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Please stand by but we are about to begin. Ladies and gentlemen, thank you for standing by. Welcome to the value capture strategies and public piping are conference call. At this time, all participants are in a listen only mode. Later we will conduct a question and answer session. Instructions will be given at that time. If you should require assistance during the call, please press star zero. Today's call is being recorded. I would now like to turn it over to your host, Pepper Santalucia. Please go ahead.
Thank you. Hello, everybody. On behalf of the Federal Highway Administration I would like to welcome you to today's virtual care exchange on value capture strategy and public-private -- public-private partnerships. I'm at USDOT Volpe Center in Cambridge, Massachusetts. I will be facilitating today's webinar and helping to address any technical problems. As you can see on the screen, we have a great set of presenters for you today who will share their expenses and expertise on the topic. Of value capture strategies and public-private -- public-private partnerships. First, let me get to the webinar room. In the top left corner of the screen you will find audio calling information. If for some reason, you are having audio issues listening through your computer speakers you may find better audio quality by dialing in and using the code shown there. Also, if you dial in you will have the opportunity to ask questions over the phone by pressing star one prayer we will remind you about that later in the webinar. With regard to the slides, you do have the option of entering into full-screen mode, so the slides will be larger on your monitor or laptop. To do that look in the upper right corner of the window with the slides and click on the button with the four outward pointing arrows. To exit full-screen mode bring your mouse back up to the top of the screen and the button should appear with four inward facing arrows. Clicking that will take you out of full-screen mode. If you have any technical difficulties, please use the chat pod or window in the lower left corner to extend a private message to me. You can start that private conversation with me by clicking on the button in the upper right corner of that chat window and picking starts conversation with host. Our webinar will run until 3 p.m. Eastern today. We will be fielding questions for the presenters at the end of each presentation, but we will also have an extended Q&A session at the end of the presentations. In addition to answering questions submitted in that chat window in the lower left corner we will also open the telephone lines for questions. The slides that you will see today will be available for download at the end of the webinar. Just a note, we are recording the session today, so that people can listen to this webinar at a later time. That recording will be posted on the FHWA website. If you are interested in applying for professional development hours were credits for your participation today, we will provide information on how to obtain confirmation of your participation. We have a set of poll questions open. I'm coming back to them now. I invite you to fill out and enter responses to those questions. These will help us understand a little bit more about our audience and your level of knowledge about the topic of today's webinar. While you are answering these poll questions I will introduce our moderator for today's event that Mr. Sasha Page. Sasha is a principal with the Rebel Group, the global financial advisory firm with offices in Washington, DC print he has over two decades of expense advising on infrastructure finance, project development, and private public partnerships for transportation and other types of infrastructure. He has focused on how value capture tools can find new and existing infrastructure. On behalf of the Federal Highway Administration and with public agencies in Boston, Chicago, Dallas, Miami, and Raleigh Durham. Sasha, before I turn things over to you what is your reaction to the poll results today?
Thank you, pepper. It looks like we have a nice balanced attendance from state, D.O.T, NPO, and local governments. And also, some additional federal agency and transit agency participants as well. It looks at folks are somewhat knowledgeable about a value capture or have heard about it, but have not really had that much experience. And then in a similar way, maybe a little bit less knowledge about PIII, but heard about a PIII. Maybe a third of their agencies or departments have entered into a PIII or transportation project and a third have not and a third still don't know. Good. I think that's a nice mix of folks Ansa backgrounds and, hopefully we will be able to assist with an education process. Great.
I am bringing up your slide deck. I invite you to introduce our presenters and then provide an overview of the topic, today's topic is that great. We have three great speakers today I hope we will have a nice dialogue. Our first speaker is Jody Grant, who is the founder and -- and founder chairman and partner of bank calf partners. Whose capital is now over $20 billion in assets and bank calf partners is a private equity firm formed to expand the Texas capital model outside of Texas, including in Atlanta but Mr. Grant is a chairman of Goodall founders Park foundation which operates the client one. And a 110 nine dollars. That serves as the epicenter of The Arts District in Dallas but he led the effort to develop the park which opened to [ Indiscernible ] in 2012, which you will hear about shortly. Earlier in his career Mr. Grant served as chief financial officer for Electronic Data Systems but Mr. Grant has an NBA and a PhD in finance and economics. Our second presenter will be Deborah Sharpless. Meds Sharpless is a Chief Financial Officer with the Maryland Transportation Authority. In this position, she oversees finance, capital planning, and program developed, procurement, and a third-generation tolling and customer service program. In her time at MBTA she has been a leader at the agency and has been responsible for ensuring agency's financial stability through difficult financial cycles while the agency has constructed two megaprojects and is beginning construction of two additional megaprojects. She has finished her mental and rebuilding agencies financial systems and getting the replacement of the MBTA tolling, back-office, and customer service center. Before doing MBTA she was a controller for the Maryland state lottery and singer auditor for the Department of legislative services. She's a certified public accountant and has an NBA. Our third and final presenter will be Brenden Morgan but Mr. Morgan has been a senior manager of debt and investments at the Regional Transportation District in Denver since 2012. In his will, he manages $800 million investment portfolio as well as RTD's $3.5 billion debt portfolio. Mr. Mark Peters, he served as vice chairman of the Colorado surplus Catholic fun and debt manager for Jefferson County, Colorado. Prior to his roles in Colorado in government he worked in corporate finance and the financial services industry. So, what I will do right now is provide a bit of an overview about a value capture and P3 but we will hear some very exciting projects from these sponsors and stakeholders. And talking about this value capture will which is primarily a funding source and P3 which is primarily project development mechanisms. Let me see if I can -- actually, with somebody maybe an operator or Pepper move the next slide? ? I'm having the will be doing it. Well, okay. Let me first talk about this value capture, as you know, some of you know, who have been participating in these webinars in the past, is an opportunity for the creation of value from infrastructure projects. It refers to really a toolbox of strategies in which a portion of that value is captured. Let's say, a new road is developed. The property around the road is enhanced with value answer a variety of mechanisms like special assessments, which -- some of that value is captured. And used by the public entity to fund that project or other projects. Value capture has shown to fund over 50% of many projects, if not 100% in some cases. Really, most of these have been from the revenues that the landowners adjacent or at the project or near the night nearby the project has received. Value capture can be very compatible with other sustainable tools, like transit or at the moment. It can really be used with value planning efforts. Value capture can be used to fund both capital and operating activities, which you will hear in all three of the cases that we will discuss shortly. Lastly, value capture techniques really work with urban, suburban, and rural settings. First about P3 is. Keith Reaser really about optimal risk transfer in realizing a new infrastructure project. The public stakeholder, private stakeholder may have a variety of these on both sides but in general, P3 is try to find the right balance between design, build, finance, operate, maintain but they don't always incorporate all of those five elements, but that is very, very common. You will see the project today incorporate all these five. On the next slide. Good. Next slide. P3 are memorialized usually in contractual agreements or similar documents. Concession agreements. They often delineate the product delivery method, discuss funding sources, accommodate financing, if appropriate but really, P3 is not designed to act as financing, it's one of the benefits of a P3. Usually for long-term. 20 or 30 years reflecting in general the asset life of the structure being built these can include penalties and rewards to ensure the performance is appropriate and meets the public agency's requirements. There are many benefits of P3
