Value Capture Webinar Series

Value Capture:
Joint Development & Use Right-Of-Way Agreements

October 22, 2020


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Thank you. Good morning or good afternoon, everyone. On behalf of the Federal Highway administration I would like to welcome you to today's Virtual Peer Exchange on Joint Development & Use Right of Way Agreements and my name is Pepper Santalucia and I am with the USDOT VOLPE center in Massachusetts and I will be helping to address any technical problems as you can see on the screen we will have a great set of presenters for you will be sharing their experience with both toward joint development and right-of-way use agreements introducing them to you in more detail before each of their presentations. Just a quick orientation to the webinar room. In the top left corner of the screen you will see the audio call in information. In the lower left corner, it is the chat box that you can use to submit questions during the webinar. You can also ask questions by pressing *1 on your telephone and we will give you more instructions when it is time for questions and answers. If you have technical difficulties during the event, you can use the chat pod in the lower left corner to send me a private message and you can start a private conversation with me by clicking on the button in the upper right corner of the chat window and select start chat with host. The webinar will run until 3:00 PM Eastern time today. We plan to field questions after each presentation and we will also have an expanded Q&A session at the end of the event. Toward the end of the event the speaker slides will be available for download and supplementary resources that some of our presenters have provided. After today a recording of this event will be posted on the FHWA website. If you're interested in applying for professional hour credits for your participation in today's event, we will provide information on how to get confirmation of participation. Before we begin, I have pulled up a couple of questions for the audience to respond to these are meant to help us to understand your affiliation and your level of knowledge with the topic of today's event. We have a good representation from state DOTs and also USDOTs but also local government as well. We welcome you and we have the book of the audience was heard about these types of value capture techniques but are here to learn more about them that we have a couple more poll questions for you, if you do not mind responding to those. While you are responding, I will introduce our moderator for today's event and it is Sasha Page. A principal at IMG Rebel financial advisory firm based in Washington say it was over two decades of experience advising on project development and public private partnerships with infrastructure. He has worked with public agencies in Boston, Chicago, Dallas, and Raleigh and Durham. Sasha, but for return to the first presenter, and the reaction to the results we see right now on the poll?

Thank you, Pepper. At approximately half of the participants have not entered into any kind of joint development or right-of-way use agreement, but maybe in the future. There is a couple ones that have actually entered into some but that is a minority. In terms of the experience ones that have been involved with the highways and road not that many with the transit or other infrastructure. We will be talking about solar and fiber optic right of way so that is a complement to traditional highway right-of-way approach. Pepper?

Yes. Great. Thank you to the audience for responding to the poll. I will bring of the first set of slides and we will leave it over to you to introduce our first presenters, Sasha.

The two presenters today from the FHWA and it will be Lindsey Svendsen who joined the Federal Highway Administration in the North Carolina division who currently serves as the property management program it's for the office of real estate services and in addition to her time at the FHWA headquarters managing the program for the FHWA Massachusetts division and several programs for the FHWA Wisconsin providing guidance and mentorship nationwide for the use agreements and acting as the point of contact for the advanced FHWA Western division. Shall be joined by John Duel whose officer Realty specialist has worked at the Arizona Department of Transportation and the District of Columbia for 17 years in Arizona working in the right-of-way division as a technician, how examiner and relocation agent and is the manager of the right-of-way plans and washing to say and responsible for real estate activities within 400 miles of federal streets and 250 miles of our lives working in the private sector as a title examiner and real estate appraiser.

Thank you, Sasha. My name is John Duel. I just want to say that Every Day Counts accelerates the development of innovation and shortening the product delivery process, increases safety, reduces congestion and integrates our nation and that is its purpose. You can see that Value Capture is one of several innovations in Every Day Counts. Value Capture refers to a toolbox of strategies or techniques used by public agencies to cover a portion of the increased property value created as a result of public infrastructure investment. Strategies for Value Capture may include land value taxes, special assessments, tax incremental financing, negotiated actions, development impacts, and today's topic joint development. These revenues can be applied directly to project cost are used as a repayment strength either from municipal bonds for private investment. Public investment in transportation may provide a disproportionate financial benefit were increased financial benefit to adjacent property owners. The value capture techniques seek to share a portion of land value to build, maintain, or reinvest in the transportation system. Joint development is a Value Capture technique in which governments work with developers to improve the use of land above or near public infrastructure. Joint development is defined as the sale or lease of land or rights on or adjacent to transportation facilities. This can include donation of land or other in-kind resources from the private sector and ongoing commercial operations. If any interest in property and out in and project uses federal funds, restrictions and requirements would capture these federal funds the basis is imposed by federal valuations and their purpose is to protect people affected by the project. This includes those from whom the property is acquired as well as the general public. Lindsey will go to some of the regulations in effect for those improvements these federal funds. Lindsey?

