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ROUGH EDITED COPY
Department of Transportation - Federal Highway Administration
Value Capture: Capital Improvement Program and Planning Elements
Wednesday, June 7, 2023
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Job No. 22442
CART CAPTIONING*PROVIDED BY:
LINDA M. FROST
on behalf of
MID-ATLANTIC INTERPRETING GROUP, INC.
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This transcript is being provided in rough-draft format. Communication Access Realtime Translation (CART) is provided in order to facilitate communication accessibility and may not be a totally verbatim record of the proceedings. Due to the nature of a live event, terms or names that were not provided prior to the assignment will be spelled phonetically and may or may not represent the true spelling.
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>> OPERATOR: Your conference will begin momentarily. Please continue to hold.
>> THAY BISHOP: Hi, everyone. I apologize if you're hearing me, please dialed into the conference number listed above the audio information window. We apologize for the technical issue, and we are working to resolve that, we hope will be able to listen and watch at the same time, using your phone and your computer.
>> PEPPER SANTALUCIA: My name is Pepper Santalucia, and on behalf of the Federal Highway Administration, and its everyday accounts initiative, I would like to welcome everyone to this webinar on value capture, and capital improvement planning.
Our webinar will run for two hours. It will go until 3:00 p.m. eastern time. We are recording the event today, and that recording will be posted to -- eventually the to FHWA Website. The speaker slide will be available for download toward the end of the webinar and will also be posted on FHWA's value capture Website. If you intend to use your attendance today toward continuing education or other training requirements, you will be able to request confirmation of your attendance of today's event. We will provide information how can you do that at the end of the webinar.
Just a quick orientation to the webinar room, again, as I mentioned, why are rye lying on the dial-in info you see on the top left corner of the webinar screen. The good you, if you're participating by phone, you will have the ability to ask questions by phone if you so choose. The operator will give us instructions on how to do that, at the appropriate time. And you can also enter questions in the audience chat in the lower left corner of the webinar room. We will make some time for questions and answers at the end of each presentation, and we are also planning for some Q&A time at the end of the webinar.
We don't have time to address all questions submitted, we will post written responses along with the webinar recording, on the FHWA Website.
If you would like to see closed captioning during today's event, please click on the CC icon on the bar along the top of the page and select the show captions option that you should see on the drop-down menu.
Before we begin, I just am going to pull up some poll questions that we traditionally open our webinars with, these help us to understand the make-up of the audience today, and their baseline level of knowledge about the topics that we'll be discussing today, and, as you respond to those poll questions, I'll go ahead and introduce our first presenter. Dr. Rafael Aldrete is a senior research scientist at Texas A&M Transportation Institute and is a Texas A&M University system region fellow. Rafael has more than two decades of experience in transportation research and management consulting. He's used to collaborating with local, state, national state, and Federal agencies. His research interests revolve around infrastructure finance in economics, focusing on public private partnerships and value capture.
Rafael has offered multiple guidelines, primers and technical document per value capture education, funding and financing and he's produced those for both FHWA and Texas DOT.
Rafael is the primary author of FHWA primer on value capture in capital improvement planning that was published in 2021. We will make that primer available for download toward the end of the webinar.
Just taking a quick glance at our poll results, thank you to all of those who are able to respond. Looks like we have a heavy representation from local government which is to be expected. Of course, we welcome all of our other audience members. And surprisingly, we have a lot of first-time attendees of our webinar series. We hope you'll come back and join others, we'll be sharing the link to the registration for remaining eight webinars that we have in the series planned for this calendar year.
So, with that, I'm going to bring up Rafael, your slide deck, and I will hand things over to you.
>> RAFAEL ALDRETE: Thank you, Pepper. Hello, everyone, in my presentation, I will be providing an overview of the primer that Pepper mentioned. On what is important about my presentation is that it's going to help introduce some common key concepts that are going to be important for the understanding or kind of gathering -- getting the best out of the presentations of my colleagues will make after me.
So, to get started, the primer covers some key elements of the capital improvement program, CIP it emphasizes the use of value capture techniques for transportation project, it stresses importance of coordination of local governments, and planning agencies and other local governments. This coordination helps secure the best combination of local, state, and Federal funding sources to ensure the timely delivery of transportation improvements.
So, following my presentation, our guest presenters will share first-hand account of the case studies included in the primer.
The presentation is divided into five sections that summarize different sections of the primer. It begins was overview of CIP process followed by the description of the process to develop, implement CIP, and I will move on to highlight some of the opportunities and challenges associated with implementing the CIP, and we'll finalize with the review of the value capture techniques that are most commonly used in CIPs. Of the case studies will then policy.
So, what is capital improvement programming? We define it as scheduling of capital improvements over several years. Taking into account available fund and community priorities. The CIP is the outcome of the capital improvement program process which consists of a capital program and capital budget. Capital prom serves as planning and financial management tool, it outlines the cost and funding schedules for all of the cap programs planned for the next five to ten years. CIP serves as capital budget for the upcoming fiscal year. The proposed budget needs to be reviewed and adopted by the local governing body in conjunction with the operating budget. That's the description of our process.
So, one of the objectives of the CIP, the purpose much the CIP is needs to align needs with capital improvements with available capital resources. It serves for local communities to achieve their planning, fiscal management, and budgeting objectives. This slide shows some common objectives of the CIP, but more important to keep in mind, when we have situations such as metropolitan areas, the intergovernmental relationships that exist between all of the agencies represented, greatly influence each local CIP process, and objectives. Metro area, often consist of multiple municipal government, County, special districts, and agencies responsible for critical infrastructure, such as highway and transit systems.
In the realm of transportation networks, metropolitan planning organizations, are important in planning, allocation, and development of transportation fund for regionally significant projects. Therefore, the very important possibility of the CIP process coordinates transportation priority projects at the local level with those outlined in the transportation plain, and transportation improvement problems or TIPs. This coordination assures availability of the transportation fund and grantee's availability of fund when the programs are executed.
There are four elements within CIP.
We start with narrative which include objectives and narrative of the CIP. The description of the CIP process, the priority investment areas in general, projected expenditure, funding sources, they impact the projects in the operating budget and descriptions of the project. The communities may have departments that focus on each of the department's assets and project relationships.
So, for example, you may have a community where there's transportation section of the CIP.
Second, we have the prioritized list of projects and cost estimates. The CIP provides cost force all projects for the next five to ten years.
Specifically, the CIP provides a cost from live to date, the cost for the next fiscal year, and the estimated future cost for each capital improvement. So, just to get a picture of what happened before, what is going to be happening in the next year and future years.
Third, we have the funding sources. The CIP provides the amount of economics resources provided by different funding sources for each project, from live to date. For the fiscal year and also for future years.
So, the last element of the CIP is the project detail forms. These forms provide the most detailed information about each project that is included in this CIP.
So, as background, some of the characteristics or uses of CIP, have -- it's a versatile tool, that local government can use to help fulfill multiple functions. First, it's a planning tool. So, while the comprehensive plans and transportation plans of our community offer guidance, they lack a specific project list within a defined time frame and budget. The CIP fill this gap by serving as the planning tool for implementing the comprehensive and transportation plans, for example.
Second, it is a fiscal management tool, because the CIP plays a crucial role in identifying capital needs in advance, aligning them with state and Federal transportation fund that are reflected in the metropolitan division and planning documents like the MTP and TIP. It ensures that the local priority projects qualify for federal and state transportation fund. And finally, it's a budget tool and that's because the first year of the CIP serves as capital budget for the upcoming fiscal year. Additionally, the CIP also provides some estimates of the impact of executing each capital project on the operating budget.
This information contributes to the review of the annual budget and some government use the CIP as a means to maintain a balanced budget which usually is required in several states.
The next slides are going to be dealing with the implementation of CIP. The primer devices a CIP implementation in three major phases, development of the CIP, implementation of CIP and administration of the CIP.
