TOD Poised to Push Past the Recession

Posted on September 14, 2009 by Nicole Schlosser, Associate Editor - Also by this author

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Creating the TOD dynamic

MTC has been conducting a residential choice study to determine what people are looking for in terms of housing. The study is focused toward local jurisdictions that are interested in making TOD more attractive.

MTC started with open-ended focus groups of San Francisco Bay Area residents who are moving or have just moved. They developed a survey of approximately 35 questions addressing various factors of transit, including quality and proximity to rail or bus, and level of importance.

The group asked about six factors of importance, and defined eight market segments based on how people responded. They started working with the easiest segment in terms of attraction to TOD: the transit-preferring group. "They want really good transit, that's the most important thing for them in finding a home. The last group is high-income suburbanites, who [aren't interested in] transit. They want to drive," says Knepper.

MTC also gathered information on each segment's income level, auto ownership, where they live, whether they have kids in the home and demographic information.

The goal is to help local jurisdictions to review their TOD plans and assess them based on the factors. MTC suggests measures that they can use to determine feasibility, identify valuable market segments and pinpoint what those segments require that is missing in their plan.

"The biggest [factors] that people cared about, across all groups, were being able to walk around the neighborhood to do chores and feel safe walking around their neighborhood at night. These are above a short commute to work, or convenient driving or good schools," Knepper says. That's favorable for TOD, because most groups across the board are attracted to the mixed-use aspect, she adds.

One group, mostly couples, that didn't express a need for transit, but like being able to walk around their neighborhood, might be a good fit in the outer areas of a TOD project geographically, because they want to be able to walk to local stores to shop. According to Knepper, they tend to have a higher income than some of the other groups, so they can support the local retail.

Every TOD should attract a variety of different market segments. "The transit-preferring group [is] a little lower-income, and they really want to take transit, but they don't have as much disposable income," Knepper says. A mix of people with different incomes is necessary, so there are people who want to support the local businesses, and people taking transit. "You put them together, and get a mixture, and create that dynamic between them."

Funding challenges

Even with the right market segments, TOD projects can be more difficult to build, take more time and are typically public-private partnerships, with the public sector putting up the piece of land or contributing funding to help the project move forward. "Any time you're talking about lengthy time periods in the development process, it ends up being much more expensive because the developers have to carry the financing in the meantime. Because [of timeframe and cost], developers tend to [target] the higher end of the market," says Ohland.  This means that the primary objective of many TOD planners, to provide a certain percentage of affordable housing near the transit station, can be thwarted.

A recent challenge for TOD projects is obtaining stimulus funds, given that the time frames of many projects extend well beyond the two-year limit in which the money must be spent.

 The Brookings Institute's Leinberger remarks that stimulus distribution has not been very widespread to transit systems. The bulk of the transportation funds went through the state DOTs, regardless of the size of transportation systems. "This is meant to stimulate the economy. And in this country, the top 100 Metros generate 75 percent of the country's Gross Domestic Product (GDP). The vast majority of the transportation money is going to the rural areas because of the state DOTs. In other words, this economic stimulus is going exactly where the economy is not," Leinberger says.

Belzer, however, sees the market sorting itself out over time. Looking at a project like Pasadena, Calif.'s Del Mar Station on the Los Angeles County Metropolitan Transportation Authority (Metro) Gold Line, she points out that there are a lot of residents who are not using transit for their daily commute, but for non-work trips, and those are a bigger percentage of total trips for any given household. The fact that transit trips are substituting auto trips, even if they're not commute trips, is a good thing, she concludes.

Market for ridership

Seven months into operation, Phoenix-based Valley Metro is experiencing growing ridership at unique times of day and during the week, in part due to a synergy with nearby development.

Three cities are connected to the existing 20-mile line: Phoenix, Tempe and Mesa. Other members that make up Valley Metro's governing board are the cities of Glendale, Chandler and Peoria. There are six future extensions planned. 

Through local, regional and federal funds, there has been a large investment in infrastructure improvement. "We want to make sure we maximize the investment, so that future development along this corridor will take advantage of its proximity to the transportation infrastructure. We assist our member cities in their effort to create policies to market sites to bring about change to their plans in order to encourage TOD along the corridor," says Jim Mathien, planning project manager.

Ben Limmer, planner, says Valley Metro is currently in the late planning stages for the 20/21 line in West Phoenix and the Mesa line (the DASH purple line) heading east and slated for 2016. The two lines are nearing the end of the planning phase. As they move toward engineering, as part of the federal evaluation process, Valley Metro will be working with the member cities and establishing additional transit-supportive land use policies and programs.

 Since Valley Metro's full funding grant agreement in 2004, the green light for construction with the FTA, the agency has seen more than $7 billion in development, including about $5.5 billion of private investment, as well as $1.5 billion of public investment. Public investments include a new convention center, hotel and a transportation center in downtown Tempe.

Arizona State University's (ASU) downtown satellite campus has drawn a variety of projects, from small to large-scale housing, mixed-use, retail and office, and many are LEED (Leadership in Energy and Environmental Design)-certified.

Housing has been the biggest success. "We've seen the smaller scale two-, three- and four-story wood frame projects, and quite a few high-rise projects [in] downtown Phoenix...there's also been a lot of infill housing. Housing has been spread across the whole line, making it unique from some of the other lines I've seen," says Limmer.

Despite the recession, development has kept moving, albeit at a slower rate, but it's concentrated in some of the more specialized areas, including ASU in downtown Phoenix, and especially in Tempe. "There are some specialized housing projects coming online, unofficial student and faculty housing, marketed to the student, smaller units, those have continued to move pretty quickly," says Limmer.

In total, there has been more than nine million square feet of commercial space, approximately 18,000 residential units and more than 3,000 hotel rooms along the 20 miles. Most of it is finished, though some is still in planning or under construction. 

Mathien says that one of the things the light rail has done is broadened the geographic area of access for ASU students to the university. "It enables them to get to campus quickly, so they can live a little farther away...there have been some residential projects, several hundred units each, which are nearing completion that are right near a light rail station. That only happened because of light rail."

Hillary Foose, public information officer, says that a significant percentage of ridership is using the system for commuting, but there is a large element that is using it for leisure, which has piqued the interest of more developers and restaurateurs.

"Particularly on Saturdays, [ridership is] thousands beyond what we thought it would be. Largely, it's people using the light rail for leisure," says Foose. Valley Metro recently extended weekend service hours on Friday and Saturday night until past 2:00 a.m., based on an overwhelming amount of public input not only from passengers who would like to ride later, but also the business community wanting to see their customers stay later, she adds.

Mathien says there are also plenty of all-day riders. "People who are going to lunch, a doctor's appointment or something that normally they would have driven to, or not have made the trip, but now, during mid-day, you'll find there are quite a few people on our light rail vehicles. And this is encouraging to property owners and developers, because they see there's a market here all day long."

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