Friday, June 28, 2013

Atlanta Transit-Oriented Development

I'm in Atlanta at the "Transit Initiatives and Communities" conference, and like many transit conferences there are tours of interesting things. Yesterday, two tours were offered, which tested our mettle for walking and standing in Atlanta summer weather (and it wasn't too bad...for Atlanta!)

Quick Streetcar Detour

Auburn Avenue looking east toward Ebeneezer Baptist Church

Monday morning was a walking tour of the new Atlanta streetcar line under construction. And we did walk the entire line, which is a loop, from Centenial Olympic Park on the west to Ebeneezer Baptist Church and the Martin Luther King Jr. Historic District on the east. We got to see the streetcar line in several stages of construction, from barely begun to almost done. This pic on Auburn Street shows the track slab nearly done, with Ebeneezer Baptist in the background. This is the church where Martin Luther King Jr. was baptized and later became co-pastor with his father. The streetcar line will run northward beside the church before turning west on Auburn.

Atlanta's TOD

But I wanted to share the transit-oriented development scene in Atlanta. MARTA (Metropolitan Atlanta Regional Transit Authority) began running heavy-rail service in 1979. The system now consists of a north-south line with two branches on the north side of the city (Red and Gold lines), and an east-west line with one minor branch on the west side (Blue and Green lines), crossing downtown at Five Points station. ( Route miles total 48.1, wth ridership of about 72 million trips per year in 2012. The "bread and butter" of the system is its 91 bus lines, almost all of which originate at MARTA rail stations.

Credit: MARTA
In the late 1990s, MARTA decided to launch TOD. Lindbergh Center Station is their flagship development; several of us enjoyed a tour guided by Dr. John Crocker (MARTA Director of Development and Regional Coordination), and Gregory Floyd (MARTA Senior Land Use Planner). According to their narration (as I heard it), MARTA purchased land around the station during its initial construction in the 1970s for use as a park-and-ride lot. In 2000 they purchased more land, including some buildings, bringing the total land owned by the agency around the station to about 47 acres; at the same time, they lengthened the platforms to accomodate longer trains and added a second entrace with direct access to the lengthened platforms via stairs, escalators, and a second elevator.

Lindbergh Station, new section, looking southwest toward TOD apartments
To make room for new development without reducing parking space, they built two new parking structures; other work was done to encourage development, such as putting in water and sewer, electric service, and a gridwork of streets. The investment in the enlarged station, parking structures, and utilities cost close to $100 million, paid for largely by a Federal grant. Predictably, the neighbors resented having their area developed, and mounted a stiff opposition, which required sensitive negotiation and significant mitigation.

Lindbergh Station looking northeast toward AT&T west tower
Development came quickly in the form of two office towers just east of the station (about 10 stories tall) for use by AT&T - originally Southern Bell - whose world headquarters is about three miles south of Lindbergh Station. (Atlanta was - and still is - growing significantly in population.) South and east of the station is a mixed-use 3-4 story complex, and west of the station are two blocks of 4-5 story apartments. All very nicely decorated with trees and "street furniture", walkable and pleasant.

Credit: MARTA
MARTA has encouraged development by offering very reasonable 99-year ground leases. From this, they reap about $2.5 million annually. Compared with the investment of $100 million, this seems relatively low. I suspect - though I didn't ask - that the rate is not adjusted for inflation as the years go by. Absent inflation, this is about 2.5% return on investment annually, but if inflation is over 2.5%, it's a theoretical loss. There are two advantages for MARTA, though: first, the majority of the initial investment was paid with Federal, not MARTA's, funds, so actually most of the return is pure profit for MARTA. In addition, like most transit agencies, MARTA has difficulty raising the local portion of its operating funds - it uses mainly a 1/2 cent sales tax, and when recessions curtail sales, this income dwindles. The constant income from land leases like those around Lindbergh Station are a hedge against these fluctuations. The total coming from such leases around MARTA's region is about $5 million annually. Though a relatively small part of their operating budget, it's always welcome.

And in Michigan?

As our Regional Transit Authority plans to establish its transit lines, it will need to acquire land for any significant stations. If this can be done on terms as advantageous as those made to MARTA (a straight grant), it would be a significant chance to develop both income and TOD. There are only two problems....

First, Congress - especially the House - is currently in a very parsimonious mood. Very little money is being made available for grants like the one MARTA used, and though nobody's crystal ball is perfect, prospects for more free grants look very dim.

Second, the Southeast Michigan RTA, as enabled by statute, is required to use (mainly) rubber-tired vehicles. So far, at least, rubber-tired transit has not performed as well as steel-wheeled (rail) transit in attacting investors. Bus Rapid Transit by its nature cannot move as many people as heavy rail subway-type trains, so the commercial advantages of large numbers of people passing through subway stations is greatly reduced with BRT. What is more, the main attraction of BRT for Michigan is its low initial cost. With a small initial investment, such as modest stations, we can't expect large returns down the road.
So let's bear these variables in mind as we plan, and (as I emphasized in the previous post) plan for the long-term future as best we can.
Credit: MARTA

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  2. Hi - actually MARTAs ground lease payments at Lindbergh are adjusted annually in relation to the CPI. Thanks. John C

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  5. John Crocker (the one who gave the tour with Greg)Saturday, November 23, 2013 at 11:32:00 AM PST

    Actually, the rent is adjusted for inflation annually. There are also provisions for incentive rent once overall rent is above a certain level and capital event participation in case portions of the development are sold. It was a little complicated to get into those details during a short tour.

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