Charlotte Lynx On the Move

The Charlotte Observer reports that the Charlotte Area Transit System has completed its cost estimate for the proposed extension of its successful light rail system.  The new 9.4 mile line is expected to cost $1.16 billion, or about $123 million per mile.  The funding plan anticipates that half of the money will come from the federal government, a quarter from the local transportation sales tax, and the remaining quarter would be paid for by North Carolina DOT.

That’s right, in North Carolina the Department of Transportation actually helps pay for transit projects. 

In fact, FTA’s 2010 Survey of State Funding for Transportation Planning shows that  Georgia lags well behind not only North Carolina but also Virginia, Florida, and even Texas in per capita state funding for public transportation.

Comparison of Per Capita State Funding of Public Transportation

Georgia is going to have a tough time competing with North Carolina, Virginia, Florida, and other states without GDOT investing a multimodal future.

 

All In With Gas Tax Money

GDOT’s Amended FY12 budget allocates $300 million in state gas tax revenue for Northwest Corridor project on I-75/575. (See slide 3).   This is one of several sources of state money that will be tapped for the toll road project, as the total cost is expcted to approach $1 billion.  The $300 million shift in gas tax money was necessary to fill the financial hole left when the project’s P3 procurement was cancelled.

With $455 million in state gas tax dollars for capital construction in the whole state, this means that 2/3 of those dollars will be used for this single project.  And roughly 1/3 of all Georgia’s gas tax dollars spent for any purpose  in 2012 will go to the Northwest Corridor.

GDOT is going “all in” on this project, undeterred by the modeling which shows negligible benefits for those drivers not using the toll lanes.

A Tale of Two Curves

The AJC ran a lengthy piece this past weekend on the financial risks of toll lanes like the proposed Northwest Corridor project along I-75/575.  The article highlights one key difference between financing toll projects through public private partnerships (P3) versus public funding: who bears the risk if (or when?) toll revenue projections come up short.  But another key difference between P3 and public financing is how toll projects balance performance against profit.  Critics of the I-85 HOV/HOT project ask whether the project is about improving travel or generating money.  The answer is …. it depends

The formula for setting a variable toll reflects a set of policy decisions including whether the lane is being managed to maximize revenue or maximize the number of cars using it.  Governor Deal’s decision to cap the tolls on I-85 is an example of managing the toll price to allow the most drivers rather than generate the most revenue.  But a lane managed by a private entity is likely to prioritize revenue and profit. 

Vehicle Throughput and Estimated Toll Price of NW Corridor Under Different Project Delivery Scenarios

 GDOT compared the pros and cons of delivering the NW Corridor as a P3 versus a publicly funded project in a document called “Northwest Corridor: Analysis of Delivery Methods”.  Figure 1 in this document clearly illustrates the tension between revenue generation and vehicle throughput in managing the toll price for the HOT lanes. (Click to enlarge)

The graph compares traffic volume and toll price under different scenarios.  The red line is revenue, the blue line is traffic volume, and the dotted yellow line  indicates the 45 mph design speed of HOT lanes.   P3 is the private funding scenario; DB and DBB are both public funding scenarios (DBB is “design-bid-build”; DB is “design build”).

Comparing the two curves, the public funding scenario (DB/DBB) delivers higher traffic volume and a lower toll price, but as a result generates less revenue.  If your goal is to maximize revenue, the higher toll in the P3 scenario results in 15% fewer vehicles using the lane.  In other words, operating the project as a P3 would mean sacrificing perfomance in exchange for more revenue. 

Another example of how behind-the-scenes policy and finance decisions, like operating the project to maximize revenue, have significant real world effects for metro Atlanta commuters.

Transit Infrastructure — A Way to Bait and Hook Urban Developers

The past couple of weeks we’ve highlighted the growing importance of transportation in the current real estate cycle.  (Click here and here).

