& Market Analysis Prepared for: VIA Metropolitan Transit
Prepared by: Steve Nivin, Ph.D. SABR Institute Eric Hovee E. D. Hovee & Co., LLC Jay Farwell The Gardner Law Firm In Cooperation With: IDC - Planners, Engineers, Program Managers
June 30, 2014
E. D. Hovee & Company, LLC 2 ECONOMI C I MPACT EXEC ECONOMI C I MPACT EXECUTI VE SUMMARY UTI VE SUMMARY vlA MeLropollLan 1ranslL reLalned Lhe luC Leam Lo conducL an economlc lmpacL updaLe and markeL analysls for Lhe now selecLed Locally referred AlLernaLlve (LA) for a sLreeLcar allgnmenL LhaL wlll serve downLown San AnLonlo. 1he SA8L8 lnsLlLuLe LogeLher wlLh 1he Cardner Law llrm and L. u. Povee & Company, LLC led Lhe efforL as parL of LhaL Leam. 1hls analysls represenLs an updaLe Lo a prevlous 2011 economlc lmpacL reporL conducLed for four norLh-souLh and four easL-wesL poLenLlal sLreeLcar allgnmenL alLernaLlves. 1he LA lncludes many of Lhe norLh- souLh (nS) and easL-wesL (LW) rouLlng componenLs. 1he nS splne lnvolves use of porLlons of 8roadway, navarro and SL Mary's. An easL-wesL clrculaLor lnvolves segmenLs along MarLln- ecan, lrlo, Commerce-MarkeL, and uurango. Whlle Lhls lnlLlal sysLem may be bullL ln phases, Lhls updaLe analysls provldes an analysls of poLenLlal LranslL orlenLed developmenL (1Cu) LhaL could be expecLed, over a LwenLy-flve year perlod aL full bulld- ouL of Lhe LA. 1hree alLernaLlve developmenL scenarlos were consldered wlLh Lhls LA assessmenL: !"#$%&'( - reflecLlng developmenL reasonably anLlclpaLed !"#$%&'$ )$*++$,-*. $)*+'&,+ ./+,)0&" - deplcLlng a /#0#/'/ 1+2+1 of developmenL wlLh sLreeLcar" 1//+'+0)2+( ./+,)0&" - as a /-3#/'/ 4+2+1&5/+0$ scenarlo wlLh sLreeLcar" A *20++2/)0 30+4&%4 ls calculaLed as a mlnlmum expecLaLlon of developmenL Lo be reallzed wlLh a Figure 1. Streetcar LPA Impact Study Area
Source: 8CAu, vlA, L. u. Povee & Company, LLC. 3 basellne scenarlo wlLh sLreeLcar versus a no-bulld scenarlo wlLhouL sLreeLcar. rlmary beneflLs are expecLed Lo occur wlLhln abouL Lwo blocks on +#$%+* )#4+ of Lhe selecLed sLreeLcar allgnmenL. CuLpuLs of Lhls analysls lnclude anLlclpaLed levels of resldenLlal and commerclal developmenL, valuaLlon, dlrecL economlc and mulLlpller lmpacLs, and flscal effecLs ln Lerms of added properLy and sales Lax revenues. A 23-year Llme frame exLendlng from 2013-40 ls consldered across all of Lhe forecasL scenarlos. 1he evaluaLlon meLhodology applled wlLh Lhls updaLe process ls conducLed conslsLenL wlLh Lhe approach Laken ln Lhe earller 2011 alLernaLlves analysls. WhaL follows ls a summary of ma[or observaLlons and flndlngs from Lhls economlc lmpacL updaLe. 1oplcs covered lnclude a llLeraLure revlew of sLreeLcar and 1Cu experlence across Lhe u.S., sLakeholder perspecLlves, local markeL conLexL, corrldor developmenL scenarlos, and poLenLlal economlc lmpacLs. STREETCAR & TOD ACROSS THE U.S. As ls Lhe case ln San AnLonlo, sLreeLcars played a plvoLal role ln shaplng Lhe early hlsLory of clLles and LranslL orlenLed developmenL (1Cu) across Lhe u.S. LvenLually, mosL sysLems were replaced by auLo and bus LranslL - wlLh Lhe excepLlon of a handful of legacy sysLems ln clLles llke new Crleans, San lranclsco and hlladelphla. SLreeLcars are now belng