Audio: https://connectdot.connectsolutions.com/pl51i0kiz84g/
Please stand by for real-time captions
[ Captioner standing by ]
[ Music ]
Ladies and gentlemen, thank you for standing by. The conference will begin momentarily.
Ladies and gentlemen, thank you for standing by. Welcome to the value to capture strategies special assessment districts primary conference call. At this time participants are in a listen only mode percolator we'll conduct a question and answer session. Instructions will be given at that time. If you should require assistance during that call, please press star then zero point I'll turn things over to your host, pepper Santa Lucy. Please go ahead.
Thank you, hello everyone. On behalf of the federal highways administration I'd like to welcome you to today's webinar on value capture strategies, special assessments, where we'll be unveiling our new primer. My name is pepper Santa Lucy. I work in Cambridge, Massachusetts, and I will be facilitating today's webinar. As you can see on the screen, we've got a great set of presenters for you today who will be sharing our experiences and expertise with special assessments. We're going to introduce them to you in more detail in just a few minutes. Just to give you a quick orientation to the webinar room, in the top left corner of the screen you'll see some audio call in information. You are welcome to listen to this webinar through your computer speakers, if at any time you have some audio issues, you're welcome to join us by phone using that dial in number and the code there. We will also, as the operator mentioned, give the folks an opportunity if you are participating by phone to press star one and ask questions that way. Otherwise, we will see an audience chat window or pod in the lower left corner. That's where folks can post questions or comments for our presenters and our moderator, who I'll introduce shortly, will help get those questions answered. With regard to the slides, there is an option to enter into full-screen mode where the slides will be larger on your screen. You can look for a button in the upper right corner of the window that shows the slides on center. When you hover over the right button with your mouse pointer, you will see the words, go full screen. To exit full-screen mode, you can press the escape key on your keyboard or look for the button in the upper right corner that will be labeled exit full-screen when you hover your mouse pointer over it. There is also an option to see closed captioning for today's webinar. If you look toward the top of the webinar room, there is CC. You click on that cc button and you have closed captioning for the webinar today, which will be running until 3:00 p.m. Eastern time. We will be fielding questions for the presenters at the end of each presentation and we'll also have a longer Q and a session toward the end of the webinar where we'll have an opportunity to engage all presenters. The presentations will be available for download at the end of the webinar, and I just want to let everyone know that we will be recording today's session so that others can listen to the webinar at a later time. We will be posting the slides and the recording on the FHWA website. If you are interested in applying for professional development hours or giving any kind of credit for your participation in today's webinar, we will provide you with the opportunity to request confirmation of your participation today, or provide you details on that toward the end of the webinar. At this point I brought up some poll questions for the audience. If you haven't had a chance to answer them yet, we encourage you and invite you to do so now, and while you're doing that, I will introduce the moderator for today's events, Mr. Terry Regan. Terry is a principal technical advisor for innovative transportation finance and planning at the U.S. DOT center in Cambridge, Massachusetts. He has over 30 years of experience working at the regional, state, and federal level on issues involving transportation planning and maintenance. Terry, as we get ready to turn things over to our presenters, what is your reaction to today's poll results?
Thank you, pepper. As you can see, local government, MPOs and transit make up a very large share of the audience today, and that's actually the audience that we are looking for with these value cap or techniques. Very few people are actually very knowledgeable. We have somewhat knowledgeable and have heard but don't know very much. So once again, that's what we have geared us webinar towards. We have one speaker who is going to give a presentation on the primary that we have released, as well as two people in the field who have experience implementing this. And 27% have implemented a special assessment district. So, I think it should be a great presentation. As pepper mentioned, we're going to have a question and answer period after the speakers have presented. If you have any questions during the presentation, we encourage you to enter those into the chat pod. We will be lining those up, so after each speaker we can have a question and answer period. In addition, we are going to ask the AT&T operator to open up the telephone lines for questions over the phone, for those of you who are not on your computer, but on the phone. And if we don't have time to address all of the questions that are submitted today, we're going to post all the questions we received, as well as the answers, on the federal highway website. Now let's turn to our speakers. First, we're going to hear from Rick Rybeck, and he's going to provide a brief overview of the special assessment from her. Which is available on the federal highway website. So, Rick is an attorney with a Masters degree in real estate and urban development. Since 2009 Rick has been the director of just economics, and for the past two years, Rick has been assisting federal highways as a subject matter expert on value capture. Our second presentation is going to be by Angela Brady. Angela currently works for the city of Seattle as deputy director of the office of the waterfront and civic projects division, which reports directly to the mayor's office, and she's responsible for the design and construction of the waterfront Seattle program, which includes a suite of transportation and park projects worth over $1 billion. She has over 25 years experience leading the city and consultant teams as a professional engineer in the field of civil, transportation, and structural engineering, and a successfully managed many multi-faceted engineering projects. Our third presentation is going to be Mr. Tom Gerend. Tom has served as the first executive director of the Kansas City streetcar authority since July of 2014, where he's responsible for the planning, startup, and public operation of the Kansas City streetcar system. In the first three years of the operations, Casey streetcar tallied more than 6 million passengers and is credited with infusing downtown Kansas City with more than $3 billion in new economic development. So, given that, why don't I turn it over to Rick Rybeck, who will give a presentation on the primer. And as I mentioned, the primer will be able to be downloaded at the end of this presentation, as well as it is posted on the value capture website within federal highway. So, Rick, take it away.
Thank you, Terry, and good afternoon, everybody. Today we'll be talking about a value capture technique, special assessments, and I'll lead off with the discussion about what the basics are, and then we'll hear presentations from Seattle and Kansas City about their experiences with this funding two. This is an overview of my presentation. We'll start off with the overview. So, what is a special assessment? Well, special assessments are a value capture tech week, and that raises the question, was value captured? At its most simple form, value capture is simply value given for value received. So new or improved infrastructure often provides benefits, special benefits to nearby properties, and access to transportation infrastructure creates higher land values and special assessments. Simply return a portion of the special benefit to the public sector that created it. Now in the illustration to the right here, you see a green arrow along the bottom. This represents the value of nearby property in the absence of an infrastructure project. The blue arrow above it shows how the value of nearby property increases as a result of the project. Now one of the key things to notice about this illustration is that land values begin to rise before the infrastructure project is completed. Sometimes, for certain types of infrastructure projects, the mere announcement of the project can induce increases to nearby land value. Therefore, if a community waits to implement special assessments or other types of value capture until after the infrastructure project has been completed, a substantial amount of community created land value has already been lost as a windfall to private landowners. Now typically, we are familiar with value capture in terms of infrastructure user fees, and by that I'm talking about roadway tolls, parking fees, transit fares, per gallon water and sewer charges, that sort of thing. But many of us are less familiar with infrastructure access fees, and those access fees return publicly created land values to the public sector. Now user fees and access fees are related. If user fees are small in relationship to the value provided by the infrastructure, land prices will rise and high land prices can thwart the development that the infrastructure was intended to facilitate, and push development to cheaper land that is more remotes, thereby creating urban sprawl. The good thing about special assessment districts as a value capture infrastructure access fee, is that these fees can help moderate land price increases, and thereby encourage development near the infrastructure, thereby reducing urban sprawl. And balancing user fees and access fees helps ensure efficiency and fairness while integrating infrastructure and land use. This point I think will become particularly well illustrated when we talk about the Kansas City streetcar project. So again, what is a special assessment? Basically, these are fees paid by property owners to a municipality based on receipt of a special benefit from the infrastructure investment. And special assessments have many different names which are listed across the bottom of the slide here. Our presentation today will focus on special assessments levied by state and local governments. Now business improvement districts are often funded by special assessment, but biz and similar organizations are created and governed by private property loans. The presentation today will focus on special assessments created by and for government agencies. We want to be talking about business improvement districts. At least not very much. So, one of the things that's interesting about special assessments, they're