columbia pike transit initiative: comparative return...

Presentation to the Arlington County Housing Commission

May 1, 2014

Columbia Pike Transit Initiative:

Comparative Return on Investment Study

HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 2

Arlington County retained HR&A to update the 2012 Return on Investment Study

by evaluating the net benefits of enhanced bus versus streetcar service.

HR&A analyzed the projected impact of enhanced bus versus

streetcar service with regards to:

Real estate value appreciation

Quantity and timing of new real estate development

Form of new development and impact on place-making

Employment growth

Tax revenue growth


HR&A estimated impacts to properties within ¼ mile of the alignment along

Columbia Pike, in Pentagon City, and in Baileys Crossroads, over 30-years.

Study Area


The characteristics of the transit investments analyzed were defined by the

AA/EA with direction from Arlington County and its transportation consultants.

• Because an agreement with VDOT stipulates that travel lanes cannot

be removed from Columbia Pike, transit requiring a dedicated lane

such as light rail transit (LRT) or bus rapid transit (BRT) is

infeasible.

• The enhanced bus system considered by this analysis largely

corresponds to the TSM 2 alternative defined by the AA/EA report.

• The streetcar system considered by this analysis largely corresponds

to the Skyline Central Plaza design alternative defined by the

AA/EA report.


HR&A found that streetcar will accelerate delivery of adopted plans, enhance

regional competitiveness, and yield greater economic benefits.

Implementing a streetcar service along the Columbia Pike

corridor is expected to generate…

$2.2-$3.0 billion in net economic benefits over 30 years

4,600 incremental new jobs 10 years after construction

$315-$620 million in incremental local tax revenues over

30 years

$40-$75 million in incremental revenues for the Columbia

Pike TIF over 30 years

…over what would be generated by an enhanced bus.


HR&A employed a rigorous methodology incorporating evidence from national

precedents and conditions particular to the Columbia Pike corridor.

Evaluate transportation characteristics

Analyzed current Columbia Pike corridor real estate market conditions

Analyzed actual real estate impacts of existing transit systems

Assessed local developer and retailer perceptions

Synthesized findings to build model of streetcar and enhanced bus impacts


Study

Enhanced Bus/BRT Streetcar Light Rail

Strong

Price

Premium

Pace /

Quantity

Increase

Strong

Price

Premium

Pace /

Quantity

Increase

Strong

Price

Premium

Pace /

Quantity

Increase

ITDP: More Development for Your Transit Dollar

New Real Estate Mantra: Location Near Public Transportation

Capturing the Value of Transit

Land Use Impacts of Bus Rapid Transit: Pittsburgh MLK East

Busway

Land Use Impacts of Bus Rapid Transit: Boston Silver Line

Capitalization of BRT Network Expansions Effects

Value Capture and TIF Options for Streetcar Construction

Portland Streetcar Development Impacts

TCRP Synthesis 86: Relationships between Streetcars and Built

Environment

The Impact of TOD on Housing Prices in San Diego

Charlotte Streetcar Economic Development Study

Land Value Impacts of Rail Transit Services in San Diego

An Assessment of the DART LRT on Taxable Property Valuations

Land Development at Selected HBLR Stations

The Impact of HBLR on Residential Property Appreciation

The Hiawatha Line: Impacts on Land Use and Housing Value

Past experience strongly suggests streetcar and similar rail modes more

consistently generate real estate benefits than enhanced bus service.


In Portland and in New Jersey, streetcar (and streetcar-like) transit catalyzed

dramatic neighborhood transformations through transit-oriented development.

Portland Streetcar • $4.5 Billion in new transit-oriented development catalyzed

• Adjacent development uses 90% of FAR (vs. 43% more than 3 blocks away)

• Property within 3 blocks achieved 40% premium over City after 11 yrs

Hudson Bergen Light Rail • $5.3 Billion in new transit-oriented residential development catalyzed

• Property within ¼ mile of station areas appreciated at 17-20% greater annually than other property over 18 yrs

Boston Washington Street Silver Line • $650 Million in new development, but primarily Downtown near subway

• 8% premium for adjacent properties over those 0.16 miles away, but no corridor value premium relative to City achieved within 9 yrs

Kansas City MAX • $5.2 Billion in new development, but primarily in Downtown and not oriented

towards alignment

• City now implementing streetcar to encourage more TOD


Most developers and retailers believed a streetcar system would confer greater

advantages to the Columbia Pike transit corridor than an enhanced bus system.

Developer Findings

• Most believed a streetcar would confer greater advantages to real estate dynamics than an enhanced bus

• A smaller number believed a streetcar would not have a greater impact than an enhanced bus, and that it may be unlikely for either to be impactful

• Almost all believed connecting to the Crystal City Streetcar would amplify the impacts of streetcar

Retailer Findings

• Most are more likely to consider expanding along the corridor with a streetcar versus an enhanced bus

• Most believed streetcar presents distinct advantages to branding, placemaking, and wayfinding


Streetcar would ultimately do more to differentiate the Columbia Pike transit

corridor in the region through its superior mobility effects….