Like John said, I will go to Ivan's favorite and the most exciting topic of statutes and regulations. We will start out with 23 CFR 1.23 including real property acquired includes the infrastructure and it says that real property acquired for the holy purpose within the boundaries of a federally assisted highway project shall be devoted exclusively to public highway purposes and that uses are subject to the statute 23 USC 111. There is none highway uses the property that may be approved in order for it to be approved they've determined to be in the public interest has to be determined that these will not impair the highway or interfere with the free and safe flow of traffic. It is interesting the last requirements are similar but not interfering with traffic and I could be as simple as reducing steps to a facility for maintenance and repair while impairment could be just an increase of physical stress on the facility itself which could reduce its transportation lifespan. The reason that we are focusing on 23 USC 111 is because many of the joint Spellman projects the with the are the interstate airspace but we want to explain that there is additional restrictions related to commercial activity and rest areas, which is covered under the statute in 23 USC 111. There's only a limited commercial activity per minute. Just want to clarify that if you happen to be driving down the interstate or highway and you see commercial activity like a gas station where restaurant and was seems to be something like a rest area, 23 USC 111 does allow exceptions for a grandfather facility in place prior to 1960. There are many of these examples that you might see around the country but the use of airspace above and below the highway facility can be used with the previously noted restrictions have the access to that is from non-interstate lanes so like a secondary roadway. When we are talking about the Value Capture technique of joint development we also to talk about right-of-way use agreement They were called airspace agreements and then the federal regulations for 23 CFR 710 updated and I we call them right away use agreements and is required for any use some of the basic requirements for a right-of-way use agreement is a has to be in the public interest and it cannot affect safety or operation of the facility. There has to be an analysis. Another basic requirement related to right-of-way agreements with the requirement to obtain fair market value for use some fair market value is determined by each state. There are exceptions to charging your market value exceptions may be requested for social, environmental, or economic reasons and it has to be made to the federal highway in writing. Each state has the obligation to develop their own criteria that they will use and have to document this criteria and their process interstate right-of-way manual. So, when developing right-of-way use agreements and request coronation for many sections within state Highway administration as well as FHWA divisions. Right-of-way use agreements come in different forms. The could be something like a permit or license way lease, as long as the components that are required in the right-of-way agreement are in their pick they could just be called something different. Each request is considered on a case-by-case basis. All none highway uses have to be approved by federal highway. If there is a none highway use that is not on the interstate right-of-way, the approval may be delegated to the state, but it varies based on each stewardship agreement figure how to look at what the state requirements are. We discussed in the last flight that fair market value must be charged, but there are exceptions that may be possible. All requests for less than fair market value determinations have to be approved from federal highway. Like we mentioned, none highway use request coronation with many areas including planning. There has to be a determination that right-of-way is it needed. The right-of-way in question is a needed in the foreseeable future. Those important aspects like safety, traffic, maintenance, and security to be considered as well as access to the non-highway use that should be from secondary roadway and that is the actual right-of-way. And must be in the public interest and finally the non-highway use project must have an analysis. There's a lot of requirements for the right-of-way use application. Some of the key points in making the application you should always make sure that you are aware of the federal requirements and the individual state requirements and any required forms. I'm not going to read through all of these, but we just wanted to include them so that everyone would have them to go back to as a reference. We have a lot of examples that already exist around the country we have examples that are not on federal right-of-way like turnpikes with purchase of rooms for in an energy or state route that have trouble centers or commercial activity in the right-of-way. There many examples of joint development third are also on the federal use right-of-way. In the airspace above the interstate it can be found in cities and there's also areas in the country when they have a place cap which is a structure over the interstate to allow for development of commercial activity above we have also included some context to help you navigate the process. If you are an interested party, the contractor should reach out to is the owner of the property that you're interested. Of your local public agency, you can reach out to your state DOT. If you are a states DOT, you should contact your local federal highway division office and if you are a federal highway division office you should contact the headquarters point of contact. I want can also reach out to John or myself directly and we can get you to the correct party. I'm just going to wrap it up by saying we appreciate you sticking with us to this preliminary regulation discussion. I know you're about to hear really interesting examples, but we needed to start elegance to emphasize the importance of considering all the applicable both federal and state requirements when you are developing a project. It is important to make sure that you know they are, all of the requirements, so that if you have a project on a federal facility or if you want to maintain federal eligibility for your projects, you can't. It is important to early and consistent coronation with all necessary stakeholders to ensure that you do have a successful project. That concludes our presentation on the federal requirements. I will turn it back over to Sasha. Thank you.

Thank you, John and Lindsey. We appreciate that. Are there any questions right now for John and Lindsey? Adequate time for one or two. You can press *1 where you can add your questions in the chat pod. I see the might be one here because doing to point out that the FHWA has a number of case studies on the EDC-5 website, including examples of caps, as Lindsey mentioned. I think those are great examples. Good. I have one question here from Lisa Austin. Can you repeat what you said about a NEPA review for right-of-way use agreements?

I can answer that whenever we are talking about a project that is on a federal facility, there has to be a NEPA analysis. It could be just a categorical CE for the has to be some kind of NEPA document with any kind of federal product.

Okay. Great. And if there are additional comments we can always pick up with them later. I'm going to move to introduce the next speakers from Massachusetts. First of all, Mark Boyle, who is the real estate and development administrator was a long career in transportation spanning over four decades and has early experience in the field as well as educational Boston College that has led him to his current position as the administrator for the MassDOT office of the state and he will be joined by Scott Bosworth who is with MassDOT and have written federal state and local transportation policies spanning three decades, including critical assignment as assistant secretary under Governor Wols as well as with Congress. Disc the private sector experience added expertise to reimagine how MassDOT deliver services to its constituents progressing we will start with Scott first and then moved to Mark.

Yes, Sasha. This is Scott Bosworth. I want to thank you for tuning in and also, I would like to thank federal highway and the regional office on the headquarters. Over the decades, we have thrown a lot of complicated things that federal highway. Every time they have been very helpful to solve the issue so I want to start out by thanking federal highway further partnership. We will run through a bunch of our projects and some are with federal highway and some without peer we will go on to talk about some of the complexities. I will introduce Mark Boyle my colleague and friend who will run you through our history some of our cool projects.

