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UC Berkeley Earlier Faculty Research Title Market Opportunities and Barriers to Transit-Based Development in California Permalink https://escholarship.org/uc/item/2c01z5hw Authors Cervero, Robert Bernick, Michael Gilbert, Jill Publication Date 1994-08-01 eScholarship.org Powered by the California Digital Library University of California Market Opportunities and Barriers to Transit-Based Development in California Robert Cervero Michael Bernick Jill Gilbert Working Paper UCTC No. 223 The University of California Transportation Center University of California Berkeley, CA 94720 The U~iversity of California Transportation Center The University of California Center activities, Researchers Transportation Center (UCTC) at other universities within the is one of ten regional units region also have opportunities mandated by Congress and to collaborate with UCfaculty established in Fall 1988 to on selected studies. support research, education, and training in surface trans- UCTC’seducational and portation. The UCCenter research programs are focused serves federal Region IX and on strategic planning for is supported by matching improving metropolitan grants from the U.S. Depart- accessibility, with emphasis ment of Transportation, the on the special conditions in California Department of Region IX. Particular attention Transportation (Caltrans), and is directed to strategies for the University. using transportation as an instrument of economic Based on the Berkeley development, while also ac- Campus, UCTCdraws upon commodatingto the region’s existing capabilities and persistent expansion and resources of the Institutes of while maintaining and enhanc- Transportation Studies at ing the quality of Iife there. Berkeley, Davis, h’vine, and Los Angeles; the Institute of The Center distributes reports Urban and Regional Develop- on its research in working ment at Berkeley; and several papers, monographs, and in academic departments at the reprints of published articles° Berkeley, Davis, Irvine, and It also publishes Access, a Los Angeles campuses. magazine presenting sum- Faculty and students on other maries of selected studies. For University of California a list of publications in print, campuses may participate in write to the address below. Universityof California Transportation Center 108 NavalArchitecture Building Berkeley, California 94720 Tel: 510/643-7378 FAX:510/643-5456 Thecontents of this reportreflect the viewsof the author whois responsible for the facts and accuracyof the data presentedherein. Thecontents do not necessarilyreflect the official viewsor policies of the State of Californiaor the U,S. Departmentof Transportation.This report doesnot constitute a standard, specification,or regulation. Market Opportunities and Barriers to Transit-Based Development in California Robert Cervero Michael Bernick Jill Gilbert Institute of Urban and Regional Development University of California at Berkeley Berkeley, CA 94720 WorkingPaper August 1994 UCTCNo. 223 TheUniversity of California TransportationCenter Universityof Californiaat Berkeley University of California Transit Research Program This paper was produced with support from the California Department of Transportation through the University of California Transportation Center. Table of Contents Introduction 1 , 2. Background: Transit-Based Developmentin California 1 3. Opportunities for Transit-Based Developmentin California 3 3.1. Market-Demographic Trends 3 3.2. Physical Assets 5 :5.3. Institutional and Regulatory Factors 7 o Examples of Leveraging Residential DevelopmentUsing Transit AgencyLand 8 4.1. Almaden Lake Village 10 ,4.2. Grand Central Apartments 10 Case Study of Station Area Planning and Implementation: . Pleasant Hill BARTStation 15 Barriers to Transit-Based Developmentin California 17 . 7. Economic Obstacles 19 7.1. Questionable Market Viability 19 7.2. Lack of Conventional Financing 22 7.3. Costs 23 7o3.1 Construction Costs 23 7.3.2. Land Costs 23 7.3.3. DevelopmentFees and Regulations 24 7.3.4. Risk-Associated Costs 25 Political Obstacles 26 . 