Transit oriented development in Connecticut may rely on 'value capture'

In most communities, it’s hard to get an appealing mix of uses and a pleasing network of buildings and streets positioned around a new or previously sleepy train station.

So as Connecticut looks toward establishing to a commuter rail line though the center of the state — from New Haven to Hartford to Springfield, Massachusetts — the big question is whether transit-oriented development (TOD) will flourish around the new or expanded stations.

The Regional Planning Association (RPA), which encompasses parts of New York, Connecticut, and New Jersey, thinks Connecticut will have to use “value capture” to orchestrate effective, compact, transit-served development along the approximately 80-mile route.

Value capture, the lead topic of the Jan. 2012 Better! Cities & Towns, is not new. New York City is, for example, using it to pay for the extension of a subway line into Manhattan’s Far West Side.

“The city is paying for the $2.1 billion project by selling bonds, which are to be paid off through taxes on the district around the new station,” RPA Vice President David Kooris explained in a recent RPA article.

RPA would like Connecticut to use value capture to ensure that public investment in rail expansion generates a series of successful compact developments. The techniques being discussed in Connecticut could ultimately be applied in communities across the US.

A February briefing paper from RPA says this about the rail corridor and about a rapid busway being built from New Britain to Hartford:

Improved transit service coupled with a growing demand for housing and commercial space in neighborhoods with transit options will draw new commercial and residential development around transit hubs, increasing property values and tax revenues. With a value capture program, a portion of that increased value or tax revenuecan be harnessed to support station area revitalization, invest in infrastructure, and spur additional development.

Transit-oriented development — housing, offices, and retail built within walking distance of stations — will not occur without strong pubic support demonstrated through local and state policy. Improvements to public areas in and around station areas, such as renovated sidewalks, streetscapes, or brownfield remediation, are often necessary before private investors will commit to development.

RPA has been studying value capture’s potential in Connecticut since last summer. The program might work like this:

• The state would offer planning grants and bonding capacity to municipalities, enabling them to identify and finance needed station-area improvements.

• In exchange, municipalities would adopt targeted zoning revisions aimed at unlocking development potential.

• The municipalities would deposit a portion of the increased property tax revenues from the areas around the stations into a statewide Transit Hub Development Fund.

• The Transit Hub Development Bank would provide up to $25 million a year for the station area improvements (including roads, pedestrian and bicycling facilities, and structured parking) in qualifying municipalities.

• The planning grants from the state would range up to $500,000 apiece. They would enable municipalities to “assess development potential, revise development regulations, determine infrastructure needs, and analyze value capture opportunities.”

• Each grant would result in establishment of a Transit Development District within which public investments and development incentives would be focused, and in a Station Access Plan that addresses parking, pedestrian, and community services.

• The state would formulate joint development guidelines, directing procedures on requests for proposals and the criteria for evaluating projects.

Zoning changes at the municipal level could permit transit-supportive densities, mixed uses, and parking flexibility while taking neighborhood context into account, RPA suggests. “Additional density in the form of bonuses could be offered in exchange for developer contributions to a station area improvement fund, generating additional revenue for the station area while providing developer flexibility,” RPA says. “Municipal plan review/permitting will be expedited for transit-oriented development projects in the district.”

The municipality could establish a tax-increment financing (TIF) district with the same boundaries as the Transit Development District. It would be expected to include properties within about a half-mile of the station.

Besides paying for street and streetscape improvements and structured parking, revenue from the TIF district might support such things as affordable housing, local transit or commuter shuttles, parks, and greenways. “The municipality should promote the creation of a station-area business improvement district [a special taxing district] to support business-enhancing improvements, services, and activities,” RPA adds.

The program advocated by RPA is extensive, but it may be needed if Connecticut is to overcome the obstacles to well-planned development. The state has been stagnant in population for years. Its business growth has been anemic. Many of its suburbs and small cities have little experience in guiding compact, mixed-use, transit-oriented development. Some communities along the main Metro North route between New Haven and New York have been more intent on providing parking at the stations than on accommodating mixed-use development.

Exacerbating the situation, the state government in recent decades, under Republican governors and Democrat-dominated legislatures, has run up large debts, leaving little money in the general fund to pay for major improvements at rail stations.

Against those difficulties must be counted the administration of Governor Dannel P. Malloy, a Democrat who, as mayor of Stamford, saw the importance of commuter rail to his city’s prosperity.
RPA sees value capture as a concept that can also be applied to other station areas, including those in the busy Metro North corridor, where additional stations are under way.

“We have agreed with our partners that this will be a year of education to get the executive and legislative branches comfortable with the concept rather than trying to push something through that may not pass,” Kooris told Better! Cities & Towns. RPA co-hosted a transportation revenue and financing conference in Hartford in January. Additional discussions will be organized in future months.