Category Archives: Transit Oriented Development

Value capture & private transit financing

NoMA Development. CC image from bankbryan.

Jarrett Walker’s weekend links post directed me to this article in The Atlantic by Chris Leinberger, asking if we might return to the days when private interests invested in transit as a means to facilitate real estate development. Our own urban history is one of linked transportation and land use planning, accomplished through the market and real estate development:

How did the country afford that extensive rail system? Real-estate developers, sometimes aided by electric utilities, not only built the systems but paid rent to the cities for the rights-of-way.

These developers included Henry Huntington, who built the Pacific Electric in Los Angeles; Minnesota’s Thomas Lowry, who built Twin City Rapid Transit; and Senator Francis Newlands from Nevada, who built Washington, D.C.’s Rock Creek Railway up Connecticut Avenue from Dupont Circle in the 1890s. When Newlands got into the rail-transit business, he wasn’t drawn by the profit potential of streetcars. He was a real-estate developer, and he owned 1,700 acres between Dupont Circle and suburban Chevy Chase in Maryland, land served by his streetcar line. The Rock Creek Railway did not make any money, but it was essential to attracting buyers to Newlands’s housing developments. In essence, Newlands subsidized the railway with the profits from his land development. He and other developers of the time understood that transportation drives development—and that development has to subsidize transportation.

The result of these transportation and real estate investments were the now ubiquitous streetcar suburbs. Leinberger proposes to return to that model, where the value added to a given area of land from transit can be re-captured through some means and invested in the transportation network.

When the streetcar/real estate barons controlled the entire system, such value capture was merely an exercise in accounting. Additionally, the ease of developing greenfield sites on the rapidly expanding fringe of the city (Leinberger’s DC example of growth along Newlands’ Connecticut Ave rail line represents the first real urbanization of that space) makes things much simpler than dealing with already established urban environments.

With those key differences in mind, Jarrett throws a wet blanket over Leinberger’s nostalgia for the way things used to be. Rightly, Jarrett notes that we won’t be able to re-create the environment of those private real estate and transportation investments.

Nevertheless, Leinberger is talking about a broader concept – one of leveraging the value transit has and capturing that value as a means to finance the infrastructure itself. Jarrett’s follow-up on the subject concurs – the same basic concept of capturing that value is the core of the issue.

Leinberger cites a of local example, the New York Avenue Metro station and the subsequent development of the NoMA area:

How would the private funding of public transit work? Most states already have laws in place that allow local groups of voters to create “special-assessment districts,” in which neighborhood property owners can vote to fund an upgrade to infrastructure by charging themselves, say, a onetime assessment, or a higher property-tax rate for some number of years. If a majority of the property owners believe they would benefit from the improvement, all property owners in that district are obligated to help pay for it. These districts can vote to fund new transit as well (potentially, the transportation-financing agency could even receive a minority-ownership stake in the district’s private property in return for building new transit). In the late 1990s, property owners paid for a quarter of the cost of a new Metrorail station in D.C. using this approach; after the station opened, an office developer told me he believed his investment was being returned manyfold.

The idea of a transit or government agency owning a stake in real estate development is another interesting idea – Hong Kong’s MTR Corporation both operates the rail system and develops/manages real estate around stations. However, vesting this kind of authority in the government can be problematic, as mixing of eminent domain capabilities and the desire for private, transit-oriented real estate development can be a touchy subject, as some experience from Colorado shows.

Existing mechanisms for value capture, such as tax-increment financing (again, as Jarret notes) do work, but are limited. As one of the commenters at The Atlantic notes, Leinberger’s example of an infill Metro station only works because the value of such a station is that it provides a link to an existing, robust transit network. Such a mechanism wouldn’t work for starting a system from scratch.

The current battle over how to re-shape Tysons Corner is illustrative of many of the issues. In Tysons, many land owners have agreed to tax themselves in order to add transit. This works because they’ll be adding a linkage to Metro’s already robust and successful network. At the same time, the initial plans aimed to maximize the return on the transit investment by substantially upzoning the area and increasing density – but now some parties are getting cold feet.

