Value Capture Webinar Series

Capacity Building Webinar:
Understand Value Capture Tools and Federal Resources - Transcript

June 20, 2019

Presented By

Thay N. Bishop
Senior Program Advisor
FHWA Office of Innovative Program Delivery

Alyssa Davis
Executive Director
Sugarloaf Community Improvement District

Julie Rabeux De Hoyos
Project Finance and Operations Director at Texas Department of Transportation

Slide 1 - Value Capture Overview & Federal Resources

Operator - Welcome to the Value Capture Overview & Federal Resources webinars. All participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will be given at that time. If you should require assistance during the call, please press star and then zero at any time. As a reminder, today's call is being recorded and I would now like to turn conference over to your host, Kara Chisholm.

Kara Chisholm - On behalf of the Federal Highway Administration, I would like to welcome everyone to today's webinar, Value Capture Overview & Federal Resources. My name is Kara Chisholm - I'm with the U.S. DOT's Volpe Center in Cambridge, Massachusetts, and I will be moderating today's webinar, as well as facilitating questions and answers and helping to address any technical problems.

On the top left side of the screen, you'll find the audio call-in information. Below that is a chat box you can use to submit questions to our presenters throughout the webinar. You can also ask questions by pressing star one on your telephone. You will receive more instructions about that later.

If you have any technical difficulties, please use the chat box to send a private message to me.

Our webinar will run until 2:30 Eastern time and it is divided into two sections. Thay Bishop, Senior Program Advisor at the Federal Highway Administration, will speak first, followed by Alyssa Davis Executive Director of Sugarloaf Community Improvement District, and Julie Rabeux De Hoyos, Project Finance and Operations Director at Texas Department of Transportation. We will queue up questions for the presenters at the end of each section and we also anticipate having a few minutes at the end of the webinar for additional Q&A. The speakers' presentation slides will be available for download on the left side of the screen at the end of the webinar.

Slide 2 - Upcoming Webinars

The slide shows upcoming webinars. You can register by clicking on the link below the titles of the webinar names. It also lists dates and times. This will go on through November, about once a month. The next is June 27 next Thursday and that will be about developer contributions and case studies.
Before we begin I would like ask participants in today's webinar to fill out the three quick poll questions that are on the screen. These are simply to help us understand your affiliation and how many people are participating, along with you and your level of knowledge about the Developer Contribution topic.

I see we have participation from a lot of different groups today. I will now close out the polls and turn the discussion over to Thay Bishop, Program Advisor at the Federal Highway Administration. Thanks so much

Thay Bishop, Senior Program Advisor at FHWA Office of Innovative Program Delivery

Slide 1 - Value Capture: Capitalizing on the Value Created by Transportation
Good Afternoon, I am Thay Bishop, Sr. Program Advisor at the Federal Highway Administration office of Innovative Program Delivery. Welcome to the Value Capture Webinar Series.

Slide 2 - On the Ramp to Innovation: Every Day Counts
The Federal Highway Administration currently implements the fifth round of Every Day Counts initiative or EDC-5. The EDC-5 Value Capture Innovation promotes the use of value capture mechanisms as part of a mixed funding and innovative finance strategies to accelerate project delivery. Value Capture can provide a reliable & sustainable transportation gap funding.

Slide 3 - Introduction to Value Capture
I will begin laying the case for value capture, provide an overview of Value Capture techniques available for State Highway and the Local Public Agencies. Further define the concept and highlight some benefits, the Federal influence, break down the VC techniques and examples of successful projects. But there are several key distinctions I want to clarify

Slide 4 - Key Distinctions: Funding versus Financing
Revenue or Funding is repaid financing. Value Capture is revenue or funding sources. Finance can be Pay-As-You-Go or Borrowing. Finance can cannot create the revenue but federal innovative finance can lower borrowing costs. More money can go into construction and lower project costs. Project Delivery is either doing it yourself or shift the responsibilities, expertise, or risk to contractor

Slide 5 - Key Distinctions: Tax versus Value Capture Strategies
The second key distinction the tax versus value capture strategies. Many defined value capture as any taxes imposed to property owners. This is not correct. Here are the differences. Tax forced contribution, generate revenue for public sector. Mandatory taxes provided by the general law and everyone pays regardless benefits or not. Value capture revenues come from the specific property owners who benefit due to property near the infrastructure investment that made by the public sector. Not revenue-generating but the way to compensate the public sector for the cost of services or transportation investment. Authorization for value capture comes from the power of local government. In general, value capture reclaims a portion of the increased in property value from the beneficiaries.

Slide 6 - Value Capture Overview

Slide 7 - What is the value capture?
This slide describes the flow of the value capture process. When the public sector makes an investment such as new roads, bridges, or interchange, it creates the value at a local level. A type of improving that increase accessibility, safety, or reduced travel time can really attract development and increased property value. The increased value accrues to properties near the transportation facility, while the public sector typically paid for the facility, the value accrues to the private property owners in the form of a windfall. Value Capture only seeks to capture a portion of the value accrued to the properties owners and the captured funds then are returned to the public sector to fund additional transportation projects. Value Capture can be used in the wide range of settings including urban, suburban, and rural settings. It helps fund capital projects as well as operation and maintenance.

Slide 8 - Examples of Transportation Improvements that Create Value
This slide provides examples of the type of public investments that can attract the new development. A new highway or an interchange can boost economic activities around the project. Attract development such as a new corporate office development located within a mile of the expressway. A new transit station means an easier way for people to get to work which means more demand for new home and apartments within walking distance

Slide 9 - Examples of Transportation Improvements that Create Value
This slide provides an example of the beneficiaries from the infrastructure project.

