Development Magazine Winter 2013

Development - Ownership

Healthy Transit Systems Can Drive Local Economies

Public transportation has long been regarded as a vital component to a healthy local economy. Today, local economic engines can be further fueled by creative land use concepts involving transit elements. Rochester, N.Y., for example, was able to attract hundreds of millions of investment dollars — both at the federal and local levels — for a variety of innovative, transit-related development projects.

A worn-out corridor in the heart of downtown Rochester provided the perfect stage for a mixed-use development project anchored by a transit center. Because this project aligned a performing arts center with a local college expansion and the federally funded transit center, local developers were eager to jump in. Called Renaissance Square, this project represented a $230 million joint development project that was eligible for Federal Transit Administration (FTA) capital funding. The project, which looked to generate 2,700 direct and indirect construction-related jobs, was administered by a partnership comprised of the Rochester Genesee Regional Transportation Authority (RGRTA), Monroe County, Monroe Community College and the city of Rochester.

Although the funding was secured and community leaders were actively engaged in moving the project forward, a twist of political events resulted in the then mayor of the city of Rochester reversing his approval of the project. While Renaissance Square became a political battleground, the transit center portion of the project remained viable, and is presently under construction. (It is expected to be completed in April 2015.) This project represents a $50 million undertaking, with 80 percent of the funding coming from the FTA, 10 percent from the New York State Department of Transportation and the remaining 10 percent from the RGRTA.

head shot of Mark Aesch

Mark Aesch

Just a few miles away, the city’s largest employer — the University of Rochester — once considered the construction of another transit facility (a satellite bus station) as an integral element to its College Town development. The original budget for this mixed-use project included $8 million for the transit center. Management of this project was passed along to RGRTA’s new administration in late 2011. While the transit center was later eliminated from the plans, the $100 million, 500,000-square-foot College Town mixed-use project is now under construction and slated for completion in fall 2014.

How Rochester Did It

The RGRTA’s ability to secure this high level of funding for transit-oriented development (TOD) occurred as a result of its ability to demonstrate that the transit system was financially sustainable. Arriving at this essential position of strength took some time. In fact, in 2004, the authority faced a $27.5 million deficit. Taking immediate steps to turn around the situation, the RGTA’s new leadership introduced a new management model — performance-based management — that altered every aspect of how the bus company was run.

This transformation of the culture within the organization translated to a transformation in the way the RGRTA’s customers perceived the transportation authority. All levels of the work-force were collectively focused on one clearly defined success moment that they worked to achieve together. They took ownership and pride in their services and how they were delivered. They focused their attention on giving customers a “Ritz Carlton level” of service, with clean, on-time buses driven by courteous and conscientious operators. They improved bus frequencies and destinations, and even reduced the bus fare.

As reported in the organization’s annual audited financial reports, in just three years (by 2007), the RGRTA had reversed the deficit and generated an astounding $33.5 million surplus — a stunning $63 million improvment in its bottom line. Customer satisfaction surveys conducted by a third party consultant indicated that riders were much happier with the bus service, and operational performance steadily increased. Ridership levels outpaced national rates by four times.

All of this good performance and financial news showed grant funders in Washington, D.C., and potential local investors that TOD in Rochester was a safe bet for their development dollars — and that those projects could even yield an extremely healthy return on investment.

Return on Investment

When one looks at the numbers involved with transit development, it’s easy to see that this specialized type of land use provides a tremendous return on investment to the community. According to transit planners with the American Public Transportation Association, every $1 invested in public transportation projects generates $6 in local economic activity, and every $10 million in capital investment in public transportation yields $30 million in increased business sales. In addition, every $10 million in operating investment in public transportation provides $32 million in increased business sales. And on top of all this are the jobs that are generated with this kind of economic growth.

A vibrant transit system absolutely can serve as the catalyst that drives a local economy. Federal funding awarded to strong and competent agencies can pave the way for creative opportunities for land use and business development. 

From the Archives: Development Ownership Articles from the Previous Issue phase 3

Developer of the Year 2013: Vulcan Real Estate's Bold Vision 

Microsoft co-founder Paul G. Allen’s real estate development company, Seattle-based Vulcan Real Estate, is leading one of the largest urban redevelopment efforts in the U.S. Vulcan’s ability to articulate a vision; collaborate with multiple public and private entities; obtain expensive infrastructure improvements; and finance, design, deliver, and fill office, scientific, medical, residential, and retail structures turned around an underused, aging industrial neighborhood just south of Seattle’s central business district.

exterior of South Jordan Medical Center

South Jordan Health Center: Developing a Sustainable Medical Facility 

When the University of Utah and Kennecott Land decided to build a new health center in the rapidly growing planned community of Daybreak in South Jordan, Utah, they had ambitious goals: to provide the community with a facility that would offer the best in health care services and state-of-the-art medical technology while also limiting the building’s impact on the environment. Most full-scale medical facilities use an enormous amount of energy, which makes obtaining LEED certification a challenge. But by implementing sustainability features into the building from the earliest design stages the development team was able to exceed its expectations.