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From page 115... ... 91 7.1 Introduction This chapter is the second of three that address key topical issues cutting across the sequential stages of the JD process. Chapter 7 seeks to enhance the reader's practical understanding of JD economics. Read the entire page →
From page 116... ... 92 Guide to Joint Development for Public Transportation Agencies 7.2 Goals, Perceptions, and Expectations The surveys of transit agencies and developers asked respondents not only to discuss specific issues and methods, but to discuss their big picture understanding of TOD and JD. Some highlights of particular relevance to JD economics and finance are summarized below. Read the entire page →
From page 117... ... Economics of Joint Development 93 Some developers cited two institutional drawbacks that can arise in dealing with transit agencies. One is the perceived unpredictability of scope and schedule associated with multiple internal departments, the maze of community stakeholders clustered around JD projects and impacting entitlement decisions, and, where applicable, the FTA/JD process. Read the entire page →
From page 118... ... 94 Guide to Joint Development for Public Transportation Agencies As noted earlier, this push-and-pull is further complicated by two factors increasingly common to JD projects: the cost of building and operating structured parking, and the economics of including affordable units in residential or mixed-use projects. These are addressed in detail in Section 7.4 and Section 7.5. Read the entire page →
From page 119... ... Economics of Joint Development 95 Differentiate fair market value, appraised value, and residual land value. The challenges posed by replacement parking and affordable housing are, as much as anything else, issues of land value. Read the entire page →
From page 120... ... 96 Guide to Joint Development for Public Transportation Agencies such a return requires both the technical capacity and the appetite to monitor the project's performance on an ongoing basis. More fundamentally, it assumes that a project will perform well enough that the present value of the agency's return over time is worthwhile, particularly if a conservative discount rate, commensurate with the degree of uncertainty, is applied. Read the entire page →
From page 121... ... Economics of Joint Development 97 authorities in the planning stage of the project. This helps align the developer solicitation (and the resulting proposals) Read the entire page →
From page 122... ... 98 Guide to Joint Development for Public Transportation Agencies • Special TOD planning and tax increment districts, like the Transit Revitalization Investment District program in Pittsburgh and other Pennsylvania cities and the Northwest Indiana Regional Development Authority's Transit Development Districts, authorized by state law for all stations on the region's two commuter rail branches; • Revenue bond financing, either through a local jurisdiction's own enablement or through its access to the state's economic development finance agency; • Oregon Metro's TOD program, which funds land assembly and gap financing for projects including JD; and • Targeted tax abatement incentives and impact fee reductions or waivers. Programs like these complement the menu of affordable housing subsidies (addressed in Section 7.5) Read the entire page →
From page 123... ... Economics of Joint Development 99 7.4 Parking and Joint Development The relationship between JD and parking encompasses two distinct policy and planning issues, each with a significant potential bottomline impact: • The location and replacement of park & ride capacity, and • The residential and commercial parking ratios applied to JD projects. Since most JD projects ultimately require structured parking for transit passengers, JD users, or both, the impact of parking on overall project costs -- and the question of how parking facility costs are allocated -- becomes a deal driver. Read the entire page →
From page 124... ... 100 Guide to Joint Development for Public Transportation Agencies scenarios, the value of the JD sale or lease, and the cost of a replacement parking structure. Several agencies have developed spreadsheet models that enable them to compare "all-in" revenue and ridership outcomes across alternative scenarios. Read the entire page →
From page 125... ... Economics of Joint Development 101 Parking for Development A body of research literature argues that the parking supply ratios required by traditional zoning were and are excessive if applied in transit-rich settings.9 Regulatory and market behavior are changing for the better, fueled not only by transit but by the re-emergence of mixed-use development (with its incentives for shared parking and walking) and by the millennial preference for car-sharing and TNCs over car ownership. Read the entire page →
From page 126... ... 102 Guide to Joint Development for Public Transportation Agencies Transit agencies have both a philosophical and a financial interest in making TOD parking requirements as low as the market and the community will accept, with as much shared parking as practicable. Moreover, by insisting on reduced parking ratios and shared facilities in their own JD projects, transit agencies can set the standard for TOD in the larger station area. Read the entire page →
From page 127... ... Economics of Joint Development 103 other applicable regulations. These site-specific standards should be part of the DRGs prepared in the planning stage (Chapter 3) Read the entire page →
From page 128... ... 104 Guide to Joint Development for Public Transportation Agencies mixed-income multi-family housing, retail, and improved transit center facilities. Each includes a shared-use parking structure built and operated by the developer, in which specific spaces are reserved for Metro park & ride customers. Read the entire page →
From page 129... ... Economics of Joint Development 105 The development will include 335 parking spaces, with no park & ride. All three projects have residential parking ratios of between 1.10 and 1.25 per apartment, below MARTA's suggested maximum of 1.5 and low for their respective districts.14 • Fridley Station. Read the entire page →
From page 130... ... 106 Guide to Joint Development for Public Transportation Agencies reasons, beyond their own commitment to equitable development. These included the opportunity to acquire sites with exceptional transit access at less than top-of-market prices. Read the entire page →
From page 131... ... Economics of Joint Development 107 Transit Agency Inclusionary Policy BART • At least 20% of all JD units at a given station must be affordable. • Goal is 35% of overall JD portfolio. Read the entire page →
From page 132... ... 108 Guide to Joint Development for Public Transportation Agencies requirement, but that is not necessarily the appropriate practice in every case. If local government has its own inclusionary program, the transit agency may defer to it, incorporating its applicable requirements into their JD solicitations. Read the entire page →
From page 133... ... Economics of Joint Development 109 recognition could take the form of an explicit discount, as illustrated by the Sound Transit, LA Metro, and BART examples outlined above, or the implicit recognition of affordable housing subsidy requirements in the definition of FMV. Incentives and Subsidies Even if a transit agency is willing to accept a land discount, affordable housing development usually requires further support in the form of zoning incentives and financial subsidies. Read the entire page →
From page 134... ... 110 Guide to Joint Development for Public Transportation Agencies In most cases, the applicant for these programs is the developer, and the transit agency rightly assigns that responsibility to them as a precondition for signing a JDA or closing on the conveyance. However, to the degree appropriate for each program, the transit agency should work with the relevant state or local officials to support worthy JD projects. Read the entire page →
From page 135... ... Economics of Joint Development 111 privately owned sites. Oregon Metro also administers a regional housing bond, whose funding can be applied to eligible projects on private or public land. Read the entire page →
From page 136... ... 112 Guide to Joint Development for Public Transportation Agencies half-mile of a station. Miami-Dade Transit, through its parent county government, has direct input on zoning within certain station area territory. Read the entire page →

From page 115...

... 91 7.1 Introduction This chapter is the second of three that address key topical issues cutting across the sequential stages of the JD process. Chapter 7 seeks to enhance the reader's practical understanding of JD economics.