successfully re-lnLroduced ln varled urban seLLlngs across Lhe u.S. As of 2013, Lhere were 26 exlsLlng herlLage and modern sLreeLcar sysLems operaLlng ln Lhe unlLed SLaLes and Canada. AnoLher flve clLles have been under consLrucLlon wlLh new sysLems openlng ln 2013-14 - and close Lo 90 clLles are plannlng new sLreeLcar sysLems (lncludlng San AnLonlo). ConsequenLly, Lhere ls now emerglng documenLaLlon abouL Lhe 1Cu lmpacLs experlenced by clLles LhaL have consLrucLed new modern sysLems. 1he mosL compleLe posL-sLreeLcar emplrlcal documenLaLlon has been conducLed for 1ampa, SeaLLle and orLland. Streetcars & TOD Almost every U.S. city once had an extensive streetcar system, which extended the pedestrian environment out into the neighborhoods, served as a collector for intercity rail systems, and stopped at every street corner to stimulate a density and an intensity of development that made for an exemplary and engaging downtown. If the high cost of providing parking drives development today, streetcars make it possible for developers to provide less parking and put their money into high quality design, building materials and community benefits like affordable housing and parks. Streetcars also enable residents to give up a car freeing up a substantial amount of money for other household expenses. - From Gloria Ohland & Shelley Poticha, Street Smart: Streetcars and Cities in the Twenty- First Century
4 As noLed by Lhe naLlonally recognlzed 8rooklngs lnsLlLuLlon, a ma[or beneflL of Lhese sLreeLcar pro[ecLs has been Lhe ablllLy Lo connecL places LhaL were noL connecLed before." roperLy values have lncreased - ofLen dramaLlcally - when compared wlLh clLywlde lncreases. 1hls ls especlally Lhe case when Lhere ls slgnlflcanL vacanL and/or underuLlllzed properLy wlLhln close proxlmlLy Lo where sLreeLcar servlces are lmplemenLed. 8esldenLlal developmenL has been a conslsLenL beneflclary of sLreeLcar lnvesLmenL. ClLles such as SeaLLle have seen remarkable resulLs wlLh added offlce employmenL, and sLreeLcar has faclllLaLed added Lourlsm developmenL ln 1ampa. Whlle less deLalled sLaLlsLlcal analysls has been conducLed for oLher clLles Lo daLe, early anecdoLal lnformaLlon lndlcaLes poslLlve 1Cu ouLcomes ln oLher clLles such as uallas, Memphls, 1ucson, and even smaller communlLles llke kenosha, Wlsconsln. SAN ANTONIO STAKEHOLDER PERSPECTIVES uurlng Lhe lnlLlal 2011 analysls, LwenLy lnLervlews were conducLed wlLh boLh publlc and prlvaLe secLor sLakeholders wlLh acLlve lnLeresL ln downLown San AnLonlo developmenL. AL Lhe Llme, general Lhough cauLlous supporL was expressed for sLreeLcar. Powever, Lhere was recognlLlon LhaL [usL havlng Lhe permanence of Lhe Lracks wlLh Lhe sLreeLcars runnlng on Lhem wlll encourage developmenL." WlLh Lhls updaLe focus on a slngle LA allgnmenL, a more llmlLed seL of lnLervlews were conducLed wlLh a half-dozen lndlvlduals acLlve ln core area developmenL. All of Lhose recenLly lnLervlewed share Lhe vlewpolnL LhaL sLreeLcar wlll have a poslLlve lmpacL on San AnLonlo. lL ls worLh noLlng LhaL awareness abouL sLreeLcar and Lhe poLenLlal economlc lmpacLs has lncreased slnce Lhe 2011 dlscusslons. ConLlnued developmenL of Lhe cenLral clLy