To build on this idea, consider a recent Atlanta Business Chronicle article discussing real estate trends with Jim Richardson, senior vice president of Forest City Enterprises Inc.   (Full article behind paywall).  Forest City, a sophisticated, NYSE-listed real estate company, is involved in two of Atlanta’s largest real estate projects  — the Multimodal Passenger Terminal in the “Gulch” downtown and the redevelopment of Fort McPherson.

Where does Forest City see the real estate market heading?

 Forest City believes the fundamental shift in the way people live across the South — an idea that developers [in Atlanta] have touted for more than a decade under various banners including New Urbanism — is gaining speed. 

And what role does Forest City see transportation playing in the emerging real estate cycle?

Forest City sees transit-oriented projects as one of the early characteristics of the new real estate cycle. 

The developer also underscores the assertion that the nation’s young creative class are going to continue moving into cities, spurring wider acceptance of transit over the next decade, especially as gas prices continue to rise and traffic congestion clogs more U.S. highways.   Richardson also believes that in coming years rail and trains can spur economic development the way that highways and the automobile have for years. 

The emphasis Forest City places on transit infrastructure should serve as a wake up call for the Atlanta region.  Savvy real estate investors like Forest City make their living anticipating what is on the horizon in the real estate market.  If Atlanta isn’t investing in its transit infrastructure, it will lose out to cities that are.

Update – Senate Passes Transportation Reauthorization Bill

Last week, the Senate passed a two-year, $109 billion transportation reauthorization bill.  The bill, known as Moving Ahead for Progress in the 21st Century or MAP-21, passed on a bipartisan vote of 74-22, receiving support from both Senator Chambliss and Senator Isakson.

What’s the word on the bill?  Check out the links below for different takes on Map-21.

To A Carpenter, Everything Looks Like a Nail

HOT lanes continue their slow creep across metro Atlanta, as GDOT held the first public meeting on the feasibility of managed lanes on GA 400. GDOT’s webpage on the project is here; WSB story is here

The project, which would run 24 miles from I-285 to SR 20 in Forsyth County, is the next step in the regional HOT lane plan that contemplates 44 HOT lane projects to the tune of $16 billion.  In addition to the project in operation on I-85 North, the GA 400 project joins active HOT lane proposals on I-75/575 North, I-75 South, and I-285 West.  

Comparison of GA 400 Peak Period Travel Times (GDOT)

 

 

 

 

 

 

 

 

 GDOT’s materials for the GA 400 project include this graph, depicting trip time at the legal speed limit (green), under current conditions (yellow), and as projected for 2040 (red).  Intended to demonstrate the need for the project, the graph illustrate a number of larger questions facing our approach to transportation investments in metro Atlanta. 

  • Speed.  Everyone would love to avoid congestion on their way home from work.  But is it economically efficient (and fiscally possible) to build roads that flow freely during the worst of rush hour? Or will this result in overbuilt roads that are immensely expensive and sit unused most of the day? Perhaps striving to achieve the maximum speed limit at the most crowded time isn’t the best use of limited transportation dollars.
  • Distance.  Though 24 miles long, this project would only get commuters as far as I-285. Driving to Buckhead would be an additional 4 miles; Midtown 6 miles further; and Downtown 3 more still.  Is it reasonable to design a transportation system around 35+ mile commutes?  Commutes of this length in all directions would require metro Atlanta to serve a region 70 miles across.  The simple fact is that our transportation funds are woefully inadequate to build and maintain a road network of this size.  Perhaps there is a point beyond which we simply can’t afford to extend the urban infrastructure?
  • Forecasting.  In 1980, few would have anticipated that north Fulton and Forsyth Counties would look the way they do today.  But the graph’s 2040 traffic projections attempt to predict growth 3 decades into the future, and they assume that the next 30 years of growth will look like the last 30.  But Atlanta’s growth patterns showed signs of changing in the years immediately preceding the rececession, and it is likely to look very different post-housing collapse.  Given changing demographic trends, migration patterns, economic conditions, and consumer preferences, the only certainty is that we don’t know where and how metro Atlanta will grow over the next three decades. 
  • Supply or Demand?  The graph depicts future traffic demand as a monolith, a certainty that must be met by increasing the supply of road capacity.  But are there cheaper and more effective ways to address transportation on the demand side of the equation? Changing  land use patterns to encourage more compact growth and shorter trips will bend the demand curve, as will increasing the availability and coverage of transit service.  The future roadway demand in the graph is not an inevitabilty – it is a prediction that we can (and should) work to reduce.   

