Www.forestcity.net Transit Oriented Development 9/20/2010 presented by Emerick J. Corsi Jr.,...

www.forestcity.net

Transit Oriented Development

9/20/2010

presented by

Emerick J. Corsi Jr., Executive Vice President

James H. Richardson, III, Vice President

Forest City Real Estate Services


• $12 billion national real estate company – housing, retail, office and bio science

• Investment management and 3rd party advisory practice of Forest City

• A proven legacy as a real estate investor, manager and developer, community builder and creator of economic growth.

• We provide our talent and experience to you.• We can handle every aspect of investment,

management, development and redevelopment.

Who are we?

2www.forestcity.net

Experience Matters

• Metro Tech• Atlantic Yards• East River• Tower City• San Francisco Center• Bayside• Wiregrass• Gulfstream• Station Square

• New York Times• Stapleton• Victoria Gardens• MIT• Central Station• M.K. Ferguson Plaza• East 29th Street Town Center

Over 29 Projects in the portfolio with TOD


Successful TOD

Walkable

Density

Public Space

Live, work, play

1.5 Million sq. ft.

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Westfield San Francisco Centre in San Francisco, California


Successful TOD– Connectivity

– Pedestrian oriented design

– Bicycle accommodations

– Regional Bus lines

– 4,700 Acres

– 13 Million sq. ft. commercial

– 8,000 Multifamily units

– 1,100 Acres of parks and recreation

Transit Oriented Development 6www.forestcity.net

Successful TOD

Central Station, Chicago, Illinois

24 hour atmosphere, not just 9-5

Convenience

Handle daily needs without driving

Create Vibrancy

• Housing• Retail• Office• Recreation• Entertainment• Live, Work, Play• 500 Room hotel• 8,500 Housing units• 2.5 Million sq. ft. commercial


Unsuccessful TOD• Metropark Train Station

– No density– No live, work, play– No convenience– No travel options– No 24 hour atmosphere– Isolation

• Penn Station, Newark– Barrier– No walkability– No pedestrian oriented

design


Station Area Planning

• Physical Site Assessment • Market Feasibility Assessment• Public Involvement• Brand development• Station and Station Area Master

Plan

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Station Area PlanningPhysical Site Assessment

– Base mapping and aerial photography– Land use and zoning– Surface transportation – access, capacity– Utilities and storm water – Natural features– Environmental and cultural features– Project character and visual impact– Opportunities and Constraints– Connectivity to other modes of transportation (shuttles,

buses, rental car, car services, university shuttles, bicycles, etc.)

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Market Feasibility Assessment– Economic and demographic trends compare

ridership to local markets to help determine development opportunities

– Supply and demand analysis– Benchmark against similar projects– Assess market segments

• Retail, office, hospitality, residential, institutional and civic uses

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Public Involvement– Interviews, public meetings, design charrettes, surveys,

stakeholder meetings, public open house

Brand Development– Vision/pattern book to create project identity and tie

local station and surrounding development to the brand of the overall high speed rail network. In addition, market to other stations, “station to station marketing” program.




Station and Station Area Master Plan – Site and Land Use Plan– Infrastructure– Station rail facilities– Open space– Design guidelines– Mixed use leasable space - part of station– Adjacent transit oriented development – retail, office, residential, civic

uses. – Master Development Program that indentifies individual projects,

phasing, development rights, cost and financing sources.– What is the income and value created?– Jobs growth – How many jobs we created?



TOD PrincipalsIn developing a rail station and adjacent Transit Oriented Development (TOD) there are specific principles that must be employed to create a successful development. The station area master plans will consider and utilize commonly accepted TOD principles below:

• Pedestrian Orientation • Higher Densities• Mix of Uses • Urban Design and Public Spaces • Live, Work, Play • Economic Development • Sustainable Development



TOD Principals

Pedestrian Orientation – place daily goods and services as well as recreational destinations within walking distance of residents, supporting transit use for commuting and other regional travel; orienting building entrances toward transit stops. Other focus on other forms of transportation available at station (i.e., bus, trolleys, cab, bicycle).

Higher Densities - Increased population and employment densities place more potential riders within walking distance of transit stations/stops.



