Guide to Value Capture Financing for Public Transportation Projects (2016) / Chapter Skim
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Pages 32-37
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From page 32... ...
This chapter focuses on how to structure the opportunity for value creation and how to frame the case for public and private participation in value capture. 5.1 Incorporating Risk Value capture projects are subject to a number of risks that reflect the exigencies of the infrastructure development, construction, and operations as well as those typical of the real estate industry.
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From page 33... ...
Typical Value Capture Project Risks Developer Impact Transit Agency, Local Government Impact Comments Transit project delay ➂ Affects all parties. Transit project cost overrun Transit agency usually takes responsibility for project delivery; however, higher costs could lead to project delay or change in project scope.
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From page 34... ...
This may make it difficult for them to underwrite the cost of higher operating and ownership costs associated with value capture instruments such as special assessment districts in the short- and medium-term. Some part of that value created by transit infrastructure may be considered as premium in the sense that real estate assets near transit command higher prices than those of competitive properties not similarly served by transit and complementary amenities.
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From page 35... ...
Obtaining certainty in this area -- such as the allowable building density -- is important for business planning, as is ensuring that the regulations affecting the real estate project will be commercially viable. For any real estate project, including one that involves value capture, developers want to know that there is strong market interest.
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From page 36... ...
An increase in land acquisition costs resulting from pre-transit speculation is one of the many reasons that transit agencies must partner with developers to maximize the opportunity for value capture. Early strategic partnerships between transit agencies and developers can allow for: • Highly market-informed consideration of station locations and development potential, • Land assemblage prior to significant land-rent speculation, and • Negotiation of mutually beneficial design standards and value capture mechanisms.
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From page 37... ...
Transit agencies can jump-start the value creation process not only by participating in early conceptual planning, approving TOD-supportive station-area plans, engaging with the local government, and partnering with the developer, but also by funding predevelopment such as site and infrastructure planning and entitlements.1 Maximizing value capture requires that potential value induced by public investment in transit infrastructure not be wasted or go unrealized. This has implications for the enticement of private investment and development and for the local government and other public-entity interests.
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