The three-mile stretch between the Braddock Road and Reagan National Airport Metrorail stations is currently the longest distance between two stations inside the Capital Beltway (Interstate 495). Alexandria officials felt a new Metrorail access point between those stations was essential to the success of the overall redevelopment plan, and sought innovative financing strategies that would serve residents, employees and businesses.
“The biggest challenge initially was determining not just the most financially viable revenue scenario, but the most politically feasible combination as well,” Thornton said. “With revenue sources from net new taxes, special district taxes and developer contributions, a diverse set of stakeholders are impacted, and striking that balance where everyone is happy with the outcome is a huge challenge.”
He said that traditional federal, state and local funding sources for infrastructure are becoming increasingly scarce, and require more outside-the-box thinking to find solutions.
“Value-capture represents an innovative alternative source, particularly in locations with real estate development potential,” Thornton said. “Fortunately, with the scale of development planned at Potomac Yard, the resulting revenue was sufficient to cover the entire station.”
WSP gathered and analyzed several inputs in the process, which included estimating revenue over time and required an understanding of commercial and residential real estate values, retail sales potential, hotel occupancies and other drivers of city fiscal revenue.
“The real key to our ability to add value had to do with our team’s approach to financial modelling, which involves a methodology that allows for the development of flexible models that can run several scenarios and be adapted on the fly,” Thornton said.
This flexibility allowed WSP to be very responsive to new client questions, and answer questions quickly, even at times when there were three different real estate buildout scenarios and four different station location alternatives, resulting in a dozen different scenarios to analyze.