Identifying Innovative Finance Opportunities

1. Identifying Innovative Finance Opportunities Miami-Dade Citizens’ Independent Transportation TrustMay 12, 2009 Infrastructure Management Group Planning and Economics

2. Identifying Innovative Finance Opportunities: Scope • Can realistic innovative development and funding instruments and approaches be identified for the North Corridor, East West Corridor and other projects eligible for Transportation Trust support? • Are these instruments and approaches being used elsewhere with success? • Do the instruments take into account Miami-Dade’s local issues?

3. Scope and Tasks • Task 1: Data Gathering • Meeting with key personnel to understand possibilities for innovative finance • Task 2: Development of Innovative Funding and Financing Mechanisms • Create spectrum of possibilities • Prioritize the list based on the instruments that 1) are most likely to fit with the County’s legal and financial parameters, and 2) the approximate magnitude of benefits provided. • Task 3: Best Practice Case Studies • Task 4: Final Report and Presentation

4. Overall Approach Funding Sources Financing Mechanisms System Revenues • Traditional • Local taxes • State • Federal - New Starts • Innovative • TOD/Joint Development • Naming Rights • Benefit Assessment Districts (Special Assessments) • Tax Increment Finance • Asset Monetization • Traditional • Debt • Pay as you go • Innovative • Availability Payments • TIFIA • RRIF • SIB Loans • Leveraged Leases • Tax Credit Bonds • Private Activity Bonds Farebox Non -Farebox • Advertising • Air Rights • Concessions • Commercialization • Parking

5. Value capture tools are ideal funding tools, in theory Value Capture tools are one way transit can capture some of benefits that systems provide to surrounding real estate: Benefit assessment districts Tax Increment Financing Transit Oriented Development/Joint Development Parking

6. Benefit assessment districts (BADs) tax local real estate benefiting from the project • Often consists of a tax on commercial real estate around a station or corridor that requires approval of local property owners • The Washington Metropolitan Area Transit Authority (WMATA), local governments and the Metropolitan Washington Airports Authority (MWAA) are working together to construct a 23.1 mile transit system • Phase I $2.6 B funding will come from approximately $900 M in Federal funds, up to $400 M from commercial property special tax districts (around 15%), and $75 M from the state and the remainder from Dulles Toll Road revenues • Phase II funding is expected from special tax districts and Dulles Toll Road revenues

7. Tax increment financing (TIF) captures incremental tax revenues around a project TIF is a mechanism that dedicates tax revenue increases from a development improvement in a designated area to finance debt TIF can be an innovative tool to attract private sector investment in targeted development zones Requires density and a long-term development perspective As a funding source, usually requires additional credit support (ex: double-barreled debt issuance) Reduces taxes allocated to general revenue In Denver, TIF revenues serve as funding ‘plug’ in the financing plan for RTD’s Union Station project: Covers interest payment on senior lien debt not covered by RTD annual lease payment TIF revenue projected to cover principal and interest as revenue ramps up Source: City of Denver, Finance Dept.

8. Florida I-595 is one of the first availability payment structures to reach financial close Reversible express lanes in the center of I-595 Budget shortfalls led Florida Department of Transportation (FDOT) to consider a P3 approach ACS Dragados Development will pay $1.796 B for a 35-year concession to build High Occupancy Toll (HOT) lanes FDOT will set toll rates, retain all revenues and make availability payments to the private concessionaire from toll proceeds Financing consists of: $800 M private bank loans, with a 10-year maturity $675 M TIFIA loan $200 M private equity

9. Parking offers enormous monetization and improvement opportunities Parking attractive for monetization due to stable cash flows, performance improvement upside, and limited public attachment Investors provide upfront payments and/or ongoing revenue streams for exclusive right to operate and collect revenues for up to 99 years Transaction value depends on local market vibrancy, ability to raise rates, operational efficiency, facility conditions, facility type and location Performance improvements realized from technology/automation, rate alteration, diversification of revenue sources, and increased utilization Recent deals completed at 30x current system earnings for garages: Chicago Garages (2006): 9,000 spaces, 99-year lease, $563 M Minneapolis Parking Ramps (2007): 6,800 spaces, $60 M

10. TIFIA will help fund Warwick Intermodal Facility, like the Miami Intermodal Center • $200 M facility for rental car, parking, commuter rail, bus station, and future Amtrak facility • Located on former superfund site, with opportunities for future office, hotel and other real estate growth • Funded with rental car charges, other facility fees, federal & state grants

11. Capital Beltway illustrates how TIFIA, private equity, PABs and grants can yield innovative financing Transurban/Fluor signed 80-year contract with VDOT to design, build, finance and operate 14-mile Capital Beltway in northern VA for 80 years, utilizing innovative congestion pricing Shows use of TIFIA or innovative finance/subordinate lending Illustrates role of private equity and private activity bonds (PABs) in P3 financing

12. Timeline and Next Steps Cases DraftReport Final Report Data Gathering InnovativeFinance May July August June