Thank you, Scott. Welcome, everybody. It is good to be with you today. Massachusetts had significant experience with Value Capture and joint development in use of right-of-way. This is a map of essentially downtown Boston. It shows from left to right the Massachusetts Turnpike, which runs all way from the New York border up into Boston into downtown. North to south is the central artery project. The turnpikes Ridge is a state-controlled highway built in the 60s and it really has no federal aid or interest in it. So, right-of-way use agreements are not applicable, but we wanted to show you examples of use of particularly airspace on the turnpike which I think your audience will find interesting. We will talk later about the central artery tunnel, which certainly does have federal interest in it. I think most folks have heard about it and know for sure that there is a federal interest in the project there. These early examples of right-of-way and Air Rights Projects, this is outside of Boston at Newton. These were the first examples of use of the right-of-way and Air Rights over the Massachusetts Turnpike. In the 80s the got more sophisticated in the scale and this is the Copley Place and the Prudential Center and also the Hynes Convention Center. You can see it rinse westbound in yellow hitting into Boston on the bottom. 2000 the city stepped forth and said what did to stop there? While you continue looking at the turnpike for air rights because it goes to the downtown Boston neighborhood. The city really wanted to approach the state about doing more development that would need the neighborhoods back together. These are prime areas with the Beacon Hill and Fenway area. It is a prime area in the city. The city really did encourage us and it is to talk about the future air rights. Is good to have your municipal partner support in your particularly when they control local zoning in Massachusetts cities and towns also particulars a big impetus for Massachusetts and the state to go forward. We briefly want to talk about what we are working on now as a result of that. So, the first one here is Fenway Center. This is adjacent to Fenway Park and this is over the turnpike. The first phase of the two buildings on the right which are complete and ready for often see in the second phase is a large one that is really more over the turnpike. The other are adjacent. Estate parcels associated with the turnpike and the rail line. This is complicated because it is not only over highway but also over the commuter rail. It is a challenging project, which we will talk about the challenges and opportunities later that we face. It is really exciting. The community and the city has embraced us. These are parcels 12, 13, and 15, that we are working on now let me just advances here. 12 is over the turnpike. Is actually the terra firma parcels adjacent to the east and west side of the Pike? Two structures are going in to the office on the right and the hotel on the left and then they have this Plaza that is in the middle that is really over the turnpike. That is a public open space Plaza as well. These are now under construction. We closed the use earlier in the year and we are pretty excited about those. Personal 13 is in the Boylston Street Massachusetts Avenue intersection that a showed earlier. That is very early in the design stages but we will be going forth with permitting with the city as well. We been on a little bit more east down the turnpike getting toward downtown it is Back Bay and this is the Gateway project. It is actually four parcels in the air rights over the old Hancock Drive. We had an existing lease when John Hancock was building their new tower. They built it over the turnpike so now they're actually building over the garage for further air rights. That you can imagine, it is complicated we went to our Board of Directors earlier in the week and got approval to move forward with this project, so we are pretty excited about it now as well. That is a visual of how it sits over the turnpike and adjacent to the rail station which is the commuter rail and Amtrak station. Another great example of the development as well. Those are some quick examples of our experiences over the turnpike. Turning to the central artery now, this is what it looked like years before we started the new project we called it the green monster. It is not the green monster of Fenway Park but this is certainly another green monster cut into all of downtown Boston, which was really not inviting and you can see it is from the air quality not very welcoming as well. That was decided to underground that highway through the tunnel. I will show you some examples. This is what stands were that elevated highway stood. This is the Kennedy Greenway running 1.7 miles above the tunnel from the stationary up to the North station area. As you can see, it has transformed the environment in downtown Boston with significant development along the Greenway over the years. The Greenway is we have a long-term lease with the Conservancy, which has proved to be fantastic. This shows the length of how the Central Artery used to come into downtown Boston cutting off the north end and cutting off the wharf district and other neighborhoods that are over on the water side of downtown. And again, it has just been a wonderful activity in downtown Boston whether it is weekends, evenings or lunchtime and all that and you can see the buildings that are surrounding it. Further north hitting two North station you can see the portal for the northern end of the Central Artery. That is where the elevated structure essentially came North. Similarly, next to it was an elevated entity a transit structure also. The state and the MBTA worked together to plan for the eventual demolition of the structures so that we can offer some prime new real estate parcel to be available and use that while destruction was taking place to work with the city of Boston because again they have the zoning policy and we came up with a very extensive use and design guidelines, which was really attractive to prospective developers but we were very successful at attracting high-quality developers. It is a mix of residential and commercial with 1000 units of housing, including a couple hundred affordable workforce housing, hotel and retail as well but we are pretty pleased with how that turned out. I know Lindsey may have moved on but she was certainly well involved in this one was local in Massachusetts that has turned out to be a great success here. Also as part of a construction you wouldn't know that eventually what they had was the office space and parking garage and the like. We have registered motor vehicles in the building and other agencies with the Boston public markets in the ground level pick there is ventilation structures associated with the Central Artery tunnel, and then you can see the end of the Greenway as well as the portal. It is just a couple more examples and this is the latest project on a central artery parcel and this is the Haymarket Hotel in Boston practices under construction. We are really pleased with this one. It will be a great addition to the downtown historic area. So, moving beyond that stretch we also have this is the substation and it is a hub of major transit in Boston with the commuter rail, subway, Amtrak and the like. It is also touching on the edge of the Central Artery as well. This has been ultimately approved above the cell station by the Hines Corporation and other investors, and it just started to be under construction but we also integrate some of their transit facilities because the highway the transit locations adjacent to where we can integrate and go forward with both transit related development as well as highway promoting transit oriented development is.'s we want to talk about not only over highways but also under highways and this is the elevated structure that approaches downtown vacancy on the left side there was remaining construction activities but also as was an area that was not quite safe. You can see the state police looking at the area and there is some crime and some homelessness and a lot of other issues that the state had to deal with. What we decided to do was to move forward with development under the elevated highway. You can see that there has been some open space for landscaping and parking amid budding developers who were short on parking areas so we have developed particular released with a substantial amount of revenue underneath the highway as well. Here are some further images of the landscaping section of it. It is much more friendly. Folks can navigate between neighborhoods on either side of the highway and it does not serve to be a barrier to pedestrians and bicyclists because it was made in a much more accessible and attractive location underneath the highway. Lastly, we are moving forward next week with launching our parcel 25 as you can see outlined in red. This is a strategic location and a surplus parcel. It is a valuable location, and we are moving forward with that project. Next to it you can see parcel 24. We think it is an attractive parcel that will certainly attract some great proposals. We will be working on that over the next couple of years. I will turn over to Scott now to talk about some of the more obvious challenges and opportunities that we have with developing and right-of-way uses that were experienced here in Massachusetts.