And before discussing the CIP implementation, let's consider some of the common local and regional guiding documents crucial for developing a CIP. The image on the screen shows transportation related documents. Basically, we have four levels that reflect the influence of the guiding document on each other. Horizontally, the local jurisdictions and regional jurisdictions and they illustrate the relationships between each one within each of these two, Federal and regional. So, local, and regional. And the influence they have on the CIP. So, we will start with the left-hand side, the local jurisdiction locals. We have comprehensive plan, which provide community vision for 20, 30 years, next, down below, we have transportation plans that may focus on specific modes or specific locations of the community and look at 20-plus years. And then, we have the CIP, and CIP prioritizes transportation projects for four to ten years, and it supports the comprehensive and transportation plans.
And, like we discussed, the CIP shapes capital and operating budgets which in turn influence and inform the annual budget.
Now, moving to the right-hand side we have regional metropolitan level document and at the top we begin with the piece that develop statewide long range transportation plan. Next, we have the MPOs which adopt MPPs which have long range or short-range studies for integrated transportation systems in the metropolitan region.
Very importantly, the MPPs are fiscally constrained for about 20 years as required by Federal law. Next MPOs develop the TIP and develop the state TIPs and the influx of MPPs, prioritized list of transportation projects.
Finally, the bottom we have the UPWP which outlines the work for one to three years, including the responsible entity, and Federal and matching fund.
So, it is very important to maintain close coordination between the local government and regional planning, for all -- the development of each one of these documents and for the CIP. This ensures that the CIP transportation projects that rely on state and Federal fund are reflective in the regional guiding documents and ensure timely access to necessary funds.
As you can see, there are -- we can see the parallels between the CIPs for the local government and MPOs TIP and state DOTs -- STIP.
So, now, let's get started with the process of developing the CIP. And we divided into nine sequential steps that we're going to discuss in detail in the next few slides. Okay, you saw the first five, and now you see here the last four. Having a total understanding of the local government CIP and internal and external stakeholders is crucial in each step of the process. It is crucial to under the stakeholders needs, priorities, as well as resources they may be able to tip throughout the process.
Internal stakeholders include, for example, the public, the government governing body, as well as staffing each over's departments.
The external stakeholders will include among others, Federal agencies such as FHWA, Federal Transit Administration, state agency, such as state DOT, state environmental agencies and regional planning bodice.
To begin the CIP process the first crucial steps involves establishing local framework and assigning response acts for its government. The local governing body plays a key role by adopting a by law that mandates the adoption of CIP. The local government also often empowers a designated CIP coordinator that has a role of overseeing and coordinating the development of the CIP. The position of CIP coordinator is typically held by a local government official, such as a Mayor, or city manager, or it may be occupied by a staff member from a department like planning, public works. CIP coordinator may have the support of all of the stuff, or consultants. And they may collaborate with CIP planning board or CIP advisory committee, which is composed of different stakeholders at the agency level or public level.
To ensure a smooth and efficient process, the CIP coordinator, establishes, as scheduled for the specific deadlines of each step in the CIP development process. And these schedules would allow for smooth implementation, and delivery of projects every year.
The second step that we have is preparing existing capital assets and here for each asset, the inventory ideally should include the date when the asset was built, the date when it was acquired or last improved, the regional cost, current condition, expected useful life, depreciated value, extended use and any other scheduled replacement or expansion updates.
Next, step No. 3 is determining the status of the previously approved projects and this step involves reviewing the capital projects that the local government already has under way to evaluate, number one, if additional fund is needed and to determine the amount of unspent fund that may be available for projects that were already completed or that were discontinued.
This allows -- this allows to assess any changes in the schedule of the project
Next step No. 4, and it is assessing the fiscal and financial resources, and this involves analyzing recent trends, projection of revenue, expenditure, and to assess fiscal policies of financial constraints of the community. The results of assessment held CIP coordinator propose a new CIP that has a funding source scheduled that is aligned with these constraints.
Next is the solicitation and compilation of project requests, where CIP coordinator solicits each department, list of capital improvement projects that they wish to be boo included in the CIP, in ranking order of priority.
Steps, step No. 6, which see involves evaluating, prioritizing, and selecting projects. Here the CIP coordinator has meeting was leaders to discuss proposals that have been received, this also incorporates perspectives of the public. The object is to create a CIP that aligns with official policies that support projects that support community's developing goals and can be submitted for approval by the community's governing body
Transportation project specifically, is based on their consistency and its comprehensive transportation plans, technical visibility, proposed cost and schedule and relationships that they have with all of the projects. And projects prioritize a scoring system that evaluates the value each project brings to the community. However, it is very important to note that scoring sometimes do not substitute professional or political judgment. Some projects may rank low based on the scoring system but may be scoring to specific need or resource availability. For example, a project that doesn't contribute to our policy area, but is essential, such as placement of aged bridge can be prioritized higher based on resources available.
Knicks have development of CIP financing plan that is the payment method for each financial resource assessments. There are various sources and mechanisms pore for paying for capital programs as we know, and includes state and Federal grants, and techniques and state assistance.
While the state and Federal grants is the funding source for most significant project, they have surpassed the available resources which has created a funding gap, and in order to address this, many communities have embraced using innovative funding or financial techniques and value capture is one of these. Explaining an increasingly important role in this process.
Value capture techniques help communities generate local transportation fund and bridge the funding gap. This process develops a CIP financing plan starts by identifying the funding source for each selected capital improvement then the CIP coordinator may be incorporated value capture techniques as needed to secure traditional funding. Once traditional funding sources are identified, then CIP coordinator evaluates funding mechanisms and has enough information to develop a financial plan.
Next is step No. 8 which is prepare the CIP draft and this is development of the final CIP draft and recommended capital budget when the drafts are finalized, they are submitted for review and adoption which is the last step in the development of the CIP.
In this step, the governing body will review the CIP because they will need to be included in the annual budget. The project and capital purchases are included for the very first time in the CMP and ongoing projects may have caused delays.
Finally, it's important to identify projects that may have not moved in the last couple years because they impact the cash flow. This is important.
At this stage, the public organizations have an opportunity to review the CIP and at the end of this process the resulting CIP and budget are adopted.
So, let's move on to the administration of the CIP, and administering a CIP involves two mean steps, instituting the approved CIP and updating it. The execution involves several categories, including planning and community engagement, environmental processes, right-of-way acquisition, design, and construction, and in transportation project, these sections can span multiple years with planning and community engagement, taking a significant amount of time. Environmental processes and right-of-way acquisition also contribute to the complexity and uncertainty of the execution of a project. The CIP serves as a coordination tool to ensure the projects are schooled according to schedule.
Now, regular updates to the CIP are essential. Most communities annually or biannually to incorporate new information, policies or new proposed project and this process of this update involves repeating the steps that we just discussed.
And the object is to ensure that the CIP is up to date in any given year.
Now, the relationship between the CIP and annual budget that we have touched upon earlier, the scream states the relationship. What we have is capital costs in the first year of the CIP. About the recommended capital budget. Some of these capital costs are contemplated in the capital budget also transferred to the operating budget. This is a case, for example, of Capital expenditures that are funded using financing mechanisms that involve that.
In addition to that service, other characteristics or information on the capital budget that influence the operating budget, include those projects that may affect the maintenance cost of assets, or that may involve the costs may change the cost of professional services.
And both of these result in the annual -- adoptive capital budget and adoptive operating budget.
Now, let's move on to the next section, and really, this section is really to illustrate how implementing a CIP enables communities to adopt systematic approach to planning, and acquiring funding for, and implementing capital improvements, because this approach allows the communities to align the program, the CIP with needs and priorities which in turn helps gain support from elected leaders and public. And while there are challenges, the message here is that for community -- especially for communities new to CIP, implementation is that the benefits of implementing one finally outweigh the cost of overcoming obstacles and challenges.
