Lessons Learned

SOUTH COAST RAIL ECONOMIC DEVELOPMENT AND LAND USE Appendix F CORRIDOR PLAN Literature Review: Transit-Oriented Development from a Land Use and Economic Development Perspective March 2008 Prepared by Goody Clancy with FXM Associates • EDR Group • Susan Jones Moses Associates • AECOM South Coast Rail Corridor Plan: Appendix F Chapter 1 – Learning from the Literature I. Lessons Learned After half a century of sprawl and auto‐dominated development, the 21st century is shaping up to be a century of smart growth and transportation choice. Throughout the nation, states, regions and cities are reinvigorating older transit systems and building new ones. Coordinating land use policies and development with transportation investments is now increasingly understood as an important part of the solution to the challenges that face us: changing demographics and markets, inefficient land use, loss of open space and environmentally sensitive land, high fuel costs, and climate change. What can the South Coast Rail project learn from the experience of others? As the first task of the South Coast Rail Economic Development and Land Use Corridor Plan, this review identifies the lessons learned and best practices that have emerged from recent decades of transit investment. Because the literature on commuter rail in specific is limited, the literature review threw a wide net to identify useful lessons from a broad variety of transit investments. This chapter focuses on the following issues: Land Development Patterns: How do transit investments serve to promote compact development patterns around stations and smart growth/anti‐sprawl development patterns outside immediate station areas? Economic Development: How do transit investments stimulate economic development and growth through productivity gains, business expansion and attraction, new investment, and job creation? Fiscal Benefits: What degree of fiscal benefit‐‐increases in municipal and state revenues from real estate tax, sales tax, income tax, and other revenues—can be ascribed to transit investments? Financing Options: What is the experience with value capture for transit financing? Summary Findings Land Development The vast majority of the literature on transit and land development patterns is about transit‐oriented development (TOD) and most of that focuses on heavy rail and light rail. The literature on commuter rail is limited. Transit alone does not automatically result in concentrated development. Transit‐oriented development is possible in urban centers, suburban areas, and even rural locations. Coordinated land use and transportation policies at the state, regional and local level are necessary to leverage the opportunity that transit brings to shape development patterns. Successful TOD requires partnerships between government, transit agencies and the private sector. Local leadership and commitment are essential to successful TOD. TOD requires supportive market conditions at the station, corridor and regional levels. Public actions, like locating government agencies at transit stations, can help attract the private sector to problematic locations. TOD requires land for development or redevelopment near the station site. Development‐ ready sites are the ideal. 2 South Coast Rail Corridor Plan: Appendix F Conflicts between commuter parking needs and TOD needs at commuter rail stations can be resolved with creative approaches. Commuter rail stations in historic town centers are more likely to attract TOD development than greenfield site stations. Polices that provide incentives and supports for transit‐oriented development do not necessarily result in significant reductions in sprawl development in the same region. Regions that have had success using transit as an anti‐sprawl tool are located in states with state and regional planning authority. Economic Development The economic impacts of new commuter rail lines have not been studied. A 1999 study found that on average, transit investments and transit operations provide a 3 to 1 return in terms of business sales; create positive impacts on business output and personal income, especially over the long term; save $1.50 in transportation costs for every $1 invested Economic growth resulting from less congested highways (or less growth in congestion over time) may locate near highway interchanges instead of near transit, unless funneled to transit corridors by public policy. A large percentage of the generative economic impacts may accrue to businesses that rely on highway transportation and will enjoy a cost savings due to a decrease in congestion as auto commuters move to transit. While redistributed growth does not result in net new jobs, it is of interest because it helps achieve smart growth goals. Communities with supportive land use policies and plans are most successful with attracting developments with the density and mix of uses that best support transit and smart growth goals. Economic development around South Coast Rail stations may include both new growth (generative impacts) related to travel time savings and agglomeration economies, and the redistribution of economic activity within the South Coast region. Regions that have dedicated staff (either planners at the municipal or regional level, or transit agency employees) to station area development have been most successful in attracting economic development to the stations. A search of the literature did not uncover examples where new manufacturing, high tech or biotech businesses have been attracted to new station areas. There are a variety of reasons that these businesses tend not to locate around transit stations. High tech and biotech industries often seek locations with room for expansion, or they locate near universities in the urban core. Manufacturing plants often receive supplies and ship product via truck, and seek locations with good highway access. These types of uses often require more than 1,000 square feet of space per employee and operations are often confined to a single floor. Both of these characteristics mean they require large sites for development. Financing Options and Fiscal Benefits The fiscal benefits of transit have not been widely studied, especially for commuter rail. Joint development has proven the most successful financing tool because it brings revenues directly to transit agencies to pay for transit projects and improvements. The most common and successful tools are revenue producing methods such as air rights sales and leases on transit adjacent land, as well as station connection fees. Cost sharing tools such as joint operations and construction co‐ventures, however, are typically utilized only in strong real estate markets around heavy rail stations. TIF districts have traditionally been utilized to fund neighborhood improvements such as infrastructure, streetscape and utility improvements to encourage higher density development. However, recent proposals in Atlanta and New York City have shown that 3 South Coast Rail Corridor Plan: Appendix F variations on TIFs have the potential to fund transit projects themselves. Although unproven, these proposals present a new approach to provide significant financing for transit investment. Special Assessment Districts around transit stations in cities such as Los Angeles and Washington, DC have been successful financing tools by receiving additional taxes from businesses that benefit from proximity to transit. 4 South Coast Rail Corridor Plan: Appendix F II. Land Development Patterns and Transportation Investments A. Sprawl, Transportation and Smart Growth After World War II, American land use patterns began to change, with people moving out of the urban centers to newer, suburban communities. Several factors converged to promote this suburban migration, including the development of the Interstate system and the advent of the automobile as the preferred mode of transportation, a newly educated middle class that could now afford single family homes, a desire to move away from noxious and noisy industrial uses, and, in some instances, a desire to move away from real and perceived increases in urban crime. The new suburban population demanded suburban service and retail opportunities, leading to strip malls and regional shopping centers. The result was disinvestment in urban centers, abandonment of rail service, and consumption of vast amounts of open land for low density, auto‐dependent development called sprawl. The characteristics of regions with sprawl development include highly segregated land use zoning patterns, fragmentation of land use powers among many small localities, low‐density residential and commercial settlement with widespread commercial strip development, auto‐dependent transportation systems, and leapfrog development. Typically, there is also great fiscal disparity among localities and a reliance mainly on the trickle‐down or filtering process to provide housing to low‐income households.1 There are many signs that the half‐century dominance of sprawl development patterns is coming to an end. Over the last generation, the negative impacts of sprawl sparked the “smart growth” movement to direct new growth to areas in or adjacent to existing infrastructure, to provide more choice in housing and transportation, and to protect important natural resources and open land. Smart growth development is characterized by focusing development where infrastructure exists, a mixture of uses, connected and walkable neighborhoods, preservation of open space and environmentally

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