EVALUATING THE DEVELOPMENT POTENTIAL FOR INTERMODAL TRANSPORTATION CENTERS USING THE MIAMI INTERMODAL CENTER (MIC) by Omar F. del Rio Bachelor of Architecture, Tulane University, 1987 Master of Architecture and Urban Design, Harvard University, 1991 and Donald R. Hackstaff Bachelor of Science, Business, University of Colorado, 1990 Submitted to the Department of Architecture and the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements for the Degree of Master of Science in Real Estate at the Massachusetts Institute of Technology September 1996 @ 1996 Omar del Rio and Donald Hackstaff All rights reserved The authors hereby grants MIT permission to reproduce and to distribute publicly paper and electronic copies oft~i th is document in w ole or jppyt. Signature of Authors ' /1/ // Center for Real Estate August 1, 1996 Certified by Gary Hack Professor of Urban Design Thesis Supervisor Accepted by MAS SACH-USE TS INS Tu (U William C. Wheaton OF TECHNOLOGY Chairman Real Estate Development SEP 1 6 1996 Interdepartmental Degree Program in LIBRARIES R0fth Evaluating the Development Potential for Intermodal Transportation Centers Using the Miami Intermodal Center (MIC) by Omar F. del Rio and Donald R. Hackstaff Submitted to the Department of Architecture and the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements for the Degree of Master of Science in Real Estate at the Massachusetts Institute of Technology September 1996 ABSTRACT Our thesis is an evaluation of development potential, with the appropriate private-public participation and financing, for infrastructure projects, specifically intermodal centers. We are using the Miami Intermodal Center, and related projects, the East-West Corridor, and the expansion of the Miami International Airport, as the study model. The project involves private development investment opportunities to build infrastructure and commercial space. More importantly is the potential for related commercial development in the vicinity of all the infrastructure components, in the adjacent underutilized neighborhood. This is where we plan to add value to the already volumous research on the project. The scope includes, evaluate current deal structure, recommend changes to the existing project, and propose a development strategy. Thesis Supervisor: Gary Hack Title: Professor of Urban Design ACKNOWLEDGMENT The five or so pounds of this document is a testimonial to the idea that a brash, loud, commercial real estate broker from Colorado, and a quiet, over achieving, public servant, designer from Florida, can work together as a team to produce a document that we are both proud of, and able to learn from. We have spent the last 60 days together as a team in a rush to the finish. The numbness is still fresh in our minds that we are truly...finished. Fortunately, the team approach has given us the opportunity to start what will be a long friendship. We would especially like to thank Professor Gary Hack for all his wisdom, guidance, and for being the only one, other than ourselves, who has to read this mammoth. We would also like to wish him well as he ventures on to the University of Pennsylvania, as the new Dean of the Fine Arts School. We would like to thank all the interviewees, listed on Page 152, for their patience, their knowledge and their complete openness to two students. A special thanks goes to Amelia Johnson at the City of Miami Beach and Dennis Connelly at ICF Kaiser, for the initial efforts at helping coordinate this project. The project that is considered in this thesis will never move forward without the tenacity and dedication of these public and private sector professionals. We would like to thank the lumbermen in northern New Hampshire for cutting down the trees used for this thesis, the scenery on South Beach in Miami for giving our eyes a view other than Times New Roman, and Omar's mother for all the Cuban black beans and rice. Finally, we would like to thank our families for supporting us through a rather work intensive year. Their patience with our long nights and short deadlines was much appreciated. TABLE OF CONTENTS INTRODUCTION Page 7 I. INTERMODAL CENTERS Page 8 Intermodalism Federal ISTEA and American Examples International Examples II. MIAMI INTERMODAL CENTER (MIC) Page 13 History The Iron Triangle, The Site The Hub Current Status and Prospects for Future Completion III. FEDERAL, STATE & LOCAL AGENCIES, THE KEY PLAYERS Page 23 Metro-Dade Government Metro-Dade Metropolitan Planning Organization Metro-Dade Planning Metro-Dade Transit Metro-Dade Aviation Department Regional South Florida Transit Authority Dade County Expressway Authority Florida Department Of Transportation Federal Agencies IV. MIAMI INTERNATIONAL AIRPORT Page 31 Current