Implementing a CIP, provides significant students and challenges for key areas, public and political acceptance, equity, cost, and administration. Let's start with the first one, public and political acceptance. Public perception of the CIP process relies on transparency and opportunities for public input. Fortunately, the CIP provides multiple avenues for public engagement which ensures that the community needs, and priorities are selected. This transparency, for residence, business, developers, investors and promotes community vitality by helping maintain the sustainability of taxes and services in a community, which is also very important from the public perception aspect.
On the other hand, the CIP also generates political support by offering a systematic and rational approach to identify and prioritize public investments. It introduces pressure on elected officials to prioritize low ranked project, and the CIP also aids in maintaining consistent payments and tax rates over time which is also very important from a political standpoint.
However, there may be challenges in gaining political acceptance, in particular, if we have, in case where's elected officials may be hesitant to share control of the CIP process with the public, or with other environmental entities.
The next area to consider is equity. Implementing equity assures fairness among stakeholders when making decisions. It involves ranking decisions such as populations served, geographic area, socioeconomic needs, and project readiness. By prioritizing projects in this way, capital improvements can be strategically located where the public needs’ priorities are greatest which in turn ensures more equitable distribution of resources.
In some cities such as City of Baltimore, additional steps have been taken to enhance equity within the CIP process and this include incorporating equity specific indicators to assist how CIP allocations are distributed across different neighborhoods, as per scoring criteria.
The next category is cost. A CIP can afford community financial benefits which include good credit ratings, economic development, and more importantly to successfully compete for Federal and state fund.
The cost challenge that communities may face in implementing a CIP is that it requires a multi-disciplinary team that is skilled in areas such as financial management, project management and public participation. And all of these things cost.
Associated to cost we have administrative challenges and opportunities, and this is because managing and maintaining and monitoring a CIP poses challenges such as, you know, especially when it is for the first time, the CIP requires a significant amount of effort from local warrants and staff which may stretch resources too thin. Of course, over time, as the community gains more experience with developing CIPs, this process becomes more familiar and demanding.
Now, let's talk about the role of value capture technique in the CIP. Funding sources and financing mechanisms, we already discussed plenty. They play a vital role in the CIP, because they determine the scope and accessibility of the local improvements. The CIP identifies specific funding sources and mechanisms for each project and this in turn allows the government, the local government, to leverage different and diverse funding sources.
On the other hand, as we already discussed, too, the increasing demand for transportation projects has surpassed the traditional funding sources and we talked about the funding gap for transportation projects, and it's really here value capture techniques emerged as a solution for many communities, they help bridge the funding gap and expedite availability of transportation projects.
I guess with this, I will be closing. There are four value capture techniques, that are commonly used as funding sources in the CIP. These include impact fee, special assessments, utility fees, and tax increment financing, the case studies that follow, my colleagues present will contain impact fees, transportation utility fee, special assessments, and tax increment financing.
So, I will end here, and my colleagues will cover in more detail some of these techniques. Thank you, Pepper.
>> PEPPER SANTALUCIA: Thanks, Rafael, again, apologies to our audience for the audio issues. If you have a working phone line above, and we're glad to have you still online with us.
I'm going to go ahead, in the interest of time, and see, we have at least one question in the chat, but we will move ahead it your next presentation and try to address that question a little bit later. I'm pleased to be able to present our next presenter, Raymundo "Ray" Dovalina. He's recently been selected to serve as assistant County engineer for Harris County. So, we congratulate him on that appointment. Ray has more than 32 years’ experience, planning, designing, constructing, leading, administering, complex large scale public works improvements.
Prior to joining Harris County, Ray held various executive level positions with the City of Phoenix and with the Texas DOT. Ray's professional career began with California Department of Transportation and spans more than 25 years in the publish sector as well as time in the private sector. Ray is a registered engineer in great states of Texas and Arizona. Of the with that, Ray to you.
>> RAY DOVALINA: Hi, everybody. How do we supplement impact fee with a Capital program, and it's focused on the City of Phoenix area.
Let me go to the next one. So, my outline here is, this particular project that we worked on, it was the City of Phoenix project that was tied to development -- economic development and also tied to one of the largest freeways that was built a couple of years ago, and the metropolitan area of Phoenix. I'm going to go into the city's budget process and how we incorporate the capital improvement program with that city's budget process and talk specifically about the project -- the baseline road project that ties into the South Mountain Freeway and finish up with some comments about the process that we did through a development agreement with the developer, the landowner, adjacent to this project and a little bit on the impact fee program.
So, this map shows an overall regional freeway system that Arizona Department of Transportation puts out every year. As I mentioned, let me pick this. This is basically the freeway that I'm going to be talking about, I have my pointer, South Mountain Freeway. As you can see, there's several freeways across the whole region. As I mentioned, this South Mountain Freeway was originally funded as well as state and federally funded and managed by the Arizona Department of Transportation.
This is just a picture of the finished project. It was a great project that we selectively worked with the Arizona Department of Transportation, and the city officials, in getting this project, as it states there, 22 miles of very large project coming through on the southwest area of Phoenix. And most -- the last thing that happened, they named it Congressman Ed pastor freeway in honor of the Congressman who supported this.
Here's how the Department of Transportation put it on here, starting from the bottom. Let me show you here, this area along the i10, away from the -- in a west word direction, that was an existing road, and it turns into -- the center segment and travels all of the way up to the other side of the i-10. I-10, if you have all gone through the Phoenix metropolitan area, kind of goes on an east-west direction but in Phoenix kind of turns to a north/south direction and goes back toward California on the west side.
As you can see here the project, I'm going to talk about a little further in my slides is the baseline road project. Some of the processes he that we go through in a typical city, the fiscal year that City of Phoenix goes through is July 1st through June 30th. As many of you worked in, if you worked in the city, that varies depending on the structure of the fiscal aspects of your particular city. Every year, through August through -- and February, there's a revenue and expenditure estimates that are created and then in the springtime, we -- the budget process for the following year start, and it's provided through a public process, publish hearings. In my tenure which I was at City of Phoenix, we would do about 20 public hearings in a series of four, four to five weeks in the April time frame. During COVID, as you all know, we went through a different process. But typically there's several, several meetings that we go through eight districts, and the council districts, and so that is reflected back with the May -- from the input from that public hearings that is presented to be City Council, and then in June, they take the City Council kind of provides input as well, and then during the July session, when the basically the beginning of the fiscal year, council adopts the primary and secondary property taxes. The primary taxes, primary property taxes are generally used for general funds, and then the secondary property taxes are used for debt service. Going into the budget process for typical transportation CIP, we normally have, in the City of Phoenix they have a rolling five-year program. As you heard from Dr. Aldrete. We need to have a planning tool to make sure we have the resource, what are expenditures we'll have for the following years, so, it is mandated also by the state requirements from local perspective, but from a regional coordination, we need to consistently work with our metropolitan planning organizations, as well as our state agencies, to make sure that the transportation plan for the region is tied back to the state TIP
Regardless of if it is getting Federal funds or just local funding, these projects are also tied back to the area on the air quality aspect of it, even though we didn't get Federal funding for this particular project that I'm going go into, but there are requirements for non-attainment, air quality that we have to make sure we're updating the existing network, overall arterial network the region has to tie that back to the air quality requirements for the region.
So, with regard to the budget, normally the street transportation didn't of the City of Phoenix is running about 200 million, could be a little more depend on the revenues that we get from the gas tax but roughly about $150 million is used for the CIP, the capital improvement program. As many southwest communities around the U.S., I mean we're -- the city is growing, continues to grow, and we do have impact fee area, pertaining more on the outlining areas, but not so much on the developed area but more on the outside areas of the city.
As was mentioned with regard to how we program impact fee, we typically, in the City of Phoenix, they had a revolving fund. That's one of the techniques that we would use, we would have a pot of money, basically and when projects would be identified, we would use that product's money that we fund to found that specific project, and this impact fee, again, there's multiple impact fee area, so we would make sure we take the funds from the appropriate impact fee area and assign those fund for the particular project that we would be doing. In this case, the baseline road.