The other piece that Leinberger raises (as well as several commenters on Jarrett’s post) is reforming the federal piece of transit financing to be more responsive and agile in partnership with private capital:

We could hasten the process by making a much-needed change in federal transportation law. The federal government typically provides 20 to 80 percent of the money for local transportation projects (with local and state governments paying the rest). Yet federal funding of projects that involve private partners is extremely rare—in large part because federally funded projects typically take years to approve, and private developers usually can’t tie up their capital waiting for the government wheels to turn. Over the past few years, private corporations and foundations in Detroit raised $125 million to help build a light-rail line, and have been working for some time to secure federal funds to complete the project. Fixing federal transportation law to expedite transit projects would allow faster development at lower public cost.

None of these mechanisms is perfect, but each will likely be a part of future transit financing discussions – value capture, tax-increment financing, public-private partnerships, upzoning, etc.

Columbus Weekend Links

I really like these Federal holidays when I actually get them off…

On airport transit service:

GGW had a point/counterpoint on how best to serve Dulles International Airport. Spencer Lepler argued for using commuter rail along the Washington and Old Dominion right of way, while Matt Johnson argued in favor of the current plan, noting the greatly improved benefits, including access to Tysons Corner and other development along the toll road. Johnson also noted the technical hurdles to reusing the old railroad right of way.

The entire idea of offering faster service between the airport and downtown DC motivates these discussions, and this isn’t limited only to DC. Yonah Freemark notes the perils of Chicago’s Block 37 and the express airport service that doesn’t really exist.

In the end, express service to and from Dulles shouldn’t be a top priority. The existing infrastructure certainly doesn’t make it easy to do so.

So what about the W&OD? Matt’s post on the challenges to re-use the right of way also raise some potential uses – perhaps using the corridor, in addition to the Silver Line, as a light rail/interurban corridor might be a good use. This allows at-grade operations in congested areas, as well as simplifying the terminal connection in Alexandria, either as a loop into Crystal City or as a connection to the new Potomac Ave infill Metro station.

With or without the Silver Line, however, I’ll still be looking first and foremost at DCA for flights.

First, convince the Bankers…

The Salt Lake City Tribune has a great article noting the biggest hurdle to transit-oriented development – the banks.

Transit-oriented development isn’t stymied by outdated zoning, unwilling developers or a lack of space. It turns out, banks, wedded to old-fashioned lending standards that stress parking, may pose the biggest blockade by denying financing.

The reason: Lenders operate from a tried-and-true principle that maintains more parking means less risk and a higher return on their investment. But ditching cars is the whole point of urban developers looking to create 24-hour live, work and play environments that hug light-rail hubs.

Take the capital’s gateway district, which soon could be further revived by a North Temple TRAX train, a new viaduct and millions in streetscape upgrades. City leaders envision a walkable, vibrant mix of housing, retail, restaurants and offices that one day will bridge the FrontRunner hub and a new North Temple transit station along downtown’s western rim.

But commercial investors, including one with a $100 million blueprint, complain banks cannot grasp the concept and instead slam their doors.

The first paragraph might be a little over the top, as outdated zoning, unwilling developers, and a lack of space are still huge hurdles, though I might change their language a bit.

Last week, there was plenty of discussion (BDC, RPUS, GGW) of the Post‘s article on DC USA’s woefully underutilized parking garage. Valerie Santos, Deputy Mayor for Planning and Economic Development, noted the parking was necessary to convince any number of parties to build the thing – tenants, landlords, financiers:

The District has lost nearly $2 million — or $100,000 a month — since the garage opened in March 2008, numbers that make Valerie Santos groan when she considers the city’s decision to build the structure.

“I don’t want to say it’s a quote, unquote, mistake. At the time the District did what it had to do to attract a retailer it sorely wanted,” said Santos, deputy mayor for planning and economic development. “Am I happy about the operating deficit? Of course not.”

Obviously, there are lots of moving parts in any urban development equation, but overall education of all parties involved is a crucial element.

When speaking of performance parking, Dr. Shoup likes to advocate for removing parking restrictions from zoning ordinances and letting the market decide. The challenge, however, is that this particular market is not acting with perfect information. Rectifying that information gap is a huge challenge. DC USA might have some use as an example of what not to do in the future, but that’s an awfully expensive lesson to learn.