Thank you. Great job. You get to see these pretty pictures of the projects we about forward. I will tell you that air rights projects are challenging in every respect. In most cases, worth the time and effort. Mark mentioned cell station air rights. That project took over 35 years. It will take another five years to build it. It is going to be a phenomenal asset. With the beginning challenged is how do you value the land and the air they were creating? To do that the authority or the entity that is the owner needs to determine what the cost differential is between building on ground and in creating the land. Be safe this that I will touch on in improvement it is going over the joint mode whether it is vehicle MARC train but also, they require hundreds and hundreds of micro-piles of drills into the ground and in some cases in Massachusetts over 200 feet. That is a premium cost. You look at the project work and some created a program and it is the network air rights premium determining exactly how much is a cost and how much is the value that will be created? They require extremely complicated legal agreements. The organs are protected against work stoppages but surety and guarantees essential. These are done over operating transit notes. We need to make sure that should there be a problem and in this case the Commonwealth or the government entity and customers are protected and that there will be free flow of the highways and also complicated insurance coverage to take into consideration. This is not your typical highway insurance. One thing I do want to mention in these agreements is that you as an owner or the owner's on the line, you are doing with the developer. That developer has to have the user agreement signed off by an equity partner. Sometimes multiple parties that developer has to have the user agreement signed off by an equity partner. Sometimes multiple parties and it can be a complex construction project. We fall very strongly that an air rights project should not negatively affect the operation below pick you have to create a schedule that will allow for enough work to be done without negatively affecting schedules and travel. Clearly, we are down to about 40% of our normal traffic on the turnpike, so it is benefiting instead of going forward right now. We need to protect the operations below. That is just the highway or the turn and it is the Fiber Optics. I am telling you there is a lot of things to take into consideration we do not allow for shutdown of our services. On the highway, we do allow for roadblocks in order to accommodate. We have to make sure that these projects do not stop the flow will create something that will require us to shut the highway. We do monitor and anything that disrupts that we have the cure and the liability. There is a lot of liability in mouth. It is very complicated. The risk managers will earn their pay. I do not want to leave it on a negative note. The challenges are there but the opportunities are great and they tend to be in the center. All of the projects that Mark mentioned are within walking distance in order to make those connections the economic development opportunities in the jobs here in Massachusetts we have very strong affordable housing requirements. Certainly, it creates a great deal of tax revenue. Every time we do a deal, we work into it to try to get some taking care of. That when we would be spending about $30 million to upgrade the MBTA station. It should be noted that many of these are helping in the community creating open space with the event today. Also, we are in the habit of some key participation on these. If it gets sold in the future, that the Commonwealth or MassDOT should receive some sort of a payment for that. It is a good way to have recurring revenue. We are out of time and I want to offer to be available to anyone if you have further question. Thank you, Gary, much, Sasha.

Thank you Scott and Mark for a very interesting presentation. You can press *1 to participate by phone and we do have a question from James.'s point is maybe this is also a question but air rights bring challenges for hazardous goods movements. Mark and Scott, did you deal with us directly? We believe could comment on that.

We really have to take into consideration on that. A few of our projects do not allow hazardous material and some of the airways coming up. There are pretty strong rules to say what is allowed and what is not the developer would have to accommodate them. Mark, anything?

That is correct. The latest for the flammable materials transported to bring you around. Tropical Storm Olivia Roddy Ricch 128, which circumvents the city. That is absolutely a particular issue of concern to be looked at for sure.

*1 thank you. Do they attach statutes that all commercial activity and alcohol in the MassDOT right-of-way?
Begins. It is allowed. As a mentioned, there are commercial hotels and other activities within the right-of-way which is part of the project so the answer is yes. There is no prohibition against the. Okay. One my question. That is regarding the premium cost that you talk about. You are building over commercial activity. Can you share what a cost in addition to build those facilities? We have heard some of our past workshops 10 or 20% is not atypical.

Sasha, Mark can chime in, but I would say that is on the low end. We've experienced it to be more than that. Part of that premium cost is the fact there is such limited work area. They are being forced to work right adjacent to the operating flow whether it is trainer highway, and they are ultimately they can pump out at night but ultimately that is a big cost driver and then the fact that they cannot use traditional terra firma foundation timings requiring very limited drilling also adds to it. You can correct me if I'm wrong, Mark, but I think 30% is not out of question.
Absolutely. The premium is quite high so it has to be factored earlier in the evaluation. The limitations that we impose on them in terms of when and how they can work is a big cost driver. Also, the design and engineering specialties is another factor as well.

One my question will move to the next presented for James and was there any freeway closures during construction?
It was diversions and overnight lane restrictions. There certainly was a permanent lane restrictions but there was never a full closure. But whether it is a one way for a team as possible in the evening or weekend and assertively a full closure. We have some other questions but I will move on to our next presenter.

The next presenter is Lynne Yocom from the Utah DOT and is the Fiber Optics manager in Salt Lake City. She has worked with these companies for the last 18 years and has been crating public and private partnerships to expand and build the UDOT fiber optic network and serves on the advisory board, Utah broadband advisory Council and shares the Utah Valley University information systems and technology advisory board and we look forward to hearing from you, Lynne.