Driving the GA 400 corridor during rush hour is undeniably a nightmare.  But simply adding new road capacity (whether toll lanes, carpool lanes, or otherwise) won’t solve congestion in the GA 400 corridor any more than previous road expansion projects have fixed transportation elsewhere in metro Atlanta.

Rethinking the Burbs

Georgia Tech architecture professor and co-author of Retrofitting Suburbia: Urban Design and Solutions for Redesigning Suburbs, Ellen Dunham-Jones, recently sat down with Next American City to discuss emerging challenges and opportunities related to suburban growth.  Professor Dunham-Jones discussed, among other things, how the economic downturn has given communities an opportunity to catch their breath and to rethink how they want to grow.    She offered several examples of suburban areas that have redeveloped old malls, revamped zoning codes, and repositioned their town squares to meet the growing demand for more walkable, livable communities.  (Click here to read the full interview).

Growing Importance of Transportation in Atlanta’s Emerging Real Estate Cycle

Three years after Atlanta’s real estate market spiraled downward, signs of a new regional real estate cycle are beginning to take shape.   A look at the marquee projects around Atlanta offers a glimpse of what investors are now looking for and what they see as the future for real estate in the region.  One emerging trend  is that investors are investing heavily in properties which offer or will offer access to transportation services.   As we noted a few weeks ago, investment in land near transportation infrastructure, such as airports and transit stations, is a safe bet because it offers permanent and reliable access for commuters, tourists, and shoppers.

Let’s take a look at the role of transportation in a number of big ticket projects on the horizon . . .

(Blue Lines = Existing MARTA network; Green Lines = Rail projects that will be built if the regional transportation tax passes this summer) 

Aerotropolis Atlanta:  The transportation connection to the Aerotropolis Atlanta project is an obvious one.  The site, once home to the Hapeville Ford Plant, is located just a stone’s throw away from Hartsfield-Jackson Airport.   The Jacoby Group, the developer behind Atlantic Station, plans to redevelop the property into a mixed-use development and hopes to use the property’s close proximity to the airport as a key selling point to attract companies looking for convenient access to the world’s busiest airport.  This strategy has already had some success, as Porsche agreed to move the carmaker’s North American headquarters to the Aerotropolis Atlanta site.

Ponce City Market: Last year, Jamestown Properties purchased the old Sears building from the City of Atlanta and plans to transform the 2.1-million square foot building into the Ponce City Market, a mix of apartments, restaurants, and offices.   So what’s the project’s connection to transportation? For starters, the building is adjacent to the proposed Atlanta Beltline, a fact Jamestown Properties surely took notice of before spending $27 million for the building and deciding to spend millions more to give the building a major facelift.   A new light rail line could be gliding along North Avenue next to the Ponce City Market soon if the regional transportation tax passes this summer.  The Ponce City Market also pulled down a $4 milion sustainability grant last year, which will help to improve bike and pedestrian access from the Ponce City Market to Ponce de Leon Avenue, the Atlanta Beltline trails, and the recently finished Old Fourth Ward Park.   Seperate from the light rail proposal, the Ponce City Market is banking on the benefit of convenient bike and pedestrian access.

Emory Point: The Emory Point project, touted as the largest private development embarked on inside the perimeter since the economic downturn, is located across the street from The Centers for Disease Control and Prevention and right down the road from Emory University.   It also sits next to the proposed Clifton Corridor MARTA extension, another rail project on the regional sales tax project list.  Like the Ponce City Market project, the Emory Point project could have rail access within the next ten years if the regional transportation tax passes this summer.

