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RV 2014: Public Finance Support + TOD. What Works? by Eric Rothman

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Public Finance Support + TOD Projects: What Works?
What is the role of public finance in your TOD project? Does it support or complicate matters? Which comes first -- the financing or the project? How should public support be structured for the best value? Explore the role of public financing from many angles with people who have lived it. What works? What works even better? Hear how public sector financial support could be a valuable piece of your development process.
Moderator: James Arthur Jemison, Deputy Undersecretary, Commonwealth of Massachusetts, Boston, Massachusetts
Conal McNamara, Director of Community Development, City of Whittier, California
Eric Rothman, President, HR&A Advisors, Inc., New York, New York
Beth Pfeifer, Director of Development, The Cornerstone Group, Bloomington, Minnesota

Published in: Economy & Finance
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RV 2014: Public Finance Support + TOD. What Works? by Eric Rothman

  1. 1. Public Sector Roles in TOD Eric Rothman President HR&A Advisors, Inc. September 2014
  2. 2. Public Sector Roles in TOD: Eric Rothman LOSS Infeasible Feasible COST PROFIT The private sector can deliver TOD, but the public sector may need to intervene to ensure feasibility. REVENUE COST REVENUE
  3. 3. Public Sector Roles in TOD: Eric Rothman Certain market characteristics of TOD locations can create barriers to development feasibility. Infeasible Cost of land assembly Insufficient demand Cost of brownfield remediation Market barriers to TOD LOSS COST REVENUE
  4. 4. Public Sector Roles in TOD: Eric Rothman Cost of land assembly Policy barriers to TOD Insufficient demand Cost of brownfield remediation Commuter parking requirements Public realm requirements Affordable housing requirements Market barriers to TOD Government aspirations for TOD typically increase costs. Infeasible LOSS COST REVENUE
  5. 5. Public Sector Roles in TOD: Eric Rothman There are a range of tools that government can deploy to improve the feasibility of TOD. Provide Infrastructure Partner Regulate Economic Developer Regulator Incentivize Rezone to higher density Reduce parking requirements Increase service Create public realm Build stations Equity investment Capital or operating subsidy Anchor tenancy Tax abatement Low cost loans Grants Tax increment financing
  6. 6. Public Sector Roles in TOD: Eric Rothman Increase service Build stations Create public realm Provide Infrastructure First and foremost, government should create the T in TOD, improving revenue potential for the D in TOD. Economic Developer Regulator Partner Regulate Incentivize
  7. 7. Public Sector Roles in TOD: Eric Rothman The creation of the Hudson-Bergen Light Rail, a government funded project, improved development economics along NJ’s “Gold Coast.” Public Investment 1996-2006 $2.2 BILLION Private Real Estate Investment Housing Units 10,000 $5.3 BILLION Hudson Bergen Light Rail
  8. 8. Public Sector Roles in TOD: Eric Rothman Provide Infrastructure Incentivize Tax abatements Grants Low cost loans Tax increment financing Partner Regulate Incentives can also improve development economics. Economic Developer Regulator
  9. 9. Public Sector Roles in TOD: Eric Rothman MassWorks Infrastructure Program provided $15 million in gap financing for a $100 million TODin Brockton, facilitating land assembly and site prep. 55,000SQ FT New commercial space New residential (25% affordable) 214 UNITS MassWorks Conventional finance New Markets Tax Credits Enterprise Block, Brockton Project financing
  10. 10. Public Sector Roles in TOD: Eric Rothman First office towers under construction; subway to open early 2015 Aggressive rezoningfor commercial and residential sites, up to 33 FAR New York City deployed a wide-ranging toolkit for redevelopment of West Midtown to create Hudson Yards, a transit-oriented district. Extension of #7 subway line and creationof new boulevard through synthetic TIF Uniform Tax Exemption Policy - property tax abatements of up to 40% for “first-move” office towers 10 Hudson Yards
  11. 11. Public Sector Roles in TOD: Eric Rothman Provide Infrastructure Incentivize Partner Regulate Through direct investment, the public sector can facilitate TOD. Economic Developer Regulator Equity investment Capital or operating subsidy Anchor tenancy
  12. 12. Public Sector Roles in TOD: Eric Rothman At Hoboken Terminal, NJ TRANSIT will invest its land upfront in partnership with LCOR as part of a major TODproject. Land Owner/Investor Land Developer Hoboken Terminal and Rail Yard Redevelopment Vertical Development Rights Land Proceeds
  13. 13. Thank You Eric Rothman President, HR&A Advisors, Inc. erothman@hraadvisors.com http://www.hraadvisors.com

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