Again, with the partnership with the adjacent property owners, and I'll kind of show a little diagram of the aerial of the proper owners, this property agreement we worked on, has right-of-way dedication, roadway improvements. It was roughly over $3 million. As you can see it was the cost of what we were putting from the City of Phoenix and development community.
Here's the aerial of the area, you have multiple entities there, private owner, freeway segment that was going north and south through that area, and the specific project. And a lot of these things that we look at, is we're trying to minimize the disruption, not only to provide an opportunity to create economic development, but also provide an opportunity for the public not to have adverse impacts to their -- to their traveling aspect of what they're doing on a day-to-daytime frame. So, we're trying to be very cognizant of that, we don't want to have one construction from one side of the developer and another year, another developer constructing. This kind of allowed us to combine forces, combine funding and do one project through a development agreement with the developer, and actually the developer ended up doing the project in regard to the project, and with the developer -- with the other developers. And so, what that also helps is making sure that we have a one complete project when it is completed.
Also, they have to follow the local laws. In Arizona they have title 34 for the city engineer's aspect for making sure they are following the local laws of the project and the aspect of bidding, designing, all of those professional services and construction services.
Just going through the baseline project, here's just a picture of, you know, out there that is an area that was vacant. As you can see there was one lane in each direction, this labels the development of how we develop a project and ties into a freeway that you don't see there, but ultimately there's a freeway there that gets developed. Having some challenges that we get into, when you have a lot of partners there's a degree of complexity that comes into this but also kind of gathers everybody to one focal point and focuses on the improvements of the area, we were lucky in having support in facilitating that development process.
Here's a finished product of the area, of the corridor, same picture you see there's a new roadway, freeway in the background. As I mentioned, it does provide -- it Spurs economic development objectives of the area. It also provides opportunity for other developments in coordination, we provided driveways and coordination of their future development. So, they don't have to go in and start cutting new driveways, impacting traffic. So, it's a very good process of how we went through this with this particular project.
Here's just a background on the city's impact fee program. It started back in the 1980s, late '80s, and the diagram shows there, we did not focus -- the focus areas are mainly on the more developing -- the new developing areas of the city, so, primarily in the north of the CIP, central areas of the project and southwest area and then the other areas south, closer to the new freeway, basically on the west side of i-10 on the south area.
Some of the elements of the impact fees. It is not a tax. It is fees that are generated through -- through permits. When developers come in and they have a brand development, and we charge these fees, and include a variety of different categories. You can see water, wastewater, drainage, parks, so, a variety of different things that we have to make sure we're following the state statutes. And it is very -- it's a very complicated law, and in the state of Arizona, and city, has had a very good success in making sure that we're collecting appropriately, the fees, as well as updating the plan, because as we all know, the costs go up, and we have to update sometimes these impact fee plans.
Here's some of the category that I just mentioned. It's all based on population, traffic projections, the land area, Lou the land is being drained, as it relates to storm drainage, the usage of water and wastewater, the aspects of that. So, those are the categories that are input into the impact fee, and we use those funds to do those projects. It could be a water project, or water line or wastewater. In this case, it was -- the roadway transportation project.
A couple of other things, just to note, we don't -- as it relates to traffic, we don't do pass-through traffic. And so, it has got to be generated. We can collect fees as it pertains to anything that's being generated as a traffic generator. We can't take fees off pass-through traffic.
Among other things, I mean the commercial property fees, things like that, that we've collected over decade, as well as trying to get the street cost included in these projects, because when we're trying to do these projects, sometimes it's difficult, and the plans have to be updated regularly.
And many other cities around the state of Arizona, I would imagine other places, have impact fee, they do program the impact fees. We don't. As I mentioned earlier, we have a revolving fund that we use to identify when projects identified. We use that revolving fund to fund those projects. But in other places they do identify those funds for impact fees for those particular projects in a five-year plan.
We've been very conservative. Phoenix has been very conservative in regard to impact fees, in how we use those fees across. Just like anything else, you know, the impact fees are based on the development, and they sometimes are what volatile, but, like I mentioned, in the City of Phoenix, they do have a pretty healthy program and it has disbursed across multiple areas and those expanding areas of Phoenix.
And then in closing, impact fees are a very good tool to implementing projects. This kind of helps the overall plan of the transportation network in this particular instance and then, like I mentioned, it is one project, not multiple entities doing a project, in one time frame and another project later. So, it is all combined into one project.
The street fees in this particular one is flexible, and it does accommodate for change in development requirements. We did have some discussion on the width, things of that nature related to the roadway. And making sure we have flexibility. Luckily the fund was flexible enough to accommodate what we needed for the development that was going in, as well as how it was tying into the freeway system, the new freeway system.
So, this with that, I'll close and let the next presenter present. Thanks, Pepper.
>> PEPPER SANTALUCIA: Thank you very much. Ray. Thank you for that presentation, because we have all of you participating by phone today, do you have the option of asking a question by phone. Operator, could you remind us of how that happen how people can line up and ask a question by phone?
>> OPERATOR: Certainly, if you would like to cue up to ask a question, press 1 then zero, you may remove yourself by repeating the command, if you are on a speaker phone pick up the handset before punching in the numbers. If you have a question press 1, zero at this time.
>> PEPPER SANTALUCIA: Thank you, while we're waiting to see if there are any questions, Rafael, I'll turn things over to you.
>> RAFAEL ALDRETE: Thank you, Pepper. Sarah is asking how to eval the effectiveness on assurance of available funding programs listed infrastructure job act for California and those current rate debt ceiling affect funding sources. I think this is a very complex question that I could speculate on, but I think what we are talking about here is -- can be categorized as risk and we have a risk primer, and we're going to have a risk related web floor, that we will go over managing list and value capture, and it's going to touch upon risk management techniques that may be helpful in this case. This is something that -- my question that I would prefer to punt to anybody, any of the presenters who may want to add to it.
Okay, I'll move to the next one. Another question from Sara, how do you evaluate the CIP budget plan to include asset management categories to delivery methods of funding to deliver with project bundling sources. I'm going to try to see if I understand the quest in case where's you have ultimate delivery methods, such as development agreements or developer agreement, let's just take that as an example, the elements that you are going to take including the annual plan that are going to be elements that are going to be related to any commitments that the local government may have made for Patriots to the contractor, the private sector partner, and this could include -- it will be reflective more as current payments, like interest payment or fee payment, they will be part of the operating budget, capital operating budget. If I understood correctly.
Now, moving on. There's a question about interstate-10 or I-65 which we can take afterwards a question we can probably touch upon in the risk webinar.
>> PEPPER SANTALUCIA: Let see, operator if we have any phone questions.
>> OPERATOR: We do have one we'll go to Patrick Brennan. Your line is open.
>> Hi, Ray, it is good to hear your voice again. I don't know if you remember me, but I have the awkward position of serving on a citizen-based committee overseeing certain buckets ascending for the City of Phoenix while working on consultant of the 202 freeway at this time. I don't know if you touch on this, I had some audio issues at the beginning of the presentation, but I think it is interesting to know particularly with regard to baseline and 202, that was almost not funded through -- at least not directly through development impact fees and that actually came to a committee that was tasked with administering fund for pedestrian projects, transit projects and some street pavement preservation and other programs under 22050 program. And that came in for funding approval along with some other interchanges that would be covered by impact fees and when that was first presented, that was a very brief discussion to say, hey, wait a minute aren't these covered by development impact fees and it was City of Phoenix project manager who said, immediately, do you think we should take those off of the map and see if we can come up with another solutions and I don't remember exact time lines but it was relatively quickly thereafter that this development agreement was put together as I recall. So, I don't know if there's anything more to add to that, but I thought that was kind of an interesting element and there were some pressures to full funding from elsewhere before this was able to materialize, and those were thankfully averted I would say.