lnLo a llve/work/play communlLy ls vlewed as vlLal Lo aLLracLlng and reLalnlng young, educaLed workers. Comblned wlLh oLher acLlvlLles, sLreeLcar wlll be a caLalysL for downLown developmenL. SLreeLcar can also be expecLed Lo affecL Lhe scale and Llmlng of some developmenL. AlLhough resldenLlal and mlxed-use developmenL ls expecLed Lo recelve Lhe largesL boosL from sLreeLcar, commerclal opporLunlLles are expecLed Lo lncrease as well. MulLlple areas along Lhe allgnmenL are expecLed Lo beneflL - lncludlng 8lver norLh, Lhe WesLslde across l-10, SouLhLown, and core area lnflll developmenL. LPA MARKET CONTEXT 1he properLles slLuaLed ln Lhe LA sLudy area are wlLhln Lwo blocks on elLher slde of Lhe sLreeLcar allgnmenL encompass a LoLal of approxlmaLely 800 acres. !usL over 490 acres are slLuaLed wlLhln 1-block ln whaL ls Lermed Zone A, geographlcally mosL proxlmaLe Lo Lhe sLreeLcar allgnmenL and Lherefore recelvlng Lhe greaLesL 1Cu opporLunlLy. Added developmenL poLenLlal ls noLed for Zone 8 properLles generally slLuaLed 1-2 blocks from Lhe allgnmenL: 3 As of 2013, Lhe lmpacL sLudy area has nearly 18.3 mllllon square feeL of exlsLlng bulldlng lnvenLory. AbouL 80 ls comprlsed of commerclal bulldlng space, wlLh Lax exempL sLrucLures aL 12 and resldenLlal aL 7 of Lhe LoLal. LxlsLlng denslLy of developmenL ls relaLlvely low, aL an average floor area raLlo (lA8) of 0.33 - meanlng LhaL bulldlng square fooLage comprlses [usL sllghLly over half of slLe area. Powever, posL-2000 developmenL has occurred aL more Lhan double Lhe denslLy of pre- 2000 bulldlngs, lndlcaLlng conLlnued opporLunlLy for greaLer lnLenslLy of Lhe urban envlronmenL. 1oLal currenL 8exar CounLy assessed valuaLlon of LA sLudy area properLles approaches $1.8 bllllon wlLh Laxable valuaLlon (excludlng exempL properLles) aL $1.4 bllllon. lrom 2000-12, abouL 193,000 square feeL per year of new bulldlng developmenL has occurred wlLhln Lhe lmpacL area - for an average annuallzed lncrease of 1.2 Lo Lhe pre- 2000 exlsLlng lnvenLory. AbouL half of Lhe new developmenL has occurred wlLh commerclal use, resldenLlal ls already accounLlng for an lncreaslng share of developmenL acLlvlLy. Cver Lhree quarLers of LA sLudy area developmenL from 2000-12 has occurred wlLh Zone A properLles. 1hls pace of Zone A developmenL has been movlng forward even before sLreeLcar consLrucLlon has been fully commlLLed and lnlLlaLed. !usL under one quarLer (24) of land area comprlses properLles LhaL are Laxable and have lmprovemenLs values LhaL are 30 or less LhaL of land value - represenLlng Lhe besL opporLunlLles for new developmenL ln Lhe years ahead. 1he selecLed LA allgnmenL wlll serve an area LhaL has already been recelvlng lnvesLmenL lnLeresL. 8uL lL sLlll has subsLanLlal underdeveloped properLy for addlLlonal resldenLlal and commerclal developmenL aL denslLles more supporLlve of a vlbranL urban communlLy. As has occurred over Lhe lasL Lwo decades ln oLher clLles, sLreeLcar can provlde one source of added lmpeLus Lo an already resurgenL markeL envlronmenL for mlxed-use, pedesLrlan-orlenLed developmenL. ln San AnLonlo, Lhls urban developmenL wlll beneflL boLh Lhe esLabllshed downLown core and ad[olnlng mlxed-use nelghborhood dlsLrlcLs lncludlng 8lver norLh. CORRIDOR DEVELOPMENT SCENARIOS uevelopmenL scenarlos for Lhe LA area have been prepared ln a manner conslsLenL wlLh prlor analysls for alLernaLlve allgnmenLs belng consldered as of 2011. 