Presentation to the Arlington County Housing Commission May 1, 2014 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 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 Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 3
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
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 4
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 Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 5
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 Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 6
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
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 7
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.
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 8
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
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 9
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
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 10
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)
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 11
…and also through its greater amenity effects.
Enhanced Bus Streetcar
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
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 12
Based on these findings, HR&A projected that streetcar will catalyze more
significant property value premiums versus enhanced bus.
Enhanced Bus Streetcar
Residential /
Office Retail
Residential /
Office Retail
Initial Premium over
Baseline 2% 1% 6% 4%
Premium over Baseline
After 10-Years 4% 2% 10% 7%
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 13
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 Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 14
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 Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 15
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
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 16
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.
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 17
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.
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 18
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.
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 19
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.
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 20
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.
HR&A Advisors, Inc. Columbia Pike Transit Initiative: Comparative Return on Investment Study | INTERNAL DRAFT 21
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