often used to fund capital projects that provide specific indirect benefits to some properties over and above the benefits that might be provided to the community at large. Now in the illustration on the left, you'll see improved infrastructure labeled M, as in Mary, and that's in between two properties. The property on the left is vacant and the property on the right is developed and has a building on it. But the benefit created by the new infrastructure or is typically related in the value of land. And is based on the increased value of the location. Therefore, both lots, the vacant lot, and the developed lot, receive the same benefit from the improved infrastructure. If the special assessment is based on the privately created value of the building, this special assessment will discourage development near infrastructure and encourage owners to keep land vacant or underdeveloped. On the other hand, if the special assessment is based on the publicly created value of the land, there is no development penalty, and it becomes more expensive to hold lands vacant, thereby encouraging development where land value is high, which is typically adjacent to the infrastructure, which is where we want that development to happen. So why do we use special assessment districts? Most obviously it's because many of our traditional funding sources simply are not sufficient to meet the infrastructure needs that we have. So special assessments can fill a funding gap. But even over and above that, raising funds through special assessments is arguably more economically efficient and equitable than general taxation, and this is because special assessments rank the collection of funds for capital projects with those who benefit from those improvements, thus a special assessment is a fee and not a tax. And by linking fees to the benefits received, special assessments avoid property market distortions, which can occur if general taxes are used. This also provides greater transparency, because the beneficiaries are being charged, and they can relate their payments to the benefits from the particular facility, enhancing accountability and building trust. The administration of special assessments is also efficient because it takes advantage of the existing property tax administration system. So, let's talk about how special assessment districts are assigned a. Special assessments are used for a variety of capital projects. These include local streets, bridges, arterial sidewalks, bike lanes, parking facilities, transit stations, streetlights, stormwater drainage systems, landscaping, et cetera. The key element is that the project has a discrete beneficial impact on nearby property. And these benefits are distinct from the general benefits that are available to the entire community. In the context of business improvement districts, special assessments can be used for operating as well, however as previously mentioned, we are not going to be talking, or bids will not be the focus of our presentation today. So how do we establish special assessments and calculate the fee? There are six primary steps in establishing special assessments. First, we have to figure out if they project is going to create special benefits, and if so, is there state enabling legislation that allows us to create the special assessment district? Then we had to identify the properties of the benefit, defined the boundaries of the district, define any exclusions that may occur. You have to determine what the basis for the fee will be. We have two determine a termination date for the special assessment, and finally, we have to conduct a public hearing and enact legislation for an ordinance. So, let's run through those steps one by one. So, the first step is doing a capital project create a special benefit for one more property that is not generally available to all properties in the jurisdiction. Now in terms of enabling legislation, the good news is that special assessments are authorized in all 50 states, the District of Columbia, and Puerto Rico, even under explicit legislation or understate constitutional provisions. However, when you're considering a project, the question to ask is, are special assessments authorized for the level of government undertaking the project, and you'll have to look at your state enabling legislation to determine that. So, the next thing is to determine which properties receive the special benefit, and if you look at the illustration, you'll see that the green oval indicates the site of our infrastructure projects. The dark blue areas represent properties closest to the project which received the greatest benefits to their proximity to the project. The light blue area represents properties that are farther away, and they still receive a special benefit, but just not as much. And within the dark blue area you'll see some gray or white circles. These properties do not receive a special benefit, even though they are close to the project. So, as we identify special properties that receive the benefit, new or improved infrastructure to weekly provides special benefits to nearby properties, and those benefits reflect the entire land value. But typically, being close to a highway is not a benefit. It's access via a highway interchange that creates the benefit. Typically, the intensity of the benefit diminishes with distance from the interchange, but some properties might not benefit, despite proximity to the highway. But highways, if they are near a highway but not near and interchange, will be negatively affect did by noise but not receive the positive impact of access. Likewise, residence near an airport, beneath the flight path or close to the airport, a lot of noise can detract from residential living values. And if you're near a landfill or sewage treatment facility, odors decrease the value of nearby properties. Here is an example in gold of a special assessment district in Suffolk, Virginia. This special assessment district was created to help fund roadway improvements along Route 17. And the point of this slide indicates that the intensity and geographic extent of benefits related to these assessment projects can often be determined with the assistance from real estate professionals. So real estate professionals can be enlisted to help you figure out where your special assessment district boundaries should be. Here is another example of special assessment boundary in Homer, Alaska. What happened here was that some properties that did not previously get water and sewer service, they extended the water main and the sewer lines, so several properties hadn't been served and the special assessment district simply assessed of those properties that received service. That's pretty simple. Now in terms of separating beneficiaries from non-beneficiaries, one example would be a municipal parking garage. So typically, retail establishments within walking distance would get the most benefits from such a facility. Residential may be close by but will likely not receive the benefits. Therefore, these properties could be exempted from liability for the special assessment, even though they're in close proximity. So, the next step is figuring out how to determine and establish the special assessment fees. And there are three primary ways to calculate. But the primary point to take away is that there should be formal documentation just of I in the calculation method chosen, and that method should be used consistently to avoid any unfairness. And as mentioned, there are three primary types of fee structures. There's the fixed cost for standard activity, a variable cost for standard activity, and a variable benefit. And what will be detailed. So here we see that the fixed cost for standard activity might be something like connecting a property to municipal water or sewer, improving the curbside. The cost for this activity is going to be the same and they only affect the individual properties. So, the actual construction costs can be obtained from the public works department and you basically end up with a fee or a schedule, and these are one off things. When a vacant lot connects to water and sewer, we charge them a fee. The next is for a bit more ambitious types of problems like extending streets or extending sidewalks, streetlights, water, and sewer, that sort of thing. Again, there's probably expanded cost for doing these types of projects, but the amount of distance is going to vary from place to place. So, a lot of times what you can do in terms of creating a special assessment is you charge the property owners based on front footage. In other words, you have the standard cost and distance and then we multiply that by the distance of the property that fronts the street or the sidewalk, or the water line, or the streetlights, et cetera. Now one exception might be a corner lot. A corner lot might have twice the amount of sidewalk as an interior lot and the question is, are they receiving twice the benefit. This is a policy decision you'll have to make, and if you want to make an exception for all corner lots, you have two keep those options applied fairly and consistently. And finally, the third way is to target special assessments based on a variable benefit. This is based on assessment by property or by district. And for example, we think that a particular public works project is going to increase land values within an area, then we might decide to charge, say five cents for every dollar of assessed land value within the zone, and one way to do that is if we determined that the project is going to increase land values by 10% within the zone, then a 5% charge is not unreasonable as long as the collection of the fees does not exceed the cost of the project. And in addition to a uniform rate, we can have graduated rates. Remembering the previous illustration we had a dark blue zone and a light blue zone, so here we can sort of tailor the special assessment aced on your proximity to the assessment, charging a higher rate for properties located within 1000 feet of the project. And a lesser rate for projects, and again, the thousand feet, when you do a special assessment for a particular project and a particular place, again, you're going to need to document your methodology, make sure that you justify what the basis for your fee or formula will be. the next step is to establish a termination date special assessment. If a special assessment is based upon a capital project, termination typically will be the date when the capital costs have been complete, paid off. Alternatively, if you're funding ongoing operating, you might have a sunset provision or a termination date to the special assessment with an option for renewal. And the final step in the process is notifying the public and enacting a special assessment or rules that govern adoption local legislation and is enabling legislation will determine the types of public notices and hearings required prior to the adoption of a special assessment. Some