I wanted to take you through what we have done at UDOT to get to the place where we are at particular people say that we have the network that everyone is trying to get, and I would have to agree and we are pretty proud of the network that we have built. You can see the extent of the interstate miles and when I got the slide ready for this presentation I make sure I put everything in the is currently under construction or currently funded that is in the design phase of was we're doing. You can see we have put a lot of miles together on the interstate. There is only one interstate that is only a 50%, and if you give me one more year, that number can move significantly but we are kind of in the plans that will as well. One of my goals was to try to get every interstate covered that I absolutely could.
This is the extent 2001 two last year 2019 and it is the growth chart of the fiber optic network and what we have been able to do with public private partnerships and we have about 98 million in 2019. We have got almost 3000 miles later in the ground with Fiber Optics that we share with the telecom companies. The yellow portion is what UDOT has built. You can see we've been on a steady growth rate. You can see we have had significant growth since we started since we opened up the trade values. To be able to get to you those trade values I appreciated the description of Lindsey in describing the fair market value that the FHWA wants you to do for the trade that you do. When you are looking at trade values, there are some important considerations. In Utah, we had a code that came about because of UDOT but because of the telecommunication companies. Somebody is rattling papers. Thank you. They asked us to put in the code and we accepted the cold because we had to kind of took the lemonade from lemons. There is another code that used to go along with this there are quite a stir the telecommunication advisory Council. I had a very good right-of-way director health and during this handheld us navigate what we needed to do. Our legislature came back and said you vets are doing a really good job managing your right-of-way, but we do not feel that you now need to have broadband advisory Council overview we also had economic development group also had a broadband group. We were able to get rid of that one law two years ago, and it is a lot of states that ask what you have to do to get this in place? It is of my opinion that this was done because the telecom data came up with it in Utah code but I believe with your right-of-way you can connect a lot of the things that we are doing within the rural area on that. We have our 907-64 and 907-65 which handles our appraisal report. You will notice with the documents that are put in with my presentation, I gave you a copy of the latest appraisal report. That is the biggest request I get from any of the states. It is how are you doing your right-of-way systems? I gave you a copy for you will notice have to do this report again by February. It will be required. You can see within this report I was just give you a couple examples. Here are two shots about what it looks like and what we are looking at with zones and we have a summary of values. You can see the steps and then refer you back to our rules to be able to have access. The federal laws usually do not get an introduction with someone like Lindsey. That was a beautiful cover on everything that we have had to go through in the state of Utah to make sure that we are crossing our Ts and dotting our I's. a lot of states said in know if we can be complaint with FHWA I say they've opened the door to allow us to do this. If you look in section 23 with the research on the section technology education, it is right there just to promote the use of resources in support of the transportation system. Really liked that section the use of in a lot of my presentations. What also points out is if you have federal aid highways you have to watch what you are doing procurement and putting in a fiber conduit system so say I put in a conduit for one of their interstates and I definitely know I'm going to occupy two of those conduits right away for ready systems on back with transportation cameras, but also may have six that I can also hope they took medication companies that are serving the communities within that area. A pair have any federal dollars have to make sure that those dollars go back into the system so any trade value that UDOT gets we just say it is all federal dollars per we just look at it that way. All of our value goes back in to make sure that we are not doing anything that we should not be doing with those federal dollars. If you build something with state dollars and federal dollars, it is very different on the way that you can manage it. Even within the right-of-way have to go through the checklist so it is not affecting traffic or safety anything, but if it is state dollars, it is not the same restrictions. But make sure you do not cross the two over. We have a lot of partners that we work with. It is not just telecom companies. We print with special service industries and all of the cities that the DOT goes through that we help with collectivity. Here is a sample of our telecoms that we work with. At any time and moment, I might have 20 trade tickets open because every single one of them works with us within our area. Here are the state agencies that we work with and it is transit authority, communication authorities, university, the governor's economic development and education and division of technology and I.T. group. We work with them all I wanted to bring a specific example of a project so you can see how we step to the trade values of a project and what it looks like the project I will choose Ms. Big Cottonwood Canyon and Little Cottonwood Canyon. Also, submitted a trade agreement that came out of this public private partnership that you could reference back to see how we started on that. The canyons are beautiful. It has several ski resorts appear. Everybody loves to go skiing, including me. Some people that I built it's because I wanted to be on the ski lift. Of these canyons, we had no monitoring for road conditions, avalanches, poor communications and emergency responses for the avalanches that to happen and the ski resorts have very limited collectivity for conventions for the everyday users. There was really a big need to build these canyons. From the traffic monitoring side, this is what it looks like on a day when you have fresh powder and everybody wants to get up the canyon. This is turned into a big problem. Avalanches cover those roads. Perking starts to get really interesting practices summer and the uses very high we want Fiber Optics to be able to do the roadside monitoring system to be able to tell what is happening in the Canyon and real-time situational awareness for when we build these canyons we had to talk about all of these stakeholders. You can see we had a lot of stakeholders to get together and talk about what to do with this. Crown Castle international was the partner we decided to go with. They are a wireless infrastructure company. I'm sure many have worked with Crown counsel. The tower division is separate from fiber-optic division. Crown counsel received fiber-optic backbones within our right-of-way and wireless polls within the right-of-way. They have some use of their existing conduit and fiber and they have building to approve within your right-of-way. What did UDOT receive from this? We get 20 restaurants of fiber on the cable. I is one for backbone and one for distribution to roadside units that we have a spare conduit in case I needed an additional fiber up to the canyon and access to all equipment and air installation powerhouse every device. We ran power with their conduit and we have a hub space for equipment. This is a picture of the routes that we built. You can see in blue this was all put in by crown counsel and the yellow was the existing conduit that we put in with another project practices the other Canyon. You can see the yellow and blue section that was also put in by us and the blue coming back. I put in conduit but crown Castle came back and put in all the power and fiber optics and polls. This is an existing when we needed shovel ready projects with the stimulus. They asked where do you want to build one? I said give me Wasatch because a can of Wasatch Boulevard I think they can come in. So, we put them back in 2008 or 2009. Because we did that, we were able to attract a partner for the canyons because it was not as big of a build. NEPA is important. It took us one year to clear this canyon with NEPA. It is a big NEPA to clear and we had a team that did that. This is what the DAS towers look like. You can see the box on the pole that is right on this section. Just below that that is what we get to use. It is power into it and we were able to strap onto this poll the other roadside monitoring devices we want to use. This is pictures of the construction. We had to cut all the way through to get everything in with and had to fill with a backfill to make sure they did not compress down we were in some really tight corners. You can see the right-of-way is right next to nothing we had to get a little inventive. We had to get invented to make sure we were not down into the river. Solid granite. Here is the have building being delivered. Looks pretty bad for a Canyon. You see the final picture how it turned out. That was the same building being offloaded that we made them conform into the canyon with a protective guard while. This at Alta ski resort has a nice roof garden along top of it to blending. It is quite the hub building to building especially if it can withstand the avalanche on top of it. Here is our project summary that is what the project cost with an estimate of 5 million. We have 35 polls, 24 miles of fiber, a 7200-volt electrical system. We installed 12 cameras, eight weather systems come in 15 chain of signs. Also, improve communication for all users with the avalanche operations interconnected we were able to bring the voice mobile radio systems off of different frequencies by putting in a gateway that allows for different ski resorts to hear each other's line. The fiber was quick enough to be able to do that. Here is the agreement that I attached that you should be able to look at. Here is any of the links. If you Google UDOT fiber maps you can see the extension. It is open for anyone to look at. It is my goal to connect every road and have everyone think of fiber is just another part of the road. Very excited about it and thank you for letting me present today.

Thank you very much, Lynne. Foxconn comment or ask questions and the chat pod but when you're talking about trade value of any receipts from the sales or leases, is it your policy to put those monies back into fiber-optic projects? Or in general any federal aid highway projects?

We keep it within what we call ITS projects. At the moment, anything that we have had benefit from has come back to benefit the conduit and Fiber Optics but it does come directly back into the system. Okay. And if there is not other ITS project is that you could put into other federal highway projects? As of right now, no. That would be a good question. We have stayed with everything. If we got funding for a ITS project and put the conduit in or a road project put in, we feel that and is to go back to it now. Could we? I have not really looking to not want.