8.1. Localism 26 8.2. NIMBYism 26 9. Structural Obstacles 30 9ol. Lack of Land 3I 9.2. Unsuitability of Land 31 9.3. Inexperience and Lack of Prototypes 31 10. Overcoming Barriers 32 10.1. OvercomingEconomic and Financial Barriers 32 10.1.1. Transit and RedevelopmentAgency Initiatives 32 10.1.2. Other Financial Initiatives 36 10.2. OvercomingPolitical Obstacles 37 10.3. OvercomingStructural Barriers 39 11. Achieving Transit-Based Development 39 11.1. Opportunities Winning Out Over Obstacle 39 11.2. An Action Agenda 40 References 44 MarketOpportunities and Barriers to Transit-Based Developmentin California Robert Cervero, Michael Bernick, and Jill Gilbert 1. Int:roduction Urbanrail transit continues to expandin Los Angeles,Sacr~-aento, San Diego,and the San FranciscoBay Area as these areas seek to improveregional mobility, reduceair pollution, and restruc- ture urban growth. Transit, of course, only producesmobility and environmentalbenefits if people switchfrom cars to trains andbuses. Manyfactors, however,are erodingtransit’s ridership base, includ- ing rapid suburbanization,much of it focusedon highwaycorridors. Nationwide,transit ridership fell from6.4 percent of all commutetrips in 1980to 5.3 percent in 1990(Pisarski, 1992). Whiletransit trips rose in absolute numbersin California between1980 and 1990(one of the few states wherethis was the case), transit’s share of commutetrips droppedin all metropolitanareas: greater Los Angelesm5.4 per- cent to 4.8 percent; San FranciscoBay Area-- 11.9 percent to 10 percent; San Diego--3.7 percent to 3.6 percent; and Sacramento--3.7 percent to 2.5 percent. Giventhat billions of dollars havealready been invested in urbanrail transit in California and billions moreare in the pipelines, these trends are worrisome.California policymakersmust respond creatively to reverse transit’s downwarddecline. Oneoption is to create attractive living, working, and shoppingenvironments around stations. Recentresearch showsresidents living near rail stations in California are about five times morelikely to commuteby rail transit as those living awayfrom rail transit (Cervero,1993). This report investigates the marketopportunities and barriers to transit-based developmentin California. A combinationof field research, informantinterviews, and literature surveyswere used in identifying marketopportunities and barriers. Particular attention has been placed on the opportunities for focusinghousing development near rail stations, as well as the barriers that stand in the way.Since housingconstruction around rail stations has beenfairly sluggishin recent years andin manysettings non-existent, barriers and deterrents appear to be far greater than opportunities. Accordingly,more attention is given in this report to factors that haveretarded housingdevelopment to date, and howthey mighl: be overcome. 2. Background: Transit-Based Development in California Interest in clustering housingand commercialdevelopment around rail transit stations has gained momentumin recent years. Rail transit agencies like the BayArea Rapid Transit (BART)District and San Diego’s Metropolitan Transit DeveIopmentBoard (MTDB) see an opportunity to jointly develop land holdingsaround stations, includingpark-and-ride lots, in associationwith private real-estate devel- opers, hopefully earninglease income and generating new patronage in the process. In recent years, BART has workedwith local redevelopmentauthorities in developing Iand around several stations; to date, joint development deals have led to the construction of mid-rise housing and mixed-use complexeson land near the E1 Cerrito del Norte and Pleasant Hill BARTstations. Rising land values and pressures for affordable housing have prompted BARTand local redevelopment agencies to seriously consider converting parts of their vast inventory of park-and-ride lots arid open parcels to mid-rise housing. These projects maybe harbingers of "transit villages" at other BARTstations, as was envisaged when BARTwas originally conceived over 40 years ago (Johnston arid Tracy, 1983). Plenty of building activity can also be found around other rail stations in California as well. In MountainView, several multi-family projects near the CalTrain station are planned, including an apart- ment complex with 700 units at the Old Mill Shopping Center. S~ta Clara County’s light rail stations have attracted several "trandominium"housing projects that rely on rail proximity as an important mar- ket toolo As part of Santa Clara County’s Housing Initiative Program, plans are underwayto eventu- ally build over 13,700 units of moderate-densityhousing (at 12 to 40 dwelling units per acre) near light rail stations. San Diego has already seen a flurry of apartment construction along the new El Cajon extension, including more than 500 modernapartment units recently built adjacent to the La Mesa- AmayaStation. Developersare not being strong-armed into building these transit-based projects. All are willing participants, seeing art opportunity to fill a new market niche-- providing moderately priced housing with superb regional accessibility. Local governmentshave also emergedas important players in promot- ing transit-based developmentin California. The cities of Hayward,Union City, E1 Cerrito, and Pleasant Hill have recently formed redevelopment districts around BARTstations for the very purpose of jump- starting new development. E1 Cerrito’s redevelopment authority has used tax-exempt financing and subsidies for