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Valuing real estate externality-based option in development of transit system projects.

File Language:
English


Details

  • Creators:
    Zhou, Xue ; Damnjanovic, Ivan D.
  • Corporate Creators:
    Texas Transportation Institute
  • Corporate Contributors:
    Southwest Region University Transportation Center (U.S.)
  • Subject/TRT Terms:
  • Publication/ Report Number:
    SWUTC/10/169112-1
  • Resource Type:
    Tech Report
  • Geographical Coverage:
    United States
  • Corporate Publisher:
    Texas Transportation Institute
  • Abstract:
    Capital-intensive transit projects rely on strong public support and availability of funds. While the general ; public has become a strong advocate for transit systems, budget shortfalls and financial constraints are still ; resulting in delays in project delivery. In such business environment, the public sector has an opportunity to ; partner with the private sector to deliver and operate needed infrastructures. In public-private arrangements, ; the private sector typically is unwilling to accept the system ridership risk, making such projects financially ; unfeasible. However, transit projects undoubtedly create value that is not internalized by the developer. The ; completion of a transit system not only increases the values of properties in the affected area, but also ; brings incremental tax revenue to the public sector. Thus, some of this newly created value can be shared ; with the private sector to make the project financially feasible. The objective of this paper is to develop a ; method for designing externality-based option and a model for its valuation. The proposed valuation model ; is based on the concept of auctions, where the price-jump results from the introduction of the new transit ; system. The numerical example results show that externality-based option could reduce private sector risk ; and add value to the private developer, making transit project more attractive.
  • Format:
    PDF
  • Funding:
    10727
  • Download URL:
    https://rosap.ntl.bts.gov/view/dot/18085/dot_18085_DS1.pdf
  • File Type:
    Filetype[PDF - 479.46 KB]
  • Collection(s):
    University Transportation Centers ; US Transportation Collection
  • Main Document Checksum:
    urn:sha256:29072f6d3db0e943857943c3ec598e6ae7d75f65764c4d4d5c01cab85edba990
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