jurisdictions require a vote by affected property owners. Enabling statutes, for example, might indicate the approval criteria. For example, in some legislation it might say 51% of property owners by number of owners are required, so if there are 10 properties within a proposed district you need at least six votes in order to get approval. Other enabling legislation might require 51% of property owners by property value. So, if you have properties of different size and different value in your district, and there's one property that has 55% of the total value within the proposed district, then approval by that alone could result in approval. And in other cases, 51% of property owners must approve of it provided that the properties constitute at least 51% of the total value. So, all I'm saying is that there are different criteria and you will have to look to your state enabling legislation to determine what criteria is appropriate for the assessment. Once the special assessment district is created, there should be an explanation provided, typically the property tax statement, and that explanation should help taxpayers understand why they are receiving additional. Now administration. Administration of special assessments is generally pretty simple because it takes advantage of the existing property tax assessment, selection, and enforcement mechanisms that are already in place. Of course, funds raised by special assessment must not be commingled with general property tax revenues. Instead it must be credited to an account that is dedicated to funding the infrastructure project for which the assessment was created. And finally, we'll talk about some legal and regulatory issues. First of all, as I mentioned before, the special assessment is not a tax. Taxes are compulsory payments, but there is no quit Pro quote. In other words, there is no direct relationship between the amount of tax paid and the benefits received. Fees are also compulsory payments, but there is a direct relationship between the payment of the fee and either the receipt of a special benefit or the imposition of a cost on the public sector are. In this way, a fee is more like a price. Now a special assessment is a type of fee levied against real property, particularly in directly benefited by a local improvement in order to pay for the cost of that improvement. The rationale of a special assessment is that the assessed property has received a special benefit over and above that received by the general public. The general public should not be required to pay for special benefits for the few, and the few specially benefiting should not be subsidized by the general public. So that's the rationale for the special assessment fee. States can levy special assessments and they can delegate this power to supported levels of government by statute. So please check your state enabling statute. Does it apply to your jurisdiction or to the substantive requirements, and what are the procedural requirements? One of the key issues is uniformity. Typically, all states have uniformity requirements, either by statute or in their state constitution, and what that says is that all people and properties in the same situation have to be paid the same. Of course, that's basic fairness. And on its face, a special assessment might appear to treat some properties differently than others, because properties within the special assessment district will pay and those outside it won't. But the key here is that as you set up that special assessment district, you have to provide the justification here, showing why those properties within the district are different, and not the same as those outside. So, once you justify the difference, they can be treated differently. And likewise, it's pretty universal to have due process, so prior to having any mandatory fee imposed, affected property owners must be provided with a notice of a proposed project and associated fees, and have an opportunity to comment either in support or opposition. now this slide is titled surviving legal challenges and also perhaps could be titled avoiding legal challenges. As mentioned, your enabling statute will have substantive and procedural requirements for creating special assessment district. Please make sure that you understand those requirements and follow them to the letter. You also have to show that you selected a methodology to accurately and fairly ascertain which properties benefit and which ones don't. This methodology identifies and properties that receive special benefits justifies the liability for a special assessment fee, and there is a relationship between the benefits received and those imposed. The method for apportioning costs among the properties has to be shown to be both fair and justifiable. And fees that are collect it will be applied to the services or facilities incurring the benefit and will not receive actual cost. So those are the key things you have to ensure and document as part of the presentation process. Finally, we'll talk about financing. Special assessments often pay, as we talked about before, if they pay for connecting to water and sewer or they pay for a curb cut, these are simply one time fees that you pay when you get your permit and then you are done. Sometimes they cover operating expenses, either for business improvement districts or for pay-as-you-go construction. Special assessments can be used as a match for state or federal funding. And again, sometimes you use the revenue for long-lived infrastructure projects like water remains or street extensions, and if the revenue is sufficient you can fund these construction projects on a pay-as-you-go basis. However, sometimes you need more money than your special assessment district will produce, at least in the short term. So, if you have a long-lived capital project, sometimes you'll get a loan. Could be to sell bonds to pay for the project, and then you will use the special assessments to pay off the loan or the bond, and this is referred to as financing as opposed to funding. And these are perfectly appropriate, provided that the life of your infrastructure project is longer than the period of financing. In other words, you don't want to fund a capital improvement that will only last three years with a bond that will be paid off over 20 years. So just make sure that the useful life of your infrastructure project is longer than the financing period and then everything should work out well. The other thing to note in terms of financing is that sometimes jurisdictions like to use something called tax increment financing to fund infrastructure projects, and we covered tax increment financing in the previous webinar. Now the one drawback of tax increment financing is that the revenue can sometimes be uncertain. So special assessments can serve as a backstop for these unserved revenues. In other words, because the revenues from the TIP are uncertain, lenders or bondholders either might not be willing to make the loan or they might charge finance fees. So, you say well, if the TIP doesn't provide the revenue forecast, the special assessment will kick in. The special assessment will provide certain revenue and that will allow the lenders and the people who buy bonds to make the loan or to charge lower interest rates, and that may make your project more successful. So that concludes the basics, and at this time, if Terry sees some burning questions about what I presented so far, you can ask me those questions now. Otherwise, we can move on to the presentations from Seattle and Kansas City. Are there any questions at the present time?
Great, thanks, Rick. Thanks for the presentation on the special assessment primer. As we mentioned before, you can download the primer on the website as well as we are going to post it here in a few minutes in the final share. Looks like it's already posted. And yes, we do have a couple questions. And if others have questions for Rick, please feel free to put them in the chat pod. The first question from Julie, can MPOs get legislative authority to impose a special assessment or is it something only a land-use authority like a city can propose?
I think you'd have to take that up with your state legislature. I don't think there's any reason why an MPO couldn't get special assessment authority, and MPOs have -- there's just a tremendous diversity of powers depending on where you are. Some MPOs are just advisory. Some MPOs can actually levy taxes. So, it depends on what state you're in. Now the one place we get especially complicated would be if you have an MPO in a multistate area. So, if you have an MPO that governs say around New York City, which would include New York State, New Jersey, Connecticut, or Philadelphia, where there would be Pennsylvania and New Jersey and Delaware, or Washington, D.C., DC, Maryland, and Virginia. No individual state can grant the state MPO authority in a multistate area. There you would need basically a compact that would be enacted by Congress. But with those sorts of multistate exceptions, I think it would be as long as you have an MPO that's within a single state, it's simply a question of getting your state legislature to enact enabling legislation.
Great. Next question from Natalie, so who can initiate the special assessment district process?
Again, that depends on the state enabling statute. So, you need to look to your state enabling statute. But typically, any jurisdiction that currently has the ability to levy a property tax can initiate a special assessment. Usually it's in the same part of the code, and you have to look at your state enabling statute to determine both the procedural and substantive requirements for doing so, but look to your states code and that will give you the process to follow.
Great. Now James would like to open the phone lines now to see if there are any questions by those who are over the telephone.
Certainly. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone. A voice prompt on your phone line will indicate when your line has been opened. You may remove yourself from the queue at any time by pressing the star key followed by the digit 2 and if you are using a speakerphone please pick up the handset before pressing the corresponding digits. Please press star one at this time.
While we wait, Dorinda posted a comment I believe in response to the first two, same for either, it would depend on your state authorizing legislation, which I think reinforces what Rick said.
That's absolutely correct.
James, do we have any callers with a question?
There are no phone questions at this time.
Great, so what we're going to do now, I see Jon Duel has a question, but I'd like to move on to the next presentation, and we will get to his question at the end. So now we are going to hear from several people who have real-world experience developing and implementing projects utilizing this process. First, we are going to hear from Angela Brady from the city of Seattle. Angela, please go ahead.
