Members/Alternates Present:

Transcription

1 Growing Transit Communities Regional TOD Fund Subcommittee Meeting Summary Notes Wednesday, May 22, 2013, 1:00pm 3:00pm 5 th Floor Conference Room, PSRC, 1011 Western Ave, Seattle, WA Members/Alternates Present: Seth Benziger, Impact Capital Jon Clarke, Enterprise Amber Knox, Bullitt Foundation MA Leonard, Enterprise Michelle O Connor, Forterra Ron Posthuma, King Cty Mark Smith, KCESC Arthur Sullivan, ARCH Tory Laughlin Taylor, Bellwether Housing Steve Walker, WSHFC Jeff Watson, Imagine Housing Others Present (for all or part of the meeting): Tim Parham PSRC 1. Introductions. The group went around the room and introduced themselves. 2. Potential Regional TOD Fund in the Central Puget Sound Region. Jon Clarke and MA Leonard of Enterprise provided an overview of the Regional TOD Fund concept, the roles of various stakeholders, and background on TOD Funds from other regions and funding structures. Clarke emphasized that the primary goal of the Regional TOD Fund would be to expand the pool of sources to greater than just the public sector, while linking environmental and housing priorities together. He used the Bay Area TOD Fund as an example. Subcommittee members provided comments and criticism on the presentation for refining the message and materials used in stakeholder interviews. Questions and Comments Posed to Presenters: Q1: [Regarding the Bay Area model] Are each loans involved in this process achieving the same interest rate? 1

2 R1: There s a range of interest rates. It ranges from 4.5% to 5.5%. Q2: How do they hang onto the interest capitalization? R2: It s interest reserve. Working with stronger entities and partnerships that can hold onto sites for as long as needed. Q3: What does the fund expect in return other than property acquisition? An affordability regulation agreement? R3: Typically there is no affordability regulation agreement unless there are public funds that have a bigger requirement involved. That s why these tried to stay away from Federal financing so that they can focus on market value and overall use. Q4: Have the projects financed been mixed income? R4: They re still in development. They are potentially four to five years out still. But the developers have all been nonprofits and low income developers, so there is a lot of promise. Q5: What is the term of the MTC (Bay Area Fund) money? R5: Good question. I don t know that there is one. I think the philanthropic dollars are ten years. This is an example of a structured fund, which are great because they can attract capital. They can also add some hassle during the approval process, which can be worked out but does add structure to the process. Clarke discussed the Denver TOD Fund, which unlike the Bay Area model is fully deployed and currently revolving, and expanding into a regional fund (outside of just the city). He discussed differences between the Denver fund and the Bay Area fund. He also touched on examples of funds in Washington, DC, Los Angeles, New York, and others. Q6: When you use the term, acquisition, are you talking about existing properties? Also what is the difference between short term and land banking? R6: Acquisition is typically a process of a couple years, where land banking is a five plus year process. Preservation versus vacant land is an important consideration of how something is structured. Clarke walked the group through several more examples of fund structures and scenarios. He also discussed sites in the Seattle area that have potential for a Regional TOD Fund to capitalize on. He also discus 2

3 3. Review Work Schedule and Business Plan Outline. Clarke discussed the upcoming work schedule, which includes numerous meetings and interviews over the next two months, with reporting to the committee on a monthly basis. By the end of August the goal will be to have much of the work done, with the fall dedicated to refining it. There will also be PSRC meetings happening simultaneously that Enterprise representatives will be attending to provide updates. The basic schedule is: provide a draft business plan in July, a final business plan in early October, and have recommendations presented to the PSRC board in mid- November. Tim Parham provided input on PSRC s plans and schedules. Clarke asked the committee for input on potential funding sources and resources. Parham asked the group for input on the plan so far. C7: There should be a foundational document that we are going to go out with to present to new funders. A key issue in this first stage is to clearly communicate the strategic objective. One concern is that all you re really doing with the front end of this initiative is leveraging future public dollars into a particular direction. That tension must be defined. Finally, for this to work, you have to have a borrower that is also a master developer the Denver fund goes at that directly. Those issues need to frame how this gets defined initially. There are not a lot of master developers with the kind of objective we are proposing. C8: We need to ask ourselves: What really is out there as far as vacant land? How expensive is it? And can we really afford it? What is the feasibility of this in terms of scale? We need to get a handle on that before we make too many commitments. R8: Would you like an empirical analysis of station areas? One of the questions we need to ask is how much time and money should we invest in doing that kind of analysis in depth and at what scope. C9: An in depth analysis might lead to the conclusion of what type of fund this should be; whether it s structured or not. If an analysis determines that our scope will be smaller, we may not need a giant, structured fund. C10: The Golden State fund is intriguing because it taps into the ability to leverage others in the process. The danger in the structured fund is that there is so much that goes into getting it all together that it s hard to meet objectives. R10: That was a big win, politically, to get the state of California to do that. The challenge will be getting people comfortable with the hands-off approach taken by the Golden State fund. 3