One of the most useful is they provide O&M resources at the beginning of the contract but it's very clear who is paying for those. They really facilitate a lifecycle cost management approach. As mentioned, they also allocate risk to the partner more capable of managing it but it's not that one partner takes everything, but it's often a shared allocation of risks. Instead of -- can improve qualities and efficiencies as appropriate. That's often the case. They do provide better place and schedule certainty, both for the additional construction project, but also for all the maintenance that has to occur over the 20 or 30-year period. As I mentioned, P3 is can access new financing sources like private capital, private equity, but it's not always the case. They do sometimes advance project despite government debt limitations. Although that is not the purpose of P3
Also, some limitations. Typically, because of the costs which are really fixed costs they often benefit large projects. There are some exceptions but also the procurement can be complex. And create risks but it has to be well thought out. Often public agency needs to add technical capacity to help manage the development and procurement and all that goes into negotiating a P3 agreement. I think it's important to understand it's a product delivery method, not a funding source. Early on in the P3 movement, so to speak, a lot of perception of all this free money out there. That's not really what P3 is about. They can help to find a revenue stream and help with that, but they're not in them solve new money. Also, a P3 the private partner needs a reasonable return on investment reflecting what the market will require. Including increase in overall cost, somewhat. In an ideal P3 the benefit, efficiency of the P3 outweigh some of those additional financing costs. Maybe just a summary in this chart. Value capture is a funding, joint development, commercial revenues, special assessments, tax increment finance but you will hear about all those shortly. And then those funds for a project that may use a three., Which will combine design, build, finance, operate, maintain, or any of those. As I mentioned, we have three very distinct presentations today. First of all, you will hear from Jody Grant on Clyde Warren Park. There are some key value capture techniques that are used here as public and private funding from nearby and regional Dallas businesses. Which is like a negotiated exaction. Not exactly the same, but has some similarities but is also a public improvement district, assessment of property owners with a special assessment. And there's also park commercial revenues to use to manage the project, to finance the project. Though is our funding sources. The nature of the P3, there's a design ability is for the construction of the original Park. The funding is 50-50 between public and private for the construction for the city of Dallas, the foundation, and the PID paid for the O&M. And they also have responsibility for that as well. You will be able to access these charts. This is a bit of a nice map of how that works. I-95 corridor areas, the value capture old. And as Deborah Sharpless will tell you, it's a design build finance, operate, maintain, provide delivery. Taking all of the risk of the funding and the concessionaire takes all the risk. She will detail that further. Last finales, Denver Union Station for two different transactions. The first one is to build the overall transportation infrastructure and those are funded from joint developed, special assessment, and tax financing. And it was delivered in various ways. Funding is from those sources, but also federal, state, and local grants. And the O&M responsibility is a public responsibility. Also, historic Union Station. The commercial revenues find that in a similar way. As some of the park revenue help fund Clyde Warren Park. And that was a design build, operate maintain transaction with commercial revenues as a funding source and a private responsibility. We can talk about those more. Like I said, we will have your three speakers here but without further ado, I would like to turn it over to Jody Grant who will talk about the Clyde Warren Park.
Thank you. Good morning, everybody. Or afternoon, as the case may be. I am currently in California, so I'm going to be talking about a project in Dallas that I worked but I'm just delighted to be able to speak to you today. We were asked to provide a picture, so I decided to dress mine up by including my wife in the picture but she, coincidentally, is my partner in this project. She is on the executive committee and helped make the decision at the outset to do this project. And has been linked with me ever since we became involved. This is our -- we are going on our 18th year in the project. I have been chairman since day one. And the founder of the project but it has been the best thing I have ever done in my wife has ever done outside of our immediate family. That includes all of the for-profit ventures that I have been involved in. If I can move -- it's not responding -- there we go. This is a picture, obviously, of what will Rogers freeway looked like before the project began. How does point out a couple of features to you. South is to the left-hand side of your screen. Right, that is the north side. That is what we call uptown. Practice outside is downtown. Downtown was suffering mightily when we started this project. As a matter of fact, I got involved when I was asked by the mayor to see if there was a way we could help revitalize downtown Dallas. We have gone through a really rough patch during the 1980s and emerged from the 80s and into the early to thousands we had the highest vacancy rate in downtown Dallas of any major city in the country. We were lagging behind the world in this respect. The venture was, in my eyes, and economic of elements venture to stimulate Dallas. And to bring these two areas of the city together, which were separated by this vast chasm that you see here. The project involved putting a deck on top of the freeway. That sounds easy until you start trying to do it. I am going to point out a couple of pictures as you look at this. On the bottom part of your screen you will see one small concrete viaduct that goes over the freeway. That carries utilities. There is another one between the two streets in the middle of the picture that you are looking at. We had to tackle the utility issues and moved I was, which was about a $6 million item. We had a fairly hotly contested situation with one of the museums but they didn't want us to close any of these streets but finally, we got the street at the top part of your screen moved but it became part of the park. You will see two entrance and exit ramps on the freeway. The one at the top, you will see curves, it has a curve in it. We were asked to straighten that out, which we did. We had to rebuild that exit ramp. And then at the bottom of the screen or about midway up from the bottom you will see a curved exit off of the freeway we had to put a beam across that to support the crossbeams that we used to build the freeway. The walls that you see on either side of the freeway are not structure walls, they are just retaining wall
Those had to be replaced. And then you put a median wall down the center of the freeway, which supported the beams, which we laid from North to South. Each beam being about 110 feet long. The next slide is an artist rendition done in 2006 of what we dreamed that this park would look like: essentially, we created 5.2-acre park on top of the freeway and we had four partners in the project including the foundation the city of Dallas, Texas Department of transportation, they were our principal partners. The project was a $112 million project in terms of what we raised. The actual cost was closer to $100 million. Going to the next slide this details the commitment of each one of the partners but at the outset this was supposed to be a 1/3/1/3/1/3 project where the city of Dallas, TechStat, or the federal government and the private sector would each have one third of the project we envisioned a $60 million project at the time. It turned out to be, as I indicated, in terms of cost, closer to $100 million. The private sector ended up finding most of that. Although, we got very unlucky in terms of our timing in that all of this was happening during the great recession. We hit a wall in 2009 where we just couldn't raise any money. We were fortunate enough to get $70 million -- $79 from the American recovery and reinvestment act. We would have -- I don't know if we have ever gotten this without that. Double play we would have eventually. We entered into, as part of the agreement with the partners, we had a development agreement and a use agreement. Those agreements took well over a year. Possibly going on three years to negotiate with the parties. We were fortunate we leaned on everyone we could lean on to do pro bono work for us in the private sector. We had a local law firm that did both our foundation, helped us create the foundation, and also worked these agreements for us. It was quite a project. That use agreement lasts for 40 years but that is the basic term. And we have five lasts for 40 years but that is the basic term. And we have 510 year extensions but we are still in the first 40 years. We will celebrate our 10th anniversary next October. October of 2022. The agreement calls for the city to take care of the tunnel that we created when we built the park and we take care of everything on top of the tunnel. As indicated earlier, we created a public improvement district or PID. The proceeds of that go to the park, to the foundation for maintenance of the project. Our annual budget is about $5 million a year but we cover about 20% of that with proceeds from the PID. That amount of money is growing rapidly, I might add. There are 660 property owners that the County collects the money and then it is paid to us next slide. This shows the project under construction, obviously. You can see the 110 foot beams are resting on the