2007 Legislative Session Review

CALIFORNIA TRANSIT ASSOCIATION JANUARY/FEBRUARY 2008

Creative Approaches to Land Acquisition Result From Creative Approaches to Land Acquisition

It should not surprise anyone familiar with the San Mateo County Transit District (SamTrans) to learn that ingenuity and creative business thinking constitute the underpinnings for its successful transit-oriented development (TOD) program.

2 California Transit Association • January/February 2008 ( San Mateo County Transit District )

After all, since its creation in 1974, the have a common denominator: TOD has By Brian Fitzpatrick District has been at the forefront of many been facilitated by the retention of real innovations resulting from forward estate that had been acquired to support Real Estate Manager, thinking by its management team and major transportation projects and other- San Mateo County Transit District board, including: wise would be deemed surplus once the • A door-to-door paratransit program, projects were completed. David Miller and Redi-Wheels, launched more than a Michael Conneran Colma TOD Project decade before the Americans with Dis- abilities Act; The La Terrazza Project is located Partners, Hanson, Bridgett, • Leadership in acquiring, together in Colma, just to the west of the Colma Marcus, Vlahos and Rudy with its transit partners, the Santa BART Station. La Terrazza is the result Clara Valley Transportation Author- of a public-private partnership under ity and the City and County of San which the District leases the land to the Francisco, sizable portions of the developer as part of a ground lease with land holdings of the former Southern a 75-year base term. The developer con- Pacific Transportation Company for structed and owns the buildings on the future commuter rail, light rail and site, manages the facility and pays the rapid transit rail extensions on the District an annual ground rent payment ; of approximately $380,000, with annual • A growing program of shuttle con- increases based on the Consumer Price nections between major employment Index and periodic adjustments to match centers and commuter rail and rapid market conditions. Because the District’s rail stations. interest in the property is not subordi- In keeping with its tradition of in- nated to any other parties, the income novation, the District also has plowed stream is virtually guaranteed. new ground in redeploying excess The project consists of 153 residential property into successful TOD projects. units and approximately 3,000 square In this article we will illustrate how ex- feet of transit-supportive retail. The units cess property can be used for innovative range in size from one bedroom/one bath TOD through two case studies—one in- to three bedroom/two bath and include volving a fully constructed TOD project six live-work lofts. The project includes adjacent to the San Francisco Bay Area 31 units (20 percent) reserved for very Rapid Transit (BART) station in Colma, low income tenants. To maximize transit California, and the other involving a accessibility, the project features a direct TOD project currently being processed connection to the adjacent BART station through the entitlement phase in San by means of Nevin Way, a pedestrian Carlos, California. These two projects pathway that connects El Camino Real