Slide 10 - Importance of Value Capture
There are greater needs for local funding sources than ever. As the state and federal share of funding for transportation projects continues to decline or diminish, there is increasingly needs for innovative revenue strategies such as value capture. Value capture is one way to generate upfront local funding. It provides an alternative to traditional sources such as highway trust fund and to fund 3.2 million miles of non-federal-aid public road. Value capture can transform into an ongoing revenue stream. It provides local matching share for state and federal grant as well as provide the ability to access to federal low interest rate loan programs. It can also attract private capital as well as provide funding to get the project off the ground. Value Capture also can provide funding for emerging investment needs for complete street initiative to accommodate micro mobility options. Fund Smart City Initiative leveraging the technologies.

Slide 11 - Importance of Value Capture
Value Capture is a set of powerful and sustainable funding mechanisms currently underutilize in highway that is gaining in popularity and US DOT support Value Capture. A strategic mix funding sources for transportation improvement solutions.
Proven to accelerate project delivery, improve safety, save time and money when done properly.

Slide 12 - Steps to a Successful Value Capture Project
One of the ingredients for successful capture is capital improvement plan. We will have a specific webinar for the topic on July 18 so I won't spend a lot of time on this topic. I want to say that an effective capital improving plan will allow time to analyze and select the right value capture technique and right innovative finance tool apply for the right project. Provide important data, credibility, and as foundation to communicate to the stakeholders and community outreach. It should be in early and on-going during the project development process.

Slide 13 - Why is Value Capture Needed?
Here are some of the reasons why we believe the State and local agencies should be interested and consider value capture

Slide 14 - Capacity & Conditions Funding Challenges
All transportation agencies face funding challenges. America's roads are often crowded. It's commuter nightmare. Frequently in poor condition, chronically underfunded, and are becoming more difficult to address due to the conditions and aging. Lack of funding can compromise safety or impact safety. Pedestrian deaths on US roads increased 11% since 2015, 5,977 deaths in 2017.

Slide 15 - Condition and Aging of the Bridges (FHWA, 12/31/2018)
Our Nation Bridges is graded C+. As we look deep into the data. There are 47,000 bridges or 8% rated in poor condition and approximately 43% of the nation bridges are over 50 + year old. According to FHWA Engineer, most of our bridges design life is about 50 years. Significant funding needed because those bridges will be soon retired or have to be rehabilitation. The worst part is, the 2015 estimated that has a backlog of rehabilitation needs about 123 billion dollars.

Slide 16 - Condition of Roads "D+"
The pavement condition is not any better. One out of every five miles of highway pavement is in poor condition. The table shows the Federal-aid and Non-Federal-aid Public Roads and by rural, suburban, and urban. Roughly only 1 million miles are Federal-aid highway fund. Federal fund can only be used for capital expenses not operation or maintenance expenses. Approximately 3.2 million miles are not eligible for Federal aid highway fund. Of which roughly 1 million miles in urban. Those are heavy traffic. The conditions are probably worse than anywhere else.

Slide 17 - Highway Trust Fund is Unsustainable
The major source of Highway Funding is insolvent. Federal gas tax revenue is approximately the same as it was since 1993. On top of that Americans are driving hybrid and fully electric vehicles which pay less into the Highway Trust Fund. In order to keep the Highway Trust Fund solvent, Congress has infused general funds into the federal Highway to fund 1 million miles of Federal-aid highway. The future outlook of Highway Trust Fund is alarming. According to Congressional Budget Office recent projections, a future five-year reauthorization bill would need to cover a projected $68 billion shortfall, and a six-year bill would need to cover $89 billion shortfall. Keep in mind that there remaining of 3.2 million miles of the nation public roads improvement are not eligible for Federal-aid funding will have to come from alternative revenue sources. That is why we will continue to seek new funding sources to help pay for infrastructure needs. Value Capture is untap revenue sources available for State and local public agencies to help fund infrastructure needs and meet other objectives.

Slide 18 - Value Capture Mechanisms & Examples

Slide 19 - Value Capture Techniques Summary
We are grouping the value capture techniques into seven broad categories. Value Capture that we describe here beyond land. Land is just a subset of Value Capture. Giving the timing, I will just focus on the couple of items together with examples to demonstrate their use and benefits. How it can be use in Highway. The future webinars will discuss much details of each Value Capture Category. The registrations for these webinars are open. If you haven't registered for these webinar, please do so.

Slide 20 - Value Capture Techniques Summary
This slide gives you the value capture techniques that fall into each category.

Slide 21 - Developer Contributions/Impact Fees
Within that, Impact Fees is probably the most well-known. Impact fee is one-time fee imposed by the local government to the developer to help fund a portion of infrastructure or services required to accommodate new development such as new subdivisions. Through Impact Fees the cost of new services is passed on to the developer rather than funded directly by the existing tax payer. Must meet the Dual Rational Next Us. Need - Proportional-Benefits. The local must demonstrates new development creates need; the fee should be proportional to the amount of capacity used by the new development; and new development subject to the fee will benefit from the improvements. No voter approval is required. Impact fee pay for capital costs. Operating and maintenance and ongoing costs are paid from normal property taxes.

Slide 22 - Example Osceola County Road & Bridge Program
The Osceola County used Impact Fees funded the Countywide Roadway & Bridge Program. The county was in tremendous pressure to build the roads and bridges to accommodate new growth. The County created in 1887, covering 1,506 square miles. Osceola County (Florida) bundle countywide 11 road projects with 13 bridges. Project Cost: Project bundling cost $350-million. Funding: 100% locally funded by the Value Capture (Impact Fees) using Construction Manager/General Contractor (CM/GC) project delivery. Boost the county economy during a major recession because 9 out of every 10 construction dollars going to local contractors. Project speed up delivery and save money - 36 million to the county. In 2015 the County replace impact fees with Mobility Fees to provide the county flexibility and cover other transportation modes. There is detail of the project and others are on the website due to time constraints, I will briefly go through.