structural walls on both the north and south sides of the freeway. And meeting and the center on the structural wall that was built but we spent eight lanes of freeway but as I mentioned earlier, we relocated all of the utilities, including there was a water tunnel under the freeway which we had to tap into. We had approved the:, which was an interesting project unto itself. There is a membrane which we are, we guard with our life, practically. We don't want anybody to puncture that. We are very careful about putting a stake in the ground but we just don't allow it. The park amenities, we build a restaurant, a performance filling, children's Park, dog park, and multiple fountains. One surprise we got was EPA issued new safety requirements during the construction of the project, which added $4 million to the cost but it just came to us out of the blue. Next slide. This is what we have today. Just quickly, the children's Park is the blue and circular surfaces that you see. Performance pavilion on the left of that and the rest I. You can't really see the east lawn, but I will get back to that. This was truly a partnership but a lot of community involvement. We put together a group of people that selected a landscape architect, which was the office of Jim Burnett. The same with the engineering firm, which we didn't start out with Jacobs. We went through two mergers and the company that is the surviving company today is Jacobs but we did a number of community meetings in order to get buy-in from the surrounding neighbors and the city. One thing that is a necessity in most of these projects is a feasibility up front. The private sector footed the entire feasibility project. My wife and I and the bank I found a gave two thirds of it and the other one third came from the real estate community. About two years into the project we hired an executive director but before that it was myself and volunteers. The bank that Iran did all of the back-office work for us until we set up a staff with an executive director and lead space. We had weekly or monthly meetings with our partners but we eventually put together a Board of Directors. We had an executive committee that was very, very involved. One thing we didn't have to deal with was affordable housing or gentrification in this corridor. There was nothing but parking lots and used car dealerships. There was no housing therefore, we were not replacing anybody's residents. That was making life a little easier for us. Turning to the next slide. We did do a great job of stimulating activity in the area. When we started, our public improvement district the value of the real estate guide as the county role was $2.5 billion. That was in 2013. In 2020 that amount was $6.2 billion. There has been a $3.7 billion increase in the seven-year period that ensued thereafter. A little-known fact is that we have returned cumulatively through caps assessments $459 in property taxes to the city, county, one of the hospitals, our community college, and our Independent School District. It has been a boom to the area. There are those that believe it has been the most important project economically that has ever been done in Dallas, including in the eyes of some Dallas DFW airport. Every year or every increase of $1 billion produces -- $1 million produces $20 million in tax revenues. This is accelerating. We have 22 acres that are yet to be developed for turning the page, this just shows you some kids playing in the children's Park. We have 1 million visitors a year. They come from all over the world obviously, from all parts of Dallas Britt it is a melting pot. Truly, it's a small United Nations in Dallas, Texas. Looking at the don'ts there is three pieces of advice that we can give you. One was you need to get buy-in from all of your stakeholders. And at the highest levels. The level of cooperation that's required to get one of these projects done is immense. In our case, it was terribly important that we had a program manager who came from the construction industry and he is still with us today. These public private partnerships are difficult in some respects and that would come from different backgrounds, most of us. Therefore, it requires a lot of patience on everybody's part buy-in and understanding and the development of a common vision. One of the realities is that in the public sector there is a live process. The private sector has its own processes, but both parties must learn to work together and understand each other. In our case, we had a tremendous team of people working on this but the quality was just outstanding. We enjoyed this so much that turning the page to the future expansion, we are reinventing the park. We are doing this again. We have and expansion project underway which will add 1.7 acres to the park. You are looking at a pavilion in this particular shot with an additional green space on the other side of the street. Unfortunately, we can't close any of these streets, because they are major thoroughfares leading into and out of downtown and connecting downtown and uptown and the rest of the city. Turned the page again, just to show you in an aerial view what we are doing, we are building a building in between the two streets that are running vertically on the page. And then we are expanding over the freeway going to the West as far as we can. Before we run out of headroom, which is in this case, we are grandfathered at 16.5 feet. The engineering on this, if you just look at this particular picture and see all of the ramp and the pillars and so forth it is a tremendously complicated project. I will say that building a building over a freeway is much more complicated than just building a Park over a freeway. I just lost my screen for some reason. I am presuming that I'm still connected.
Yes, but we still hear you but we are now on page 13.
Okay. For some reason, I'm not showing anything on my computer screen. Here we go, we are back. This is a pavilion which will be under construction in about a year and a half. It is a visitor center for Dallas, plus event space for the park. Gensler has already won two awards with this design, although it hasn't been built yet but we are very excited about it. It is two levels of air-conditioned space. And then there is a roof terrace on the top but we have a service level, which you don't see from this side looking from east to west, but would you would see it from west to east because of the elevations that exist there. Turn the page once more this is a long green space that we are building, which will have an ice skating rink for two months out of the year, the winter months. This is artificial grass for Kelly place other than our dog park where we had used artificial grass but the reason is we expect and a lot of activity in this particular area. We are adding 37,000 square feet of green space with this. Just to wrap this up, we have over 1 million visitors a year. We expect these improvements and additions -- I didn't mention the improvements, but we are also refurbishing the existing park but we are building a new fountain, which was part of the original design, but never got built. We are expanding our children's Park and relocating our dog park to create more green space. We expect in addition to 1 million new visitors $175 million in additional local spending per year. $2.7 billion increase in property values over the first part of the life of this park. And an increase of $75.6 million in new additional property tax revenues flowing to the entities that I mentioned previously. Concludes my remarks I look forward to answering any questions that you might have. Thank you very much for your attention and I will hand it back to Sasha.
Thank you very much, Jody. A really interesting project that I think we have time for one question but I think this covers sort of the topics in the chat box but I will read them. From Sam Baker, Atlanta is pursuing a project very similar to Dallas to cover its downtown connector with an overhead park. I'm sure Atlanta can learn from Dallas area in this case. A comment from Danielle Tucker, having worked on Clyde Moore with all of the funding available for. We will be economically feasible to fill in more [ Indiscernible ] with the same method while stimulating the economy? That's actually a question. Let me ask you, how do you see the applicable the of this model in other cities where there is interest in parks, but also in capping highways, as we see and potentially will be the push forward in further federal legislation? How can this apply in other places?
I think it's a perfect example of what can be done in other places. As a matter of fact, our landscape architect tells us, we don't keep track of this independently, but there are over 100 look-alike projects being contemplated or having been undertaken across the country. In 33 different municipalities. We are very familiar with the Atlanta project but the delegation from Atlanta has been in the park at least once, if not more than I. We hear from aspiring municipalities who want to cap their decks with park and other uses fairly frequently. Our engineering firm brings their clients and they are involved in assisting with a lot of the efforts that are going on. Atlanta, in particular, they bring their clients to see the engineering model that we have created here. I think it's perfectly applicable in the partnership works well. Everybody just needs to go into it with their eyes wide open.
Great. Thank you. We are going to be turning shortly to Deborah Sharpless now from MBTA. I want to remind participants if they have comments feel free to put them in the chat box in the lower left. Into questions for speakers or a comment but as you have seen already. Feel free other participants to respond to those in the chat box. You can also dial star one on your phone. I would like to turn now to Deborah Sharpless, the CFO at the MBTA in talking about the I?95 service plazas. Deborah.