Thank you so much. To present on Seattle waterfront's program. I'm always happy to talk about our program and I hope you'll find a helpful nugget of wisdom somewhere within my presentation. Today I plan to spend a little bit of time describing what the waterfront Seattle program is all about, how we got started, where we are now, and really focus in on some of the details of the local improvement district that we used as a major funding source for our program. I'll start by saying the reconstruction of the Seattle waterfront has been a dream of many planners, engineers, politicians, dismisses and property owners since the 1990s, but nothing really beyond early planning ideas were completed until the 2001 earthquake hit our city, and at that point WSDOT, the state and the city realized that it was really necessary for something to be done to address our aging Alaskan Way viaduct, and at the same time the city realized it was time for us to replace the aging seawall, which was also in very poor condition. And here you are seeing the Alaska Way viaduct. It's our old and vulnerable double Decker transportation structure. It's no longer there. It supported 110,000 vehicles a day on Alaskan Way and then we had a surface street along the west side of that viaduct which supports about 10,000 vehicles a day. For those of you not familiar with Seattle, we have two major highways that carry north/south traffic through our downtown. We have identified that runs kind of right through the center, and then we have SR 99, which runs along the waterfront and includes the Alaskan Way viaduct. So after the 2001 earthquake, it took a lot of years of planning and options developments, and environmental analysis, and political hot potato throwing, and several public votes until finally in 2009 a decision was made by the governor, King County executive, the Seattle mayor and the Port of Seattle executives, to build a tunnel in lieu of replacing our viaduct. That decision also included the re-destruction -- the reconstruction of arterial streets to eliminate traffic through downtown, since the tunnel had no entrances or exits into the Downtown Core. So from that decision, the city and state then started working on the details of the plan and exactly what to construct in face of the viaduct, which ultimately includes building a new multimodal surface transportation system along with a set of parks and public open spaces along the waterfront. A lot has happened since that initial decision was made in 2009. The city has replaced its aging 1920s era seawall with a brand-new one. This is really important because it forms the foundation of the city's new waterfront, and this is just an image of the new seawall while it was under construction. You can see the old viaduct in the background there. And here is what the surface looks like now that the seawall is completed. Another megaproject on the waterfront is being constructed by Washington State ferries. They started reconstructing one of its largest capacity ferry terminals in Washington state, which is also in need of replacement due to its deteriorated of status, and this is a terminal that services 8 million passengers per year on the waterfront. And WSDOT has completed and opened a nearly 2-mile tunnel to traffic. They did that in early 2019. And once that tunnel was opened, as soon as it was opened, the old Alaskan Way viaduct was demolished, which frankly has been a noisy, dirty, visual obstruction and eyesore in the city for decades. And we finally have realized the dream of removing the viaduct's massive obstructions between downtown Seattle and Elliott Bay. And that has really opened up the gorgeous views of Elliott Bay and the Olympic Mountains and provided the city with this enormous opportunity of reclaiming our waterfront. This is an aerial map showing you all of these projects together in one place. The area highlighted in yellow represents the waterfront program and all of the elements that we are constructing as part of the waterfront program. The stretch of the waterfront we are reconstructing is approximately one mile long. Early planning for the city's waterfront started with creating a multi-department leadership team to drive the program forward, and these were folks from Transportation Department, planning developing, parks and rec department. In 2009 the city formed what we call the waterfront committee, which is a committee of volunteer community representative and leaders to help develop and support the waterfront program goals, and those folks have become champions of the program over the long haul, and they have been absolutely critical to the success of our local improvement district, or what I'll call the L I.D. moving forward. Together we developed a strategic plan with guiding principles. We obtained political leadership and stakeholder endorsement from the beginning, and it's really important to include, for us, a clear and achievable funding plan, which included an L I.D. and other sources I'll talk about in just a minute. On the design side, we held a very public design competition to develop a vision for Seattle's new waterfront, and this resulted in hiring of a New York taste urban design team, and after a year of public engagement as it related to what Seattle wanted to see on its waterfront, we developed a framework plan, and that plan was used as the basis of design for all of our programs moving forward. And this was all done while soliciting meaningful community input, which in turn provided the city with buy-in and generally got people excited about our new waterfront. And we continue to engage in a strong public outreach approach as designing has increased over the years, and that outreach has consistently included discussions about our funding strategies. Both the strategic plan and the framework plan developed early in the process were endorsed by city council in 2012, and repeatedly referenced throughout the life of our program. A quick couple of slides to share with you what we're doing. We ended up with a project that spans about a mile. Approximately 26 city blocks, from the South and Stadium District to the north end. Several blocks north of the famous Pike Place market if you're familiar with that. The projects it's along the waterfront with downtown Seattle to the east, and instead of historic peers, along Elliott Bay to the west. We have an average of about 180 feet of width of the city-owned right of ways between the face of the Eastside buildings and the water. Here you can see the footprint of the former viaduct structure. We are building the new surface roadway in its place. And what's important to know here is that we are utilizing at least half of the public right-of-way, and in some cases more, toward building an ultra-wide park promenade along the water's edge, with landscaping and places to sit and enjoy the views, and a dedicated space for bikes, including a two-way cycle track which will separate the new roadway from the Promenade, which you can see here. This is a view of the Alaskan Way construction looking south toward the stadium district, new roads being constructed within the former viaduct footprint and the existing road on the right-hand side of the screen will become a wide promenade. This picture gives you a good sense for what the buildings currently look like along the east side of Alaskan Way. And just to give a sense of perspective in the difference the removal of the viaduct has made, here is a quick before and after. So, these Eastside buildings have gone from completely obstructed views to these gorgeous open spaces with wide-open views out to Elliott Bay, and a huge market value has been created here. In terms of the properties along Seattle's waterfront, their value has skyrocketed since -- really since word of the waterfront improvement set out. They've been selling for unprecedented value, and in 2019 there was a property shown on the lower left-hand side of your screen that sold for $44 million, which was the highest sales on record on the waterfront. Nearly every single block along Alaskan Way and the waterfront has renovations or redevelopment land or underway, or already completed. In 2014, I just wanted to mention the city did make some zoning changes to the waterfront blocks to help promote construction of residential, retail and street-level retail throughout the neighborhood. On the other side of the right of way we have a set of historic peers, and although there is no rezoning allowed here, given that these are historic landmarks, the value of these peers has also skyrocketed and expected to see further increases once we complete our construction. So, we are essentially converting a pavement in the before condition into the world-class promenade, and we worked very hard with the existing peer owners and property owners on a design they can support and endorse and champion over the years. And that's been really important to the success of our L I.D. So, bear with me, I just have a few more slides to provide a sense of scale of our planned improvements and then I launch into the cost and funding for the program. Our program has given as much or more focus on parks and public open spaces, as we have two transportation improvement. This is what we call the overlook lot structure, the pedestrian bridge connecting Pike Place market down to our new waterfront, and we also building a new aquarium expansion in this particular location. We will have constructed 20 acres of public open space and parks when we complete our program. And this project in particular captures incredible views out to Elliott Bay and the Olympic. And then we have another project on the waterfront to reconstruct a new park on a peer. And my point here is really just not necessarily to show you some pretty renderings of what we are building, but providing these beautiful public spaces that people can enjoy is what really creates the value in a public right-of-way, and it forms the backbone of the city to property owners as part of the local improvement district funding source that I'm about to discuss. You can see that the state and city have put some real financial investment into the waterfront infrastructure. We all recognized the deterioration, the need to replace these structures, but we also recognize the tremendous opportunities in local and regional economic and if it's of doing so. Obviously government investment matters a lot and we are looking to supplement our budgets with creative funding sources, because it shows that we care about the place and that government has skin in the game, which helps to soften the blow when we ask property owners to pay their fair share. You can see here on the chart on the left, public money with city and state funding along with a mix of creative funding sources including an L I.D., local improvement district of $160 million value, and also an astounding $110 million that we are receiving from the philanthropic community. The total customer program is approximately $737 million and the chart on the right depicts the split in the different aspects of the program budget with a large chunk of money going towards transportation improvements and a very significant amount spent on parks and public open spaces. So, let's talk about the local improvement district a little bit here. Washington state has very limited value capture options allowed by law. Local improvement districts are Washington state's best mechanism to capture value created by improvements and future developments due to those improvements. L I.D.s have a long-established history in Washington state, going back before it statehood. What is an L I.D.? Rick did a really great job of describing what this is. But an L I.D. is a funding tool by which property owners financially contribute to a project that will increase the value of their property. So, an independent consultant, and appraiser makes a determinant of special benefit assessments provided to properties located within a specific boundary as a result of the property value increases expected due to the adjacent public improvement. The city then takes a portion of that expected property value increase and uses it