TOD Market Dreams + Realities The station is in, the riders are coming and the development has been proposed. Now everybody wants retail. But is there a market for it? Will it be supported? Or would other uses be more appropriate and generate additional riders? Everyone expects TOD to generate a mix of uses -- to create a 24/7 environment at every station. How do market realities change that equation? Learn what it takes to support that mixed-use environment that everyone expects; how to assess the market and what residents really want; and how to manage expectations if the market doesn't deliver. Moderator: William M. Velasco, Chair of Board TOD Committee, DART, Dallas, Texas Christine Maguire, AICP, EDFP, Senior Manager, Development Planning and Finance Group, Austin, Texas Anne B. Ricker, Principal/Owner, Ricker Cunningham, Centennial, Colorado John Breitinger, Vice President, Investment and Development, United Properties, Bloomington, Minnesota Michael Horsting, AICP, Principal Analyst, Regional Transportation Authority, Chicago, Illinois

1. “Where’s the Beef?”
Managing Investment Expectations
Rail Volution Conference 2014
Monday, September 22

3. Redevelopment
Truths
Feasibility extends beyond the market
The first one in can’t get it done
Never do what’s easy, always do what’s right
A long memory can be the death-nail of any project
Development at the station must work in spite of transit
Ditch the pot roast recipe
Save the best for last
Partnerships are 5 parts therapy to 1 part real estate
Even ugly babies have cute feet

4. Feasibility
extends beyond
the market
Market
Physical
Financial
Regulatory
Political
Organizational
Barriers
to
investment
…

5. The first one in
can’t get it
done
Examples
…

6. Never do
what’s easy,
always do
what’s right

7. Development
@
Buildout Development Program:
Transit-­‐
Accessible Conventional
Project
Indicator
Project
Land
Area
(Acres) 100 100
Developable
Area
(Acres) 75 75
Overall
Density/FAR
XX
6.0 3.0
Total
Project
Population 1,080 675
Residential
Units:
Single
Family
Detached
150 225
Single
Family
Attached 150 0
Apartments 150 0
Total
Units 450 225
Non-­‐Residential
Sq
Ft:
Retail/Restaurant/Service 0 0
Office 0 0
Total
Sq
Ft 0 0
Estimated
Annual
Revenues
by
Type:
Property
Tax $605,208 $395,066
Sales
Tax
(see
below) $45,360 $29,700
Other
Revenues* $61,932 $38,708
Supportable
Retail
Space/Sales
Tax
Revenue:
Average
Home
Value $180,000 $235,000
Required
Household
Income** 42,000 55,000
Estimated
%
of
Income
Spent
on
Local
Retail
Purchases 24% 24%
Potential
Local
Retail
Sales $10,080 $13,200
Supportable
Retail
Space
@
$200/sf 50 66
Potential
Sales
Tax
Revenue
per
Household $101 $132
Total
Annual
Sales
Tax
Revenue $45,360 $29,700
Total
New
Annual
Revenues
to
City: $712,500 $463,474
Estimated
General
Fund
Expenditures
by
Department:
Pubic
Safety $78,220 $48,888
Culture
and
Recreation $331,232 $207,020
Development
Services $27,427 $17,142
Neighborhoods
and
Development $86,400 $54,000
General
Government $69,569 $43,481
Non-­‐Departmental $49,681 $31,051
Total
New
Annual
Service
Costs
to
City: $642,530 $401,581
Total
Net
Annual
City
Surplus
(Deficit): $69,970 $61,892
*
Includes
Franchise
Fees,
Licenses/Permits,
Charges
for
Services,
Fines
&
Misc.
Revenues.
**Assumes
90%,
30-­‐yr,
6%
mortgage
and
28%
of
income.
Land Area 100
Developable Area 75
Overall Density / FAR 6.0 / 3.0
Project Population 1,080 / 675
Municipal Revenues:
Property Tax $605K / $395K
Sales Tax $45.5K / $29.7K
Other Revenues $61.9K / $38.7K
General Fund Expenditures:
Public Safety $78.2K / $48.9K
Culture / Recreation $331.2K / $207.0K
Develop Services $27.4K / 17.1K
Neighborhoods $86.4K / 54.0K
General Gov’t $69.9K / 43.5K
Non-Department $49.7K / 31.0K

8. A long memory
can be the
death-nail of
any project
“This is never going to work.”
“I lived under the L growing up and we never slept!”
“Government shouldn’t be the developer – remember when …?”
“Hasn’t Donald Trump gone bankrupt like three times?”
“Bobby Ewing never sold a piece of property in his life and he isn’t
about to now.”

9. Development at
the station must
work in spite of
transit
Of office workers, about 15 percent used rail to get to work
with the majority of employees arriving by automobile.
On average, the first retail tenant moves in (to ground floor
retail) nine months after the first residential tenant moved in
(and the tenant probably signed their lease at least six
months prior).

10. Ditch the pot
roast recipe

11. Save the best
for last
Develop the soft sites first – the economics are more forgiving.
Prove up the market in phases.
Be patient and take a patient position.
Rest assured … the stars are aligning!

12. Partnerships are 5
parts therapy to
1 part real estate
“In
redevelopment
…
the
pioneers
get
the
arrows
and
the
se8lers
get
the
land!”
Gov.
John
Hickenlooper
Lots of critics!
Lots of “friends!”
Higher costs (building and infrastructure) - lower revenue (initially).
Perceived higher risk.

13. Even ugly babies
have cute feet
Don’t be afraid to say “no!”
Screw personal property rights – just kidding!
Give City Council more information with which to make decisions.
Avoid the obvious market.
Minimize risk in creative ways.