Slide 23 - Special Assessment Category
The next category special assessment including Transportation Development District, Sales tax Districts, Community Improvement Districts. Special Assessment District in general creates zones around a transit station or highway corridor for specific duration. Imposed by local government to property owners within the district. Can be self-impose by property owners. Property owners pay an additional assessment for specific improvements or services direct benefit from a public project. In most cases, property owners must consent to the additional fee, with clear understanding that they will benefit from the public investment once its completion. Normally collected as part of the annual property tax and then distributed to the special assessment district for the authorized uses. Improvements that provide a direct and special benefit such as streets, sidewalks, curbs and gutters, water, sewer, gas

Slide 24 - Example: the Route 28 Corridor in Virginia
Special Assessment was initiated by the two counties, Fairfax and Loudoun Counties. The assessment is on the commercial and industrial properties inside the district. In 1987, the Virginia General Assembly gave localities the go-ahead to create special assessment districts to finance transportation improvements. Fairfax and Loudoun Counties quickly teamed up with Route 28 property owners to form the first transportation improvement district in the Commonwealth. The district covers 10,204 acres of land, in an approx. 14 miles long corridor in two counties, Fairfax and Loudoun Counties. Assess about 0.2 per $100 valuation on all commercial and industrial properties inside the district. Raises ~ 23M in annual revenue. The Route 28 Corridor Improvement project consists widened 14 miles from 2 to six lanes. The project was completed in 1991. $138 million Bonds were issued to fund the construction, and the debt service was paid by Route 28 special assessment revenues with a back-up guarantee by the Commonwealth. The district paid 75 % and State DOT match 25 % of the project costs
This can be a powerful Value Capture Technique as a gap funding for major highway projects or funding the local roads and bridges condition. It's frequently used in transit and streetcar projects but underutilized in Highway. This Value Capture Technique can be used to advance the Project Bundling which is one of the EDC-5 Innovation.

Slide 25 - Lake Shannon Road Improvement, Tyrone Township, MI
The second example demonstrates the special assessment was fund project specific and imposed by the property owners. Property owners petition and got signatures from 55% stating they were in favor of the project. The project cost 1.3M in. Issued 10-year Tax-exempt Bonds. The special assessment district petition by property owners to repave the roads around Lake Shannon and the Tyrone Township Board of Trustees approved the special assessment. The project repaired to a number of paved roads around Lake Shannon including crushing and shaping asphalt on some roadways, and milling and removing asphalt in others, with new asphalt laid. public hearing was set for residents wishing to voice their opinions on the project and the proposed SAD during the Board of Trustees review. Special Assessment District can be a powerful Value Capture Technique as a gap funding for major highway projects. It's frequently used in transit and streetcar projects but underutilized in Highway

Slide 26 - Fees/Transportation Utility Fees
In the fee category, there are transportation utility fees. Primarily by the local government to fund ongoing transportation improvements such as repair and maintenance of the street, traffic light, sidewalk. Eligibility project is typical included in the city ordinance. They are paid by property occupants rather than property owners. Everyone paid whether you own property or not. Fee is determined by the trip generation and typical added into the utility bill.

Slide 27 - City of Newberg, Oregon
Example is the city of Newberg, of Oregon. The city is responsible for 66 miles of the pavements and four mile of gravel roadways. In 2016, the City explored a new revenue source to invest in their deteriorating roads. The goal is to see improved pavement conditions throughout Newberg over the next ten years. The Transportation Utility Fee allows the City to clear its backlog of street maintenance projects by 2024. Also provide fund for the construction of new sidewalks and bicycle paths. In 2017, City Council adopted a Transportation Utility Fee, which will annually generate approximately $1.2 million for road maintenance. The fee is collected from all properties in the city because all benefit from a well-maintained road system. Single-family residences will pay $4.99/month. Multi-family properties, such as apartment buildings or condominiums, and manufactured homes will pay a little less, still on a per-unit basis

Slide 28 - Incremental Growth: Tax Incremental Finance
The next category is incremental growth. Tax Incremental finance is the best example. Throughout the nation, Tax Incremental Finance is delivering with successful economic development & redevelopment projects. Authorized in 49 States and District of Columbia. Tax Incremental Finance district also has a Zone/geographic boundary and for the specified duration, from 20 to 30 years. The property owners within the Tax Incremental Finance district pays no surcharge in their property taxes. Property taxes within the district are frozen for the duration of the Tax Incremental Finance. Revenue is based on future increased in property tax revenues generated from the new development. Offers a source of long-term revenues and generate significant gap funding. Flexible, powerful technique to foster high quality development and redevelopment. Use to spur development in distress or underdeveloped areas. Requirements for establishing a TIF district vary across jurisdiction. Often formed in the areas where properties are demonstrably blighted, vacant, or otherwise distressed but where the potential for growth is strong.

