can register for the event by using the link that is right above the table. Before we wrap up, we just wanted you to complete the evaluation. We will greatly appreciate if you can take a few seconds to do so. And what you do is just click in the evaluation, submit your responses to each question, you click "submit." And we will be able to get the responses to the questions. Also, on the left side of the screen, you should now see a file share window. It has a pod there with today's presentation. So that is available for download. And so you can just click on that file and click "download." And that will allow you to download the presentation. And again, just as a reminder, if you are interested in applying for professional development hours or educational credits for today's webinar, request confirmation of your participation today. To do so just please send the request to Value Capture @D.O.T.gov. The email address is provided at the upper right-hand corner of the screen labeled "evaluation instructions." I will give you guys a few moments to respond to the evaluation. And again we would like to thank the presenters for their participation today and acknowledge the ongoing support of the FHWA web conferencing office. Thank you for that. That concludes today's webinar. Thank you so much.
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