to pay for some of the capital improvements necessary to construct the project. LIDs have funded very large public projects in Seattle. But they're not super popular with property owners, as you might imagine. And then the process is governed by specific state and local laws that require a lot of time and patience and risk. In terms of legal protections and guidelines, there are three basic legal requirements in establishing L I.D. in our state, and these probably vary with other states. So, the total L I.D. assessments can't be more than the cost to construct the improvement. L I.D.s are often more successful when they leverage other funding sources, which is what we did here in Seattle. The second is the total L I.D. assessments can't be more than the special benefit. Generally, this means that the real estate values are expected to increase by more than the amount of the L I.D. investment. And the third is that assessments are proportional to each other. So, the assessment to benefit ratio is equal for all properties in the district. Creating an L I.D. for major projects requires a special benefit study done by a qualified appraiser. We hired one out of a local appraiser out of Everett. And the basis for the special benefit study uses the approximate principle and this is speaking back to something Rick talked about earlier, in terms of the value of the benefit and how that's applied within the city. So, the principal basically says the commercial and residential property benefit aced on the distance from the new improvement. And in our case, we used about 75% of the benefit from a Park is captured within the first 500 feet, or three blocks, of the project, and the remaining 25% of the benefit likely dissipates over a 500 to 2000 foot range or 4 to 12 city blocks. Part of the special benefit study is determining what the increased value to a property is, based solely on the improvements being felt through the L I.D. assessment. The study for our waterfront L I.D. was based on the set of assumptions about before and after conditions. So, your appraiser will need the descriptions of the before and after assumptions from you as an owner, prior to beginning his or her work on the L I.D. assessment. In terms of the waterfront L I.D. area, it consists of most of downtown Seattle, over 6000 parcels with a total appraised value of over $49 billion. A total special benefit was calculated by our appraisers at $415 million, and the city shows an assessment to benefit ratio of 38%, resulting in approximately $160 million in total L I.D. assessment. The choice of that 38% was not scientific at all. It's really more of a political choice. By law we could have assessed at 100% of the total special benefit, however, given the public process and hearings, and legal appeals involved, and also our conversations with some of the city's largest property owners, who we needed support from, we chose to go with what we thought was a reasonable ask here and that landed at 38%. The L I.D. formation process takes a lot of time, and this schedule just shows the timelines for the current phase of the L I.D. process, which is finalizing what we call the assessment role. The process technically started with a feasibility study in 2017, and we formed the L I.D. the city ordinance in 2019, and our city Council adopted the assessment role in June of this year, 2021, and that happened in June, and we've already received approximately $49 million in payments from those assessments, so we are feeling pretty good about where we landed there. One of the ways we helped to build support for the L I.D. was by identifying early wins for our program, like the replacement of Pier 62, which is shown here. We used a mix of city funds and philanthropic funding prior to L I.D. formation to get this project off the ground and running, and this project has been extremely well received. It's generated excitement and public trust in knowing that the city can and will deliver on its waterfront program. Though it was in part of a special benefit analysis, supporters of the L I.D. also conducted an economic impact study to help illustrate the benefit of the waterfront improvements to local property owners, and this was really developed as part of the sales pitch for the L I.D. One of the largest concerns of L I.D. ratepayers understandably relates to the O and M planning, the operations and maintenance planning for our new waterfront, and we have worked together with the friends of waterfront Seattle. They are a nonprofit partner made up of many longtime supporters of the waterfront, and friends are strong civic leaders since supported the program since 2009. Some of them served as part of a counsel appointed waterfront committee I talked about earlier. Some are past politicians. Other our large state property owners. But all of them have brought a passion to our waterfront vision. This really helped to keep our program moving forward in the face of an ever evolving and changing political climate and political leadership. I think we've had seven mayors and countless city council changes over the last decade. You could imagine what the politics were like there. So, as I said, the operations and maintenance question came up again and again. It's really important to L I.D. ratepayers that if they're going to pay into something, they want to make sure the city has got a plan to take care of it. And it was so important to the L I.D. ratepayers that we actually ended up negotiating a companion agreement to our proposed L I.D., which is basically a written agreement that states the city -- requires the city to ensure a clear plan is in place to operate and maintain our new park spaces very well. And in return they -- the folks who actually signed that agreement on the property owners' side, which was about 60% of the net benefit, they agreed to support our L I.D. publicly and not legally challenge our L I.D. So that was key. That was key to our success in terms of advancing our L I.D. So, I was asked to put together kind of lessons learned, successes, challenges, to talk about that a little bit. Talk about that on a couple slides here. First and foremost, an L I.D. process requires a lot of time and planning and patience and risk tolerance. In our case it took us nine years to get through the early planning and the idea of it, to actually implementing the L I.D. So be prepared to spend a lot of time. Second, the political support obviously changes over time when you're spending 10 years working on something. You're not going to have the same political leaders around. So, you really need to find large property owners, strong civic leaders, to help champion your program over time, and those people have to support your L I.D., or the L I.D. That really helped us be successful. It took a lot of dedicated time and staff and building relationships with these property owners, but it really paid off. Thirdly, public trust is huge. Leadership consistency is a challenge, not only does the political leadership change, but when you've got a group of people working on a program for as long as this, people come and they go. For us, one of the ideas that we have in terms of maintaining our success is we created an independent organization structure with the sole focus of delivering the waterfront program, so that we would have limited distractions. We were all focused on the waterfront. We set up a reporting structure that allowed for direct access to the mayor's office, which has really been instrumental for us in getting key decisions made weekly and keeping us moving forward and focused. Another thing to consider is getting annual counsel support action to show a clear history of that support over time. For us, we found that we had a couple of key councilmembers who really helped own this issue and push it and champion it over the years. And we found that it helped to show a clear history so as counsel changes over time, they can look back at all the legislation that was passed, and the planning that's taken place, and really consider that in their decision-making. Last on this sheet is budget appropriately. Administering an L I.D. of this size is not an inexpensive endeavor. In our case we are spending around $6 million-$7 million to make this $160 million L I.D. happen. A couple of other key points. Outreach is huge and communications with the public and how you communicate your L I.D. with the public is a big deal. Online data sharing and communications is clinical. We actually created what we called an assessment portal, which was basically a tool where property owners could look up their property assessment to see approximately how much they would be paying for the L I.D., and those final numbers were delivered and invoiced by mail. But people were able to see before the end result approximately how much they would be paying into this L I.D. In our communications with the public, these renderings showing before and after, you should be ready to show renderings of the Noel I.D. condition. So in our case, opponents argued that the city would build these improvements with other fund sources if the L I.D. didn't pass, and this was in part through because the city did need to proceed with a project of some sort, some improvements regardless of the L I.D. status, due to the conditions left when the viaduct was removed. And basically, our Noel I.D. condition included a sea of pavement with traditional sidewalks and public parking, and none of the green parks and public open spaces that everybody wanted to see on our waterfront, and that help sell the L I.D. I already talked about investing in operations and maintenance. That is huge. Make sure you have a clear plan in place and know how to answer those questions. I have a bullet point about considering exemptions that impact individual condominium owners versus large property owners. An L I.D. of this size requires detailed preliminary final assessment studies by a qualified appraiser. Our state law requires assessment to be proportional to the benefit received and we have no ability to change rates for different types of properties. We also have very limited exemptions. We have a few federal properties that were exempt. However, the law doesn't allow for exemptions for our agricultural land where development covenants are in place. And then finally, legal appeals and challenges can be long. They can be expensive and exhausting and they can result in lower overall assessments. IC you factor in our success in limiting our legal challenges was the negotiation is of what we called the protest waiver agreement which representatives and property owners controlling about 60% of the net benefits. This required concessions from city and some property owners to require strong leadership so port within the property owner community, and agreements to long-term operations and maintenance strategy. We still, however with this, have a small group of determined opponents who did appeal the L I.D., which took time and perseverance to get through. But the city ultimately did settle that appeal, and we are complete with our legal challenges. And the last item I have on here is just to consider, when you're considering L I.D. formation, you've also got to compare that with when you want to start construction and sequence your project accordingly. The city waited to start construction until the L I.D. formation ordinance was passed, so we went through all of the steps, that we went through that first really important radical step of forming the L I.D. But we were able to start on a few early projects to help gain public trust and generate excitement by using non-L I.D. funding. So, I think that is -- those are my lessons learned. This is kind of our before image and hour after image, and I'm happy to move on and take any questions. I will mention also, I do have Dorinda Costa on the phone. She's actually our finance manager here in Seattle for the waterfront program, and she has been essentially the guru behind the brain behind all of our L I.D. implementation. So, if we get into any tricky questions, I see that she's already typing in some answers to the end of the chat. So, thank you.
