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April 2008

Rail News: Passenger Rail

Transit-oriented development: Demand and supply

Transit-oriented development (TOD) isn’t a new concept. In the early 1900s, neighborhoods developed around train and streetcar systems. However, many of those systems and city centers fell by the wayside as people bought cars and moved to the suburbs.

But interest in TOD has picked up — way up — in recent years. Downtown areas are being revived and with transportation costs on the rise, more people want to live in pedestrian-friendly areas near a transit line.

“Homes near transit are almost becoming like beachfront property. It’s coveted and rare, and there’s a huge demand for it,” says American Public Transportation Association Vice President for Policy Art Guzzetti.

As a result, many transit agencies are jumping on the TOD bandwagon. Nearly every U.S. transit-rail agency is involved with TOD in some way, shape or form, whether they’re managing real estate near stations, working with cities and developers to create transit-friendly communities, or looking into potential development opportunities.

“You don’t necessarily have to have money in it, you don’t necessarily have to have land in it,” says Jack Wierzenski, director of economic development and planning for Dallas Area Rapid Transit (DART). “Our role varies.”

DART’s first TOD project was at Dallas’ Mockingbird Station, which now features a movie theater, several restaurants, loft-style apartments and retailers. The first businesses opened in 1999, but DART plans to soon sign a memorandum of understanding with a developer to build ground-level retail space with apartments above it, a pedestrian plaza and two parking garages on about seven acres of land that the agency owns. For the first time, DART will enter into a long-term lease with the developer.

Downtown revival

While Mockingbird Station has an urban feel, downtown Plano’s development is more suburban. Since opening in 2002, the Plano station has spurred residential and commercial development in an area that previously was home to only a smattering of antique stores. Today, a mix of apartments, restaurants, coffeehouses, art studios and offices complement the antique shops that remain. The next development phase will include condos, townhouses and more retail space.

More projects are popping up throughout DART’s system. Plans are in the works to develop about 50 acres at the Walnut Hill Station. Near the Spring Valley Station, construction is set to begin on the Brick Row complex, which will include apartments, townhouses and retail space. And at the Gatalyn Park Station, developers plan to build a hotel and residential units.

“There are opportunities all up and down the line,” says Wierzenski. “When the time is right, the land can be developed.”

The Tri-County Metropolitan Transportation District of Oregon (TriMet) is heavily involved in TOD, as well. When the agency built its Westside light-rail extension in the early 1990s, officials determined they’d need to focus on station-area planning to meet ridership projections. So, TriMet launched the Westside Light Rail Station Area Planning and Development Program under which the agency implemented a coordinated approach for land use around stations. TriMet worked with developers, landowners, residents and communities to create standards for zoning, design and transportation access.

“At the time, we didn’t really understand the power light rail had to shape communities,” says TriMet Senior Planner Jillian Detweiler.

But shape it, it did. Since TriMet embraced TOD in the mid-1990s, the agency has recorded about $4 billion worth of development near its stations. TriMet took advantage of a Federal Transit Administration (FTA) joint policy issued in 1997 that enables transit agencies to sell property for less than market value to attract TOD. The agency also adopted its own policy to manage real estate in an effort to promote ridership and vibrant station areas, says Detweiler.

Since then, several developments have been built on property TriMet used to own. In January 2000, Collins Circle — a ground-level retail development with five floors of housing above it — opened near the Jefferson Street station on a property TriMet purchased for a light-rail construction staging area.

The West Gresham Apartments, which opened in 2005 near the E. 172nd Avenue station, were built on a portion of a site the agency purchased to build a light-rail substation.

In the Gateway District, TriMet and the Portland Development Commission redeveloped a park-and-ride lot into a medical office building and 650-space parking garage. The first phase opened in October 2006; a second phase is planned to add 10 floors to the medical building and seven levels to the parking structure. Subsequent phases could include commercial space, a hotel and residential units.

And last month, contractors broke ground on a Crown Motel redevelopment project on a site TriMet purchased specifically for TOD. When the Interstate MAX project was completed under budget, the agency obtained FTA approval to use $4 million of the savings for TOD. Now, developers will build a five-story, mixed-use building at the site.

Meanwhile, The Round at TriMet’s Beaverton Central MAX Station is on track to become the agency’s most developed site. The Round currently includes residential units, a fitness center, bank, offices, and restaurants. Ultimately, the site will feature 350,000 square feet of office space, 120,000 square feet of retail space and 164 housing units.

In California, the Los Angeles County Metropolitan Transportation Authority (LA MTA), currently has about 30 deals in various stages of development, construction or negotiations, says Roger Moliere, chief of real property management and development.

“We began our TOD program in the late 1990s, but it’s really accelerated in the last two years,” he says.

A mix of mixed uses

One of the largest projects currently under way is near LA MTA’s North Hollywood station — a $1.6 billion development that includes 2 million square feet of retail and residential space. At the Hollywood and Vine station, developers are building a W Hotel, 250 apartments, 182 condos and retail space. In addition, LA MTA is working with NBC Universal, which plans to build 1.4 million square feet of office space at a station near Universal Studios Theme Park.

“We do joint development on a leasehold, so we get the type of development we want and retain ownership of the land,” says Moliere. “In the meantime, it provides significant income to the agency that can be used to support other transportation uses.”

However, some agencies aren’t ready to plunge into the real estate aspect of TOD, so they’re starting off slowly. Case in point: Sound Transit

“For us, the difficulty of getting a multi-billion-dollar capital program up and running from scratch without any history of doing so didn’t leave much time or opportunity to consider joint development,” says Sound Transit’s Transit Oriented Development Program Manager Scott Kirkpatrick.

Most of the agency’s TOD work is being done along the 15.7-mile Central Link light-rail line, which is under construction between downtown Seattle and Seattle-Tacoma International Airport, and scheduled to open next year.

Coming soon ...

One project involves relocating a Bridgestone/Firestone retail store because the current store interferes with the light-rail line. Once the store relocates, Sound Transit will seek redevelopment offers.

Across the street, the agency will seek a developer to build ground-floor retail space with 220 residential units. Sound Transit also plans to release a Request for Proposals this year for a mixed-use project 500 feet from the Othello Station platform.

And, the agency soon will begin the pre-development process for the University Link light-rail station at Seattle’s Capitol Hill, which could include 40,000 square feet of ground-floor retail and 330 residential units.

“As demand for service increases, I think we’ll see the obvious convenience of being within walking distance to a station, and as a change in mentality occurs, developers might look for these opportunities,” says Kirkpatrick.

Sooner, perhaps, than later. Sound Transit’s senior management has asked Kirkpatrick to look into joint development opportunities as the agency plans its future capital program.

Regardless of their level of TOD involvement, agency planners know they need to be smart when it comes to developing the precious land around stations. Demand for transit — and, therefore, development near transit — will only continue to grow.

“Real urban places have been missing and cities like the idea of putting them back. One of the ways to do it is by giving people a choice to take transit,” says Jeffrey Wood, a program associate with Reconnecting America, a non-profit organization that helps run the Center for Transit Oriented Development. “And with what people are spending on transportation, they’re thinking about ways to do things differently.”


Browse articles on transit oriented development Dallas Area Rapid Transit TriMet Tri-County Metropolitan Transportation District of Oregon Los Angeles County Metropolitan Transportation Authority LA MTA Sound Transit

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