PUBLIC PRIVATE PARTNERSHIPS

WORKING TOGETHER:PUBLIC/PRIVATE PARTNERSHIPS

Prepared for Prince George’s County Planning Staff

July 18, 2012

PUBLIC PRIVATE PARTNERSHIPS

METRO’S JOINT DEVELOPMENT PROGRAM

• METRO SYSTEM FIRST OPENED IN 1976

• TO DATE, 33 JOINT DEVELOPMENT

PROJECTS AT 27 OF 86 STATIONS

• 20 COMPLETED PROJECTS • CURRENT AVERAGE ANNUAL REVENUE - $15 MILLION

• TOTAL EARNINGS 1976 – 2010 ARE $250 MILLION

JOINT DEVELOPMENT PROJECTSHISTORY AND REVENUE

METRO JOINT DEVELOPMENT PROGRAM

Gallery Place - Chinatown

OFFICE AREA: 237,000 SF

RETAIL/ENTERTAINMENT AREA: 250,000 SF

RESIDENTIAL: 192 UNITS

METRO FACILITIES: BUILT OVER RAIL STATION

METRO JOINT DEVELOPMENT PROGRAM

Gallery Place - Chinatown

METRO JOINT DEVELOPMENT PROGRAM

Bethesda

OFFICE AREA: 323,000 SF

RETAIL AREA: 41,600 SF

HOTEL: 390 KEYS

METRO FACILITIES: BUILT OVER RAIL AND BUS

STATIONS

ECONOMIC EFFECT:ANCHOR TO

DEVELOPMENT BOOM; NOW A SUBURBAN

DOWNTOWN

METRO JOINT DEVELOPMENT PROGRAM

Bethesda

Dunn Loring

METRO JOINT DEVELOPMENT PROGRAM

Dunn Loring

METRO JOINT DEVELOPMENT PROGRAM

RESIDENTIAL: 624 UNITS

RETAIL AREA: 125,000 SF

METRO FACILITIES:

NEW PARKING GARAGE WITH BUS BAYS ON

GROUND LEVEL; 60,000 SF OF RETAIL SPACE FACING THE GARAGE

AND ADJACENT TO IT TO BE

BUILT

METRO JOINT DEVELOPMENT PROGRAM

White Flint

White Flint

METRO JOINT DEVELOPMENT PROGRAM

E D

C

PHASES - 8

OFFICE - 3

HOTEL - 1

RESIDENTIAL - 4

RETAIL - 200,000 SF

TOTAL - 2.7M sf

PROVIDE FOR FUTURE TRANSIT NEEDS—BUS AND STATION

NEEDS ASSESSMENT

ENHANCE PEDESTRIAN/BICYCLE CONNECTIVITY

DENSE MIXED USE DEVELOPMENT AS MAY BE

LIMITED BY MARKET & ZONING

CREATE HIGH QUALITY PLACES

ADDITIONAL RIDERSHIP

CAPITAL FUNDS

METRO GOALS

THE OFFERING – ALTERNATE METHODS--RFP

•Selection based on Financial Offer and Qualifications

•Respond with a price

•Best Suited for less complicated sites

•No Zoning or Master Plan Issues to Resolve

THE OFFERING – ALTERNATE METHODS—RFQ

•Selection based on Qualifications

•Benefit: Do Planning First to Resolve Land Use Issues

•Negotiate business terms when planning is near completion

RFQ PITFALLS

•Large $ to Plan

•Developer needs patience and staying power

•Without development rights, developer will want to limit investment

•Public aid for consultant costs

SELECTING A PARTNER

•Financial Strength + Commitment = Staying Power

•Require Experience in each Land Use Category

•It may be best to select a team

• Experience

• Financial Strength

• Commitment to the Project

NEW CARROLLTON ISSUES

Site Issues

AmtrakPurple LineBus BaysKiss & RideAll Day Parking

THE NEW CARROLLTON PLAN

?

FINANCIAL STRUCTURES

Align Interests as Much as PossibleKnow Your Public ConstraintsPlan in Advance if Public Facilities will be Required

• Sale

• Lease

• Joint Venture

FINANCIAL STRUCTURES--SALE

Developer likely to Prefer

Ongoing Land Use Requirements Can be Enforced Thru Easements or Covenants

Otherwise More Difficult to Enforce Public Requirements

FINANCIAL STRUCTURES--LEASE

Public Retains Long Term Fee Interest in Land

Provides Mechanism to Enforce Long Term Public Requirements

More Difficult to Finance

Traditional—Annual Payments

Alternative—Capitalized lease payment + Deferred Participation

FINANCIAL STRUCTURES—JOINT VENTURE

Higher Risk--Fee Interest in Land Can Be Lost

Must Provide for Subsequent Capital Investments

Aligns Interests

Public Relies on Developer’s Profit Motive

Must Have Transparent Accounting & Audit Rights

Synthetic Joint Venture

Risk/Reward Continuum

VALUATION

Value Today – Three Appraiser Method

Value Tomorrow – Method and Instructions

Joint Venture

THE MARKET

THE PUBLIC SECTOR CAN’T CHANGE THE MARKET BUT IT CAN

SPUR THE MARKET

THE MARKET

The Reeves Building on U Street NW

THE MARKET

Wheaton: New M-NCPPC Headquarters

COVERED IN OTHER PRESENTATIONS

Stakeholder Involvement

Financial Assistance

Expedited Process

Developer Certainty

Fiscal Impact Analysis