Okay. One more question. In terms of you have a lot of partners here. If you ever find that more than one company wants to provide that fiber-optic service right-of-way? In that case, how do you choose between them? To go through a public or private partnership process or selection process? What is your motive of selection?

We open up anybody can put the conduit in and used to have a system where we advertised for two years if the put in if you are requesting and we just open up the right-of-way all the time. It is accessed by permit only so you on the right away by permit and we will not give you a right-of-way on it. You are a permit occupant so anybody can come in and put on the right away and whether I partner with you or if you are just putting conduit informed me I'm putting in my own fiber optics everyone can work together that way and so also promotes economic growth and it is good for your bandwidth and what is applied to those areas. One partner you should really make it available to Park.

Right. Very good. Thank you. I think will move now to the next presenter. Hopefully we will have a chance to discuss this with the others. I have been moving to Donald Pettey who was with the strategic initiative highway program manager in Boston and prior to his current position at MassDOT working on renewable energy projects and his resume includes 20 years in the MassDOT research and materials division. We look forward to hearing from you, Donald.

I know there is questions along the way so I will try to hit on those is a get to the prospective slides specifically this is developed in this section and the good news is you practice this earlier in the day and I got it down to 86 minutes the U.S. are in for a treat. Looking at the outcomes we have various outcomes that one is by supporting the effort to develop in Massachusetts by reducing the greenhouse gas emissions were also generating green power in the summer time where we can get started going back to the grade. And we are looking at leveraging the parcels. With each spot, I'm trying to find this arrow. Here we go. Here we wouldn't even develop if we do not have some sort of economic incentive to do that. Unfortunately, I have identified seven or eight permits or programs. Additionally, we have AECOM as a designer looking for programs that would support solar. We have these specifications to develop. For the size of the federal highway support we also have encouragement on those sites. Eventually, once we get involved with the developer start developing these sites, we have to engage with the Eversource National Grid utilities. Is a state resource providing this information regulation? Also, provides grant programs for the development. So, I will go through this quickly. The SREC is an incentive program in Massachusetts from early 2010. It is about solar renewable power in Massachusetts. We completed the SREC two program came about in 2016 and both of those programs allowed agencies to have this system you are allowed to choose whatever goes in the grid and apply those credits. We are also looking at the solar department of energy resources. The developer guess that only the tax credit but also there is accelerated depreciation for the developer. These general programs also define the connection between the Department of Public Utilities and the Department of Energy resources connecting to the grade with the application process. We started with the photovoltaic program and we have hopes of expanding that up to 250. As we get further into the development it will cost us probable close to $500,000 to connect the grade. It had to be reduced so that no power was going back out to the grid. What we did learn was valuable information about that particular pilot. So, we had initially 600 sites and they whittled it down to 47 flights and then 16 sites to the internal canvassing process. Scott mentioned that
Essentially, we got these sites with the two of the lease and they will that to our various construction groups in the district offices. We want to be sure it will not interfere with the future needs for the highway and expansion of traveling. In certain cases, there might be a crossover train bridge construction and that is a tough sell pick we are very protective of the trial of is not an easy task. The vetting process can often take six months to one year to clear. Once we get the approval from the district and the other review groups, we look at the concurrence on those locations and we have four or five sites so to be able to acquire the highway approval is still go through the process. Be included the ability to install these projects in a right away all of that said lessons learned he stepped from the pilot program trying to develop six megawatts based on the contract use and also started to negotiate beating a contract to pay for the sites. The license agreement has the pensions to go with that contract. It talks about the science of the PV from which we determine the lease amount that we look at the amount of power that we expect to be produced based on your design and that we have provisions that it must be a percent of the anticipated production of the annual basis and repercussions. There's also a termination point. We agree that we put the solar panels but in reality, it is a win-win situation because the more energy produced the better it is for the developers. We are gaining the advantage versus what we are receiving. We are gaining what was produced so there is the way. Looking through this criteria quickly we do not want to put them in the paved roadway but we want to try to get them off on the clear zone as much as possible and is to be conducive to the solar panels. We do not really have to cut a lot of trees down but that is also part of the internal team process that we talked about earlier. Perhaps we could use knowledge of those locations although they are looking to add a facility that would have you. Also, there are these key programs where you are limited per site and that was essentially because it is to get the credit back and he demonstrated the time wanted to make sure that MassDOT would be participating in the development and thereby being. There is a private and public partnership. Financing the project and developing and contracting working with the utilities for those interconnection costs and at the end of the 20-year lease period the option to extend the lease if the panels are sufficient at that time. We can assume the responsibility with the operation for those facilities. We have reached the parcels agreed to pay for all that is produced we are also getting a lease agreement and the developers get some of those tax credits and renewable energy credits. The amount of power produced in the first 10 years in production and with apologies for the first time to assess the property of the sites because really seen it and some municipalities in our development it was in that event. Some photos of the Phase I construction sites. Primarily it is utilities you can see where they have installed these anchors and the crossbars that are in the panels to be installed. We started in late November of 2014 and there was a sense of urgency to get this going and also the license agreement. Once construction started, the developers would be assessed for the site to the point where the commission was operated. We also wanted them to enjoy that tax incentive. Some additional pictures you can see the data connection to the grid in the support systems. There were several sites where we needed to look at this cost of the surface. The next couple of slides we've been looking at aerial shots today. Many of them use this and it is pretty much axis that is typically here and once they install what needs to be installed, maybe once or twice a year internal the area and there is a lot of ability here and I'm assured this is a Starbucks coffee shop now or what but there is a lot of activity here. Based on location this is on the new client and again you can see a lot of these figures. If you can up to 650 this location is in Salisbury, which is in the northeast corner of the state. You really cannot see the panel and it is the access to the installation. This location is in the service sponsor and it is a low-speed area. The left side is under the special regulations that was extended and this is Interstate 90 appear. That is pretty close to Interstate 495 East. Also, is about 50 solar tops. To give you little bit of a status update, this is one of the sites that was in 2015 and we are looking at developing three additional sites which will be the solar carports and parking lots that would be in the new state development incentive program for developing PV. These are the projections that we had when we first started this. At the time states were restricted to 10 megawatts we looked at six based on what we are looking at in the power generating and it is the reduction of the example and this is what was designed and received two years later very close to what we anticipate as far as the CO2 reduction as well but to reiterate, all of these sites have a specific item associated and it is these kilowatt hours and peace are the credit rates that would be applied in here in Massachusetts we have very high rates upwards of 20 for the best part on these credits. It is almost a three in one advantage. Also in 2019 we received a cash benefit of just under $600,000 and on top of that is the total benefit of $685,000. In similar those who fall. They are protective we started one way and they seem to be much higher than the 2% which is great for the program but not so great because probably we should probably caught annually what we are producing now with across the agency and quickly a recount based on the megawatts we expect that we are going to enjoy 1.5 million in the annual lease payments on over a 20 year period and also the difference between his power of purchasing and to date 2.6 million producing 22,500 megawatt hours and this is a quick recap of that was developed in Massachusetts and it did not go far and only 400 megawatts option is to 1600 which is supposed to get us up to 1600 megawatts by 2020 how we did hit this early 2018. You can see it is not mentioned. Lessons learned. It takes a bit of time. You have to go through the process I need to know who the project means are and also, they interconnection options with utilities and if you're dealing with a real estate group you have to have a license agreement and developing the real estate. You need to know who those players are because they come and go. Project leads change. You can keep apprised of things need to change. The big lesson learned here is that you need to be nimble and you need to be able to jump on when these things are available because they do not last long. So, you can jump on quickly and take advantage of those incentives and have the opportunity take advantage of the tax rate. Looking ahead, as mentioned, we are looking to develop additional parking lots in Massachusetts into the future incentive utilities. We have this office that is being built on I think it will be occupied within the next few months. You can also see the solar noise barriers. Thank you.