>> RAY DOVALINA: Yes, Pratt trick nice to talk to you again. They are all -- I didn't mention this, but the budget I had back them, I showed 44 million currently in the CIP where it shows impact fee program, let me see if I can -- we actually had actually was way down. Impact fee, 24 minutes, actually around 25 million back then, as I mentioned, that is basically a post money of all of the different impact fee area, so it could have been in that area, specific area that we didn't have enough for funding that portion, and you're correct. And I think I showed here some other portion of the funding that we provided to cover the difference on the capital side.
One of the big things that we have to do as any development comes in, was for the landowner to provide the land for the right of way, typically that happens when a developer comes in with a plan. But in this case, we have to work with another landowner to the north the one you see on the North Side, they weren't ready for the land, the development. They have to pony up the land, basically, for the right-of-way. In combination of that, that helps close the gap with regard to what we needed with the amount of funding that we had. You're right there's some funding that we showed there, we had to put funding to the project. So, you're exactly right. Sometimes it is sort of a stop gap but also working with good partners they can provide the land that's needed, regardless of if it takes another two years to get that land to be developed. Does that answer your question?
>> Yeah, absolutely. I thought that was an interesting element. Obviously, I was very close to different aspects of this project, so, I was probably looking at it a little differently than years. But I think some of those areas were already covered by old development agreements that were very much due for revision, and that, I think helps. Yeah, I believe it was that property owner in the northeast quadrant that sort of led the effort.
>> Yeah.
>> Maybe not led but helped make it happen.
>> RAY DOVALINA: Spearheaded. Yeah. Thanks for the question
>> PEPPER SANTALUCIA: Great. That's great we have someone on the webinar today with local knowledge and glad we could have some dialogue of -- at this point, we're going to move on to the next presenter, I'll introduce now, Tina Bailey is assistant Director for the City of Hillsboro in Oregon, has spent her career in the city in various roles in the public works department. Her most expensive efforts are building the city's transportation division where she developed the current asset management program and led the efforts on development and effort of the city's transportation utility fee.
Today she provides direct management over the division and provides direct leadership over the department's remaining divisions.
With that, Tina, I'll turn things over to you.
>> TINA BAILEY: Thank you, good morning, if you're like me on the West Coast or good afternoon if you're on the east. Today I'm here to talk about how we use transportation utility fees both from funding and maintenance but proposed to fulfill a capital improvement need. I like to mention we use all things initially mentioned to fund capital improvement programs. We have a traffic impact fee that's citywide for all new developments they pay. We have a supplemental that we instituted five years ago in a growth area we have called Hillsboro, we use tax increment financing in the North Hillsboro. And when we started South Hillsboro development. It was primarily residential development blacking some major gateway treatments and we have massive $20 million local improvement district that we worked with various developers who are looking to come in and build housing to help us fund it.
But traffic impact, most of those fees, we kind of reserved for arterial and collector facilities. What we tried to do when looking at transportation fee, was fund things more at a local level. With that, I want to give a little history about Hillsboro. We are 11 miles northwest of Portland. We have been massively growing since the 1990s. We were 5,000 when we were incorporated around 1950s. Can see we had massive population and road mass growth. That number is 252. I didn't update that slide 252 center lanes from roadway. A lot of missing bicycle lanes from 1960s to 1990s. Growth. 1992 is when we started building sidewalks and bicycle lanes around the frontage.
We saw 70 miles of roadway growth in the early 1990s.
As I mentioned we have a new development south Hillsboro, if you're familiar with the land use system. We have boundaries which restrict development and have 1400 additional acres for 800 new Holmes about five years ago, that's currently in development and growing our roadway network again rapidly.
So, what is transportation utility fee? And, again, what we did, we originally proposed a transportation utility fee when we were looking at trying fund a bike/ped improvements but the challenge we were having was from the growth. Dealing with underfunded pavement program. We proposed a utility fee initially to fund our pavement management program in its entirety, get the maintenance dealt with, and take the revenue that we would have normally spent on pavement management program from gas tax and vehicle registration fees and use that to build bike-ped improvements and transportation utility fee lend itself from a public utility transport, because it basically treats the roadways like any other utility. People are comfortable with monthly service charges for storm sanitary and water to maintain lines. It really does the same thing. It tries to assess how much you're using the roadway and allocate a portion of the fee, the maintenance for the roadway to the various customer classes. It is billed with other utilities we have on the utility bill and for us based on eggs mated trip generation for each of the businesses or residential units that we have out there in the community.
We've seen it when we were looking at it, there's a lot of waste that it has been assessed. We have another local agency who actually, nearby, Tygert, Oregon who does it on parking stall, some do it off sewer dwelling units, it makes sense, but whatever is palatable to your community and local officials when going through and doing this.
Prior to having our transportation utility fee, we were funding our bicycle and pedestrian capital improvement program primarily off interest fees from our assistant development charges, trying to hold the big dollars for expansion of the arterials and collectors but squirrel away a little bit to make critical sidewalk connections and primarily sidewalk was the focus, but we were getting some bicycle connections at the time with this particular capital improvement program. We focused on location that is were tied to schools but because there was coming off assistant development charges or project impact fees here, they were restricted to collector and arterial facilities. It really restricts where we can apply connections and we had lower volume neighborhood result, even local routes that carried significant enough volume that there were some safety concerns for our pedestrians and bicycles where we wanted to make improvements that we just couldn't pick.
So, again, this is what we were looking to release money trying to increase this particular program.
At the same time as I mentioned, we were struggling with pavement management back log and council was very much we are dealing with maintenance of what we have before building more infrastructure. And I can tell you from my perspective, that was a message we've been delivering about six years before we finally caught on and our council said who is going to do something with about this.
At the time we were funding pavement management at.8 million dollar a year and needed 2.8 million dollar to get out of trouble and our massive 1990s growth was really something that we were focusing on. Our pavement management system, we were anticipating about 70 miles coming online with massive maintenance all about the same time of 2020 and we wanted to get ahead of that. And that was really the critical message that we drove home with our council, we are not bad now but we're going to be if we don't do something to take care of this problem.
So, they proposed to generate initially 2.84 million dollars to fund -- out of transportation utility fee to fund pavement management program and that was going to release $1.8 million of tax and transportation fees to build a bike-ped program.
The whole program was built off finding money to release money for bike-ped. So, the cost allocation is based around that premise. I think the same logic to do this for strictly funding capital improvement projects, by looking at the gaps in infrastructure. What we do, we do a cost allocation of that, and then $2.84 million, and we allocate the dollars to a residential cost and non-residential place. And we assigned arterial collectors and neighborhood routes 50/50. And local and industrial streets that are commercial go to non-residential. The local residential streets and allegations go to residential customers, and it results in a fee allocation, revenue generation need of 75 percent from resident, 25 percent from non-residential. This was not the allocation that we actually had at the time of adoption. This was something that modified, in the first five years of the program, where our council was looking to do it. And they recognized that they had more residential customers in a small increase there resulted in larger dollar amounts than a massive small increase with the non-residential customers, so, we went back and revisited this and came up with a methodology that was expendable about reached our goals. For residential customers this fee is the number of units, we assigned single family residential units at 90 percent of the target value of the revenue -- of the fee for multifamily -- I can't talk this morning, I apologize. We assigned multifamily customers 90 percent of single-family residential customer rate. You can see equation how we determined that. And we take that revenue generation, the 75 percent and come up with a monthly user fee for a single family residential, multifamily part of that. Also, because of the way our non-residential customers using the program, businesses arguing about, we don't want you to charge us more money to release revenue, for you to build bike-ped capital improvement because we don't believe we benefit from the bike-ped capital improvement project. At the time our council bought into that object. They reduced the fee on non-residential customers but held the fee on single family residential customers, and that forced us, in order to keep the logic of the program in place, earmark that -- earmark a portion of the fee into the bike-ped capital improvement program.
