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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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Rail as community catalyst

In Dallas, the relationship between rail and TOD has solidified and provided a place for walkable urban communities to take off.

Dallas Area Rapid Transit (DART) runs a 45-mile light rail line, which opened in 1996, and has since added a couple of extensions. The system also includes 30 miles of heavy rail, and the agency is constructing another 45 miles of light rail, effectively doubling the system.

Jack Wierzenski, director of economic development, DART, says that all of its member cities that have or are about to get rail have been very active in planning for TOD. When the first line opened, it was still a new concept. The line at that point was only in the city of Dallas. "The position [in the development community] was, 'let's see if there's anything to this.' Within three years, we had a couple of projects moving forward. The two big ones were the Mockingbird station and the Cedar South Side station, which are both infill projects," Wierzenski adds.

The Mockingbird Station is served by the North Central segment of DART and crosses near Southern Methodist University (SMU), right at the confluence of the Red and Blue rail lines. "There was already a community there, and this has enhanced it," says Wierzenski. The new Bush Library will be going in soon, too, he adds.

The Mockingbird Station has helped to renew the old downtown area, attracting a lot of new restaurants and businesses over the last eight years. There has been a noticeable impact on the economy, creating a thriving environment, Wierzenski says. "I think that project is a good example in terms of impact on the community, the rail station being the catalyst...it's really brought a lot of attention to the downtown and a whole new environment's been created because of that," he adds.

Conversely, the Mockingbird Station also provides a prime example of how the economic downturn has affected DART. Until November, the agency was in negotiations on a development deal on some of their parking lot property, in hopes of moving their surface parking into a structure. That has come to a stop, based on an inability to secure funding.

"With the economy the way it is, and the banks' reluctance to loan money, nothing is really moving forward. No one's in a real hurry to finalize negotiations on the development side. But nobody's saying, forget it, go find another developer. They all want to keep their finger on that, it's just that they can't get access to money right now," Wierzenski says.

He confirms that there is still plenty of preliminary planning going on, in anticipation of when the economy starts turning around. "Everyone wants to be ready. We're preparing for when that happens, getting an inventory of all of our properties that have TOD potential. We're going to prioritize those, so we'll be ready to go out with RFPs when the market is there again."

Community collaboration

Jeff Ordway, manager of property development, for the San Francisco-based Bay Area Rapid Transit District (BART), says that the Fruitvale Station Transit Village has been their most successful TOD project.

The agency partnered with the Oakland-based Unity Council, a non-profit community development corporation serving the Fruitvale District of the city, and the city of Oakland. The Fruitvale Station Transit Village is built on the east side of the tracks, and BART replacement parking and bus intermodal facilities are built on the west side. The project opened in 2004, after ten years of planning.

"It has become a bit of a poster child to show to others," Ordway says.

The project was complicated to finance and put together, because the ground level is retail, the second level is office and housing is on the top level. The real estate market for housing, retail and office products rarely coincides, and having all three pieces come together by market forces at the same time is extremely rare. "Banks and lenders are changing, but they still look at these land uses independently. They don't look at the synergy that they bring to each other. A bank will send out an appraiser who will only look at the retail, and won't relate the fact that the retail is under offices and housing. So, it's extremely difficult to finance," Ordway explains.

The solution to this problem was to physically enlarge the area slated for development and make some buildings office, some housing and a smaller portion retail. This enables the agency to react to the real estate marketplace, and build products as the cyclical market changes.

"If you really think in terms of what's necessary for good TOD to be effective, you need a variety of land uses: retail, housing, office, some place making element, whether it's a pocket park or a focal point, a gathering space, and you need to accommodate all the access modes," he says. Doing that on a five-acre piece of ground that the transit agency owns, won't work, Ordway adds. Again, the agency decided to collaborate. "We needed to shift our focus into a larger area, blur the boundaries as to who owns what, and joint venture with adjacent property owners," he explains. This enables the agency to look at all the pieces necessary for TOD to be placed, and there's more land to comfortably accommodate all the access modes. "It also creates flexibility. If you're going to put parking in a structure, you don't want to do it just for transit; you want to do it for shared use," says Ordway.

One lesson learned, says Ordway, was there was probably too much retail initially put in, and the project struggled. "There was intent to have retail occupied by local businesses, and there was just too much retail for that to comfortably occur. There's been a lot of re-ordering," he adds.

Collaborating with the local jurisdiction, the community, and then the private sector is what drove the project's success. "If people aren't on the same page, it won't happen. This is all about building relationships, and then about building a physical space. But the relationship needs to start first. I think that's an absolutely critical thing to understand," Ordway says.   

Driving the economy

Ultimately, transit operators, according to Leinberger, have a critical role to play in the future of the country, and need to understand what business they're in. While they may think they're in the transportation business, he argues that the work they're actually doing is in economic development and that they are integral to creating sustainable places at their train stations. "The means by which they do this, is by people. But the end is creating extremely valuable, sustainable, walkable urban places." If they don't realize this, they end up building systems that don't generate adequate economic development and tax revenues.

"The built environment, which is real estate and infrastructure, is 35 percent of the assets of our country; the largest asset class. It's obviously a huge driver," says Leinberger. "Until transit [operators] understand that they drive that growth, it's going to result in sub-optimal systems. They're every bit as critical to the growth of our country as the highway builders were during the late industrial era."

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