TOD Principals

Mix of Uses - Retail, office, residential, and public space promote concentrations of public activity around transit station/stops, increasing the physical and cultural prominence of transit in the community, as well as facilitating trip chaining linked to transit (i.e., stopping at a dry cleaners or day care facility on the way to the train during a morning commute, instead of making separate trips). Uses to match market ridership.

Urban Design and Public Spaces – Make each station a place. Create a destination, make the buildings landmarks, build high quality streets, orient buildings to the street, and create public open space to emphasize the station as a public place. Create an anchor.



TOD Principals

Live, Work, Play Live-Work Overlay Districts, which allow shared occupancy of space by residential uses in combination with work activities in suitable locations. These districts are intended to assist in revitalizing areas impacted by the presence of under-utilized and deteriorated buildings suitable for re-use as live-work space. There should be direct statement to livable communities.

Economic Development – creates new economic development as a result of the rail and transit investment. Increase the emphasis of economic development for value creation.

Sustainable Development – This is vital to any development within or around the station.



Criteria for Train Station Planning


1. Proximity and access to the tracks.

2. Identify the infrastructure cost for the location of the station.

3. Will the station be in the best location to drive economic growth?

4. Identify the economic growth that will occur within a 5 mile radius of the station and how the station location will help drive those economics.

5. Describe and identify how local stakeholders will be brought into the planning process.


Criteria for Train Station Planning (continued)

6. Describe and identify how local developers will be involved in the planning process and the implementation of the master plan

7. Identify projects that can happen and what economics the projects will produce along with a time schedule.

8. Provide a market study of the master plan area that addresses the demographics, office, retail, residential and industrial market and absorption.

9. Describe how the train station will be marketed with the other stations within the communities.



Criteria for Train Station Planning (continued)

10. Describe coordination with other commuter modes of transportation and how this station will be intermodal.

11. How will the station and the area be branded and coordinated with other stations?

12. Provide a transportation report that addresses the impact on the area and any mitigation for ingress and egress.

13. Describe how sustainability and green plans will be incorporated into the implementation plan.



Local Benefits of TOD

• Increased property values• Revitalization• Expanded Housing Choices• Sustainable Development• Economic Growth


Funding Stations and Station Area Improvements

Currently there is a disconnect between the investment being made in the overall HSIR system and the need and interest to provide adequate stations. As the planning moves forward, station sites are being identified by the rail planners with little to no consideration for potential future economic impacts. Communities should have a keen interest in economic development related to the stations but no specific program is in place to implement a planning strategy, to fund the planning effort or to fund the implementation of the plan. This will take significant increased allocations to the states and cities to provide the necessary station improvements.

The states, cities and private real estate market are prepared to pursue alternative strategies to fund and construct the necessary station area improvements. Working with state and local governments models can be established to utilize these alternative strategies to fund the station improvements in a manner that meets the best transit oriented development practices described above. Tools and strategies to be used include.




• Special Assessment Districts• Tax Increment Financing • Joint Development• Assessed Taxes • Public Private Partnership • Value Capture




Special Assessment Districts – a tax assessed against parcels that have been identified as receiving a direct and unique benefit as a result of a public project.

Tax Increment Financing – a mechanism that allows the public sector to “capture” growth in property tax (or sometimes sales tax) resulting from new development and increasing property values.

Joint Development – cooperation between the public and private sectors to deliver transit-oriented development (TOD), usually involving development on transit agency owned land leased to a private concern.




Assessed Taxes – a fee assessed on new development as long as that area of development can sustain the tax burden.

Public Private Partnership - a type of project financing, management and ownership sharing that is based on a long term, performance-based contract where appropriate risks can be transferred cost effectively to a private sector partner.

Value Capture – Create a real estate model that includes a pro forma that transfers a portion of the net operating income (NOI) for the transit oriented development to the operation of the station, the rail line and the development surrounding the station



TOD Model

The following is a possible model which establishes a PPP (Private Public Partnership) where all parties are a true partner and share in the value created and profits from the TOD. The concept is to hire a qualified PPP Administrator that will coordinate with all partners to help locate, prepare the economic analysis and manage the TOD.