Slide 29 - Atlanta Beltline Project
Example is the Atlanta Beltline project. Georgia refers as Tax Allocation District. There are three jurisdictions: City of Atlanta, Fulton County, and Public School in the Tax Allocation District. Utilized 22-miles unused freight ROW, empty residential and commercial properties, cleanup 1100 acres of contaminate industrial properties, and remediate 100 acres of brownfield. A financing tool that captures future property tax gains from a project or district. A powerful tool to advance $4.8 billion redevelopment project in Atlanta, Georgia. Adopted in 2005 and sunset in 2032, about 25 years. Provides social benefits such as 5,600 Affordable Housing Units of 28,000 residential units. The project estimated to generate about $20 Billion in new economic development including create 30,000 permanent jobs & 48,000 temporary construction jobs. Environmental benefits, reduce Carbon foot print by 665,000 metric tons annually

Slide 30 - Atlanta Beltline Project
This slide will explain how the tax allocation district works. There are three jurisdictions involved in this project. City of Atlanta, Fulton County, and public school. The tax allocation district was created in 2005 for the 25 years or when the project completion. But it opened in phases and there are significant development already happening. At the time, the tax allocation district created the three jurisdictions agreed to receive the same amount of tax revenue for 25 years. The Tax Allocation District retains any increase in property taxes resulted new developments to pay for the project. The light blue area is incremental revenue that expect to generate from new developments. Because of the timing of the revenue generate by Tax Incremental Finance, the local public agency issue tax exempt bonds and pledge tax incremental revenue as repayment source. At the end of 25 year, the city will receive all tax revenue for many years to come which is higher than it would have been without the project.
Slide 31 - I-10/Loop 375 Americas Interchange, City of El Paso, TX
The next example is to show the different ways tax incremental revenue was used, you will hear more detailed information from the Texas Director of Finance. She is an expert in this area and she will share with you how Texas Transportation Reinvestment Zones work. Texas refers Tax Incremental Finance as Transportation Reinvestment Zone. The city uses the incremental revenue as the City's matching share for the state and federal grants. It's also used incremental revenue as a source of repayment of the State Infrastructure Bank loans to fund for the project. This value capture technique helps advance rural and suburban roads and a viable model for State DOT to look for new form of funding sources for highway projects.

Slide 32 - Joint Development
The next category is joint development. Joint development is when the public and private sector partner to develop infrastructure project for the benefits of both parties. It's usually on the public owned land and can be near, below or above the facility. The good example for development near the facility would be the retail concession at the train station or the parking garage near the highway road or the solar energy in the State owned right of way. The state partners with the power company for solar panels. Development below facility is when the public sector leased to the private developer fiber optic line. In the case of above the facility development would be the public sector sells the right or lease to develop on the top of the train station or on top of the highway.

Slide 33 - Capitol Crossing Air-Right Development Project, Washington, D.C.
The example is the capitol crossing in the District of Columbia. The district captures one hundred twenty million at the time of the contract closed. The district sells the right to develop on the top of the I-395 and generate 40 million in annual property tax revenue. It is not about the money, the district has been long for the opportunity to reconnect the two divided neighborhoods, Capitol Hill and East and district. The two neighborhoods were divided by the construction of the I-395 in late 1960. Several mayors in the last several decades have tried to correct the problem.

Slide 34 - Concession: Asset Recycling
The next category is asset recycling. The name asset recycling come from the idea that the value of old infrastructure facility that the public sector invested long time ago, pay for, and considered a sunk cost. The value of the property recapture in the form of long-term leased and recycle revenue to pay for the new infrastructure facilities. It does not have to be a revenue generated facility. US has limited experiences in Asset Recycling but it has changes. the most recent example of the asset recycling is in Colorado. State sold the prison facilities and lease back for 20 years. It captured $545 million to fund for rural highway projects.

Slide 35 -Indiana Toll Road, Indiana
An example of asset recycling project is the Indiana Toll Road, a 175-mile toll road across Northern Indiana. The State leased the Indiana toll road that owned by the state to the private sector for 75 years and received $3.8 billion upfront lease payment. The funds were used state-wide road and bridge improvement in 10-year transportation plan.

Slide 36 -Arizona Land Sale
The Arizona DOT sold 21-acre parcel of land along the north side of the Interstate-10 near Phoenix Sky Harbor International Airport for $28.7 million. The proceeds used for the I-10 widening project
It does not have to be a revenue generate facility and I have provided several examples.

Slide 37 -Advertising/Naming Right
The last category is advertising and naming right. Public agency sells the right to name the infrastructure facility or advertising space or media to private corporation. typically for a defined period of time. Fund uses to subsidize operating expenses. Examples: Advertising can be generated by selling space on transportation facilities such as inside and outside transit vehicles, transit stations of bus stops, and roadway billboards. Advertising is popular in transit but not so much in highway.

Slide 38 - Virginia Rest Areas Sponsored by GEICO
The example GEICO sponsored Virginia 43 welcome centers and rest stops as safe areas to use cell phone in 2012. The objective was to reduce distracted driving, prevent accidents, and save live. Generated about $2 million a year in revenues for the Virginia Department of Transportation. At the time, GEICO sponsored eight states embracing the idea of repurposing highway stops as Safe Phone Zones. GEICO sponsored the safety program that reminds drivers to stop, pull over and safely call, text and otherwise use their cell devices in a safe environment. The three-year contract requires CRH combined with its new GEICO sponsorship partner to generate about $2 million a year in revenues for the Virginia Department of Transportation.

Slide 39 - Federal Roles
Let looking at the federal's influence in the value capture strategies

Slide 40 - Federal's Role in Value Capture Strategies
I would say it's very limited. Only to the land purchased with federal fund. The states and federal would have a direct influenced other than that the value capture is local decision and for local funding. US DOT support value capture.

Slide 41 - Value Capture Implementation Team (VCIT)
The value capture support at Federal Highway Administration. Federal Highway Administration supports the value capture innovation and has assembled an implementation team to provide assistance to state and local governments interest in implement EDC-5 Value Capture Innovation. The team is charged with building capacity among the partner included state, metropolitan and rural planning organization, local and tribal governments.