1hls analyLlcal meLhodology has been adapLed Lo Lhe 2-block wlde lmpacL geography on elLher slde of Lhe now selecLed sLreeLcar LA allgnmenL. luLure developmenL ls expecLed Lo reflecL recenL developmenL Lrends slnce abouL 2000. 1hls wlll reflecL a compleLe economlc cycle ad[usLed for updaLed reglonal 8exar CounLy growLh expecLaLlons. CounLywlde populaLlon ls pro[ecLed Lo lncrease from 1.7 mllllon resldenLs as of Lhe 2010 census Lo over 2.8 mllllon by 2040. LmploymenL ls pro[ecLed Lo lncrease from 0.8 mllllon Lo beLween 1.4-1.3 mllllon over Lhls same Llme perlod. 6 ro[ecLlons assoclaLed wlLh each of Lhree developmenL scenarlos for Lhe sLreeLcar LA beneflL area over Lhe 2013-40 Llme perlod are summarlzed as follows: under a ,"#5%&'( */+,)0&" (wlLhouL sLreeLcar), nearly 3.3 mllllon square feeL of developmenL ls pro[ecLed, represenLlng a 30 addlLlon Lo Lhe exlsLlng bulldlng lnvenLory ln Lhe lmpacL sLudy area. Assessed valuaLlon wlLhln Lhe lmpacL area lncreases by close Lo $300 mllllon (as esLlmaLed ln 2013 dollars). WlLh Lhe 5)*+'&,+ */+,)0&" (wlLh sLreeLcar), an esLlmaLed 12.3 mllllon square feeL of new developmenL ls forecasL over 23 years, for a 68 lncrease ln exlsLlng bulldlng space wlLhln Lhe LA lmpacL area. Assessed valuaLlon lncreases by $1.4 bllllon. under a more aggresslve )//+'+0)2+( */+,)0&" (also wlLh sLreeLcar), developmenL could lncrease by as much as 19.6 Figure 2. LPA Development Scenarios (25 Years) Added Building Development (Sq. Ft.)
Added Assessed Valuation
Source: 8CAu, vlA, L. u. Povee & Company, LLC. mllllon square feeL, doubllng Lhe bulldlng lnvenLory wlLhln Lhe LA lmpacL area over Lhe nexL 23 years. Assessed valuaLlon lncreases by over $2.3 bllllon. 1hls lncrease more Lhan doubles Lhe assessed valuaLlon of Lhe LA lmpacL area and reflecLs boLh new consLrucLlon and Lhe lncreased per square fooL value of hlgher denslLy consLrucLlon. WlLh Lhls updaLed assessmenL, a *20++2/)0 30+4&%4 ls conservaLlvely deflned as Lhe mlnlmum expecLaLlon of added developmenL wlLh Lhe basellne scenarlo /#0') whaL ls forecasL under no- bulld (wlLhouL sLreeLcar) condlLlons. 1he premlum equaLes Lo an added 7 mllllon square feeL of LA lmpacL area developmenL and close Lo $900 mllllon ln assessed value above whaL ls pro[ecLed wlLh a no-bulld scenarlo. 7 ln effecL, Lhe 1Cu posslble wlLh sLreeLcar under basellne condlLlons could serve Lo leverage more Lhan Lwlce Lhe added developmenL and close Lo Lhree Llmes Lhe lncreased valuaLlon as would be anLlclpaLed wlLhln Lhe LA lmpacL area wlLhouL Lhls LranslL lnvesLmenL. WlLh acceleraLed developmenL, Lhe effecLlve sLreeLcar premlum could lncrease Lo as much as 3-4 Llmes Lhe added developmenL and 4-3 Llmes Lhe lncreased valuaLlon as would be anLlclpaLed wlLhln Lhe LA lmpacL area under no-bulld condlLlons (wlLhouL Lhls LranslL lnvesLmenL). 1here ls a markeL shlfL now underway Loward a greaLer mlx of resldenLlal developmenL, whlch ls expecLed Lo conLlnue. 