For non-residential cause he, we again allocate by trip generation, and we assign all of the individual customers into seven bin classes. Again, non-residential is generating 25 percent of the revenue, so, we individually go through and determine for each non-residential customer what generation code they would be in, and anything that generates under seven trips goes into bin one, 7 to 21 goes into bin 2 and so on and so on. And we determine all of the customers on the phone, what percentage of the non-residential trips are they generating. For example, it has been one that's 10 percent of the total non-residential trip, bin one needs to generate 10 percent of the non-residential customers' revenue every month. And on the right, you see the comment customer, or types of customers that fall into each bin category.
I should beverage bin 7 is a special category for those land uses that provide -- are not based offer a square footage charge. It's going to be gas station, which are based off pumps, cinemas which are based off theaters, et cetera. And this category is limited, at a maximum trip generation of 1500 trips. So, the no customer in that bin is currently assessed beyond 1500 trips and that is because we didn't want to penalize the gap stations at the time of adoption. They were already collecting the gas tax. They were the customer objecting to these fees being established for that reason and so, it was in an interest of trying to keep balance with them, that that limit was put on
The only other customers who do benefit from that limit are the cinemas. One of our cinemas does go over the cap and has their fee reduced.
So, again, generation, as I touched on the percentage of trips, capped for bin 7 that each represent bin generates based 0 off the bin's total traffic load to the system.
Some of the things we heard through public hearing testimony, generally, they supported the program. When we put this out for public comment, we did sell it to the community as, we wanted to generate revenue. We have this paving program. We need to fund it, but we also want to do bicycle and pedestrian capital improvement program. It was good and bad. Our customers, our residential customers didn't really care about the paving maintenance as much, they were -- they are very aware they take out tax and registration fees, that they very much want the city to live within that budget from their framework. And they don't want to pay additional revenue for those payment. But they are okay to pay more money to get bike-ped. We didn't have a lot of pushbacks from residential customers for that reason.
We have a business lobby, we were doing that 2007-2008 before the recession, it was a terrible time to increase what they were calling taxes for these customers. The money is also our solution, live within your budget. We had arguments I.T. overestimates our trips. One of the most common things we heard, ITE doesn't account for, if you're familiar with the concept of pass-by trip. The customer is not the main draw of the trip. It is somebody shopping, going from home to work which is basically the final destination, but they may stop at McDonald's on the way to breakfast and McDonald's doesn't believe they should be penalized for that trip. Because they are not responsible for getting the person behind the car. ITEs that some numbers for that. But we didn't account for adjust for it.
Overall, because you're grouped in similar trip generation spend, you're not actually as a non-residential customer assessed on pure ITE trip generation numbers, they are watered down. You're paying an average rate for all customers in that bin classification.
So, again, because of the argument from the business lobby, our council reduced the -- the business lobby to offset the money that would have, from their portion, their 70 -- 25 percent that would have gone to the bike-ped capital improvement program, that pulled that out of the fee.
At the top of adoption, we were sitting at rates, roughly, you can see the column in there, type of adoption in '09, we had rates that were 22 cents for bin category 1, they are currently at 27 cents for bin category 2. And you can see the various rates there. I'm not going to cover them all. One of the things I would note, we didn't have a non-residential space charge at the time of adoption. We quickly found out there were a number of customers who were paying less than residential customers for their fee. And within the first year, we went back and established a base charge which is equal to the multifamily rate. So, you see at a current rate we have $8.20 base charge which is now equal to the $8.20 multifamily rate charge just to keep some equity in the program.
Right now, we generate about $3 million, a little less than 4 million dollars for the pavement management program. That has gone up quite substantially over the years. Originally, we were only generating about 1.2 million dollars from this fee. And we're generating about 1.2 million dollars from the bicycle and pedestrian capital improvement program which again comes completely off the residential customer's rate.
In answer to some issues related to trip generation, we do offer discounts for customers on their fee. For family customers if they certify they don't have a motor vehicle at the house or buy an annual transit pass we discount their fee up to 30 percent. We don't wipe off anybody's fees, even if you don't own a car, you're riding transit, still get mail, U.P.S. coming to your house. Everybody does pay a fee.
At the time of adoption, we have a low-income waiver, if you're at poverty threshold we waive the fee for one full year. We have since gotten rid of that program. We use a different program for all of our other utilities where we contribute money to salvation Army programs where they bowled out income need. And it was confusing to our customer to have two different ways to get their fees written off. And we consolidated and became part of that program.
For non-residential customers we have discount programs for -- if they buy annual transit passes for their employees, they can get up to 30 percent, depending on how many of their employees they are buying transit passes for. They also, in Oregon, they have to go through every two years and certify that they are doing vehicle's trip reduction through various programs and demonstrate how much that reduction is. If they can demonstrate that they are reducing trips by 15 percent, then we will give them a 15 percent discount. Again, that's up to 30 percent. The employers can combine those two discounts to get a combined maximum of 30 percent discount. I can say when we first did this program, there were several customers taking advantage of that, despite the fact that we advertise it every year, and we send notices to aspiring customers that their discount is getting ready to go out. The only customer that takes advantage of this today is the City of Hillsboro. No other customer is using it.
We discussed getting rid of the programs but it's easy to point to as a way for the business customer who is upset about the fee to tell them here's some option force you.
Since that time, we have actually been able to increase drastically capital improvement program for bike-ped. These numbers look awful today. These were the original numbers we put out in 2007-2009-time frame. We just finished up the last project, Jackson school road. We did tip into the one project which is show and below the one project originally proposed and dropped. We did build that last phase of the road and just buttoned that up late opt. That project, all three phases were budgeted at $7 million and came in around $21 million, and you'll see we're marrying the program with not only transportation utility fee but traffic impact fees as well, and that's how we made up a lot of different stretching the project out to generate additional revenue and to make these projects happen over the years. But it allowed us to take on bigger projects as a result, of course that $1.2 million this year coming in strictly for bike and ped improvements and not all of the improvements were on collector facilities or arterial facilities we were able to get into some neighborhood routes on this program.
As I indicated we previously had a residential hardship waiver which we got rid of, because it was difficult for the customer. We do not have -- we have the ability to index this fee but the group that helped put together the citizens advisory committee didn't want us to automate a fee increase. We actually go through and do a rebalance of the fee every five years to make sure we're collecting according to the methodology we set up and basically revenue neutral, whatever we are generating now is what we rebound to. So, we get a customer growth about 2303 percent every year, so, the revenue does increase despite not increasing fees. Our goal generally is to look at -- what's our revenue with the current customer class and current fee structure. We do have some indication from our counselor of an interested program for street and sidewalk maintenance. We have a lot of pressure these days, our community sentiment changed, and they want us to do that. We're looking at that as a possibility in the next year to have the fees start to cover that.
There has also been a fee -- a desire to go back and revisit the conversation of non-residential customers paying for bicycle and pedestrian capital improvements specifically related to the fact that we're doing a lot of EDA upgrades with the paving program which certainly along the roads that non-residential customers are paying -- are adjacent too, and we are paying for those with our transportation utility fee bike-ped portion. We are looking at doing that.
We are also potentially then, I would go back to that logic of gaps in sidewalk to kind of allocate the fees, residential and non-residential burden based on if those gaps exist. Whether they are on arterial collector and the like.
And with that, we maintain a pretty extensive Website, we're the last jurisdiction to do a transportation utility fee. We get a lot of inquiries. A lot of background in history is contained on our web page, that web address and anybody who is interested in the -- any more information, I'm happy to answer any questions on the fee.
>> PEPPER SANTALUCIA: Great. Thank you, Tina. Operator, we'll open up the phones again. I believe you said 1/0 if someone wants to get in shine to ask a question by phone s-that correct?
>> OPERATOR: That is correct. It is 1 then zero to place yourself into the queue and ask the question at this time. That's one and zero.
>> PEPPER SANTALUCIA: We did have a question that came into the chat while you were presenting, had to do with for city hall. I think there's a question of payment of the transportation utility fee by a government entity. So, they are not exempt from the fee?