TOD Public/Private Partnership [PPP] Administrator

PPP Administrator

FRA/HSIPR

Host Rail Amtrak RR State Local

GovernmentDevelop

er

Partnership Structure



TOD Public/Private Partnership [PPP] Administrator

MissionMaximize the income from the TOD, manage the real estate and distribute profits to the partnership.



PPP Administrator Duties & Qualifications

Duties• Sets criteria for TOD• Establishes value created based on TOD location• Sets up development program for location• Establish partners [partnership in TOD PPP]• Oversees development• Sets up management team• Manages the property/real estate• Distributes proceeds to the partnership



PPP Administrator Duties & Qualifications

QualificationsDevelopment and Management Company with mixed use experience.

A. Experience in:1. Master Planning2. Development expertise in mixed-use development

a. Commercialb. Officec. Residential

3. Management expertise in mixed-use developmenta. Commercialb. Officec. Residential

4. Public/Private Partnerships5. Projects in excess of $100 Million6. Projects in excess of 1,000,000 square feet7. Have completed TOD Development(s)



TOD IncomeNeeds to be established based on location (PPP Administrator to perform analysis) Sources

• Commercial Income (i.e., 100,000 sf x $30 psf = $3,000,000 NOI @ 10 Cap = $30,000,000 (value created) - $20,000,000 ($200 – 100,000 sf) costs = $10,000,000 net value created.)

• Residential Income (200 units/cost $20 Million/$180,000 - $200,000 NOI – at a 7-10 Cap is $2-$8 Million in value.)

• Real Estate Taxes (i.e. $50,000,000 development would generate taxes at $600,000 per year or $6,000,000 value at a10 cap)

• Sales Taxes• Payroll Taxes• Assessed Taxes• Station Revenue



Train Study Concepts

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• Development– 65,000 sf train station

• 15,000sf station and circulation• 50,000 sf commercial real estate.

– 250 unit apartment complex– Surface parking for 500 spaces or garage

deck for 500 spaces

Economics of a Prototype



• Cost– Train station 65,000 sf @ $200psf = $13,000,000

• 15,000 train/50,000 commercial

– 50,000 sf commercial space [build out] @ $100 psf = $5,000,000– 250 unit apartment complex @ $80,000 ea. = $20,000,000– Surface parking [5 acres at $5 psf $2,200,000]– Garage 500 spaces [@ 15,000 ea. = $7,500,000]




• Income– Commercial Real Estate

• 50,000 sf @ $30psf = $1,500,000– Apartments

• 250 unit = $2,400,000– Real Estate Taxes $ 500,000

• Based on approximately $40,000,000 value,

taxes estimated $500,000 per year.

– Train station revenue TBD– Other taxes, payroll, special assessments, etc. TBD– TOTAL REVENUE

$4,400,000




• Scenario A [surface parking]– Train station $13,000,000– Commercial Real Estate $ 5,000,000– 250 Unit Apartment Complex $20,000,000– Surface parking – 500 spaces $ 2,200,000

$40,000,000– Less Federal subsidies of 50% $20,000,000– Net Cost $20,000,000

Recap of Cost and Income



• Scenario B [garage]– Train station $13,000,000– Commercial Real Estate $ 5,000,000– 250 Unit Apartment Complex $20,000,000– Garage parking – 500 spaces $ 7,500,000

$45,500,000– Less Federal subsidies of 50% $22,750,000– Net Cost $22,750,000




• Revenue vs. Cost– Total revenue of $4,400,000 @ 10cap $44,000,000– Less net cost of Scenario A $20,000,000– Value Created $24,000,000

Based on a 10 cap, $24,000,000 of value created or a net cash flow of $2,400,000 per year.

– Total revenue of $4,400,000 @ 10cap $44,000,000– Less net cost of Scenario B $22,750,000– Value Created $21,250,000

Based on a 10 cap, $21,250,000 of value created or a net cash flow of $2,125,000 per year.




• Location, location, location means value.• This model will provide economic support to the cost of

the station and surrounding infrastructure through the PPP Administration process. The station economic package will provide support to:– Cover the cost of operating the station.– Creating a minimum development program with the station. Will be a catalyst for

further economic growth, which will happen quicker vs. build the station and wait for development to occur.

– Value is created for all of the partners.– Jobs will be created faster due to the minimum development occurring at the time

the station is built.– Federal subsidies could be repaid.

Closing


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