Good afternoon. Thank you for having me and for the opportunity to talk about our Maryland and Chesapeake house travel houses. To begin, just a little bit of background about MBTA. We are responsible for constructing, managing, operating, improving anything associated with toll roads in Maryland. Our state model and statute has a single agency responsible for all of tolling in our state. Recognize that other states sometimes will have multiple organizations responsible for different roadways. We are a mature, diversified market asset system. We have eight toll facilities as well as the I-95 express Tollway, which is a part of JFK. We are fully funded by total revenue. When you look at this portion of Maryland's map you can see that I-95 starts at the Maryland Delaware line. Our responsibility extends just south of Baltimore as well as the Chesapeake Bay Bridge. Harbor crossings, there are three harbor crossings. That is just a little bit about MDTA. On the I-95 corridor we have the Maryland and Chesapeake house. To begin with regard to commercialized travel plazas, I thought I would start off by just talking a little bit about the value that we see in them. First, they provide comfort for travelers and drivers. We really see them as a key element of Highway safety. The fact that they are convenient rest stops and they serve all types of vehicles, passenger, recreation, buses, tractor-trailers, motorcycles, any type of transportation the travel plazas can accommodate. They are key with regard to fatigue and distraction. I visa, people get very tired driving extended hours. Children can be distracted. Pets need brakes. In our world all student travelers are workers, so they need the ability to stop and maybe make phone calls, do computer work. Also, they provide a safe mechanism for drivers to change safely. Far safer than pulling off on the shoulder of a highway. We also have bad weather that comes through. They are a safe location to get out of whether. We provide comfortable, relaxing seating. We have kids corners, Wi-Fi. It's a food court. Meeting, had prepared food, not vending. Convenient stores and all travel plazas have plenty of restrooms. Or lavatories. Provide fueling. Fueling today is more than just gasoline and diesel electric charging stations are more and more common travel plazas, including the ones in Maryland. We have welcome and information centers. Assay talk about all of these benefits that we see with travel plazas they are located in 16 states or commonwealths. At least that is what I have been able to identify. If you are asking the question why? Why only 16 states if you receive benefit from them? The common attribute with all of them are they are tied to toll roads. Toll roads are largely funded without federal funds. And U.S. code limits commercial development when federal funds are used for the interstate system. Just to highlight a little bit of safety, part of our plan and that being integral in our program is from the national Highway transportation safety administration estimates that 91,000 police reported crashes involved drowsy drivers in 2017. It led to an estimated 50,000 people injured and 800 deaths. Fatigue contributing factor increases or is from 2.2% to 2.6% of all fatal crashes. From a tractor-trailer, commercial view, Federal Motor Carrier Safety Administration estimates that fatigue is a factor in approximately 13% of large truck involved crashes. When used travel, plazas help with fatigue, drowsiness, to overall improved Highway safety. Next, a little bit about our two travel plazas. The first one is the Maryland House. I'm proud to include several pictures. I think, first, I think it's a beautiful facility. The Chesapeake House as well. And seeing pictures I really think helps promote the facility and the type of atmosphere that we are trying to create. The Maryland House sits on 49 acres. It says literally in the middle of I-95, JFK Memorial Highway. In the median. We have what we call the primary house, which is shown in the lower right-hand corner. That is one view of it. The upper right-hand corner is another view of the primary house but and then we have a store which is in the middle section of the photo to the left. The primary house is just over 40,000 usable square feet and is expandable. A food court, you can see in the one image the high wooden roof but you can see the concepts in the back but whether it's Wendy's and Pizza Hut or anti-and, hot food, not just vending machines. The seating. There is a lot of seating but enter Maryland House is about 486 seats. Outdoors is 160 seating. It shows you one picture of an outside. That is the image on the left-hand side at the bottom. That is outdoor seating. The buildings were constructed and qualified for Leed Silver. And restrooms. All travel plazas need them. The Maryland House has 104. If we look at the service center it's about 5700 square feet and provide fueling. We have 40 fueling stations for cars or gasoline in four for trucks and 22 lavatories. Collectively, parking for little over 500 automobiles, 60 trucks, and 30 buses the buses can also be used for trucks in the evening there is also a memorial at the Maryland House for highway maintenance workers who have lost their lives while servicing customers on the highway. We moved to the second house. Chesapeake House sits on a little bit more property. The highest the size of the house is smaller. It is also located in the median of JFK in Cecil County. This is the county right before entering into Delaware. An image of the house is in the upper right-hand corner. That is looking into the entrance of the house. It is just under 30,000 usable square feet but it can be expanded an additional 9400. It also has a food court, retail, and merchandise. Seating is a little smaller, 325. Indoor and outdoor. In a later image, I will show you an image at the outdoor seating at the Chesapeake House is. It is my favorite place if I'm stopping her to be able to go. It is also the silver and has plenty of restrooms. The service center, I provided an aerial view for this one as well as an image of the store. It's a 4300-square foot convenience store. Fueling, 24 vehicles, four trucks. Parking collectively at the facility is 360 78 for trucks and 30 per buses but also their I'm showing you the mental image in the bottom our concessionaire constructed a memorial for us, a monument but is the Maryland women in military service monument but that's an image of the monument. We have different services there throughout the year. The state and citizens were very appreciative of our concessionaire constructing this monument at their cost. It was not a requirement of the RFP. Our concessionaire has been very involved and committed in our community but this is just one example of that. How did we get here? The first thing is to look at our facilities. On the left-hand side is the Maryland House. The original Maryland House. This is an old image quite old. This is kind of like in its prime. And then underneath that you will see the reinvented Maryland House but quite a different look. We still think very, very appropriate. On the right-hand side we have the outdated Chesapeake House interior. Compared to the new Chesapeake House. What you see there is it's bright, clean, open. It is windows, outside. You touch nature. It's a completely different feel and atmosphere in these houses. They are among the most traveled, the most traveled highway on the East Coast. We have more than 5 million visitors a year. The Maryland House was open in 1963 and Chesapeake House in 1975. They were past their useful life and overall outdated. We have a 35 year P3 leasing concession agreement. It was a design build finance, operate, and maintain. Request for proposals were done on a competitive sealed proposal basis. They were customer driven, performance-based, and provided like stability to the developer in order to innovate on all aspects per the selection was made based on the most advantageous to the state but sometimes the expression of [ Indiscernible ] value was used for our contracts were awarded to Marilyn travel Plaza, LLC. With regard to some key dates for the RFP that produced this outcome was advertised in June of 2011. The contract was awarded in March of 2012. Financial close as well is Aries assuming operations sponsored occurred in September of 2012. New Maryland House was opened in January 2014 and Chesapeake House followed in August. One of the requirements in the RFP was one of the two plazas had to remain open. Both of them could not be closed. As the Maryland House was shut down and constructed the Chesapeake House remained open. We removed a little bit of the building and they began constructing the Chesapeake House while the original facility was still open. In the next two slides let's talk about a little bit at first, about our project schools but also why we felt like this was an ideal project under the right circumstances. It fit. I will talk about the sharing of risks that we were able to accomplish with this project. We have three goals. The reason that I'm stressing this is in a couple of minutes I'm going to get to a lessons learned slide. And this was not our original RFP that produced these results. In this RFP, we had three straightforward, direct goals as to what we were trying to accomplish. We wanted a newer or like new facility to replace the current houses via a public private partnership. We didn't say what kind of the facility, we didn't say it had to be replaced, but we were describing a standard but we wanted it new or like new. The rest of the flexibility was left up to the concessionaire. We wanted to -- we wanted the facilities to be designed and operated, so the customer service was a focus. We want customers to have a positive experience but we didn't dictate how that was to occur. And then, lastly, we wanted a fair return to the state. And being able at the end of this concession these assets, these buildings get turned back over to us we wanted them to come back to us any satisfactory condition they were our goals. Every aspect of the procurement, evaluations, how the proposals were requested traced back to these three goals. Why do we feel like this was an ideal project for a P3? I documented in these nine different reasons. The first one is that the private sector invested $56 million to redevelop the travel plazas. Our concessionaire