Wow! Study says DC Streetcar could add $10-15 billion in value
The Charter-Award-winning DC Streetcar Land-Use Study, which looks at the economic and development impacts of the city's coming streetcar system, is New Urban Network's April Plan of the Month.
The Washington, DC, streetcar certainly looks like a good deal. The 37-mile system, the first corridor of which is under construction and expected to be completed by 2012, will increase the value of existing properties by $5-7 billion, according to the study by Goody Clancy & Associates of Boston.
Add to that an estimated $5-8 billion of new development over 10 years attracted by the streetcar, and the total increased property value is $10-15 billion. Half of the tax increment from that total could support $600-$900 million in bonds to help support property development and streetcar capital costs, the study says. The streetcar system is expected to cost $1.5 billion.
The study used target-market methodology to determine the streetcar's substantial potential appeal to households across the demographic spectrum. The study predicts a 20-50 percent increase in demand for new housing and up to a 15 percent value increase for existing housing. On the commercial side, the study found that up to 95 percent of any new office development is expected to locate around streetcar corridors.
Such figures may sound fanciful, but the development and property value increases generated by smaller streetcar projects in Portland and Tampa, and light rail lines in Denver, Minneapolis-St. Paul, and Charlotte, have demonstrated the substantial economic development potential of urban rail.
In addition, retail market analysis revealed $340 million in spending potential (equivalent to 1.2 million square feet of new retail space) over 10 years driven by streetcar-attracted households and jobs, according to the DC study.
The mobility benefits will also be significant. The streetcar would put 50 percent of households in DC near rail transit — from the 16 percent currently, the study determined. In some of the poorest parts of the city, this system would substantially increase access to jobs.
The city commissioned the study to “identify how and where streetcar service would offer the most significant opportunities and challenges.” DC will use it to:
1) Prioritize which streetcar segments should be built in which order;
2) Identify the most promising strategies for funding the streetcar, utilizing both Federal and local sources; and,
3) Update city policies, touching on everything from zoning to housing, to optimize benefits and minimize challenges.
The benefits sought fall in two primary categories: quality of life and economic development. Community quality of life is addressed through the broadening of transportation choices, which is expected to bring new alternatives for housing, jobs, retail, recreation, and education that will crop up around the newly constructed transit corridors. The biggest challenges are identified as housing affordability concerns, rights-of-way issues, and potential loss of future development in non-streetcar corridors. In most cases, strategies are proposed to mitigate these challenges.
The interdisciplinary study was designed to capture the complex dynamics of real estate, business, transportation and community while the findings weave together elements of design, economics, transportation, and heritage. “The project looked at a key land uses impacted by streetcar and the potential synergies of combining them – such as the increased retail viability stemming from presence of both residents and workers in walking distance,” according to the description from the 2011 CNU Charter Award.
“The project looks comprehensively at housing, office and retail market impacts of streetcar through several lenses including: New development potential; opportunity to revive existing underutilized and historic buildings/districts; job growth; property value growth (for existing and new development); fiscal benefits through increased tax revenue; and increased potential for creative industries to locate along streetcar corridors. The project also looked at existing incomes along streetcar corridors, how markets will expand housing choices, and how policies may be needed to mitigate gentrification impacts,” says the award description.
Impacts on housing are expected to be greater than those to commercial development. Still, “the most significant benefits (for both sectors) occur when streetcar adds service to underdeveloped areas.” In addition to intensity differences, property value increases for housing and commercial space is expected to occur at different times. Residential value boosts will occur after implementation while commercial values can be expected to rise during the planning phase.
In terms of taxpayers dollars, the “streetcar offers a better ratio of benefits to costs compared to Bus Rapid Transit (BRT) or Light Transit. While BRT is less expensive to implement, it does not generate the real estate investments to the same degree that streetcars can. While light rail can produce similar benefits to streetcars, implementation costs are many times more than that of streetcar.”