Thank you very much for that. We're going to take just a couple questions before we hear from Kansas City. And as Angela mentioned, Dorinda has been busy answering questions online. Let's still read them out and have a brief discussion. Natalie wants to know, who can initiate the local improvement district process, property owners or city of Seattle, and what are the requirements to form the L I.D.?
I don't know if Dori has access to voice. Dori, do you have access to voice? I'm just checking. So, I think it really depends -- the question is who can initiate the L I.D. process, property owners or the city. It has to be, in our case, it has to be the city. But I think that varies depending on different state requirements. What else does she have here? Is L I.D. assessment enforceable? Who would be responsible for L I.D.? I'm not sure of the question on that one.
Okay, and I think Dorinda answered that partially by saying if 60% of property owners by value decide to protest the formation of an L I.D., it can't be formed.
There you go.
So, Rick has a question. What is the percentage of final assessments that were protested by the same parties that supported the preliminary assessments and project advancement? How did they waive their legal rights to protest the final assessments? And Dorinda has provided an answer in the chat pod, but Angel, maybe you want to expand upon that.
Yeah, on the question of how do they waive their legal right to protest the final assessment, I talked about the agreement that was made prior to the finalization of the L I.D. assessment, and that agreement was signed by greater than 60% of the property owners. And within that agreement they waived their right to protest. What is the percentage of final assessments that were protested by the same parties? That supported. To my knowledge there were none. Dori responded, but for the final assessment role we've had less than 1% of property owners protest their assessment. So, we have 6400 properties in the final assessment role, and we had 4400 pay already, about one month after the L I.D. assessment notices went to the properties. We consider that a win.
Great. John has a question. What contributes to the $6 million-$7 million in cost to have the L I.D.? Is the 3% to 5% of expected capture typical to plan for in the cost for an L I.D.?
I can't speak to the percentage, per se, but that $6 million-$7 million covered items like administration, management, outreach, all of the materials we had to generate two describe the L I.D. process for both the public and city Council, all the time it took for us to work with all these property owners over the year, to gain the support on the L I.D. It takes a lot of time, and time is money, right? I'm not sure if that's the average across the nation, but I'd be interested to hear from others about their experience.
Great. So, I think for those of you who have specific questions about Seattle, on this slide, Angela gave her contact information. So, feel free to reach out to her afterwards. Now we're going to turn to our last presentation. So, we are going to turn to Tom Gerend, the Executive Director of the Kansas City streetcar authority. And he's going to talk to us about how the streetcars led to development in the downtown district. Tom?
Thank you, Terry. Can I just say everything that Angela just said? She did a great job walking through their details and Seattle has done some amazing work there. So, I'm going to talk about our Kansas City story, and our story really wouldn't be complete if I didn't talk a little bit about our history. This is centered around our modern streetcar that we are currently in the process of expanding and I'll talk about those details. But really, the story that led us to special assessments was a story of failures, actually. We had numerous attempts in Kansas City. We are a unique region. We are a bistate region. The city of Kansas City, Missouri, is about a quarter of our region's population, but a quarter of our jobs, half of our region's jobs are in Kansas, half of them are in Missouri, and the same with population. And we had struggled for many years to advance a plan for rail transit and high-capacity transit in general that would bring dedicated revenues to build out a system. And one of the things that we ultimately learned through a lot of those failures was that our big, sprawling regions are hard to serve. It was hard to develop a plan that had the public support that it needed, and most of those plans got crushed under their own weight because they got too big. What we saw in all of those failures was a core of support in the core of the city, and the conclusion ultimately was that maybe we need to take a different approach and start small. So, I'm going to start with our lessons learned, and sort of then walk into the details. What we saw in those failed attempts was that downtown residents were ready to move on high-capacity transit, but the rest of the city and region wasn't, and we got into this very conversation about equity and fairness. How do we advance a project and a proposal that is fine answerable and that is fair from a funding perspective? As I mentioned, most of our citywide elections were due to political pressure and the need to try to stretch a system to catch votes, to touch Council districts. Ultimately ended up getting too big and collapsing under their own weight. Didn't make a lot of sense. And our city and our region as a whole wasn't ready to take the next step, so that in conclusion, our efforts were better spent on smaller scale demonstrations with more targeted funding mechanisms, where those who benefit pay. And we had some great political leadership back in 2010, to help identify some of these patterns and also look creatively at current funding mechanisms and existing state statutes. So, I would echo what has been said about authorizing legislation in Kansas City, again depending on what side of the state line we are in. We had a combination of community improvement districts, CIDs and transportation development districts, or TDDs that have historically been used for, particularly TDDs, for site-specific incentive or benefit programs that would support surface transportation of sites adjacent to interstates, interchanges, surface roadway, access improvement, sidewalks, those sorts of transportation betterments that help drive it development projects move forward, and we looked at it through a different lens, a broader lens of a broader district. And I'll talk about that in more detail in just a moment. Ultimately to find what was an initial $110 million project and 2.2 route miles, and our financing work really started in 2011 and 2012, and it led to construction in 2014 and opening in 2016. Important for this conversation, out of the $102 million, $67 million was financed through bonds that were issued based on revenues that were received through our special assessment TDD district that we ultimately formed. So, we are bringing new money to leverage federal money, new local money to leverage federal money and get a smaller project done with a much smaller footprint. Here is just an aerial photo for those familiar with Kansas city, of connect the city market, River market on the north of the Missouri River front come through the heart of our downtown crossroads and then we have our union station, active Amtrak station, historic rail train station, and our crown center, major employment district. And here is just a picture of what we opened ultimately in downtown in 2016. So as mentioned, for a transit operation, this is a really unique model and it was appealing for a few reasons. One obviously was on the books in the state of Missouri. It can actually be formed in our case by two different paths. You can have transportation agencies directly form a district, which then requires a vote of the residents or electorate within the district, and a secondary vote to levy, so there is a formation vote and a levy vote, or there's a process where 50 petitioners could petition the state. Elected voters could petition the state. We actually have an avenue where the public can initiate a district, and again, historically, these have been used to support site-specific developments, malls, highway adjacent real estate, et cetera, and we sort of stretched the definition to apply to a much broader system that has direct community benefit and public benefit and that is a public service, and to support both capitalization of the funding needed to build a project, and ongoing operations and maintenance. Uniquely for us, this fit very directly into a policy conversation we had back in 2014 about our fair on our system. I know many systems through COVID have moved to zero fair, but we had an opportunity to really look at an analysis back in 2013 and '14 around the idea of a fair on our downtown system, and the costs of administering a fair, which were significant, and the capital equipment, and what it does to ridership, and what that might do to depressed economic impacts. And ultimately our conclusion was really back in 2014, and then we executed it in 2016 when we opened, that removing the barriers to use would ultimately produce more economic activity and more value into the district, both in terms of sales tax generation and special assessment growth. So, we created this win/win cycle. We removed fares on our system, or never instituted them. We push more people to the transit system. We think 30% to 35% additional ridership on our system from day one, those people buy things downtown. We capture that through really an indirect fare, through sales tax collection and growth in property value that benefits local business and that supports the fund obviously on an annual basis that supports our paying back of our debt service on the capital project as well as our ongoing operations and maintenance. So for our transit project, where we are linking operations cost and long term sustainable revenue collection, this really created a unique synergy between the revenue that we are generating, the activity that we are helping to stimulate on the route, and the need for that sustainable revenue source that can grow over time, proportional hopefully or in excess of our growth of expense. So, our model was unique because it wasn't just one revenue stream. We weren't just looking at benefits and special assessments, we were looking at sales tax, so we had a combination of 1% sales tax within our district as well as special assessments on real property, and we had the flexibility in our state laws to flex rates based on the classification of property, and this was really a negotiation of downtown business. One of the unique things about the formation of a TDD is that it's the registered voters within the district that ultimately vote on formation of the district and the levees, and the unique part of drawing a boundary