1hls shlfL ls expecLed Lo become even more pronounced pursuanL Lo Lhe wlLh sLreeLcar" developmenL scenarlos as has occurred ln oLher clLles wlLh sLreeLcar 1Cu experlence. Commerclal and Lax exempL developmenL ls also expecLed Lo be greaLer ln Lhe wlLh sLreeLcar" scenarlos Lhan wlLh Lhe no-bulld scenarlo. POTENTIAL ECONOMIC IMPACTS Lconomlc lmpacLs have been evaluaLed from Lhe dlsLlncL, buL relaLed, perspecLlves of added houslng and employmenL, economlc mulLlpller effecLs, and local governmenL flscal lmpacLs. 1he focus of Lhls analysls ls on Lhe *20++2/)0 30+4&%4 - Lhe added poLenLlal mlnlmum level of beneflL under basellne scenarlo (wlLh sLreeLcar) as compared wlLh Lhe no-bulld (wlLhouL sLreeLcar) scenarlo. Lconomlc lmpacL numbers are derlved from Lhls esLlmaLe of sLreeLcar premlum," whlch measures Lhe developmenL wlLhln an approxlmaLe 2-block dlsLance on each slde of Lhe sLreeLcar llne LhaL reasonably can be aLLrlbuLed, Lo some exLenL, Lo Lhe presence of sLreeLcar. 1o calculaLe Lhe sLreeLcar premlum, Lhree dlfferenL developmenL scenarlos were pro[ecLed: 67 !"#$%&'( ./+,)0&" - capLurlng Lhe developmenL ln Lhe area assumlng LhaL sLreeLcar ls noL lnsLalled 87 $)*+'&,+ */+,)0&" -- whlch assumes sLreeLcar lnsLallaLlon and a mldpolnL of developmenL beLween Lhe no-bulld and acceleraLed scenarlos 97 1//+'+0)2+( */+,)0&" -- assumlng sLreeLcar lnsLallaLlon and Lhe besL posslble case for 1Cu A *20++2/)0 30+4&%4 mlghL be calculaLed as elLher Lhe dlfference beLween Lhe no-bulld and basellne scenarlos or Lhe no-bulld and acceleraLed scenarlos. 1he numbers provlded here and LhroughouL Lhls reporL are based on a sLreeLcar premlum derlved from Lhe more conservaLlve basellne scenarlo. 1here may be many facLors LhaL conLrlbuLe Lo Lhe developmenL along Lhe sLreeLcar llnes, buL Lhe presence of Lhe sLreeLcar plays a key role ln faclllLaLlng Lhls developmenL by elLher acceleraLlng or provldlng a sLrong lncenLlve for Lhe developmenL or redevelopmenL of a properLy. As descrlbed ln a prellmlnary evaluaLlon of Lhe poLenLlal lmpacL of sLreeLcar along alLernaLlve San AnLonlo sLreeL corrldors ln 2011, Lhe lnLroducLlon of sLreeLcar presenLs subsLanLlal opporLunlLy Lo leverage new developmenL LhaL would oLherwlse noL occur." 8 1ranslL lnvesLmenL alone does noL assure Lhls beneflclal ouLcome. As has been experlenced elsewhere ln Lhe u.S., reallzaLlon of Lhe full economlc developmenL poLenLlal assoclaLed wlLh sLreeLcar also depends on supporLlve publlc-prlvaLe lnlLlaLlve Lo creaLe corrldor amenlLy value - a walkable urban envlronmenL offerlng Lhe sense of scale and crlLlcal mass LhaL draws lnvesLor, buslness LenanL and resldenLlal lnLeresL. 1he opporLunlLy for LranslL supporLlve developmenL caLalyzed by sLreeLcar ls furLher supporLed by: ulscusslons wlLh local developers and oLher lnLeresLed parLles who have lnLlmaLe knowledge of developmenL paLLerns ln Lhe area and how Lhe presence of sLreeLcar mlghL affecL developmenL ln Lhe area. o 8ecognlLlon among many of Lhose lnLervlewed LhaL [usL havlng Lhe permanence of Lhe Lracks wlLh Lhe sLreeLcars runnlng on Lhem wlll encourage developmenL." knowledge of Lhe effecLs LhaL sLreeLcar had on developmenL ln oLher clLles such as orLland, SeaLLle and 