Enhanced Bus Streetcar

Quality of rider

experience

Improved over existing

buses, but overcapacity

Smoother and quieter than

bus; not overcapacity

Connections

Crystal City Streetcar

(transfer), bus system, and

Pentagon City Metro

Crystal City Streetcar (one-

seat ride), bus system, and

Pentagon City Metro

Corridor travel time 23 minutes 22 minutes

Vehicle capacity 94 riders 155 riders

Initial ridership w/

Crystal City

Streetcar connection

11,800 15,900

2035 network

volume to capacity

ratio

1.19 (Indicates

overcapacity)

0.91 (Indicates under

capacity)


…and also through its greater amenity effects.


Place-making

function

Vehicle, station

infrastructure, and signage

Vehicle, tracks, wires,

station infrastructure,

signage

Infrastructure

permanence Stations

Vehicles, stations, tracks,

and wires

Branding /

differentiation effects

Less unique positioning

offers less brand value

Modern positioning offers

cache and brand value

Impact on corridor

congestion

Lesser congestion reduction

based on model ridership

and capacity

Greater congestion

reduction based on model

ridership and capacity


Based on these findings, HR&A projected that streetcar will catalyze more

significant property value premiums versus enhanced bus.


Residential /

Office Retail

Residential /

Office Retail

Initial Premium over

Baseline 2% 1% 6% 4%

Premium over Baseline

After 10-Years 4% 2% 10% 7%


Substantial development potential remains along the Columbia Pike Corridor.

Incremental Growth Required for Corridor Build Out

Residential Units Office Square Feet Retail Square Feet

Pentagon City 3,100 2,580,000 85,000

Columbia Pike 13,500 570,000 210,000

Baileys Crossroads 3,500 1,745,000 260,000

Total 20,100 4,895,000 555,000


HR&A projected that both enhanced bus and streetcar would support corridor

development, but streetcar will do more and faster.

Percent of Remaining Build-Out Achieved Within 30 Years

Under Baseline Under Enhanced Bus Under Streetcar

Pentagon City 100% 100% 100%

Columbia Pike 60% 65% 80%

Baileys Crossroads 25% 35% 50%

Total 58% 64% 75%


HR&A estimated that streetcar would generate 2,800 more housing units, 70,000

more sq. ft. of retail, and 360,000 more sq. ft. of office than enhanced bus.

Total New Real Estate Delivery Over 30 Years

Under Baseline Under Enhanced Bus Under Streetcar

Residential (units) 11,400 12,600 15,400

Retail (sq. ft.) 260,000 300,000 370,000

Office (sq. ft.) 3,410,000 3,610,000 3,970,000


The return-on-investment study utilized the best available cost estimates for both

the enhanced bus and streetcar systems.

Baseline Enhanced

Bus Streetcar

One-Time Capital Costs

(Millions of $2014) $0 $67 $284

Annual Operations and Maintenance

Costs (Millions of $2014) $15.7 $21.2 $24.5

Capital cost estimates for both the enhanced bus service and streetcar service

were increased above the estimates in the AA/EA Report to reflect new

information.

The capital cost estimate of the enhanced bus service increased by $15M, and

the capital cost estimate of the streetcar service increased by $31M.


Over 30 years, HR&A projects that streetcar would generate $2.2-$3.0 billion in

greater real estate impacts than enhanced bus service.

7% Discount Rate

3% Discount Rate

Enhanced Bus

Streetcar

Net Incremental Benefits (Return on Investment) Over 30 Years

$1.4 B

$4.4 B

$1.0 B

$3.2 B

Economic benefits result from the appreciation of existing properties

and greater extent and faster pace of new development.


Within ten years of project construction, streetcar service would catalyze real

estate development enabling significantly more local jobs than enhance bus.

Incremental New Jobs Supported by 2027

Total Jobs Enhanced Bus

Streetcar

2,000

6,600

Development on the Columbia Pike induced by new transit creates

accessible employment opportunities for County residents.


Streetcar would also generate up to $620 million in additional tax revenues to

Arlington and Fairfax Counties relative to enhanced bus.

Incremental Local Tax Revenues Over 30 Years

7% Discount Rate

3% Discount Rate

Enhanced Bus

Streetcar

$275 M

$895 M

$140 M

$455 M

Fiscal benefits owe to real estate, personal property, business license

(BPOL), sales, and meals tax revenues to Arlington and Fairfax Counties.


With the streetcar, the Columbia Pike TIF could generate an additional $55-105

million to the Transit-Oriented Affordable Housing (TOAH) fund over 30 years.

Incremental TIF Revenues Over 30 Years

7% Discount Rate

3% Discount Rate

Enhanced Bus

Streetcar

$30 M

$105 M

$15 M

$55 M

The TIF dedicates one quarter of the incremental real property tax

revenue derived from Columbia Pike to fund the TOAH.


A streetcar service would ultimately be more effective in meeting development

goals for Columbia Pike, Pentagon City, and Baileys Crossroads.

Arlington County’s Columbia Pike Initiative and Columbia Pike

Neighborhoods Area Plan envision a vibrant and livable corridor with

affordable housing, increased density, and enhanced public facilities.

Fairfax County’s Comprehensive Plan envisions Baileys Crossroads as a

denser area featuring mixed uses and new amenities

These plans expect the Columbia Pike corridor to accommodate a

larger share of future regional growth.

Attractive infrastructure improvements like streetcar make the corridor

more competitive in capturing demand in the Capital region market.

Columbia Pike Transit Initiative:

Comparative Return on Investment Study

Presentation to the Arlington County Housing Commission

May 1, 2014

columbia pike transit initiative: comparative return...

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