downtown is that many of the commercial property owners don't live downtown. They don't even live in the state of Missouri, many of them. They live across the state line in Kansas, or California, or Florida, so it's a unique dynamic, and we had to manage that through a really direct collaboration with City Hall and the downtown business Association to negotiate rates. And you see a line item here for the city, which was ultimately a voluntary municipal contribution that really related to the city's share of special assessments to buydown the rates for residential property owners and commercial property owners downtown. And interestingly, initially, when this deal was formed, obviously those would be applied annually, and those would grow. The rates would remain stagnant but the revenues would -- to the district but Ash would grow as values grew, and ultimately our growth in other areas, sales tax, non-city properties, far exceeded our forecast and you were able to capture the city's contribution, their net contribution, so their effect of rate is decreasing every year as their net contribution has now been fixed through agreement. So, this is the context on the left. You have our transportation development history boundary. So as mentioned, our route is about 2.2 miles north to south, so that gives you some context for the scale. And then on the right you have the broader region and then the yellow area is Kansas City, Missouri, municipal boundaries, which is 119 square miles of sprawling city. So you can imagine trying to pass a vote in the yellow that's really benefiting primarily your direct the location in red, that small, little, we like to call it the Gumby shape for those of you familiar with Gumby, the Gumby district on the left. So, we were really -- those who benefit pay and that allowed us to forgo a citywide vote ultimately in that yellow and move the project forward. So again, I won't go into details of the equivalency here is for context and scale. If you own a $200,000 -- or a $250,000 condo, your annual special assessment would be about $260 a year. So that sort of gives you a scale on the residential side of what we are talking about. And what we saw, this is a little bit dated. We saw just on the sales tax side was that our growth and collections was far exceeding our forecast, far exceeding citywide growth and sales tax, and exceeding our growth and expenses over time. The way that our two different primary revenue streams are structured, the special assessment has a 25-year sunset, which really coincides to our debt service on the capital project, and the sales tax is a long-term to support the ongoing operations and maintenance. The special assessment will fall off after 25 years. This is how this was ultimately formed. This is one of the goals of development and we see the growth and development far exceed our original forecast downtown and the rate of return here far exceed, which has been great. We took a very conservative approach. We sort of took the historic growth trajectory, both in terms of sales tax and real estate. We didn't assume induced economic development because we didn't want to be wrong and we wanted to be able to pay back the bonds and operate the transit system, so we took a very conservative financial approach to modeling this, knowing that you would likely induce economic development. We believe that to be true. We would collect more than we anticipated and be able to ultimately reduce assessments, even over the period of that 25 years, or portion with our growth beyond our forecast. So that's been great, and again, we've seen really direct activation up and down the route, and I've got some slides. I won't go through the detailed project but those of you familiar with Kansas City know we are a pretty low-density metro. Even the heart of our downtown is really still littered with underutilized properties, surface parking lots, and sites that definitely can survey higher and better use. We see the route catalyzed development that had really previously never happened at the levels and the densities we are seeing there, and definitely used to happen much slower to the degree they happened at all. So as Rick mentioned, also, earlier, what our experience was directly what he communicated, which was we started to see the growth and development as soon as our project really became public, for it was ever built and opened, and this sort of just charts our growth in population downtown over the top of sort of some of our streetcar milestones in terms of starting planning when we opened in 2016 and where we are now, which has been really a sustained rate of record levels of residential growth and we've now over the last decade, we just saw the senses added about 25,000 residents to our Downtown Core, which is right where we want to be and we are looking to add another 15,000 over the next 10. Our goals and results, obviously this is about moving people but it's also about catalyzing development and capturing some of the value from that development to support our operation, and those cities of all panned out as we had hoped, and better than we had hoped. It wasn't just about the new construction, though, as great as those pictures are. It was about supporting the existing business. And this is one of the areas where we have folks really, really nervous, before we opened, and it took a lot of handholding and engagement and multiple years of efforts, in fact, to help bring people along and ultimate the proof that the value that we thought we would bring, we would actually bring, and you see 98% of businesses on the route since we opened have indicated a positive impact. There were fears that this would be the case. That led to political challenges. We did have legal challenges of our process as well that cost us some delays and ultimately public satisfaction, and all of those things led to what we had hoped they would lead to, which was a conversation about how we grow ourselves and our system beyond downtown. It was never intended to be just a downtown effort. It was a start, and since we opened in 2016 we've been working aggressively on multiple extensions of both the system and our financing district, our transportation development district, and had since proposed expansion of the 2.2 mile line to be over a six mile line, so tripling the size and greatly expanding our assessment zone, which you see on the right, moving from the green area to the green plus the yellow area, which connects all the way south to our university, to the country club Plaza shopping district, through the most dense neighborhoods in our city, and that proposal to extend both the special assessment on residential and commercial property, and the sales tax, passed in that district, which was 30,000 registered voters, by a margin of 70-30. So, who would think a sales tax and basically property tax would pass 70-30, when you couple it to a real project that people see value in.? They're going to pay for it, and we are seeing that loud and clear. And ultimately that has allowed us to leverage that additional local money to compete for additional federal money. We received a full funding grant agreement for U.S. DOT and FTA, as many of you know, one of the largest national discretionary programs we've had on the books for decades, for almost $200 million in federal money, to build a $350 million extension with no additional city contributions. We talked about the city contribution negotiated downtown, the expansion retains the net cap on the city's contribution, so the city is contributing $2.309 million per year on downtown and that amount will never grow, and it won't grow as we expand the system. So, 100% of our new local share is coming from our expanded district, to support that service on the bonds, matching the federal money and annual operations and maintenance expense for the entirety of the system. That's federal money in a federal program that the state of Missouri hasn't been able to capture any resources from for over 20 years, since the light rail project was built, and Metrolink in St. Louis. Said bringing new money has freed up to federal money. Bringing new local money freed up federal money, and that's key. And obviously what we are seeing already, we are now on utility relocation. We are going to start streetcar construction on the first of the year and we will be opened in 2024, or early 2025. And what we are seeing obviously is already the announcement of the expansion, the passage of the public vote as land rush along the streetcar line continues. The goals, the results are speaking for themselves and we are moving our city forward with projects we otherwise would not have the resources to advance, and the one challenge with this model is it doesn't work everywhere as we extend beyond this core spine. Some of the other areas of the city that need conductivity and investment at a higher level than our current system can provide cannot be financially supported with the extension of the TDD, because we don't have the property value. We don't have the sales tax generation needed so it's now leading to this is a great tool for an appropriate context, but for other locations we need to scale a broader revenue stream as many of your cities and regions have done, to be able to move farther, and particularly as we approach questions of equity and regional conductivity, how do we connect and serve the region? It's not just through this tool. It's through other tools and it's about finding creative solutions. So, I'm going to go ahead and shut down my presentation and pass the torch back to Terry, and happy to answer any questions people have.
Thank you very much for that. We've got a number of questions lined up. So, let's start first with Rick has a question and Dorinda has provided a bit of an answer but it would be interesting to hear others weigh in. I'm interested to know, agencies address legislative or counsel's concerns where their actions have committed future elected parties to a long-term obligation of political and financial commitment.
We handled this -- most cities build infrastructure and they bond projects from time to time. The utilization of bonding for public investments is, I think, pretty common practice. So, what's unique about this model is that we are bringing dedicated revenues to support the repayments of those long-term obligations that -- that part of this model is unique. So, we leaned heavily into that in our local communications, our city financial staff obviously sort of good debt and bad debt, and its complicated equation, but ultimately having voter approved, dedicated, long-term committed revenue streams makes that an easier lift. It still not easy to do things, but by the fact that we can bring voter approved dedicated revenues for this purpose I think definitely eases the path to these long-term commitments.