Condition Challenges and Growth Retail Expansion Airport Strategic Plan MIA at the MIC V. THE PORT OF MIAMI Page 40 Cruise Port Maritime Park Cargo Port and the Port of Miami River VI. INFRASTRUCTURE COMPONENTS Page 43 Metrorail East-West Corridor Metrorail Earlington Heights Spur/North Corridor Airport-Seaport Connector MIC-MIA Connector High Speed Rail Tri-Rail Amtrak SR 836/SR 112 Interconnector Private Toll Road VII. COMMERCIAL COMPONENTS Page 52 Airport Landside Functions Rental Car Facilities Hotel Office Retail Industrial Convention Center and World Trade Center VIII. THE MIAMI ECONOMY, AN OVERVIEW Page 59 The Hong Kong of the America's Miami, Gateway to the America's The South Florida Economy Transportation Tourism Trade Miami Real Estate The Airport Market IX. MIAMI TRANSPORTATION ISSUES AND PROBLEM Page 69 Background, History and Statistics Current Status Transportation Plan, Long Range Element X. VALUE ADDED TRANSIT Page 73 Transit's Effects on Property Prices and Rents Development Centered Around Transportation STRATEGY FOR DEVELOPMENT Page 77 XI. ECONOMIC FEASIBILITY Page 77 Transportation Demand Forecast Population Growth Estimates Dade County Employment Growth Estimates Transportation Demand Forecast Dade County Real Estate Forecast XII. DEVELOPMENT SCENARIOS Page 84 Government Involvement Private Sector Involvement Associated Development Joint Development Build Operate Transfer Privatization Sustainable Development XIII. SOURCES OF FUNDING Page 90 Expressway Authority External Funding MPO/FDOT Debt Financing Equity Contribution User Participation XIV. FINANCIAL ANALYSIS Page 94 Overview Capital Costs Projected Revenues MIC Facility Development Related Revenues Real Estate Development Related Revenue Capitalization and Cash Flow Management Opportunities Projected Internal Rate of Return (IRR) XV. LAND PLANNING Page 102 Comprehensive Development Master Plan Land Use Guidelines and Control Land Use and Transit Planning Design Guidelines Sustainable Communities Environmental XVI. RISK FACTORS Page 109 Miami Politics Funding Sources Government Support Public Support Land Acquisition Financial Risk Analysis Demand Forecasts MIC Facility Transportation Volatility XVII. SCHEDULING Page 113 Land Acquisition Project Phasing Incremental Development Interim Components XVIII. RECOMMENDED DEVELOPMENT PLAN Page 115 Creation of Economic Development Authority Land Acquisition and Eminent Domain Programming and Planning Creation of Land Use and Design Guidelines Development Phasing CONCLUSION AND RECOMMENDATIONS Page 139 Implementation Strategy Application Elsewhere Conclusion APPENDIX I Page 142 ACRONYMS APPENDIX II Page 143 BIBLIOGRAPHY APPENDIX III Page 152 INTERVIEWS APPENDIX IV Page 153 AERIAL PHOTOGRAPH INTRODUCTION Our central question is to determine the development issues and potential for intermodal transportation centers. We address this question through a detailed analysis of the proposed Miami Intermodal Center (MIC). The MIC will be used as the prototype in determining the following: * Potential uses. * Methods for development. * Possible builders and development scenarios. * Sources of Funding. * Economic, environmental, and physical affects on region. * Forms of ownership and management. Located adjacent to the main terminal of the Miami International Airport (MIA), the MIC truly has the potential of being an intermodal center by providing a single point of origination and convergence of all modes of transportation to a city and region. The MIC would have the capability of transporting the international passenger through a seamless gateway into the local transportation network. The Miami project is at the intersection of MIA with expressways, private tollroads, rail freight lines, bus lines, urban heavy rail transit, regional commuter rails, intercity rail, and high speed rail, which would all be connected to the largest international gateway into the United States and the largest cruise ship port in the World. The MIC will be located alongside a major expansion, already underway, of the Airport terminal. Given the trend towards incorporating large commercial components with airports and intermodal centers, there are proposals for retail, entertainment, gaming, etc., to be included. This project is in the beginning stages of analysis, with several pieces of the timeline already approved. A study of this prototype facility, with all of its components, will provide the opportunity to examine how a mega-center, such as the MIC, can be developed in order to handle various dynamic and diverse tasks. This topic is important to Miami and South Florida, but also to other rapidly growing American Cities that are being constrained by infrastructure deficiencies. Miami is a Twentieth