I've recently written about a major development occurring over the West Side Yards in New York City as well as Amtrak's review of the value capture potential on its properties up and down the eastern seaboard. This time around, New Jersey Transit is getting on board. Hoboken, New Jersey may be the next place in the U.S. where a rail yard becomes a major joint development. The proposed plan for the Hoboken Yards was developed by a four-member City Council committee, incorporating extensive feedback from city stakeholders and the public. It would allow NJ Transit, which owns the land, to build up to 2.3 million square feet of new development, as well as three buildings potentially as tall or taller than the W Hotel. The W is the tallest building in Hoboken. Land values in the New York metro are sky high. This affords opportunities to carry out major development projects--and value capture initiatives--that are the envy other U.S. markets. While these projects are impressive and would be wonderful to duplicate outside of NYC, other U.S. transit agencies should be thoughtful and realistic about their own real estate markets. Carrying out such colossal joint developments in most U.S. markets is unfathomable.
0 Comments
Many value capture mechanisms generate small funding streams over long periods of time. However, transit projects are expensive projects and may not begin to generate value increment until they're substantially completed or operating. Thus, the money trickles in slowly long after the construction funding has been spent. That's a big disconnect. Folks in Northern Virginia overcame the timing problems associated with value capture the same way we often do in our personal lives. They took out a loan. Just like a mortgage that will be repaid in small amounts over time, the Fairfax County officials have agreed to a federally-backed TIFIA Loan that will provide much needed up-front construction funds and be repaid by a property-based improvement district. Fairfax officials will use money from the Dulles Rail Phase 2 Transportation Improvement District and Commercial and Industrial Tax Fund to repay the loan. The county use $218.2 million from this voluntary tax district and $185.1 million in commercial and industrial taxes. Through the TIFIA program, the federal government provides significantly better terms than bond markets would allow. Repayment is delayed (the same offer you might get on a new TV) and interest rates are low (think about a federally backed mortgage versus a private mortgage).
Expect to see more talk about TIFIA in the near future as more loans complete the program's complex process following a program expansion that occurred several years ago. There is some good coverage of the recent deal inked in Toronto for a private developer to replace the main downtown bus terminal as part of their new development. “When we looked around for the available [bus terminal] sites at that time, in about 2008-2009, there really was only one undeveloped site left that was in close proximity to Union Station and the Gardiner [Expressway] and Lakeshore Boulevard – 45 Bay was that site,” says Metrolinx president and CEO Bruce McCuaig. “And it was owned by Ivanhoé Cambridge.” The transit agency's press release includes the following gem: "At Ivanhoé Cambridge, we believe it is important for the private sector to create public benefit in the communities in which we operate and invest and this project achieves that goal. Our project will also include a new, larger modern GO bus terminal located at the base of 45 Bay that will provide easy accessibility to Union Station, the financial district, the waterfront and the PATH," said Paul Gleeson, Executive Vice President Global Development Ivanhoé Cambridge. "By creating more opportunity for commuters, residents and tourists to get around, whether it is on the GO, through the PATH, or on the newly created green space, we are creating an integrated, forward-thinking sustainable development that will make a significant contribution to the evolution of our downtown and help it achieve its full potential." |
AuthorIan Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit. Archives
March 2019
CategoriesSpecial thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.
|