decided to tear down the old and replace with new. The benefits were is that it. Total revenue, because that's our only source of revenue in order to invest in infrastructure. Bridges, tunnels but we were able to use our money and that way. On the private side for that money they earned the right to operate and maintain the plazas. They took on operational revenue risks as well as the returns or rewards. We received a firm commitment to construct two travel plazas. It accelerated the delivery for us. At MDTA we didn't take schedule risk or cost overruns. It avoided capital commitments that we would have otherwise needed to make. Areas, on their side, they had the ability to design and build the facility as a deemed fit. It allowed their ability to innovate, but at the same time where they could innovate they were also assuming design and construction risks. We had contaminated soil at these facilities from the prior fuel stations. Through this procurement, we were able to close out and open environmental case and to help manage that risk areas we capped two cleanup efforts for what they would be responsible for. It eliminated uncertainty for them, but it also has them assuming the environmental compliance moving forward, since the facility and the case was closed and the soil was cleaned once they took over operations. Next, it avoided us, MDTA, assuming responsibility for something that is a not a core competency for us. We are not hospitality individuals but that's not our area of expertise but in return, by having a company provide this hospitality piece it helped us ensure excellent customer service that we were just not equipped to provide. On the areas side, it provides them full control of the operations and practices as long as they met the contract requirements. They assume that operational risk, but they also received the efficiency returned that they were able to incorporate into their business model and their plans for these houses. Also, it was the best use of land. We were able to maximize the value in that land and provided a critical service. We monetized an asset. Some folks in a second might look at it and say $5 million, that's not very much money per year but I agree. Especially for a toll agency that's not a lot of money. It's also about what costs you avoid. I will touch upon man on the operating side in a second. As I already stated, we didn't have to spend capital money for these houses. If these houses were already fully constructed and ready to go our return would be much higher. On an annual basis. We can't lose sight that our traveling public has a beautiful new travel plazas in order to go to. A day, in exchange, areas, by us allowing these facilities to be here they have the opportunity to operate and earn revenue as well as assume risks for a very heavily traveled corridor. The operating expenses that I mentioned a minute ago, we estimate that we are going to save about $35 million in projected operation and maintenance expenses such as HVAC and water and sewer and pavement and lighting all of those expenses just to maintain the facility, we estimate that we are avoiding. To us avoiding an expense is the same as earning revenue. On the Areas side, they have the ability to control their expenditures and plan it and have a long-term look with the facility, so they make decisions up front about how the facility was constructed to help them from an operational expense moving forward as well as replacement and reinvestment in order for the facility to remain in a satisfactory condition. Of course, we had economic benefit. Any time you're building these facilities and construction we estimated we have 405 construction jobs. And the concessionaire, again, had the ability to create growth with these facilities. For us it was a second major P3 transportation project but at this time it was the second. It provided more experience for us. The concessionaire's ability to enter into long-term agreements. Lastly, we do have the right to cancel the agreement if the concessionaire fails to perform. It allows us to enforce high standards and the concessionaire has control over the facilities. Lastly, before opening it up for questions, I wanted to touch upon four lessons learned. First, we learned that the original RFP was far too restrictive and prescriptive. It literally stifled competition and innovation. A couple of facts, the RFP was 711 pages. It said that we preferred Georgian architecture. We would specify the amount of the square footage we wanted. It specified parking. And the contract today still specifies parking for trucks, but it doesn't for vehicles. We felt like we needed to specify trucks, because, generally, travel plazas don't make money on trucks. It's more of an expense to them, but that safety element and providing a place of rest for the trucking community was important to us. That's why we included that. Prescriptive language, it felt good to the agency but it felt like you had more control. Our experiences have definitely been with P3 you have got to let go. You have got to give some freedom for the people that you are hiring and entering into an agreement to do what they are good at. And letting go of that control we found to be really important but when we did and it was harmful to the project. Is a type of, who you select -- let me phrase it as the partnership. It's critical. It's easier to let go when you have good partners. Alternately, the RFP was canceled and later issued with the one that we were successful awarding. The next lesson that we learned is in P3 to us it's about letting the organization best equipped to handle a risk or a task to perform that. We shifted some core competencies of hours over to the concessionaire. Yes, we avoided some of these costs, but if we would have stepped back and looked long-term we should have kept some of this. Examples are, the concessionaire did a highway signage project for us. It was the signage for the travel Plaza. Last our expertise. Paving work. That's what we do. High mast lighting. That is not normal for a concessionaire. And snow removal. We are excellent at moving snow. Our maintenance staff is incredibly proud that we are cleared shoulder to shoulder hours after storms. We shifted that responsibility to them and our lesson learned is that you need to keep the competencies that you are best handled to handle. The next lesson that we learned, and we still experience this, is at the time of this P3, as well as the first P3 for the state and transportation, our understanding was that there are basically only two extremes. Either a concessionaire is in compliance or in noncompliance. Meaning, you're looking to terminate. Although, we have performance criteria established what is not in our contract is incentives or disincentives to encourage excellent performance or above standards but also, have disincentives to motivate. There is this needs improvement area. It's not where you want things to be. There is really not where you are talking about any kind of termination. Our contract had enough of that middle ground and hindsight, I wish it did. One of the biggest lessons, and, hopefully, a lesson that is taken away by this group have to do with value capture opportunities. In the past I always thought of P3 as these huge megaprojects. They don't have to be. The idea of P3 and value capture, they exist in smaller, more simplistic operations, which we certainly consider on the scale of the projects that we work on. The travel plazas are very simplistic there is opportunities there. They don't have to be huge, complex projects in order to become very successful P3 and have value capture. That concludes my presentation. The last slide is just my contact information. If needed.
Thank you very much, Deborah. And that is a great presentation in regard to the projects and how you have done that but if people have questions or comments put them in the chat box or dial star one. On every question, right now but if you have additional questions to her we will get to them at the end of the session with Deborah, the fact that the concessionaire was willing to take commercial risks for all 30 years, comment on. Well, I visa, these are well located on a very, very busy road they are alternate
There are lots of exits on the way. Lots of fast food and lots of weights to get food and gas and other services in other ways. How did they take that? How did you convince them to take that risk? Or was there any question about that?
There wasn't but it wasn't part of the conversation but I think it was understood that I think for travel plazas it is a common practice. As I understood. Technology has changed. People Google all the time where is a Dunkin' near me? They don't have to stop there are competing measures into their revenue streams. There can be additional exits around their plazas and that is a risk they assume. We did not have a noncompete clause but we did not provide that protection. At the same time, when the RFP was out there and we received questions no one asked for that noncompete element. It wasn't part of the RFP. In good times, they prosper more. COVID has been difficult for everybody. You can imagine how much sales are down. They have the opportunity to whether -- what, they have to weather the difficult times, but also really prosper in the good times. When we give them complete control over their operation they have the freedom to create that value in the repeat customers that come back.
Thank you. I'm going to read one question that has come in and we will do the other one afterwards. It's a question from Mark. What, if any, P3 coordination is recurring to address the needs of the rapidly increasing number of customers using EV on indicate facilities? Electronic vehicle charging stations.
We have charging stations at the Maryland and Chesapeake House. I provided an image of the Tesla one. I could look up really quick the number of them that I want to say at the Maryland House we have every bit of eight charging stations. Some are Tesla and other ones are more universal charging stations but they are also at the Chesapeake House. We have some charging stations at our actual toll facilities. You know, along the highway.
Thank you. Great but we will get to the other questions afterwards. I want to make sure we have time for Brenden Morgan print we will be talking about RTD's Union Station. Brendan.