Thank you very much, Donald. A couple questions that I heard. Can you just clarify what is the minimum size of property that you would need to make this feasible? I see that they've been put in in a variety of shapes. Is there a minimum that would make sense?

From the economist and you probably are looking up for five acres to get something close under the new program. We had 16 sites in four or five of those locations which is hard to show because the interconnection cost with the bridge was so high at $1.5 million per site. So, you are looking at that. It doesn't make sense to put in the system because you will never recoup. So, I think the larger the better in most cases. You the economy of scale for the installation purposes and recoup some of those interconnection costs.

Very good. Thank you. When my question as well. Is what is the process you go through when choosing your partners? Is it a case-by-case basis?

Just in MassDOT alone it changes right from the start. Was a group that was dealing with is exclusively and they are gone. All of this fell on my lap as well. Fortunately, the real estate group is a shared resource, so that it will change. The external partners did not change as much because we became a bit more adoptive. We could save some for the entire duration including the folks working on the ground. We got lucky.

Okay. Great. Thank you we are going to have a couple of questions that I'm going to ask each of the presenters. Before I do that, I do want to read some of the previous chat so can go to the transcript here but there's at least one more question put in the chat box and I invite people to do the same. Lisa asks earlier how do you protect the right-of-way for the transportation purpose? This refers to the MassDOT right-of-way project. Scott replied before we consider entering into a long-term lease property above are adjacent to a right-of-way we canvas every department within MassDOT to make sure there are no plans for future use. Transportation use is paramount. We are very conservative when we are considering leases and sales. Pepper underscore the fact that the documents would be available at the end of the event.

David has a question. If a company installs Fiber Optics does UDOT require the company to address NEPA clearance? She said yes, we do require NEPA and if it is a joint project UDOT will take on NEPA as part of the trade value. Dave Kramer said it's not a joint project is telecom required to address NEPA? She said yes. This is a question right now. To any of the presenters do create a separate real estate management group to lead these efforts, since they are so different from the land acquisition group? Let me start with Donald and then turned to Lynne and then Mark and Scott.

At the time, there is a couple new folks in real estate that were very helpful organizing they do not have the experience so they brought in the agency to support that effort. Okay. So, you brought in a special agent. Lynne?

We do not. Are used our right away group and we just figured out what to do so we did not add in a special group.

And Mark and Scott?
Go ahead.
Go ahead. We have an office of real estate in active development that would be one it was formed. It was before my time but it is so it's sole purpose is maximizing active development whether that is through sales, leases, license agreement, and whatnot have a dedicated staff who works on this. The air rights projects are very complicated. We are not able to price out foundations so we do have quite a few consultants to help us. I would add that third-party consultants are almost always paid for by the proponent or the lessee.

Okay. Thank you. There is a question from David Kramer. Are the right-of-way use agreements exempt from disclosure? Let me ask Lynne.

It is public record. We call a grandma. We call it grandma.

Donald, I could ask you that and then also Mark and Scott.

In order to get records, you have to go through the legal department picks has to go through a request and legal decides.

Okay. Mark? Go ahead.

It is still under negotiation if it is not subject to public disclosure. Once the transaction is complete and obviously, it is subject to public disclosure but not while it is still being negotiated and under consideration.


Scott Bosworth is a question for FHWA. Have you considered allowing states to commercialize using the right-of-way using the 23 USC 106(c)?

I can cover that one. We do not have any applications for SEP-16 at this point. We will definitely be interested in reviewing an application. The one thing that I can't say I can say is whatever the applications for it can be directly in opposition to something that the statute. Everything is a case-by-case basis but at this point we have not seen the application product would be happy to review one of somebody does send one in.

Okay. Thank you. I have a question for all participants and presenters. How do you address stakeholder concerns? A related question which applies for Boston but I will ask for everybody. Did you address anything related to affordable housing concerns? Let me start with Mark and Scott.

Mark, I would like you to take that because you've done such a good job in this area. Particularly in Boston with regard to in Massachusetts is the permit granted authority so nothing could be built on property was the secure all of their zoning permits and all that. The city and many other cities and towns of all adopted zoning for affordable housing. We require developers to follow secure city and town required permits and approvals that is primarily how the communities and neighborhoods that is how those are addressed.

Okay. And was affordable housing and issue were the groups may have heard this taken into account in these projects?

Yes, because in Boston the threshold is pretty low. All residential projects in Boston require a certain percentage of affordability so that is all in the approval process.

Okay. Thank you. Lynne, stakeholders addressing concerns?