Slide 42 - VCIT Focus Areas
Federal Highway Supports Value Capture Strategies. The team focused on communication, using a web conferencing platform just as we are doing today to bring awareness of the value capture and its benefits. Technical assistance, we use peer platform by partner with the experts from the leading cities and Counties and States to provide technical assistance to the public agency wants to implement the value capture but needs some help. We also have consultant experts that provides direct technical assistance as well. We have significant value capture resources. Using web platform to make it available to the public. Resources includes lessons learned and best practices from past and current efforts, and connecting folks to others who have experience. You too can help us by provide us the value capture projects in your state so we can share with others. We would love for you to email them to us. We want to show case make it available for others to learn from.

Slide 43 - Clearinghouse for best practices/lessons learned
The slide provides a link to the value capture resources that are currently available on the website. Keep in mind, this is evolving. We will be updating as the information when information is available. One of the important documents we are currently develop is the value capture implementation manual. The pilot workshop will happen July 17 &18.

Slide 44 - EDC-5 Funding Opportunities
There are important funding sources that I want you to be aware of. It's important to know there are grant available for state & local to consider. The State Transportation Innovation Council or STIC Grant is up to $100,000 per year. Let just said the city want to implement Impact Fee. Impact fee required experts to prepare a methodology of calculation Impact Fee report. City should consider apply for STIC grant. Accelerated Innovation Deployment Demonstration or AID Demonstration Grant is up to $1M available annually. Example: city has a project want to use value capture technique has not been use by the city before. This is an opportunity to apply for Aid Demonstration Grant. The process and contact are on the website. The link provides on the slide.

Slide 45 - Thay Bishop Contact Information
This concludes my presentation. Thank you for listening and please send me value capture projects in your states. We love to show case them and made them available for others. If you have questions, don't hesitate to contact us. My contact information and there also direct mail box that you can send a request for technical assistance directly.

Thank you. I now turn them over to Kara

Kara: At this time, we are ready for phone questions if any have come in.

Operator: If you wish to ask? Please press star one. A voice prompt will indicate your line has been opened. You may remove mute yourself from the queue at any time by pressing the star key followed by digit 2. If you're using speakerphone, make sure your mute is off.

At this time, there are no phone questions. Will pause for moments. There are no questions at this time.

Kara: Thank you. Now we will hear from Alyssa Davis, Executive Director from Sugarloaf Community Improvement District to describe the role of community improvement districts in value capture.

Alyssa Davis, Executive Director from Sugarloaf Community Improvement District

Slide 1- The Role of Community Improvement Districts in Value Capture
There are different models around the country, but today I will talk about how the community Improvement district model works and go into how we use this model for commercial properties to fund infrastructure investments.

Slide 2 -What is a Community Improvement District (CID)?
I know there are people from all over the country on this webinar so I want to make sure go over first how it works in Georgia. CIDs are self-taxing districts made up of commercial property. That allows the property in the area to invest in improvements to benefit them. We have 27 CIDs in Georgia I think that number is still correct. There is some in formation right now. The first was created in 1988. Most - over 70% - have been created since 2000. This is a more recent development that we have become such a large player and funding infrastructure in Georgia. Once it's formed, a Board of Directors is made of commercial property owners. All the decisions on what to fund arm made by commercial property representatives. The board sets a tax rate for funding, there is a six your life and so that means every six years, the board can vote whether or not they want to dissolve the CID or keep it going. None have been dissolved to date. That shows how valuable a tool they have.

Slide 3 - CID Formation Requirements
When SCID is formed, it requires us to go get consent forms to join. This is the most difficult part.

You are going to commercial property owners who are typically conservative people who are concerned with the bottom line and asking to raise taxes. But the real value is they pay not a huge amount of money and they get a lot of benefit and we can leverage the funding. Once you explain that to property owners, a lot of them understand the huge benefit. The property that is eligible for the CID is retail, office, industrial. When you form CID, you had to have a majority of owners who represent 75% of the value in the given area. The parcels must be contiguous and you cannot have holes where you jump over parcels. You have to have parcels next to each other or across the street to on boundaries.

Slide 4 - What can CIDs do?
CID can do a number of things. This is in Georgia, there are business improvement districts in other parts of the country that have different areas they work in. For us, the main thing we do is transportation. We are allowed to do other things, parks, water. And we have this other service category that gives leeway. The benefits of having CID is it allows us to be a partner for local government and doing these infrastructure events.

Slide 5 - Sugarloaf CID Context
Now I will go into the Sugarloaf and give context for why we have this here. We are located in Metro Atlanta so we are just northeast of Atlanta. We needed a CID here because we are major activity center. We are newly formed in 2016. We are major job center and we also have huge entertainment district. There's a forum, a convention center and theater, and art center. We have over 1 million visitors coming here every year. That is from conventions to concerts. We are a very busy area and have of business community and entertainment center. Having the CID allows the business community here to have a voice and what's happening.

Slide 6 - New development underway
We have a lot of change coming already. There is a large development underway, a large area in the middle of the district around the arena and forum. This is a public, private partnership where there is a huge amount of surface parking. The Convention and visitors Bureau came to the realization is not the highest and best use of the land around this huge entertainment center. They are building parking decks that will allow surface parking to be available for private developments. They have an exciting redevelopment happening in the middle of our district. Since we have a busy area with a lot of traffic already, we know it's growing, that has led CID to realize we need to come up with transportation projects and think to the future. And look to what's coming.