Miscellany:

Some of the ugliest buildings in the world?

So says this list. (h/t Yglesias)

Amtrak ridership is down…

…but still up over the longer tiemframe (Housing Complex)

Exit, stage left

DC Metrocentric takes a look inside the new Arena Stage.

The data wants to be free

Rob Goodspeed looks at municipal data sharing programs, and wonders what differences they make.

Transit Planning and the Big Picture

1955 Interstate Highway Plan - Wikipedia

A few days ago, Cap’n Transit had a great post up on Paris’ RER commuter rail system, specifically how the system was designed and planned to not only address current transportation needs, but also accommodate future growth:

As I wrote in earlier posts, Paris’s Regional Express Network (RER) of commuter/rapid trains was not simply designed to make connections, but to accomplish specific development goals. The same 1965 SDAURP (Master Plan for the Urban Development of the Paris Region) that laid out the RER also planned the development of the five “new towns” around the region and the suburban campuses of the University of Paris. Anticipating a new wave of residents who would study and work in the area, regional planners under the direction of Paul Delouvrier, the General Delegate to the District of the Paris Region, designed these train lines to connect residential developments with universities and job centers. They also aimed to relieve congestion on certain metro lines that were overloaded, particularly the 1 and 4 lines, the main east-west and north-south lines in the system.

I’ve commented previously on the (potential) similarities between DC and Paris – (Polycentricity and Commuter Rail). The opportunities for through-running service on various commuter rail routes, as well as focusing these lines on various employment nodes across the region (Alexandria, Crystal City, Silver Spring, New Carrolton, and of course, downtown). Now, whether this is the result of active planning is up for debate, as most of those centers have existed for years. Even if it’s just a happy accident, those centers have grown and great deal and retain potential for future growth as well.

The key point with these ideas for commuter rail systems is that they involve commuter rail, not urban rapid transit. Granted, DC’s Metro attempts to kill two birds with one stone. To some extent, so does Paris’s RER, though in the other direction – commuter rail that trends towards transit, rather than transit that trends towards commuter rail.

For urban rapid tranist, however, polycentricity alone isn’t enough. More investment in the core is required.

The challenge, however, is funding. As I noted in Minneapolis’ plans, the option for the Southwest Light Rail corridor that would involve the most investment in the core will likely be eliminated due to the higher cost. Mostly, this is due to the FTA’s emphasis on cost-effectiveness – and how they define both costs and effectiveness.

Yonah addresses the FTA’s issues. Despite the fact that the CEI is dictating some major decisions in Minneapolis, Yonah shows that it doesn’t even matter in terms of receiving Federal funds:

The results are inexplicable. There is no clear correlation between federal government responsibility and total cost or ridership per mile, or even cost effectiveness. What appears to be happening is that representatives from states and cities go to Washington and hope to get the best deal, and then the FTA makes a financing decision that has nothing to do with relative merit. In terms of per person benefits, the construction of New York’s Second Avenue Subway may be more important than that of any other transit line in the country. Yet the corridor only has a 27% commitment from the FTA; on the other hand, the short extension of Atlanta’s MARTA finished earlier in this decade got a 2/3 sponsorship. Why? Similarly, based on the numbers above, the San Juan Tren Urbano and the Chicago Douglas Line Renovation would cost the same to build per rider-mile, yet the feds allocated 25% of the price to the first and 66% to the second.

The problem with this system is that it makes it very difficult for cities to accurately predict how much money they’ll have to raise from local sources, and long-term plans are as a result often inaccurate. A system such as India’s, simplistic as it might be, at least would make clear that if Houston wanted to build a $2 billion rail line, it would simply need to raise $1 billion — and then the federal government would fill in the rest.

That, after all, is roughly how the Interstate System was built. Congress authorized about 50,000 miles to be built, and when a state got around to building a section, the Federal Highway Administration would simply distribute 90% of the necessary funds — no matter how complicated or “wasteful” the project’s specifics turned out to be.