>> TINA BAILEY: They are not. All of our government entities pay fees as well as non-profit. Everybody pays a fee. Our current highest customers are generally, the highest paying customer in the city, then it goes to Hillsboro school district, Washington County, we are the County seats is Hillsboro and the fifth is clean water services, which is water quality agency over the entire County. Most of the government agencies that are paying it.
Thank you, operator do we have any phone questions?
>> OPERATOR: There is no one cueing up in the phone at this time. Please continue.
In the interest of time, I'm going to introduce the last presenter, Miss Terry Quezada, she has worked on the planning implementation and monitoring for capital budget. Terry currently served as consulting capital improvement program manager for the time of Horizon City in Texas. Terry, go ahead.
>> RAY DOVALINA: Hello, everyone, thank you, Pepper. I will try to do this as quickly as possible. The way this presentation is the overall theme of today's webinar, Horizon City's experience implementing a transportation reinvestment zone which is tax increment zone but it is specifically for transportation infrastructure allowed within the state of Texas, so, I will go through the background form Horizon City so everyone understands the context a little bit and go through the process that the city underwent to establish the transportation reinvestment zone, the TRZ, the project, single project east lake extension phase 2 and some lessons learned as the city went through this process.
So, as background, the current estimate for the city, for the population is a little over 23,000. The city has experienced pretty significant growth in the last ten years. In 2010 it was under 10,000. So, you can see it has experienced explosive growth Horizon City is 20 miles east of El Paso Texas, it's the western most community Texas it borders Mexico and New Mexico, and it is a metropolitan area that El Paso is the county seat.
Just for a matter of context, the general fund for Horizon City is a little over $13 million, and in fiscal year 2014, the city issued its first debt -- there's a typo there, debt issuance of $15 million for infrastructure project. The city has a charter provision that staff has with council every year, we usually do that in May and in September when council is adopting its operating budget, it adopted a three-year can't improvement program.
Slightly different from the guidelines i presented at the beginning of the presentation, not everything is updated every year, usually it's the lifting of program, projects. The projects collected from department heads who are intimately familiar with the community's needs from public discussions that have come before council. We do not have a formal process as described because this is a relatively small community. So, the more objectives, process, has not been implemented
In 2018 the city added another 13 million dollars of debt for parks and recreation facilities and this summer looking at another 28 million dollars for infrastructure and Police Department facility. The overall capital improvement program is estimated at approximately 115 .8 million dollars. Most of the projects included are under funded projects. We have estimates on some of those projects. Other projects have come from comprehensive plan, or, again, comments from the public but it is usually the first three years that are similar to MPO transportation plan, those are the ones.
Going back to the single project that was funded with value capture mechanism, the city participated about with the region's other entities to develop a comprehensive mobility plan. That was endorsed also by the metropolitan planning organization, and it identified about two dozen transportation projects that were the highest priorities, not only for the region of the whole, but also for individual communities within the El Paso. The comprehensive mobility plan included different types of projects, so, traditional transportation projects, interstate improvements, were included, transit improvements, to include this new bus route who is included in comprehensive mobility plan, and it was also comprehensive, because it included a variety of funding forces.
With transportation investment zones, meaning one of those funding sources, but Eastlake was a new location, major arterial for horizon city, was included in comprehensive mobility plan.
Although it was not specifically identified as an economic development driver the city understood by building this roadway, it would open up areas that were undeveloped and that was particularly important, because Horizon City is land locked and future expansion is going to be through infill, or repurposing areas within the city, and the station is not seeing a feasible option for horizon. Again, they wanted to make sure they were looking at the lands already within their boundaries and making that more productive.
This is the 2016 comprehensive mobility plan, and you'll see that there are 16 projects in here, and the Eastlake project the one we're looking at is highlighted in the yellow oval. For the city at phase 2, there was a phase 1 in the County.
As I mentioned, the comprehensive mobility plan included Texas mobility fund, vehicle registration fees collected by the County. Transportation reinvestment zone fund, and Federal funds that are distributed through the MPO, primarily for the transportation program category.
The city hires Transportation Institute to conduct a financial analysis for the feasibility of the proposed transportation reinvestment zone for the Eastlake project.
This is the transportation reinvestment zone looked like. The dotted line -- hold on here. Of the roadway, this portion was built already, so, the project included reconstruction of that area. But this portion was all a new location, and it conducted to Horizon Boulevard at the bottom of the slide, which is a state highway. You can see that it also provided connectivity through these territories, Darington Road.
For the city, there were a number of considerations that they had to take into account as it was developing the value capture and basically the TIP. The zone size was going to be important because any growth within that size, within that area, would then go into the TIP fund, and would not go into the general fund. So, that was the impact on the budget. The term was also another consideration. We wanted to make sure that the term was long enough to generate revenue to pay for the city's proportionate share of the roadway.
The overall project funding mechanism was a concern. We talked about different options to fund the project. We talked about a state infrastructure bank loan which would mean an application through the Texas Department of Transportation for a project of this size, we expected that would take a couple of hearings. The hearings are held on a monthly basis so that would add time to the project development. Any use of Federal funds and state of infrastructure bank would be considered Federal funds and finally, state law as far as the zone description. There are two ways from describing the zones that are allowed by law, one is through a survey, and a meet and bounds description and the other through parcel identification numbers. The city opted for the parcel identification number because that makes it infinitely easier to identify the footprint of the zone and thus monitor it and be able to generate reports where we know how the road Heat happening with subdivisions are taking place and it maintains the footprint, actually more stable than meets and bound, because that becomes -- you see some sort of parcel identification number and parcels are difficult for our central appraisal district to include into special zoning divisions.
The funding mechanism that was finally adopted was a three-party agreement that relied exclusively on local entities and that was horizon city, the County and -- the Camino Real regional mobility authority. They are able to pay out significant, regionally significant transportation projects, but they must find their own funding. They do not have taxing authority, but they can issue debt depending on the revenue screen that they can pledge for that debt, and they can be pretty powerful ail lies in developing larger project, certainly for a community like Horizon City the original mobility authority brings in expertise that the city would be hard-pressed to find. Not to say they couldn't do it, they could certainly contract for consultants and contractors to do this work, but the Camino Real regional mobility authority becomes a cleaning house that addresses not only technical aspect of project development but project administration and also financing.
As far as I know, this is the first agreement of its type in the State of Texas and we were pretty clear that this broke some barriers that were previously thought to exist, and so far, is allowing for the collaboration and due to successful. So, we believe it is a good model for other entities to follow.
The three-party agreements identify the mobility authority as the clearing house, and then we very specifically avoided state infrastructure bank loans as we had originally contemplated. Again, that's important because of all of the Federal requirements that come along with Federal funds
The RMA was responsible for issuing the bonds to fund this project. The County fund for the repayment and then the transportation reinvestment zone fund, reimburse Voce vehicle registration fees. So, we basically got a very patient lender to help us fill this which was a priority for Horizon City.
This was the estimated finances. The total project was he estimated at a little over $19 million. We had a County participation of over three quarters of the project, with the city portion spending 22.7 percent. You can see how that breaks out.
This is the project schedule the city adopted, the TRZ in December of 2014, meaning that 2014 was the base year for the valuation of all of the properties within the zone.
By July of 2015, the design was awarded. Bids were open July 2016 a year later. We finalized all of the three-party agreement in November, and in January of 2017, the project began. A little over a year, about 15 months after that, we had the ribbon cutting, and then in October, the city adopted the project for maintenance. That was strictly a city facility. It was never intended to be a state facility. And then in 2020, again, we had a patient lender the city made its first payment to the RMA this is the design of the project, the free-lane roadway. Divided the roadway which shared beams on both side of the roadway, this the roadway portion and this is the new portion. We recognize help in meeting the construction of the traffic. There was no traffic control. No existing traffic to deal with, there was no development that was occurring on the anticipating development, however, throughout the design we coordinated with utilities to make sure that we had appropriate sub outs, primarily for water and wastewater services. Also, we received most of the right-of-way from the property owner. They dedicated the right-of-way at no cost to the city, there was one property owner where the city had to purchase property and then we also had a permanent easement from the utility company. But the property owner understood the value of the roadway which was opening up all of their property with basically a master plan roadway.