Slide 7 - Task #1: Identify initial projects for SPLOST funding opportunities
Our first task was to identify initial projects because here we have special-purpose local option sales tax and there was a citizen committee meeting in 2017 to decide what projects to fund and we looked at the list of projects we realized there were not any in our area. Knowing it's a busy area, we commissioned studies and were able to go to the citizen committee to present the needs to them and that led to them allocating $7 million for projects in our district and those were necessary projects. The citizen committee members all do a great job, but a lot of members are interested in sidewalks in their own neighborhood or this intersection outside their subdivision. This gives the business community a voice in the process that it otherwise wouldn't have.

Slide 8 - Initial projects completed
Many of our early projects were simple, not high dollar things. One didn't cost us any money. We were able to identify the need for a right turn lane that was creating a traffic backup. We identified this project and County DOT was able to complete it to their quick fix program. It was a win-win for the county because we solved a problem that was easy to fix. Another was filling in a large number of sidewalk gaps. Completing three sidewalk projects was great for our district.

Slide 9 - Project underway: Sugarloaf at Satellite intersection improvements
This intersection project is a great example of how the local government can work together each bring something different to the table. We have the sales tax funding here that has restrictions on what it can be used for. When it comes to transportation it can only be used for those hard infrastructure improvements like turn lanes, traffic signals, that kind of thing. The CID has been able to come in and say, in addition to the 4 million for the intersection improvements, we want to put in additional funds to make this project even better. We will put money for pavers for streetscape in, landscaping and mast arms. Those upgrades in an area like this with such an important destination, we wanted this to be a high-quality project. So, we know your county funds are restricted and we can bring in these CID funds to do some of those things you cannot do.

Slide 10 - Loop Trail
Another project is the Loop Trail. We know trails are important to residential areas but we are hearing more and more from the business community they want trails, and they are looking for an amenity they can sell to their employees. The Loop trail project is one of the county signature trail projects. We were able to advance this project by applying for grant. Picking projects that go through our district's, we can go and apply for a grant and we provide the local match. It is another great example of getting a project started that wouldn't otherwise. When the county has almost 1 million people, there are priorities all over.

Slide 11 - Sugarloaf Livable Centers Initiative Master Plan
Another thing we do is come up with master plans. You have the county government with very large comprehensive plan, they cannot get fine-grained in their planning. Our area is much smaller. We completed an initiative and this is a partnership with the County and the Atlanta regional commission. The county contributed funding along with CID so we created this plan and through the regional commission program we are now eligible for grant funding that we otherwise would not have been. It was a great opportunity to think comprehensively about the new development coming in the area, transportation needs and also position ourselves for grant funding.

Slide 12 - BRT Corridor Study
Finally, I will close on this. This is the bus transit rapid corridor. Our county has Gwinnett County transit. It's not part of the larger heavy rail system. There have been studies to expand heavy rail into the county and studies that include light rail and bus rapid transit because funding for heavy rail is difficult to come by. CID have been working on transit planning for the past 10 years. The business community was head of local government on this subject. They see the need in terms of attracting businesses to the area. In addition to multiple studies done over the years, we are now partnering with the County to do a bus rapid transit corridor study. It's a $400,000 grant. It's a great partnership and allows us to have a voice in the process, and we are looking not just at transportation but development potential around transit stations for this corridor. We had a transit vote that did fail in March are hoping will have another chance next year for that.

Slide 12 - Other CID initiatives
With that, I'll wrap up with a few other things. I want to make sure everyone has an idea of other things CIDs do. Most of the big dollars go to transportation. CID have other areas we focus on. One is security. We have cameras with license plate readers and that has been really effective in a partnership with police. A lot of our problems are car break-ins and that helps give the police information but is also something we can advertise to the community to let people know this is not a place you want to come commit crime. Another project is landscaping interchanges. That has been a great benefit to the area. We also have banners and we will put up some Gateway signage next year.

Slide 12 - CIDs are critical champions for advancing projects
With that, I will close. I want to make the point that as a CID, we don't have the kind of money local governments do. We are a small area but we can be critical for contributing local funding match to get a project going or doing a study to identify a project. I think it's a great partner for local government to make projects happen.

Thank you.

Kara: At this time, we are ready for phone questions. To address the question in a chat box, we will get to those at the end of the webinar. We can take phone questions or anyone has a chat pod question they would like to ask, please go ahead.

Operator: If you would like to ask a question, please press star one. Voice prompt will indicate your line has been opened. You may move, remove yourself by pressing the Starkey if you are using a speakerphone, pick up the handset before pressing the corresponding digits. That will be star 1 for phone questions. There are no phone questions of this time.

Kara: Thank you. With that we will turn it over to Julie De Hoyos, Project Finance and Operations Director at Texas Department of Transportation.

Julie Rabeux De Hoyos, Project Finance and Operations Director at Texas Department of Transportation

Slide 1 - Transportation Reinvestment Zones
I am part of the project finance. I will speak about transportation Reinvestment Zone (TRZ)

Slide 1 - What is a Transportation Reinvestment Zones
I will quickly go through the background of TRZ. Where we are today and how to use the program. We were created in 2007. A few years later, the program received increased flexibility because they detached it from a program with pass through tolls. Has been since then we have seen an increased use. Until 2011 community started to use this tool. Currently we have 14 used the program. I see my colleague on the call today but the TRZ is specific contiguous zone plan around transportation projects. Established as a method to facilitate capture of the property tax incremental around a project. It allows for the capture of sales tax but I've not seen the community take advantage of that aspect traditionally we see communities focusing on the capture of property tax. Those number change legislation and we have users of the program that are port authorities and navigation districts. It's a local program. Taking advantage, we have conversations with our partners about funding issues on projects.