1ampa. o A sLudy by Lhe 8rooklngs lnsLlLuLlon on Lhe lmpacLs of sLreeLcar noLes LhaL a ma[or beneflL of sLreeLcar ls lLs ablllLy Lo connecL places LhaL were noL connecLed before," such LhaL ln effecL, Lhe sLreeLcar became Lhe connecLlve Llssue and organlzlng prlnclple for growLh ln an area." 1he followlng polnLs summarlze Lhe lmpacLs of Lhe full LA wlLh $280 mllllon ln caplLal expendlLures and assumlng Lhe more conservaLlve sLreeLcar premlum based on Lhe basellne scenarlo of developmenL. 7 mllllon square feeL of ,+: (+;+'"34+,2 wlLh a Laxable value of $736 mllllon. Cver 3,000 new 0+*&(+,2&)' %,&2*. AL full developmenL, Lhe new buslnesses ln Lhe area wlll supporL +43'"<4+,2 of abouL 8,300 full-Llme equlvalenL poslLlons earnlng wages and beneflLs esLlmaLed aL $387 mllllon, lncludlng mulLlpller effecLs. 1he +/","4&/ &43)/2 from Lhe operaLlons of Lhese buslnesses wlll be $1.3 bllllon. =",*20%/2&", "> 2?+ ,+: (+;+'"34+,2 wlll supporL almosL 14,000 [obs wlLh wages and beneflLs golng Lo Lhese workers of abouL $704 mllllon. 1he overall lmpacL of Lhe consLrucLlon acLlvlLy wlll come Lo abouL $1.8 bllllon. =",*20%/2&", "> 2?+ *20++2/)0 lLself wlll supporL employmenL of over 4,080 [obs wlLh lncomes and beneflLs of $206 mllllon and an lmpacL of $489 mllllon Lo Lhe reglonal economy. =%4%')2&;+ 2)@+* generaLed from Lhe new developmenL wlll lnclude abouL $263 mllllon ln added properLy Laxes. 1he cumulaLlve sales Lax revenues from Lhe operaLlons of Lhe new buslnesses along Lhe sLreeLcar llne wlll be nearly $33 mllllon and Lhe sales Laxes generaLed from Lhe consLrucLlon of Lhe new developmenL wlll be abouL $4 mllllon. 9 ln summary, sLreeLcar 1Cu poLenLlally may affecL boLh where developmenL occurs wlLhln Lhe San AnLonlo meLro area and Lhe LoLal level of reglonal acLlvlLy - Lo Lhe exLenL LhaL a more llvable urban envlronmenL mlghL lnfluence Lhe reglon's compeLlLlve poslLlon relaLlve Lo oLher locaLlons naLlonally and globally. Powever, Lhls sLudy does noL alm Lo quanLlfy wheLher or Lo whaL exLenL sLreeLcar lnvesLmenL affecLs neL reglonal economlc growLh. lor aL leasL Lhe near-Lerm, much of Lhe developmenL acLlvlLy can be expecLed Lo occur close Lo Lhe sLreeLcar allgnmenL and ln places LhaL are already provlng aLLracLlve Lo prlvaLe and publlc lnvesLmenL. LaLer ln Lhe forecasL perlod, more of Lhe developmenL wlll begln Lo mlgraLe ouL from Lhese prlme locaLlons Lo porLlons of Lhe corrldor lmpacL area LhaL have remalnlng underdeveloped land or whlch may have recelved less lnvesLmenL aLLenLlon Lo daLe. 1hls ls parLlcularly Lhe case where Lhere are large properLy holdlngs - wheLher currenLly vacanL or parLlally developed. 1he degree Lo whlch sLreeLcar 1Cu occurs aL basellne or acceleraLed levels wlll be affecLed by a number of facLors lncludlng naLlonal and reglonal economlc Lrends, real esLaLe flnanclng avallablllLy for mlxed-use developmenL, local culLure for ploneerlng real esLaLe pro[ecLs, and supporLlve publlc lnfrasLrucLure lnvesLmenLs. 8eallzaLlon of Lhe acceleraLed scenarlo can besL be faclllLaLed by conLlnued San AnLonlo redevelopmenL plannlng and acLlve publlc-prlvaLe parLnershlps, lncludlng conLlnued avallablllLy of approprlaLe redevelopmenL lncenLlves.