Fort McPherson: The redevelopment of Fort McPherson also has a connection to MARTA.  When completed, this mixed-use development will be accessible to residents, employees, and shoppers via two MARTA stations — the Oakland City Station and the Lakewood-McPherson Station.  Even 30 years after being built, MARTA continues to play an important role in shaping Atlanta’s real estate market.

SkyHouse Midtown: Seeking to tap the growing Generation Y demand for intown living, the Novare Group broke ground last month on SkyHouse Midtown, a 23-story apartment building situated at 12th and West Peachtree streets.  SkyHouse Midtown will be the first intown high-rise built in Atlanta since the economic downturn, and will offer a host of city-living benefits,  including access to the existing MARTA rail system.  The project is within three blocks of both the Midtown and Arts Center stations, giving future SkyHouse Midtown residents easy access to Atlanta without the grind of traffic.

Multimodal Passenger Terminal: The Multimodal Passenger Terminal is another regional project with transportation infrastructure at its core.  (For a discussion of the terminal’s estimated economic impact, click here).  A group of investors and developers agreed to help build a regional transit terminal in the “Gulch” area of downtown in exchange for the right to develop the land surrounding the terminal.  Because the terminal will be the epicenter of Atlanta’s transit services,  the terminal’s development team will be guaranteed a steady stream of commuters, tourists, and shoppers each day.

These projects show that investment in transportation infrastructure can significantly impact real estate decisions.  While access to airports and transit stations is not the only factor investors consider when deciding to acquire property, it is an increasingly important factor.   This trend has special significance for Atlanta.  Investing in transportation infrastructure can serve as an incentive to revitalize underutilized parts of the city and as a tool to guide growth around important corridors and employment centers.  Voters will decide this summer whether to pass a sales tax to fund regional transportation projects.  If the Atlanta region fails to pass the tax, then investors are likely look to other cities — Charlotte, Dallas, Salt Lake City, and Phoenix — that are investing in their transportation systems.

Transit and Traffic

The Atlantic Cities blog has a great piece on the relationship between light rail and increases in automobile travel. 

The post summarizes the findings of an article in the Journal of Transport Geography on traffic patterns in Denver during and after construction of their light rail lines.  Comparing traffic numbers in their light rail corridors to those outside the light rail areas, the study found that construction of the rail lines slowed the rate of increase in vehicle traffic in the affected corridors.  The light rail lines helped traffic.

An important finding for Cobb and Gwinnett Counties, as they evaulatue mobility options and look for real solutions to traffic congestion.

The Value of Real Estate, the Cost of Speed

The Better Cities blog leads with images of the road networks in Florence, Italy and Atlanta to introduce a discussion of road speed and the larger amount of real estate required for higher speed driving.

Florence, Italy courtesy of Better Cities

Atlanta, Georgia courtesy of Better Cities

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This relative comparison of road size reflects a design decision, exemplified here in Atlanta, of building larger roads to accommodate higher speeds.  Wider lanes.  Shoulders and medians.  Larger, banked curves.  All of these design elements are necessary to accommodate higher speeds but as a consequence increase the footprint of the road.
 
An equally illustrative image would be the empty lots at the corner of 14th Street and I-75/85 as a result of the 14th Street bridge expansion.
 
The reconstruction of this bridge and interchange required private land to be taken and used for the project’s increased footprint.  The adjacent lots on West Peachtree and Spring Streets were partially consumed by the project and now stand vacant.  Beyond the urban design and aesthetic issues, expanding the footprint of this interchange to accommodate  increased vehicle speeds took valuable Midtown real estate off the tax rolls and put it to a lower economic use.  Increased throughput and vehicle speeds may have been achieved, but the faster on-ramp comes at the cost of the City’s tax base, private property rights, and Midtown’s urban fabric.
 
As we consider the true cost of transportation projects the relationship between designing for speed, project size, and the value of the real estate consumed must be part of the conversation.