Angela, do you want to weigh in on Seattle? I know Dorinda has provided a partial answer also.
This is going to say, what Tom said. I talked about on my presentation a lot about just making sure that we are laying the trail of breadcrumbs with city council over the years has been really helpful. So when you get new city Council members, they are forced to look back at history to see, okay, we've made this commitment and these are the reasons why, and therefore, they can always vote against what the trail of breadcrumbs that you played for them, but we found that it's been super helpful as an education tool and also for them to see the long-standing support.
I would also add there was sort of a unique dynamic that we didn't anticipate when we started this. People originally, the first project, property owners were very defensive, and it was very much a negotiation to try to get to yes, and the solution that we can move forward with. That's what we did, and most of the folks were around the table were there to protect their interests, and before we even opened the system, but definitely after we opened the system, those folks shifted from being there to protect their interests, to being sort of active owner investors of the system. They are bought in, literally financially bought in and they've got a different level of commitment and motivation to ensure that this effort succeeds. So indirectly, unintentionally we created champions that were really skeptics of planning to financially protect their interests, who ultimately now have it in their best interest for this to work really well, and we've seen again, sort of reflected as it was demonstrated, the value, and that's been demonstrated through our expansion of the district and a strong vote. Property owners are now coming to the table, and you don't get any feedback, negative feedback from folks on their special assessments. We thought we would get inundated, that all of the discussion was on the front end of the process, and now we are executing the plan, and folks are owners of the system assets. They feel bought in and we use that to our advantage all the time, and it makes for a better project, for sure.
Excellent. We have a California-based question. Can anyone speak to how SIDs work differently in, given proposition 13 limitations on growth in assessed value? They noted that there are a number of participants from California on the webinar.
This is Rick Rybeck speaking. I'm not an expert on California, but I have paid a lot of attention to proposition 13 over the years, and my understanding is that proposition 13 applies to taxes, and one thing that I think we've tried to make clear during the presentation is that special assessments are not a tax, they're a fee. So, I do believe that under proposition 13, fees might be exempt. But you need to -- you need obviously to speak to somebody who is a specialist on prop 13 and its related provisions in California. But that's my recollection for some prior discussions.
Anybody else want to weigh in on prop 13?
All right. John Duel had a question. Are there special considerations when a property is in a special assessment district and a portion of the property is taken for the project? He notes that on federal highway projects, consideration of the capital improvement project is not allowed in the appraisal undertaken.
Rick, I think you wanted to answer part of that question. Then we can open up to others. Rick? Have we lost Rick? Anybody else want to respond?
Hi, I apologize. I accidentally hung up after I finished my answer. What did I miss?
We missed your accolades of you. I was asking the question from John Duel, are there special considerations when a property is in -- and a portion of the property is taken?
I think John's question, if I understand it correctly, is when you're doing eminent domain and the property owner is asking for the fair market value of their property, is the fair market value of the property determined before or after the project is completed? And I think the fair market value of the property is the value before the property is undertaken. Because after all, if the property isn't taken, then the project doesn't happen, then the value isn't created. A good case in point, if you will, I think it illustrates this point, and I don't know, pepper, if you could bring up my slide deck again, if you can, or I guess I could go to the next slide there. Maybe not that one. There we go. This is an indication of we built a new transit station on the red line in Washington, D.C., between two existing stations, and can people see the illustration there? Basically, in the center is a square, two squares. Their diagonal line running through the right side, going up and down, that's the railroad line, the transit line. And their new station was built in this location. And basically, the thing is that we needed to acquire some real estate that was privately owned to move the station and the rail lines a bit to the west, the left. And what ended up happening was that the landowners donated that land. They did not require us to go through special -- and why was that? One of the reasons we created the special rail station and the special assessment district to go with it was because these owners were not allowed to develop their property, because there was no transit and the road network was already maxed out. So, we were desperate to have the rail transit and we knew by having the rail there, it was going to hamper the value of their property. So, they were happy to give away what little slivers of land they needed to make this project happen in order to get the value benefit on the rest of their property. But I hope that answers John's question.
Great. Angel, did you have anything to add?
I think I did a great job with that. I don't have anything to add.
One thing -- let me just show what happened as a result of the special assessment district going in. This is the after picture. So as you can see, the before picture, lots of vacant land, and in the after picture, lots of development, and some of the -- this aerial photo from 2019, a lot of the vacant land that's in the upper right-hand corner and the green space there has all been developed now over the last two years. So, development has gone gangbusters as a result of the station and the fact that we financed it through a special assessment district that does not penalize new development.
So, we've answered all of the questions that have been posted. What I wanted to do now was thank all the participants and thank you for your questions. One thing to note, the federal highway value capture implementation team is prepared to revive technical assistance and training for those municipalities and agencies that are interested, and for additional information on how to utilize value capture technique, you should reach out to Thay Bishop, who is federal highway administration. She is one of the two co-leads along with Stefan Natzke. So, there is in addition to these primers, these webinars, and frequently asked questions, there is also assistance. And with that I'd like to turn it over to pepper to remind us about the next webinar as well as the evaluation.
Before we carry that -- a little conclusory comments about special assessments.
Go ahead, Rick.
So, we've had a lot of discussion. I think the examples from Seattle and Kansas City were really fantastic. I would just want to help clarify because of all the details, what for me are the key takeaways. First, infrastructure improvements often increase the value of nearby land and failure to return this publicly created value to the public sector that creates it impoverishes the public sector. It also means that the general taxpayers end up subsidizing windfalls to a few private landowners. So special assessments can help cure that situation. Second, returning publicly created land values to the public sector is not only a source of overlooked revenue, but it creates fairness because those receiving the special benefit pay in proportion to the benefits received. And finally, it helps create more efficient land use by encouraging development adjacent to new or improved infrastructure. Many taxes and fees discourage development. Value capture and special assessments, if properly designed and implemented, will actually encourage development, and enhancing job creation and enhancing the affordability of the development that ensues. So, I just wanted to leave summation of the key points and special assessments. Thank you.
Sure. Thank you, Rick. This is pepper. Just brought up our schedule for our two remaining webinars this year. Next one is September 15th, on the topic of risk assessment or value capture limitation, and then we have one in October, on October 6th, on making business and economic case for value capture strategies. The link that you see there will allow you to register for both of those events. They're also at 1:00 Eastern on those two dates and you will also on that page find recordings of the webinars that we've been running since March of this year. So, we encourage you to visit that site. And if you look to the left of the screen, you should see a file share window. It's just above the audience chat. If you bring your mouse pointer over, either those files, the first one is the slide -- compilation of today's slides. The second file, labeled number two, is primer itself. When you bring your mouse pointer either over those files you see an icon pop up. It's a downward facing arrow. You click on that. It will start the download process. And if you click on the three dots in the upper right corner of that file share window, you should see a menu that has an option for download all. That will allow you to just pull them both in time. So, with that, I would like to -- I'm going to bring up our evaluation tool. We encourage you to help us improve the webinars series by giving us feedback on today's events. As promised, I'm giving information on how to request confirmation of your participation in today's webinar. To do that you can send a request to value capture at DOT.gov. That's value capture, it's all one word. You can see that email address in the upper left corner of the screen now, under evaluations and instructions. That's value capture at DOT.gov. We invite you to use the evaluation tool to provide feedback to us and the feedback directly to value capture DOT.gov. We'd like to thank today's receptors, Rick, Angela, and Tom for their presentation today and acknowledge the ongoing support [ Inaudible ] -- again, please join us on September 15th. Thank you very much.
That concludes our conference for today. Thank you for participation and for using AT&T teleconference service. You may now disconnect.
[ Event concluded ]
[ Music ]. This message is intended only for the use of the Addressee and may contain information that is PRIVILEGED and CONFIDENTIAL. If you are not the intended recipient, you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error, please erase all copies of the message and its attachments and notify us immediately.
>>