Thank you for the introduction. It's a pleasure to be here today. As mentioned, I'm here to discuss RTD's Denver Union Station Project Authority I would jump right in and get a quick overview of who RTD is and what it is that we do. And why this project is important to us. We are the Regional Transportation District in Colorado. We are a special district in the state of Colorado that provides public transportation to the greater Denver, Boulder metropolitan area. We have been around since 1969. We serve a community population of approximately 3.1 million people. Our service Areas cover approximately 2300 square miles but we are very large geographically. To provide service to 40 cities and eight counties here in the state of Colorado. We are governed by a 15-member elected board. A quick look at us by the numbers. Annual ridership pre-pandemic we had approximately 105 million in 2019. The map on this slide to the right side is a map of our rail services and the rail corridor as we are currently operating as well as a few future projects that are in the gray hair. The project we will be discussing today is a bit hard to see on this map, but it's a Black square roughly northwest of the metal of the center of this map. All of the colorful trainings are feeding into Denver Union Station. As far as the rail goes, we are currently operating eight light rail corridors, four commuter rail corridors
We have a one bus rapid transit service that connects downtown Denver and the city of Boulder. We operate a FlexRide, which is a Microtransit service that we have collaborations with Goober and Lyft. There are four future rail extensions on this map in light gray that we will go into, but they will also feed service into the Denver Union Station eventually. And we are currently operating with approximately 2700 employees. To understand why the Denver Union Station project is so pivotal and has been so pivotal part RTD I'm going to talk really quick and give it quick introduction to our fast tracks program. Fast track is a major transit expansion project in the entire Denver Boulder metropolitan area approved by voters in 2004. That includes a 4/10 of 1% sales tax as well as a list of projects specifically, a list of specific projects. Those projects included 122 miles of new light rail and commuter rail tracks but 18 miles of bus rapid transit, that's the one we are operating today between Denver and Boulder. It included 31 new parking rights, with over 21,000 parking spaces. Various enhancements to our bus network and transit hubs. Of course, the redevelopment of the historic Denver Union Station. Fast track would also create 57 new rail and/or BRT stations but also, last but not least, opportunity for transit orientated development communities that have come out of the ground in the past 12 years in the past Metro area much of fast tracks is complete. I will jump right into the meat and potatoes of why I'm here, which is the redevelopment of the Denver Union Station. This project involved major transportation infrastructure as well as the historic train station, the historic Union Station in Denver. The original station was built in 1881. About a decade later everybody regretted building it out of wood, because it burned to the ground. The station was rebuilt and open again for service back in 1914. This time built out of stone and brick and concrete. Much more sturdy structure than it was originally. This is what we are calling element one of the project. The transportation infrastructure component. We will set the historic building aside for this element one. Back in 2008 the Denver Union Station Project Authority was created. Is being referred to us DUSPA but it was a single purpose entity and it was created through collaboration between the city and County of Denver, Regional Transportation District, Colorado Department of Transportation, and the Denver Regional Council of Governments. This project authority was -- the scope was to improve and expand the light rail, commuter rail, and regional bus facilities at Union Station. Improve plazas and pedestrian connections surrounding Union Station. And billed all of this infrastructure that was planted to connect all of these services right outside of the historic building. In 2009 Trammell Crow nobodies was hired by DUSPA to administer the design and construction of the project. In 2009 also Kiewit Western was awarded a design build contract. Element one. Transportation infrastructure. Element two is the historic building redevelopment. In 2001 RTD purchased the historic building along with help from the city and County of Denver, CDOT, DRCOG. In 2012, fast forward to 2012, RTD entered into a 99-year lease, which is technically right now the first portion of that lease is 60 years and there's options for an additional 20 years. Crowley, we are in the 60-year portion of this lease with the Union Station alliance. The Union Station alliance has responsibility of this lease. Their job was to redevelop, restore, improve and they will continue to maintain and operate the historic building. For the next 60 years, or down to 55 or so now. RTD will remain ownership, retain ownership of this building for the duration of the lease and afterwards but as part of this arrangement RTD required broad public access 24/7, so that travelers could use the great Hall within the station but the great Hall is great but if anybody has been through Denver you'll know what I'm talking about if you go through Union Station. If you haven't, if you get a chance to come to Denver I highly encourage you to stop by the historic building is full of restaurants, bars, a hotel, boutique coffee shops and ice cream shops, a bookstore. It's really greatly improved in the transit ridership experience if you get to travel through the station. That is all operated by the Union Station alliance. USA is responsible for all the operations, maintenance, replacement for the duration of the lease but it has taken the burden of operating, maintaining this historic building. Is a very large historic building. There is also a gross revenue sharing component of the contract. There's a mechanism in place that once revenues exceed a certain threshold Union Station alliance will then begin to share revenues with the RTD. That has been ongoing for several years. Most recently in 2019 the revenue sharing coming into RTD was approximately $650,000. It's not a huge amount of money at this point in time, but if the cherry on top of not having to pay for any of the operations, maintenance, and capital replacement of the facility for the next 60 years. If we take a look at risks and responsibilities, we really have to do this individually by element number one versus element two. As I discussed earlier, element number one we are involving the specific transportation infrastructure that was built outside the historic building. Is the commuter rail platform, light rail platform, the underground bus concourse but all of the public transportation? You will see planning and acquisition and finance was all the public's risk and responsibility there and continues to be. The design and build was outsourced to the private sector. And then operation maintenance and capital replacement remains the responsibility of RTD. If you take a look at element two on the far-right side of this chart you will see planning and acquisition was the public's responsibility, which would include RTD purchasing the building back in 2001. Everything else has been put off onto the private side. The finance and design, build, operations, management, capital replacement was open onto the Union Station alliance, who operates that facility for us. And shares revenue with the RTD as well. Two different approaches for different components of the same product. This slide takes a look at the project financing excluding the historic building. The transportation infrastructure components of this project, total project cost for that was approximately $482 million. This funding came from various sources that are listed on the red bullets here at the top of the slide. There is a TIFIA loan, and RRIF loan, RTD had purchased the historic building and also purchased some other real estate in the neighborhood. Almost a decade later RTD started selling off these empty lots that were around the neighborhood. We raised approximately $74 million to contribute to the project from those land sales. We did receive some grants from local, state, and federal governments that amounts to approximately $103 million. And then there were other sources of approximately $4 million. That's where the funding for the transportation infrastructure part of the project came from. The repayment plan was interesting. The city of Denver pledged to address the last bullet here, the city and County then pledged sales and property tax revenues that were generated for this specific Union Station neighborhood. Including the historic building through 20/40. Those collections were projected to be $636 million over time. These projections were created during sessions. Confidence at the time was not very high and there was a lot of uncertainty around economic recovery, how long it would take. What things would look like afterwards. This neighborhood being what it was at the time, a bunch of empty lots, abandoned warehouses, this dry, dusty neighborhood that did not have much economic activity. There's a lot of risk here. Especially to the creditors. In this case RRIF and TIFIA. To get the credit quality of higher RTD issued and gave to the project authority $168 million bond that would pay principal interest payments from RTD to the project authority every year through 2040. This was a doubly rated bond, which really helped get the credit quality up high enough. We got a single a rating for the TIFIA loan which enabled us to feel them and the RRIF loan as well. You fast forward in time and this neighborhood has really come out of the ground. In the next slide, I will show more detail about this. Approximately $500 million public investment in this neighborhood just in this particular project. Catalyzed about $3.5 billion in development value in the immediate surrounding neighborhood. This slide highlights a lot of that value of those captures that are created here. If you take a look at the aerial photograph in the middle of this slide, this is an aerial photograph of the neighborhood surrounding Union Station. The historic building can be found at the very bottom center of the picture, number 20. Has a number 20 on it with the circle about it. That is the historic building. The one that is sticking out to the right and left. Immediately above it there is a White what looked like a White tent with an oval in the middle. That is the commuter rail platform. The number six commuter rail lines come in here. Exactly right there where the blue cursor is. Moving directly up towards the top of the picture there is a green walkway. You can see that used to be history, but now it's just a Greenway where pedestrians can travel. Straight up to the very top of the picture where the light rail platform is today. Under that Greenway that is the underground bus concourse. There are 22 bus bays and a lot of operations go through there, whether RTD, CDOT, the Colorado Department of Transportation operates commuter buses out there that connect to Colorado Springs or Ft. Collins. Also, Greyhound is operating but it's a very busy terminal. And then all the other numbers on this map you will see our commercial buildings that have sprung out of the ground since RTD and the city announced the plan to redevelop Union Station. For example, if you look at number one on the top left corner of this slide that is the Peter world headquarters. They moved here in 2012. It's a 14-story office. It's just full of [ Indiscernible ]. There was a ton of real estate developed all around this neighborhood. We have over 3000 residential units. 