Slide 2 - What is a Transportation Reinvestment Zones
This similar to one of the slides Thay shown earlier. I like to show because there were two things communities can play with when figuring out anything captured after 2019, and increased value will go into this tax increment accounts. We have a flexibility in Texas for communities to put that whole increase in value within the account or percentage. That's something that can be analyzed during implementation decision. And can be explained as a savings account of tax money coming in. It's the community being set aside specifically for projects like a savings account.

Slide 2 - Hidalgo County TRZ No.2
Anything that can be flexed or changes in geographic foot print of this is a picture of the Hidalgo county #2. They dissolve number 1 and started over. You can see within the area is a blue line and in no way is its own symmetrical or a perfect shape. You could tell they have captured particular parcels that may not be bringing in our property tax revenue. Perhaps your other intentions of that zone. Here, this is an example of a footprint. Another thing we look at with feasibility studies, what amount of the city or county for this new increment be taking away from the expected future budget. Making sure the balance between the fund being set aside from expected future property tax revenue as opposed to other growth needs. The two things to flex or play with the geographical print or the wedge itself. The percentage pledge of property tax increase. It captures existing economic growth that would happen whether the transportation project was to move forward or not as expected growth generated from the project.

Slide 3 - What is a Transportation Reinvestment Zone
That's what you capture specifically for this zone and the project. You capture all organic growth as well. Why haven't they been used more in Texas? Because of the pass-through toll project or program in 2011, there were limitations so many communities felt they couldn't participate or there was a misconception it was still tied of years after that. The transportation reinvestment zone is similar that exists within the transportation code specifically. Other tools can be used for other improvements. What's the difference? The TIRZ typically used for non-transportation projects we see here in Texas or they are used more in urban areas. One benefits we hear from many of our local partners, they do not require a board to manage it. Once it is established and passed within the community, that requires local buy-in but after that it is no longer requiring the board. It has already been identified.

Slide 4 - What should be included/considered in a TRZ feasibility analysis
We will go to this in detail. Some things we like to consider on the front end, community say this is a great idea. I would love to do it let's talk about funding for how much will it bring to the table if we want to use this as a funding source. Over the bring to the table. We have partnered with public and private entities to do feasibility studies. My colleague is on the line as a participant. We have looked at everything from historical growth valuation working with local Central Appraisal District on valuation parcel, different economic growth models and all the different aspects. Looking at long-term cash flows for the purpose of being able to issue debt. Not just in the first few years. We talk about value capture, the big and if it is out.

Slide 5 - Financing

Slide 6 - Financing
Funding versus financing, TRZ is the is a source of revenue capture. Cannot fully fund? It's can but rarely does. It's usually a gap filler. Local governments can use their funds directly towards a project or as a pledge method. Both cities and ports can use toward bond issuance.

The tax increment bonds are way to issue debt towards a project by pledging TRZ. Those have higher cost compared to other debt mechanism. We often see people lean toward the State Infrastructure Bank program we have. We request a GO backstop condition to the revenues coming in to secure the loan.

One thing I want to point out, it doesn't have to pay for the project in its entirety. Perhaps this is the way before the community to participate on the front and for preliminary studies for right-of-way survey, utility relocation. Some of the gap fillers that might help logic get off the ground or otherwise you may have a stalled project.

Slide 7 - Implementation Process

Slide 11 - TRZ Implementation Process

Slide 12 - TRZ Implementation Process - Initiation
Initiation aspect, the preliminary feasibility study for research on the property values looking at historical growth rate is a great place to start. Developing stakeholder relationship is a key to success. Making sure communities understand this is not a new tax. What does it do for them? What does it mean? Making sure you have that stakeholder relation and outreach that will make, you don't want to report. That's a very important aspect on the front end.

Slide 13 - TRZ Implementation Process - Zone Formulation
Understanding which parcels to include and establish that benchmark year. In refining that feasibility study.

Slide 14 - TRZ Implementation Process - Adoption
Once you do the initial feasibility study, understand impact on your budget. Being able to adjust the size of percentage being pledged

Slide 15 - TRZ Implementation Process - Implementation
Now that it is established, being able to issue that debt, issue bonds or go ahead and forward with the loan application to the Department. This is when you start to utilize TRZ. You have to remember at the beginning will be a slow start in terms of revenue coming in. Established a mechanism for funding partnerships is more discussion that happen. This may be a way for different communities to partner on a project may span across multiple county lines across different areas for partnership with another transportation department.

Slide 16 - TRZ Implementation Process - Monitoring and Evaluation
Monitoring evaluation, oftentimes TRS is established may be very successful. People are excited, I created it, it's Sunday the project, I'm done. Oftentimes, a wall can get dropped or something can go wrong and lately we have been promoting monitoring and evaluation of the zone establishing and monitoring and making sure someone is responsible because there's no board. Making sure someone is monitor the TRZ to optimize revenue and payment stream. Monitoring what was estimated versus what is actually coming

We have worked with our partners to offer communities ways to very live information at the district level because that can be very complex utilize. Just to monitor revenue stream coming and making sure their own targets. Is the flexibility of increasing the size of the zone? You can catch an increase the size of the zone and capture more parcels and stand target. You can't decrease if you already pledged. It dissolves the calendar year at the end of contractual requirements. Be at the end of the calendar year at the end of the term. Avoids it dissolves. We have seen a few dissolves earlier than that.

That's it. I want to mention in Texas it has been a great tool for us. We hope it continues to be used and get taken advantage of when there's a short. It could be a great gap filler or project launcher when things have slowed down or required community participation. Is a local program. It doesn't have to be tied to a state project. Sometimes I don't even know these exist because they may get established and utilized and separate from a textile project or study being done at a local level. It's a great tool that's there and eligible for local government to take advantage of and we are hearing resources to do outreach and promote the program and I will take any questions today or in the future if there are follow-up questions.