This is the finished project. You can see the connection, with Kenazo, one of the major roadways I mentioned, and this is Horizon Boulevard which is the state highway, and this is the shared use pass, and I like to say this is the most misleading picture I have in my presentation, because it shows cloud and what is sun city, but we do get rain every once in a while.
The actual costs were lower than anticipated. The total project included right-of-way, 16.7 million dollars. We maintained the portion 77 percent for the County and 22 percent for the city. These are cost allocations, 13 million for the County and under 4 million for the city.
We shared at a portion rate, so no one enjoyed all of the benefits, so we shared in the cost.
As I indicated, the payments to the RMA began in May of 2020. Per the original part of the agreement, the final payment is scheduled for May 2038. However, we do have an opportunity to repay costs, as the zone growth and as the increment that comes into the fund grows.
We have had growth that has greatly surpassed what et cetera estimates were. The first payment was only 29,000. The final payment was estimated at 842,000, but this is how we're growing, from fiscal year 21 to slightly 2 million dollars to 20,000. In 221, paid 156,000, 2023, we're anticipating 548,000, although contractual obligation this year is only 128,000. Again, we are making the payment exactly as we're generating the revenue and anticipating the complete payment through 2038.
Some of the highlights is that, again, we adopted the reinvestment zone in 2014 after following the process required by state law to adopt the zone. The zone was projected to generate approximately $6 million which was the expected contributions at the time we were working with this. But much to our happy surprise, we completed the project in April of 2018 ahead of schedule and under budget.
So, these are some considerations of the value capture.
First of all, amended the CIP guide lines to identify the project need, identify the project as economic drivers, if they do have an economic development component, then they are probably good candidates for value capture, because the value capture you are relying specifically on that increase in the valuation of the property
Identify, particularly for smaller community, I notice there were a number of municipal governments, and I know that the case studies that we've had before, in this webinar, were much -- were larger communities than horizon city, but even smaller communities can identify partners and enter into agreements that will develop these larger projects that are much, much beyond what a city could possibly finance within a year, or even throughout several years.
Then, study and analyze the value capture potential, and it is important that someone who understand value capture, and who can incorporate various factors into developing that analysis, continue monitoring those zones' value, so that you know how much is generating, how quickly you can either complete the debt if you have pushed that increment at debt so they will return that increment back to the general fund.
And if you have economic development opportunities, they can certainly augment those within the zone to provide incentives and, again, develop the zone so that it is I much more productive zone and again, feeds into your valuation.
And so, I wanted to be respectful of your time, but I'm happy to answer any questions that you may have. I think the final take away for this case study is that collaboration consider and must happen to have a successful project implementation. Due diligence is critical in making sure that you have champions on your local government agency, as well as with your collaborators is also key and doing your due diligence will help you development a volume awe capture to augment.
>> PEPPER SANTALUCIA: Great. Thank you so much, Terry. Operator at this time we would like to make available the option of ask a question by phone. The audience this could be a question for Terry or any of our previous presenters at this point in time.
While we're waiting, you can press 1, zero on your phone to get in line to ask a question by phone. The layout here, the audience chat is on the center of the screen but the window that I alluded to in the chat. If you're interested in pulling down the slide from today's presentation, there's two ways to do it. One way is hovering your mouse pointer over a particular file, and you see icons that appear, downward facing arrow that allows you to download a particular file. That might take time so be patient. The other is clicking the three dots in the top portion of the window, there's an option to download all. It should take time but there should be a window to pop up that asks you where you want to save your files.
With that, I guess, operator, I want to double-check and see if we have any questions by phone at this point?
>> OPERATOR: We do have one that is cued up here just now. Please allow a moment, we'll get a name for us.
>> PEPPER SANTALUCIA: Before that I want to point out a few web links.
You can look at the whole series for 2023. You can register for future webinars in the series and also access recordings for the ones we've already held.
The second link brings you to record having webinars that we held in value capture webinar, that we've held in prior years and finally that third link is for the primer on capital improvement programming that Rafael authored. It is in the file share pod but if you want the link, it will be to the FHWA Website. You can view it there.
Operator, are you ready for the question now?
>> OPERATOR: Absolutely we are going to line of Candice Sawyer, your line is open.
>> Absolutely. This question is for Tina Bailey. I was wondering if the legislation that enable us to do this program, was that legislation or some kind of special legislation that enabled you to do this or this was already something that you had been able it does, due to some other legislation?
>> TINA BAILEY: It actually was available to us as an option in the legislation. The utility fee assessment didn't restrict transportation. Now, I am aware that some states have put that limitation on their specifically when they've been adopting other funding mechanisms for roadway infrastructure. Washington, for example, used to have a restriction on it, however I just got a contact during the conference during a Washington jurisdiction where they were looking at it. I don't know if that changed recently. But it was already existing in code.
>> All right. Thank you.
>> OPERATOR: And there are no more questions in queue at this time. Please continue.
>> PEPPER SANTALUCIA: Great. Thank you. Rafael, you may have a question or two for our presenters and we'll wrap up promptly.
>> RAFAEL ALDRETE: I was wondering if the speakers could say, for example, in the City of Phoenix you many neighboring communities that impact your capital project, may impact your capital projects. Tina, I am not familiar with your area, but perhaps you have the same, but the question is, does coordination happen between the municipals individually, like within themselves, or does it take place within the local MPO, for example, in Phoenix?
>> PEPPER SANTALUCIA: Tina, do you want to answer that first?
>> TINA BAILEY: I'm not sure. We have a local MPO where we coordinate localized projects or state funded projects. We work directly with our County. We have another funding mechanism called transportation improvement program which is a bonded program through the property taxes that we coordinate with our County to help determine what proms that funds, one of our bike-ped programs received $5 million that was actually funded. Is that the kind of questions you're asking?
>> RAFAEL ALDRETE: Yes. That's all of the coordination of your fellow project, coordination takes place at MPO while other projects maybe between jurisdictions is coordinated locally.
>> TINA BAILEY: Yeah, that would be correct. We want to make sure we're submitting the best project Fort state going forward for some of the Federal projects or state funding.
>> PEPPER SANTALUCIA: I believe we have coordinator, as you mentioned, we have a position of government, so we have a venture to coordinate a lot of different projects, but also, we used to immediate with a lot of city, individually when there were new projects coming up or we wanted to get some work from their staff and ultimately, if we have to go through interlocal government agreement, so we would work with the staff and work toward if we needed to get funding so we work with individual staff members from that particular community and then also, like I mentioned, we would meet with the County regularly, like every month, so, a lot of coordination meetings, making sure we were all on the both on the same page and supporting each other as we go through across a multitude of cities in one major metropolitan community.
>> RAFAEL ALDRETE: Thank you, Ray.
>> PEPPER SANTALUCIA: Thank you to all of our presenters today. Thank you for the audience bearing with our technical issues.
>> If you want to receive confirmation of your participation today, please eval@valuecapture@DOT.gov. @valuecapture, all one word. You can see that in the evaluation instructions in the upper left of the webinar room. That's also an e-mail address you can use to provide feedback on today's webinar. There is an evaluation tool you can also use that should be available on the screen now.
We really, again, like to thank our presenters for participation today and like to acknowledge the ongoing support of the FHWA web conferencing office and also the past support of everyday account program here at HWA.
That concludes today's webinar and thank you for bearing with us and thank you for coming.
>> OPERATOR: Ladies and gentlemen, that concludes your conference for today, thank you for your participation and using AT&T event conferencing, you may now disconnect. Speakers may remain on the line. Speaks may remain on the line.
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