1.9 million square feet of office space for 250,000 square feet of retail. And 750 hotel rooms. This went from being a dusty, almost abandoned neighborhood to what you see today a transportation hub, employment hub. And 3000 residents, residential units here in the neighborhood. It has been quite the change. We are continuing to talk about value capture. In our mind value, will continue to be captured over time from various perspectives in the top left corner here it talks a little bit about the transportation impacts that we RTD prior to the pandemic were moving approximately 13,000 people daily on our rail service but almost another 13,000 daily on the bus service but of course, the pandemic has impacted those numbers. That is what they are looking like in a 2018/2019 time period the middle left side of this slide in blue there is more information about the development. We went through this already put a little more detail there for anybody that's interested. On the bottom, left corner of this slide there's an interesting timeline that shows the neighborhood. Again, and aerial map of the neighborhood showing back in 2012 the project was coming out the project, rather, but the neighborhood was roughly 23% built. Fast-forward to the middle of the bar, 2016 the neighborhood was 87% built but by 2019, at the end, 98% built out but it came out of the ground very rapidly. Employment impact. Net household impact, guest impact. Those are all listed on the right side of this slide. I will save a little time by not going to the detail here. Those are all economic activities that were directly impacted by this project but the value was created and continues to be captured over time. DUSPA wind down. This is one of the more interesting parts for me. The project, back in early stages, we have the is revenue projections that were very uncertain. It was the economic recession. We weren't quite sure what these revenues were going to look like. So, the development of this neighborhood, as we demonstrated, was really fast. Came out of the ground in about seven years. Three and half billion dollars sprouted out of the ground the first seven years. The sales tax revenue started flowing rapidly. The property tax revenue started flowing and. RTD and Denver got together and agreed that we could refinance and restructure the project authorities debt in a way that would say both RTD and the project authority time. It saved us a lot of money over time. We had, if you recall, we had a RRIF loan and a TIFIA loan. As a way to unwind DUSPA, if you will, RTD issued some doubly rated bonds. The City and County of Denver entered a bank loan pledging revenues from the neighborhood, tax revenues from the neighborhood of approximately $188 million. The outcome here was fantastic but RTD reduced our interest expense over the life of the financing by approximately $134 million. We are also, on top of that, pursuing return with a credit risk premium that is related to the RRIF loan. Again, this loan was having a fairly low credit issuance but a lot of uncertainty, economic uncertainty, during the great recession, so in order to secure the loan RTD or DUSPA, rather, the product of 30 was -- the reserve fund from a municipal bond to secure the credit a little bit more. In the event that something went wrong with the projected revenues, pledged revenues. At that point it was the highest revenue stream ever paid by a project but I'm not sure if that still holds the title or not we are continuing to work with RRIF to have that credit risk premium returned to us now that the loan has been prepaid. If it's to Denver included reduced interest expense over time. And also, give them something they wanted, which was released from a moral obligation pledge that was tied to the original financing. They wanted to redeploy that into other projects now that this one had been sped up and refinanced that added a lot of value to the city at that time period and the project authority, which from accounting perspective was a component of the City and County of Denver, we were able to wind that down and retire it. The project had been completed and debts had been taken off their balance sheet and put onto the balance sheet of RTD and the City and County of Denver no longer had any assets or liabilities. The project completed. We were able to simply wind it down and retire the organization entirely. Very much simplified things for both RTD and the city. That is the project in a nutshell. I would be happy to answer any questions.
Thank you very much, Brandon. Very interesting project. A great place to visit. Brendan, participants, please feel free to put your questions in the chat box or dial star one but let me start up with a question for Brendan. Brendan, Deborah mentioned lessons learned from the service classes is that Maryland wish they maybe had more graduated penalties or incentives built into the contract, because they are either or put it in a performing option will be to terminate. Tell us a little bit about how the hotel contract was a structured and the retail, et cetera. If the operator is not performing, they are not cleaning the bathrooms or maintaining the facilities what incentives do your are RTD or Denver have two instead of penalizing them without terminating the contract?
Sure, that's a good question. Actually, while we have this slide in front of us, this is just a picture of the front of the historic Union Station building. The hotel you are referring to, from looking at this, would include everything on the second and third floors of this building. And on the wings, the second floor of the rings. The hotel is operating upstairs. They do have a desk on the main floor. The operator, Union Station alliance, is also responsible for operating and maintaining those restrooms, for example, that are in there but they are open to the public on the main floor. We do have some provisions within the contract that require them to maintain them at certain standards as prescribed by the contract but if they are not maintained, kept cleanly and cleaned in certain frequency and kept a certain standard there are some sticks within the contract to motivate the Union Station alliance to improve their service or maintain the level of service that is prescribed by the contract. Another component of that is having the building open to the public 24/7. All year round. So, that travelers can use the great Hall. A place to keep warm in the winter while you're waiting for the train or simply just sit and wait for the next bus or where ever it is you are trying to get to. There are various services they are providing, like keeping this building open and maintained but we do have some financial characteristics we built into the contract to motivate them to do that the way we would like.
Thank you.
I would like to ask both Jody and Brendan about risk allocation. I'm going to post this question for you to think about and I want to go back to a question that Deborah, it was asked of Deborah early on. The question to you is if you had to do it again would you change risk allocation between public and private stakeholders. That being said, I want to go back to Andrew's question for Deborah. Since Toll Authority don't get FHWA funding how does this fit with FHWA funding opportunities? I think the question is, Deborah, maybe you can just give a bit of background on how MBTA, which is a subsidiary of Maryland D.O.T, work with directly or indirectly with its funding sources but maybe provide that background. Deborah.
Sure. We consider ourselves, we call it the end.family. We are part of the them. Family. The Maryland Department of Transportation has a secretary [ Indiscernible ] and five model or administrations. Our secretary is the chairman of the board. We are a non-budgeted agency, independent toll setting authority, eight-member board, plus the chairman but that's how our operations work. Generally, I mean, we don't receive any federal funding at all. We have had a TIFIA loan. Well, we had a TIFIA loan for the intercounty connector. It has been paid out. We are in the process of a TIFIA loan for the replacement of the nice Middleton Bridge. Generally, we don't have any federal funding that comes into our agency for our state highway funding goes to the State Highway administration but and then sometimes through local programs. Our interaction from a funding perspective with federal Highway, other than a TIFIA loan, we really don't have that interaction.
Good. Thank you. Going back to my question I mentioned earlier, if you had to do this again would you change the risk allocation responsibility between public and private or construction, design, operations between the various parties? Maybe, Jody, when you start, please?
Sure. The public sector, both the city of Dallas and highway department, their liability was fixed in the original Park at $20 million each. Any amount that the cost to the park ran above the $60 million agreement that we originally had felt to the private sector. If we had it to do over again some sharing of risk and overruns would have and helpful to us. As I said, we ran into the face of the great recession but fortunately, our local Congress woman was on the transportation committee in Congress and was able to get $17 million for us during the middle of the recession. Which helped us immensely. In reality, we ended up raising more than that $17 million before the project was completed. We would have gotten there. I said maybe we would have, I think maybe we would have, but it would have delayed the project by some measurable period of time.
Thank you. Brendan.: That’s an interesting question. When I think about element one of our project, which was the transportation infrastructure, designing and building of our transportation infrastructure that was sent out to the private sector, however the acquisition, financing, operations maintenance, capital replacement Allstate with the public side of RTD. That was okay but those are our core competencies. We know how to operate public transportation but that's what we do every day. That's why we exist. Under element one, that particular structure made sense. We really had to bifurcate this whole project between transportation infrastructure and historic building. The historic building by itself is a very unique animal. It's very large. There's a lot of maintenance it costs a lot of money to renovate. It had a lot of potential to be filled with restaurants and bars and shops, which are outside of the RTD core competencies but I think aligning us to be the owner of that facility, which is right next to this historic building, which is right next to our modern infrastructure made a lot of sense. And moving everything else, the financing, design, build, maintain contact replacement, all of that relating to the historic building made a lot of sense to private site they can - hotels and restaurants and bars but we have no business doing any of that, really. We even had some state my challenges around revenues generated by those activities. At the end of the day the two approaches that we took for this project really made a lot of sense and continue to work well today.
