Trends In Transit Value Capture And Other Innovative Funding Strategies

02/23/2015

A number of U.S. transit agencies are looking to use value capture (VC) techniques to fund a variety of improvements and major new projects.  This was the key message that IMG Rebel’s Sasha Page delivered at the American Public Transportation Association’s 2014 annual conference in Houston panel on innovative funding strategies.

Value capture can encompass a number of mechanisms, including:

  • Tax Increment Finance (TIF) – incremental property value increases around transit stations or along corridors
  • Assessment Districts (AD) - a property tax on buildings and/or land in specified districts
  • Joint Development - development on property around stations
  • Impact Fees - one-time per unit or square foot fees
  • Parking Fees - district or citywide parking fees/taxes.

Transit agency value capture examples include:

  • Portland Streetcar – Almost a third of this 7.35-mile system was funded using VC mechanisms, using TIF, AD and parking fees.
  • The Washington Metropolitan Area Transit Authority Silver Line –  Around one-sixth of the $5.5 billion project will be funded from assessments of primarily corridor property owners.
  • Denver Union Station’s – Combined TIF and AD funding mechanisms with innovative finance instruments USDOT Transportation Infrastructure Finance and Innovation Act (TIFIA) and Federal Railroad Administration Railroad Rehabilitation Improvement Financing (RRIF) loans to realize the reconstruction of this multi-modal terminal.
  • Kansas City Downtown Streetcar – Used AD mechanism (on commercial, residential, city, and not-for-profit real estate) and parking fees to fund a portion of the $100M 2.2 mile system.
  • A number of other projects include VC in their financing plans, including the Transbay Transit Center (San Francisco), Miami-Dade Downtown Link, Atlanta Beltline Tax Allocation District, and  New York Hudson Yards.

These examples suggest that value can be captured and used in funding a variety of transit projects and modes.  VC can fund up to 30% of project costs, in some cases, when leveraged with innovative financing instruments and/or secondary funding “backstop”.

Please contact Sasha Page for more information.