Greater Cleveland Regional Transit Authority Real Estate and Economic Development

Greater Cleveland Regional Transit Authority

• Real Estate and Economic Development

• James DeRosa

• TRB BRT Workshop

• “An Introduction to Euclid Corridor BRT”

• July 21-22, 2008

ECTP Economic Development Plan Basile Baumann Prost & Associates, Inc. (revised November 30, 2001)

• Goal for Plan: Assure that development plans, public policies, and transportation improvements are mutually supportive.

• Established an economic development program and implementation plan through 2025

The Outlook

Transit Improvements will …

• Facilitate the movement of people

• Energize the street

• Support increased levels of development along the Corridor

• Empower the community and facilitate the development that is called for in existing plans

• Transportation and capital improvements will serve as a unifying element for the development within the Corridor

• Increase property values

Transportation Investment and Property Development Flow Chart

• Transportation Investment -> Accessibility of Benefits -> Capitalization of Benefits -> Re/development

Affect on Property Values

• Simulates development by enhancing the attractiveness of parcels for development or redevelopment.

• Parcels that were not previously considered prime for development appear more desirable after the improvement is announced or implemented.

• While not conclusive, studies of Bogota’s TransMilenio corridors suggest that real estate prices and development opportunities increase incrementally for every 5 minutes of walking time closer to the BRT station.

Circa 1920

ECTP Map

Land Value Impacts of BRT Systems

• Like rail systems, the cost-effectiveness of BRT hinges on the ability to have supportive land uses that concentrate activity along system corridors. Therefore, in most cases BRTs have been built in corridors with proven demand.

• Cleveland’s Euclid Corridor is mostly high density development in downtown, University Circle, and East Cleveland.

• Midtown Cleveland offers the ability to attract dense development that will enhance the BRT system in the future.

Economic Development Benefits by 2025

• (constant 2001 dollars)

• Commercial Development 9.2 million sq/ft.

• New Residential Units 7,760

• Capital Investment $1.75 Billion

• Additional Population 15,500

• Annual Local Taxes $55.8 Million

• Annual GCRTA Sales Tax $2.5 Million

One-Time Construction Period Impacts

• (constant 2001 dollars)

• Construction Costs (includes $1.9 Billion

• transit-related development

• & system costs, excludes vehicles

• & a/e)

• Person Years of Employment 17,000

• Annual Payroll $0.7 Billion

• Local Taxes $13.4 Million

• GCRTA Sales Tax $6.3 Million

Difference over No-Build, Post-Construction Impacts by 2025

• (constant 2001 dollars)

• Non-Residential Sq Ft. 6,100,000

• Residential Dwelling Units 5,350

• Population 11,900

• Annual Ad Valorem Tax $38,300,000

• GCRTA Sales Tax $1,750,000

Increased Regional Market Share

• BBP suggest that without capital improvement, growth would continue to happen at the termini of the Corridor, but not elsewhere

• MidTown segments of the corridor in particular would not reach its development potential

• IMPORTANT: Investment in the corridor does not account for any net new regional development that would be created by ECTP investment, but rather the redistribution of projected regional growth into the Corridor.

Existing Cleveland Economy

Population Loss

Housing Starts

Foreclosures

But There IS Good News:

• Neighborhoods: Local development corporations and other stakeholders have a strong history and track-record for meeting and exceeding their development plans.

• Downtown: Currently 4 tenants are looking for Class A space Downtown in excess of 175,000 square feet which could anchor one of several planned, new office development projects within the next 12 to 24 months.

• This could be the largest new CBD project since the early 1990s.

More Good News:

• Industrial: Growth in certain areas of the manufacturing sector (plastics, rubber, transportation equipment, fabricated metals, and chemical manufacturing) prompted developers of industrial space to commence with the first large-scale speculative projects in recent years.

• Rental Market: Large number of single-family mortgage defaults are causing homeowners to enter the apartment rental market increasing occupancy levels and providing upward pressure on rents of apartment units.

Project Development by Type by 2025

• Institutional 5.0 Million Sq. Ft.

• Light Industrial 1.25 Million Sq. Ft.

• Office 3.0 Million Sq. Ft.

• (16% regional capture rate)

• Commercial 1.0 Million Sq. Ft.

• Residential 7,762 units

• (12% of the average regional residential construction)

• Population along Corridor 57.3% growth

• 19,230 (2000) to 30,255 (2025)

So far so good!

• Projects completed since 2000, underway, and/or proposed:

• Public Square to the Inner belt = $1.3 billion in new investment

• Midtown = $87.3 million in investment

• Fairfax and University Circle = $3 billion in new investment

Downtown

Playhouse Square

Cleveland State University

Midtown

Cleveland Clinic

University Circle

Guide Development through Zoning

• MidTown Zoning Overlay District

• Minimum floor-area ratio, parking mitigation, pedestrian emphasis, and façade improvements

• Design Guidelines refocus development away from parking garages and driveways

• Transit orientation will serve as the unifying element for the entire Corridor

• Residential Design Guidelines in place in University Circle

Midtown Zoning Overlay District

Financial Incentives

• Land Assembly/Land Banking Initiatives

• City of Cleveland, Port Authority

• Streetscape Improvements

• GCRTA’s Art in Transit Program (1%)

• Tax-Increment Financing (TIFs)

• Tax Abatement

• Federal Empowerment Zone & City Loans/Grants

• Brownfield Incentives

• City of Cleveland, Cuyahoga County, & State of OH

• Ohio Job Creation Tax Credit

• Historic Preservation Tax Credit

• Cleveland-Cuyahoga County Port Authority Financing

• City officials established the “First Five” program

• “Circle Living” housing assistance program

Economic Development Success? Yes! But Too Early to See The Full Story…

• Generally it is impossible to insolate whether the BRT caused the land value change, or whether planners sited the stations in locations that were already valued by residents.

• Changes may be the result of local real estate submarket variations.

• The capitalization of benefits from the BRT improvements may take a long time to occur.

• Nonetheless, it appears that positive factors in Cleveland are creating a “perfect storm” for development along the Corridor.

• Time will show what investments will now happen because of the transit improvements that were not previously planned.

Questions