Thank you. I'm going to combine a question from Lisa Austin but this will be for Jody. You mentioned a develop agreement and use agreement for these agreements has a 40 year plus tenure with no options but is this a use of the airspace agreement or use of the CAP agreement? Who owns the CAP and was there any requirement to have a termination clause that D.O.T could retain control of the highway? Lisa also asked him also was there any need to receive two payments in any portion of the CAP and use agreement? I guess, it would have to be fair market value but there's a number of questions there for Jody, did you try to address some of these?
I will do my best. The city of Dallas owns the property, even though the private sector raised the money to build the improvements. We, basically, gave us improvements to the city. So, our lease provides that we are responsible for the operation of park completely but we get no city funds. We didn't really want any, because we wanted to have the freedom to be able to determine our own destiny. We had benefited from the expense of others but you are part of the city budget and the budget gets tight but we run into tough times. One of the first things to go would be, is in many cases, the maintenance of the parks but we didn't want to be subject to that we are not but in terms of revenue sharing, we get all of the revenue generated on top the park. That includes, and we negotiated all of this but we have food trucks that are there every day. We have a waiting list of 60 food trucks that would like to be there. We get 12% of their gross. So, the same is true with the restaurant we outsourced that when operator. We are in the middle of changing operators. We will have a new operator bidding beginning September. We get a percentage of the revenue plus the basic lease payments from the restaurant but we are totally independent from the city as it relates to operating the park. Our budget is about $5 million a year. During COVID we reduced that budget by 1.5 million. We got to that period, we do have a reserve today of about $12.5 million. So, the park is raising money every day. For the new addition that we are structuring, again, if it public-private partnership we have raised $86.7 million to date. $40 million of that has come from the public sector. $46.7 million from the private sector. I don't know if I dressed all of the questions, but that's an overview.
Good. I think you addressed many of them. Jeff has asked a question. RTD and Clyde Warren, how did you first introduce the idea of using P3 agency organization control projects to elected officials and agencies? What were the greatest concerns you had to overcome to make these P3 projects possible? Brendan, would you start please?
Sure, but I'll be happy to. But there are many individuals that were here in the early phases of the P3 that we operate today. I don't have a fantastic answer for you, but I can tell you that our conversations with the new board members as they continue to come in every few years, always have questions about the P3 and why we chose to do things this way. What are the risks? What are the rewards? It is an ongoing education process as we get newly elected officials from time to time. These are conversations that we have. In the beginning, I'm sure it was more of a social exercise, exercise and socializing the idea to officials and folks in charge. However, it's more just education about how these contracts work, what the risks are, what risks we are taking and what risks we are not taking or protecting ourselves from. It's really just about education.
Thank you. Jody?
Yes. We have a great relationship with the city. I to the project to the city after we in the private sector dreamed it up but the city got right on board and put us in an upcoming bond program for $20 million. The state, we had to get the rest of our public money through the legislature but we did that in two tranches. I became a lobbyist. We got that done but we had $49 from the public sector. It has been a great relationship. Like Brandon mentioned, we have had counsel people and mayors who come and have gone but we are dealing with new people all the time. That is the public sector. We have learned how to negotiate and navigate those waters. I couldn't ask any more from the public sector then we have gotten, except for maybe a little bit more money. In terms of cooperation it has been absolutely terrific and continues to be. I might say, at one point in time certain councilman try to [ Indiscernible ] and we successfully put down that effort. Anyhow, we continue to go forward lockstep and everything is working well.
Great. Thank you.
We have a chance for one more question I would like to ask all three panelists. That's really about the pandemic. We have all been going through a pandemic and your projects have been affected by it in various ways. Both Jody and Brandon you mentioned that the earlier recession that had an effect on the outlook for funding. Can you talk about how your concession agreements, your P3 agreements, had anticipated economic downturns, like the pandemic? Or at other times in a normal recession. How did it actually work out? What were the results are the impacts of the economic downturn and how did your agreement anticipate that or address that?
Let's start with Deborah.
Sure. We didn't call out economic [ Indiscernible ] in the RFP. I think over the 35 years we all understood that is a normal course of business. They anticipated good times and bad times but at the pandemic, I don't think anybody predicted this. With regard to the pandemic we allow them to close concepts. There might have only been one or two of the food options available. At one point in time there was no indoor seating at all. Everything was on a carryout basis but our travel plazas did remain open throughout the entire, I call it 15 months but they never shut down. People were still traveling on the highways. Particularly, the truck traffic needed that place of rest to be able to go. We just allowed them to modify their normal operation, so that they could reduce their operating expenses, because, I visa, their revenue wasn't significantly impacted. I really think that just falls back on trying to be a partner with each other.
Thank you. Reef Bay, Brandon and then Jody, please.
Out. It was certainly a challenging environment. Everybody knows that public transportation suffered during the pandemic as well as full-service restaurants. They suffered as well. And for conversation say, the RTD ridership cut roughly in half but it's like moving those 13,000 transit passengers through Denver Union station every day, that number is cut in half. There is no foot traffic. Or foot traffic, rather, doesn't go through the historic building and passed all the bars and restaurants and shops also was cut in half. Beyond that, the restaurant, full-service restaurants in their pit of course, we are not allowed to have dining and service from an at this time. It was a bit of a perfect storm for the operator but all of the operators and businesses in the facility RTD was fairly well insulated from that. We do have that revenue sharing mechanism and pre-pandemic I was giving us approximately $650,000 a year. Not huge money, but a nice little cherry on top. The operator was still required to perform all the functions as if it was any other year. The risk transfer there really paid off nicely for RTD. We did not get any revenue sharing in 2020. Zero dollars. It was not really an issue, especially considering all the operations which continued to be performed by the operator.
Thanks for Jody, I know you have less commercial revenues, but you have commercial revenues and I'm sure you are affected to a certain extent by COVID.
We were. We are, as I mentioned early, publicly owned, but totally privately operated. The full impact of COVID-19 in terms of financial impact fell to the foundation. We were the beneficiary of two PPP loans during the course of the pandemic. We closed, like anybody else did, roughly March through June of 2020. We were among the early public entities. We call ourselves public, because we are open to the public 24/7, but we opened because of the outdoor spaces. We started having our regular programming. I never really mentioned this, but one thing to differentiate our product from us parks in the country is we are fully programmed Park. Is a high energy and there's something going on there during the hours that we are open roughly 16 hours a day. We are back Thomas Allen. We are still socially distancing. No masks required in the park today in the outdoor spaces.
Thank you.
I want to thank all three of you for your participation in this. It has been extremely interesting but everyone who has participated in the weather with questions and listening and. As Pepper, has said, you can download the [ Indiscernible ] here. I'm going to turn it over to Pepper right now.
Thanks, Sasha. We want to thank everybody for attending today's event but we want to let you know that we will be doing this again in just one week, June 16th. We will be doing a webinar. This time focusing on tax increment financing. That's June 16th, same time. You can register for that event and any of the following events happening later this year by following the link that you see on this slide. We do want to ask you to provide some feedback on today's event. There are two evaluation options open in front of you now. I have been told that one or the other will work for you, depending on how you entered a webinar room. If you see a play button next to one of these evaluation tools, if you click that you will have a chance to give us some feedback. As Sasha mentioned, and as I put in the chat pod, we do have the slides available to download in this file share pod. As well as a finance plan related to the Denver Union station project but if you click and highlight one of those files and then hit the download file button below it you should have a new window open up and a web browser that enables you then to pull down the file. As I mentioned at the beginning of the event, if you want to receive confirmation of your participation today you can email your request to value capture at D.O.T.gov you can see that in the upper left corner of the screen in the evaluation instruction window did you will get a response confirming your participation. We would like to thank our presenters for providing so much useful information about public-private partnerships in the transportation context but would also like to knowledge the ongoing support of the FHWA web conferencing office but with that I will conclude today's event but thanks again for your participation.
With that, that does conclude today's conference. Thank you for your participation. You may now disconnect.
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