Slide 17 - Contact Information

Slide 18 - Contact Information of Julie De Hoyos

Q and A Section

Kara Chisholm: At this time, we are ready for phone questions again.

Operator: Thank you. Once again, if you wish to ask a question, please press star then one. Voice prompt indicates your line is open. You may remove yourself at any time by pressing start two.

Kara Chisholm: We have a question in the chat pod from Val Rader.

  • We have considered leasing some dark fiber for our signal system. How is this viewed by FHWA. IIRC, we've been told we would have to pay back a portion of the Federal participation.
  • If we arranged to charge the potential users of the dark fiber before installation, how would that affect the answer?
  • Can we arrange fees for use of the ROW for communications cables installed by the private user?

Thay Bishop: It's really depends. We need to know additional information about the project. I would want to hear from Val after the webinar and hopefully we will get together with the division office as well as headquarters experts to get you answer. We will answer all the questions raised. It's very good questions and we will send out the answer to the all participants. In general, depends

  • How was the fiber installed? What was the purpose? If the fiber was installed as part of the transportation facility I think it's likely a disposal question. If the dark fiber is not needed then you would need to determine how and why it was installed. That determination will lead you to the reimbursement disposal answers.
  • If you were told that you would have to "pay back a portion of the Federal participation," was the fiber acquired or installed as a part of a Federal-aid project or in an existing FAP right of way? If so, revenue generated from projects developed using federal funds may have requirements attached to those funds. That would typically be found in the State Right of Way manual and/or in the funding documents for the project. See answer "a" above.
  • How does your state treat the fiber? Is it considered a communication facility or a utility? If it is a utility then leasing dark fiber is likely not an option, the amount that may be charged for public utilities may be limited by state and federal regulations.

Again, we want to know additional information on the project. It can depend on where the right-of-way will be viewed and also to update the specific area the state D.O.T. might need for anything on the horizon. Before we give a definite answer, we need to know more. Val, could you give me a call after the webinar? We can get additional information and provide answers to all the participants.

Guest: What challenges do CID's experience and how do they overcome them? e.g. different City/County land-use/transportation planning policies?

Alyssa Davis: Every knows Transportation projects with a whole lot of challenges. I would say, we face the same everyone faces and we have more projects we want to do than typically have funding for. I would say one challenge is there's limited funding available. We are all going after the same funds. CID can bring to the table that we have funding local match we can bring and then we can also come as a partner to local government. Sometimes, we have the advantage of just saying we can make our grant application more attractive because it has multiple partners. We bring funding to the table and it shows more stakeholder engagement so that can help us advance our project. Trying to take of any other good examples of challenges. Another challenge, we are working to grow and expand our district. Sometimes you can have one property owner who is a large property owner who doesn't have the community mindset that investing a small amount of money is a long-term benefit. It keeps us from going beyond them to get people around them. That's another challenge we have. Not everybody has the mindset if we want to be part of this district. Their monies to put into the community. The goal is to improve the area and that raises your property values. It's really a good investment. Those are the two main challenges.

Kara Chisholm: The next question WFRC -Salt Lake City: What is average time frame for TRZ project?

Julie De Hoyos: I would say that is not necessarily an average time frame. It would depend if the funds were being used towards issuance. If you were to issue for a specific project, then maybe it 30-year period for more than anything we can look at anything from 30-40 years. The initial years, you will not bring in the largest amounts of revenue. In the out years, it depends who you borrow from whether you speak about increment bonds technique revenue bonds or loan and what term the borrower would want to consider. Could even be an agreement with a developer. There is flexibility and in our case, it can go as long as the contract or debt agreement is in place. Let's pretend it's for 27 years then TRZ would last for 27 years. It depends on the needs of the project.

Kara Chisholm: Are there any questions on the phone?

Operator: Not at this time. Star one if you would like to ask the questions over the phone.

Operator: No questions at this time.

Kara Chisholm: Thank you. If you have additional questions you may ask them in the chat pod as well.

In the meantime, the slide shows upcoming webinars. You can register by clicking on the link below the titles of the webinar names. It also lists dates and times. This will go on through November, about once a month. The next is June 27 next Thursday and that will be about developer contribution, techniques and case studies.

Kara Chisholm: We have another question.

Jen Miller: Are there any examples for industrial areas?

Thay Bishop: We have quite a few project examples on our website. They range from small to major projects. It's from urban to the rural area. The link for that projects is on the slide that provides on the presentation, they should be available for downloads very soon.

Thay Bishop: The presentation is available for people to download.

Kara Chisholm: At this time, if there are no other, no further questions, we can move on to our final poll question. At the left of the screen, three presentations we had today available for download.

Kara Chisholm: Unless there's anything else, that concludes our webinar for today.

Thay Bishop: I want to thank Julie and Alisa. We appreciate you sharing your valuable time. A lot of information to learn. Also thanks the participant patience and listening. Next, I want to ask that any state, local or county that implement value capture, we are looking for the projects you implement of any type of value capture technique you have implemented. Please email them to us. We would love to have them and we want to showcase them and make them available for all the participants. The email as well on the chat pod. Also at the end of the presentation. We need your help on that.

Thank you.

Kara Chisholm: Anything else? I think that will conclude our webinar today.

Thay Bishop: Yes. Thank you everyone. The presentation is available on the left side under filesharing. Just click on the presentation and hit the upload file and it will pop up and then you can download to save it to your computer.
Thank you.

That concludes our conference for today.
[ Event Concluded]