Of course, with the funding formula for the Interstate highways, there was a great incentive for states to plan the biggest and most expensive freeway projects they could (often in urban areas). Apply that same mindset to Minneapolis’ Southwest corridor or a New Blue line in DC, and you’ve got a positively reinforcing mechanism – instead of putting the most expensive highways where they’re lease effective, you put the most expensive transit systems where they can be most effective.

Such a set and defined set of plans would also allow for effective long-range planning. One of the amazing things about DC’s Metro has been envisioning a whole system, and then executing it – rather than trying to have a go at it piecemeal. And that kind of certainty and planning would enable better regional planning – not to mention the raw ability of infrastructure to attract and shape the form and location of development.

Polycentricity

VRE Train. Image from Ouij on Flickr.

Nobody would argue with the idea that DC’s commuter rail system could be better. Metro, however, is largely praised (disaster responses and publicity notwithstanding). However, Metro also gets attacked in some quarters for its hybrid nature as both an urban subway and a commuter rail system.

Richard Layman in particular likes to emphasize the writings of Steve Belmont. When talking of transportation, Belmont contrasts monocentric transit systems (essentially dense hub and spoke networks with all lines serving a dense core) with polycentric ones, where the city has many nodes and thus requires many links between them. Belmont (and Layman) argue that polycentric is bad and monocentric is good – at least at encouraging dense development and urban living within the core. The problem, however, is that the monocentric/polycentric division isn’t all that useful when only comparing one system to another.

Belmont’s two main criteria for determining the centricity of rail transit systems are station density and the spatial extent of the system. Metro in DC fails on both accounts, as it has long ‘tail’ lines and stations separated by long distances. However, within the core, the station density is actually quite high – extremely high when you consider the context and time it was built (as opposed to the older systems in New York et al with predominantly cut and cover construction).

Paris, on the other hand, is the textbook case of monocentric rail transit, Belmont argues. Paris’s Metro has more line miles than DC’s Metro, but all of them are squeezed into an area no more than 7-8 miles in diameter. Likewise, there are far more stations within that smaller area. It’s an incredibly dense system.

Where the comparison breaks down, however, is the limitation in comparing one system to another. DC’s Metro is a hybrid system and needs to be analyzed as such. To make it as close to an apples-to-apples comparison, you’d need to analyze a combined system of both Paris’s Metro and RER.

Jarrett Walker did just that. The end result is that Paris’s employment patterns are far more polycentric (and as Walker argues, more akin to Los Angeles rather than New York) than Belmont might imply. Walker’s starting point was Alon Levy’s proposal for through-running commuter rail trains in New York (Part 1, Part 2), a theme I picked up on with ideas for DC’s commuter rail system. Walker writes:

But when you start looking at the cost/benefit of all the tunnelling to get the various commuter lines connected to each other, you stumble on an important difference between Paris and New York. For all the suburbanization of the last 70-some years, New York still has an world-class concentration of jobs and activities in a very compact core (roughly the southern half of Manhattan plus inner Brooklyn). For trips from the outer suburbs to this core, it’s not hard to get where you’re going with the existing commuter rail line and one connection to the subway.

Paris commutes are widely distributed to major employment centers located mostly on the edges of the city. This pattern particularly cries out for RER-style through-running of commuter rail because so many people are commuting to a center on the far side of the city from their origin — for example, from suburbs east of Paris to La Défense in the west. Greater New York would benefit from such an arrangement, but not nearly as much as Paris does. For New York it’s a nice feature, but for Paris it’s foundational to the growth pattern of the city.

Polycentricity is the fundamental pattern for the region. This statement could apply just as easily to DC (especially in terms of employment clusters) as it does for Paris, which is why the through-running concept is so attractive. The Overhead Wire has some great images talking about how we shape that polycentric reality that most cities deal with.

Walker’s takeaway message is this:

Los Angeles and Paris have come to their similar structures by very different paths, and have drastically different cultures of planning. But urban structure is destiny because it changes so slowly and incrementally. The constellation of major centers in both cities is a tremendous advantage for transit: people are flowing in all directions to centers on various edges of the city, so there is a huge area in which transit demand is two-way. By contrast, suburban commuter service into New York will always be a story of trains and buses flowing empty or nearly empty in one direction so that they can run full in the other, because the concentration of jobs in the center is so massive.