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Transit California • January/February 2008 3 and the station property. Residents of La Administration, in turn, approved the two acres are currently used for transit Terrazza can stroll from their apartment entire package with the understanding parking, and another two are too nar- to the door of a BART train in less then that the District would pay 100 percent row to support potential development. five minutes. of the cost of the remnant parcel and The development itself will include ap- The La Terrazza project was the out- in turn would obtain sole ownership proximately 280 residential units and growth of the District’s ambitious “Cen- unencumbered by any federal interest. approximately 35,000 square feet of tury Plan,” which laid out a program As a result of this arrangement, the commercial space. of significant transit improvements, District obtained 2-1/2 acres of valuable The focal point of development will including the purchase and operation property, with frontage on a major be a pedestrian plaza directly in front of of the Caltrain commuter rail line link- thoroughfare and immediate proximity the San Carlos Caltrain Station building, ing San Francisco to San Jose and Gil- to a transit station, with significant which is listed on the National Register of roy and the extension of BART’s rapid potential for future TOD. Historic Places. This plaza will be a pub- transit rail system beyond Daly City. The District then solicited interested lic gathering space and will be flanked The Comprehensive Agreement negoti- developers to submit proposals to by the majority of the commercial space, ated with BART to implement the Pen- develop the remnant parcel. A substantial which may feature one or more destina- insula extension designated the District feature of the advertised development tion restaurants that will use the plaza as lead agency for all real estate acquisi- opportunity was the fact that the District, for outdoor dining. The frontage of the tions. The Colma Station Extension was along with the County of San Mateo project will be a series of courtyards and the first project implemented under the (which exercises the land use authority widened sidewalk with streetscapes de- BART/District agreement. One of the 29 over the property) and the City of Daly signed to provide a connection between properties needed for that project was the City (within whose sphere of influence the station and downtown San Carlos, former Millett Motel, a roughly 210,000- the property was located) had funded creating a vital link between Downtown square-foot parcel that had been slated the preparation of the Colma Station San Carlos and its Caltrain station, effec- for residential development. After nego- Area Specific Plan, a land use tool that tively bridging the gap across the wide tiations failed to result in the voluntary authorized increased densities in the roadway artery of El Camino Real, itself transfer of the needed land, the District vicinity of the new BART station. This a critical transit corridor. filed eminent domain action to acquire action meant that the La Terrazza project The property on which the develop- the property. did not require a separate discretionary ment will be constructed is comprised of Among the differences that arose was zoning approval and made the land more the San Carlos Caltrain Station parking the land owners’ contention that the Dis- valuable. lots, plus six acres of property that were trict’s plans called for using only half the In addition to increased riders for purchased from Union Pacific Railroad parcel—rendering about half the remain- BART trains and SamTrans buses, the to support the construction of a grade ing land, about 102,000 square feet, less District now receives regular rental pay- separation project at Holly Street. In or- valuable for development. The owners ments from the project and, as a result of der to keep the railroad operating during contended that this amounted to a tak- specific terms negotiated as part of the the construction of the grade separation, ing of their property and they claimed deal, also will participate in any profits the designers rerouted railroad traffic off about $500,000 in “severance” damages. resulting from sales or refinancings of the main line onto a “shoofly” located on They also held an elevated opinion of the the project. the property now slated for development. value of the property. The railroad operated on this shoofly for San Carlos TOD Project These differences gave rise to an three years while the new railroad bridge innovative settlement strategy—the The proposed San Carlos Transit Vil- was constructed over Holly Street. At the negotiated acquisition of the remainder lage Project will be located on approxi- completion of construction, rail traffic parcel that was unnecessary for the mately eight acres of property adjacent was re-routed back to the new grade- station project. This approach facilitated to the San Carlos Caltrain commuter rail separated mainline tracks, freeing the an agreement to a reduced unit price for station. Of these eight acres, four acres property for development. all of the land and completely avoided are vacant land of optimal size and width Typically when a transit agency re- severance damages. The Federal Transit for development, while approximately quires property during construction for

4 California Transit Association • January/February 2008 a defined, temporary period of time, District, as well as enhanced transit sys- the agency will rent the property from tem ridership (both bus and rail). The the property owner or will acquire tem- project, along with planned improve- porary construction easements. In this ments to El Camino that will be funded case, while planning for the grade sepa- by both the project and by other grants, ration, the District also decided to take will serve to create a pedestrian linkage into account its long-range vision for the between downtown and the develop- Caltrain corridor, which included an ex- ment. In addition to bringing the agency panded right of way to accommodate the approximately $1 million per year in potential for additional tracks. rental revenues, it is anticipated that Initially, the agency considered the with approximately 500 people living at minimal property requirements for the the door of a transit stations, ridership grade separation, including the potential on Caltrain and SamTrans will increase expansion of the rail operation, and con- significantly. The District also will par- cluded this would require the purchase ticipate financially in the gross profits of of an approximately one-acre strip along the project and in events such as sales the back of the development site and a and refinance. It is anticipated that 15 to five-year temporary construction ease- 20 percent of the project will provide af- ment over the entire remaining prop- fordable housing. erty. After considering the overall costs Case Studies Serve as of such an acquisition, including the Inspiration potential for severance damages being asserted in the context of a partial land The District is excited about its tran- take, the District decided to recommend sit-oriented development program and is the purchase of the entire property. As a hopeful that the success of the program result, upon the completion of the grade to date will inspire similar projects at separation project, a vacant site suitable other locations within its service area. In for development and located on prime addition, the District hopes these exam- property proximate to both a rail station ples will encourage other public agencies and El Camino Real, was in public own- to seek innovative opportunities to use ership. acquired land that previously may have Following a formal public solicita- been regarded as surplus, suitable only tion process, the District selected Legacy for disposal. As always, the District will Residential Partners, LLC to develop the continue to look for new and creative project and entered into an agreement ways to maximize its resources and to to exclusively negotiate a transaction increase the level of service to its com- with that firm. Anticipated benefits from munity. the proposed project include a healthy Reprinted 2008 with permission of the California economic return on investment for the Transit Association. All rights reserved.

Transit California • January/February 2008 5