4 Q11: Is this an either-or situation? Do we start out with what California has done and at the same time continue to look at the possibility of structured fund? So the fund would have two different ways to go about doing business? R11: I don t think it s an either or situation, it could be both. On the spectrum of the Bay Area- Denver-Golden State model, you could do multiple, depending on the appetite from foundations and funders. Q12: How do you identify who your stakeholders are? There aren t just master builders waiting around to do something like this. R12: We have been working through typical for and nonprofit developers. We do need to look to see if there are master builders available. C13: I assume you are working off of something that establishes the need as part of the analysis. R13: The basic analysis we are looking at is what Dan Landes had done for PSRC, and using that as a baseline. C14: If we are trying to get for-profit, socially oriented developers to take on larger project sites, where they can access some percentage of the project for profit, we have to show that the conditions are right for something like this. R14: There is an overall assumption about percentages and requirements. There does have to be some kind of public benefit. Q15: Are there other conditions that might be considered as part of the project overlay such as green infrastructure? Proximity to open space? Bike lanes? Green building techniques? R15: That s also going to feed into what s the cost and the requirements of funders. There are a few funds that work on where there are green building requirements and components. Q16: Are costs calculated on an up-front model where a project will get flipped in five to ten years? Or are they calculated on a longer term model where a project is expected to last for a hundred years? R16: This goes back to the master development question. It s easier to have a conversation about how the whole project and area are going to develop. There is a concern that doing this on a project by project basis could create pushback. 4

5 C17: The fundamental question is still: what are the requirements? Is it just to buy land close to stations? You need to be clear what the prioritization of objectives is and how much of a carrot do you have to get to those. C18: I think everyone is aware of how sensitive capital is to cost. When dealing with public capital, you have to consider the regulatory barriers that transfer into cost. In this environment, people are tenuous about it. C19: I was glad to see that it appears that the money being taken from the Federal government is being cleansed of the feds before it is used. If this fund is going to be broad, it s a good idea not to federalize the land. Having their involvement adds layers and layers of complexity. C20: Timing is interesting for the conversations that will be happening because budgets for agencies and jurisdictions are being finalized soon. And we re also in an election year, which adds complexity as to who is going to be in charge to make decisions. R20: That s a good point. If something is feasible and starts moving forward, typically it takes a few years to work through all these hoops. Q21: Snohomish County isn t going to see light rail until Is there a way to accommodate that longer timeframe? We do have Swift Bus stations in Snohomish County. Is there a way to accommodate the differences and timing structure in Snohomish County because the land is much cheaper? R21: In Denver the thought has been looking far enough out so that the line doesn t need to be there. It s then okay to take the risk that five or six years out something (light rail) will be there. For PSRC funds, this has to be funds linked to extremely long range plans. We should think about how do we start off in King County and do what we can in a few sites and then expand that outwards or how do we go for the cheaper sites in areas without light rail first? Q22: The Bay Area fund is for all nine counties, which has triple the population of the Seattle region. How did they go about deciding how to do their first wave of projects? R22: Most funds are driven by how much of a top loss that you can get, if millions of dollars are available. They have regional growth centers like we have, but those are more broadly defined than PSRC s definitions. C23: There s already some pushback on the seemingly single focus on light rail stations. So it would be good to have some non-light rail station examples. C24: In the case of Snohomish County there has to be predictability for what the placement of the light rail stations are going to do to the bus rapid transit. 5

6 C25: Snohomish County doesn t view light rail as in competition with the Swift Bus. C26: At some level the market is going to determine what s available. If you have a fund and ratchet it down too much, at some point the real estate market won t respond to it. Q27: What s missing is a statement about what we want to achieve with this and how we want it to be measured. How will we get to that? R27: Based on other GTC work we need to incorporate that. People respond better to concrete goals. That will be a big deal for councils. C28: On the funding side, there have been conversations with national funders who are considering Seattle on a list of four to five cities for inclusion in consideration for funds. 4. Next Steps. Clarke discussed the collateral being produced to be used for upcoming interviews and meetings. He said that, when finalized, the products will be sent to subcommittee members for review. C29: Make sure that, when talking to specific entities, you are not to regional in scope all the time. Drill down to their specific regions, because that will catch their eye. Q30: Who is the audience for the collateral being reviewed here? R30: Currently we just have a general information collateral piece. We will develop products that are more tailored to specific interests. Q31: Are there some definitions of things like equitable development? R31: We can add language about that. C32: This should be seen as a tool for looking at equitable development in station areas. R32: Staff is going to continue this work throughout the year and continue to have these meetings. It would be great if this group grew to include potential funders who want to have their hands in the process instead of just having a finished product handed to them. Tim Parham discussed the potential schedule for future meetings. A Doodle poll was proposed. 6

7 5. Adjourn. 7