I can’t think of a better vision for DC’s future – a dense core employment area, surrounded with high density neighborhoods – and other employment centers around that (Rockville, Bethesda, Silver Spring, Alexandria, etc). Enabling, where possible, DC’s commuter rail system to offer through-service to those centers would be a huge improvement in service for DC’s current (and future) economic geography.

More investment, please.

It’s all a matter of time horizons. If you have a long term investment horizon, you can think big. If you’re thinking short term, you need something that makes an impact right away. As this applies to transit and transportation planning, it’s much easier to implement a service, such as a bus route than it is to plan, design, and build a rail line.

Advocacy for change is important, but some are annoyed with the focus on the near term instead of keeping our eyes on the long term prize. The Overhead Wire takes Streetsblog to task for perceived Bus Rapid Transit advocacy. Buses are great, and we should certainly invest in them and upgrade them wherever possible. But we also should acknowledge that they don’t have the long term impacts that rails do.

You want less people to ride transit? Then build inferior transit. In all actuality though, this country needs more Metro Subways. You know, the kinds of things they have in first world countries on the European continent. Washington DC is an example of a place that has developed more recently around the subway. Regions that build BRT will always be car cities. If you want to truely transform regions, we’re going to have to think bigger.

I think a lot of people talk about Arlington County because of the great success it has had in development. Yet no one talks about what Atlanta was like on Peachtree just north of downtown or in the Buckhead area just north of there before MARTA. Not a lot of people seem to realize that San Francisco is much more dense now because of BART and Caltrain connections as well as the Muni Metro than it ever would have been without. In fact, certain companies have pushed the MTA in San Francisco to make Muni better or they will leave. They wouldn’t be saying that if we had a system that actually worked.

The problem with places like San Francisco and Atlanta is that they didn’t go far enough. They built a couple of lines and then stopped. If we truely want to see our cities transform, we need to go further and without BRT as THE substitute idea for Heavy Rail or Semi Metro Light Rail. It’s an outrage to think that people actually think this is a real alternative to transform our cities and turn the population to transit. It’s just us being cheap. We’re already cheap with transit, and look where that gets us. To more people riding cars and more sprawl.

It’s important to note the Arlington County case. The “Oranjington” corridor is always hailed as a paragon of transit oriented development. And it is. But any quick glance at aerial photos from that area shows plenty of surface parking lots yet to be redeveloped:

That section of the Orange line opened in 1979. We’ve made a lot of progress in 30 years, but the long term land use changes and reinvestment in those areas takes time.

Ryan Avent takes it one step further:

It seems to me that the only thing more remarkable than the great success cities have had when they’ve focused on improving land use around fixed-guideway transit is the fact that cities seem so reluctant to repeat the experiment. Metro’s Green Line through the District has been a gold mine for the city, leading to billions in new investment, thousands of new residents, hundreds of new businesses, and so on. And there is absolutely no momentum in the District’s government to try and create more opportunities for this kind of growth.

I’d suspect the reason for this is precisely because of the long term time frame. Add in cost factors, and thinking this big is simply not going to happen for most municipalities. Perhaps regional entities could do better, but the Feds also have to be on board:

A big part of the problem, of course, is that the federal government doesn’t adequately take these kinds of land use changes into account in allocating funds. It’s nonetheless possible for cities to press ahead with these things, particularly since attitudes in Washington are changing. You’d think that someone down in the city government would be like, you know what? That worked really well. Maybe we should do it again.

Indeed. However, going at it ‘alone’ is a tough road. It’s somewhat heartening to see Senators considering transit within the climate bill, but transit’s biggest potential isn’t in energy savings but in land use changes. These kinds of land use changes will make transportation cleaner all by themselves as well as slowly make carbon-friendly lifestyles more accessible to the population of America’s cities. So many of the problems we face in terms of climate change stem from our land use patterns, yet we treat them as fixed when discussing solutions. Again, some long-term perspective is in order.

City Block

a work in progress…