Other then we build to help get broadband to the affordable housing areas, they have to follow up with a permit so I'm not sure how that applies.
I really meant in general and the concerns on the project overall?
They have concerns about relocations and because there in a permit and of the jury duty locations look at the 50% if they are on utility and there are others that have to come up
When we have these meetings prior to installing many of these sites are specifically addressed to Massachusetts with the stakeholders meeting to discuss what we were planning and doing into the project and unfortunately once the panels were all Delta and the fence was installed with others who were not involved in looking at the solar panel so you do not know how to catch everybody, despite having the process.


This is Scott Bosworth. We have a very rigorous public involvement on all of our projects and even in the event of our project you harm the public involvement on obtaining consent of these committees in the neighborhood and then it also how public meetings with users of the transportation on the highway and we have multiple meetings with community folks that are impacted by the work that will be gone from lane closures. Mark and his team on parcel 12 had over 50 public meetings. It is very much a part of the success portion for the air rights.

Okay. I would like to ask you how this right-of-way approach is an economic downturn and whatever's with the different types of approaches and services that you are addressing. Real estate is one fiber-optic demand and energy prices. How have they done in the downturn or how do you expect them to the downturn? We will start with you, Lynne and then Donald Mark and Scott.

It has skyrocketed because everybody working from home wanting higher broadband capacity right now we are working on more projects than we have ever worked on with a lot of federal dollars coming out. We are building 100 miles in a project right now that we are trying to get done by the 30th. Demand has been huge. In the economic downturns, it was the same way during the last one that we had to actually increased on our projects as opposed to decreasing so it goes up for broadband.

That is great to hear. Donald?

It doesn't matter what the economy is doing as far as future installations. Our biggest hit is because of the cost of the steel and that really impacted how much development there was across the state. Sometimes the stimulus packages have the changes to the tax incentives.

Okay. Scott? And Mark?

So, we actually have been asked this very question. Just before COVID hit we were about to do this for parcel 23. And everything was shut down sweet but that importance. Later in the spring and summer when things started to open up somewhat we decided rather than issuing the RFP at that point we would enter a request for information. One of the questions that we asked prospective developers to answer is should we wait until this is over and we have a vaccine and people are pretty much back to normal? Or should we go ahead and still issue RFP? With his responses from significant development companies. Seven out of eight said you should absolutely continue to go forward. Only once and you had better wait until this is over because real estate is so settled this time. Based on the seven out of eight positive responses, we are going to do it because they did save the design, review and permitting still takes a long time. Specifically, in Boston Massachusetts. I think they were thinking long-term within 1.5 years or two years hopefully things will be back to what was normal. We believe that given that forecast that is how we are operating.

That is great.

Sasha, which is and we felt very fortunate that we have not seen a big impact just yet but that will be different for every municipality that is represented here today. In Massachusetts, just like everyone else the office market for development has crashed at the space is in huge demand we are getting calls for open space and transit. We had a housing crisis here in New Orleans change the start of a housing crisis and the need for new units. We find that the developing community still has the equity and the access to fund the lenders and make projects have been. have been.
And have you found that cost is going down or construction calls going down on the downturn?

I wish that were the case that we have seen they had but it tends to trail because a lot of the projects were priced a while ago. Donald me now from other parts of the department, but for the real estate world is not quite happened yet.

The question from Fred is how occurred they best work with Utah to develop broadband in rural areas using utility system sets? And also, he asks has any entities used former right-of-way tour United development projects? The first one is definitely for Lynne. Is a clear?

So, I'm not sure who SC is do you mean ETP systems? So, is that utility or electronic tools on your acronyms?

South Carolina. Okay.

So how does South Carolina use it to utility. We can show how he worked with our broadband that we really get broadband coverage in rural areas and they work with Utah education telehealth networks to be able to get out to all of the schools that we have done quite a bit of that if you want to get with me or send an email I can show you how we have done that necessarily using the transmission side because they are connected with fiber optics haven't had to use the system.

Okay. Thank you. Have any these used former right-of-way for economic development projects? Lynne maybe you could answer and then Donald and Mark and Scott?

We use our railroad trend right-of-way for the transit systems which all have fiber-optic communications that are built within. Each one of those stations you have the economy build up. I think at the point of the mountain where the prison sits is a good example of where we are relocating our prison system to open it up for economic development and creating rail stops and the broadband collectivities coming through and we work together to help the development kit service and what they need to be able to do.

Okay. Thank you.

I cannot speak directly to that because I only deal with the highway section. The MBTA might have some information and was ordered developments we have had on right-of-way.

Okay. Thank you.

Sure. Thank you for the question. Is on the, the Robert right-of-way is protected very strongly by federal and state governments; however, we have done and are now currently working on a few projects in the railroad right-of-way. We have an instance where there is a .....

And footprint is to Boston and Cambridge and Allston we are now working with the Boston University to create a large development. We are actually considering moving the highway onto the former Riverland in order to create a better swath of land and also entertaining 30 million square-foot neighborhood south of the city and all of that is active in the future real right-of-way and that includes Amtrak and their own commuter rail services. In the case, it would be underneath a platform which would have square feet above it picked up anything else he wanted to?

Sure. I do what we have done was many surplus right-of-way so they acquired all of the bankruptcy right-of-way from the railroad to preserve what we have done is review some of them for expansion of the commuter rail and subway but the others have been turned over to the rails to trails with the cause that should we ever need a for the transportation purpose we could take the right-of-way back but they've been a huge success. Believe it or not, it has been developing

Thank you. I am not going to bring up an evaluation. We would just encourage all of the participants to provide us with some feedback about how you like or found value in today's event. You can answer the first question and simply hit submit and it should bring it to the following question. In this particular layout, you should see to the left above the chat box window onto the window this house a set of slides in today's presentation as well as the documents that Lynne Yocom referenced in the sample agreement. Also, available in that window is the value capture implementation model. There is information on the full range of value capture to ask. If you're interested in applying for professional development hours for today's, you can request confirmation by sending your request to If you look the evaluation instructions in the upper left-hand corner of the screen, you'll see that we have provided the address there. We would of course like to thank the presenters for their participation today and acknowledge the ongoing support of the FHWA office.
The concludes today's webinar thank you for your participation.

Thank you.

That does conclude today's conference. Thank you for joining us.

[Event Concluded]