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Bus Rapid Transit Can Boost Local Growth

Rapid transit line, HealthLine in Cleveland
A new study reveals that such bus rapid transit lines as the HealthLine in Cleveland can be more cost-effective than a light-rail line, bringing in one dollar of commercial development for every dollar spent on the transit system. Wikimedia Commons/GoddardRocket

Bus rapid transit lines can be economical to build and stimulate just as much local development—and economic growth—as other forms of mass transit, according to a new study.

October 29, 2013—While Bus Rapid Transit (BRT) lines have increasingly become a go-to option for cities looking for affordable transit upgrades, the option often suffers from a poor image: stakeholders tend to focus more on the “bus” than the “rapid transit.” Often, a light-rail transit (LRT) option is easier to sell, even though it may be more expensive to design, build, and operate.

But a recent study by the New York-based Institute for Transportation & Development Policy (ITDP), “More Development For Your Transit Dollar: An Analysis of 21 North American Transit Corridors,” found that the top BRT lines stimulated just as much, if not more, local development when compared to other transit options, making BRT worth a second look. According to the study, BRT lines have stimulated more than $1 billion in development on average—and one, Pittsburgh’s MLK line, generated just over $900 million. Only three out of seven light-rail lines transit (LRT) lines match that billion-dollar marker.

“The biggest surprise was that actually the transit [type] itself is not the main factor responsible for stimulating development,” says Annie Weinstock, the director of the U.S and Africa initiatives for the ITDP and one of the authors of the report. “After you build the transit, it doesn’t just happen automatically. There was a direct correlation between the corridors that received the most private investment and the level of government support given to those corridors outside the transit investment itself.” In fact, the level of government funds spent to prime an area for redevelopment was the most important variable in determining the amount of private investment that a transit line could ultimately stimulate—the type of transit was not the driving factor. Other important variables included the strength of the land market around the transit corridor and the characteristics of the BRT system itself. A conveniently located system with attractive stations and amenities will attract more riders—and more investment.

The report may begin to dispel the notion that BRT is an inferior infrastructure investment when compared to fixed-rail systems. “One of the reasons we wrote the report now is because, until recently, there wasn’t enough longevity in high-quality BRT systems in the U.S. to be able to look at it systematically to see which BRT and LRT corridors have had comparative success,” Weinstock explains. But as more BRT lines have begun to operate, a comparison became viable.

The report studied 21 transit corridors—14 of which generated more than $1 in transit oriented development (TOD) investment per $1 spent on transit itself. Of those 14, five systems were BRT and four were LRT. The study found that Cleveland’s HealthLine BRT and Portland’s MAX Blue Line LRT generated the most TOD investment: $5.8 billion and $6.6 billion, respectively. But because the BRT was less expensive to build, the BRT effectively leveraged more than 30 times the TOD investment per dollar spent than did Portland’s system.

The report is welcome news in cities like Cleveland, which had been considering a transit line for years that would connect its downtown with University Circle, the city’s second-largest employment center and home of such significant institutions as Case Western Reserve University and the Cleveland Clinic. The 4.5 miles in between those endpoints, called MidTown, was once the city’s “millionaire row” and later served as a warehouse and distribution center, but more recently the region has felt the brunt of the loss of the city’s manufacturing base.

Both the city and the Greater Cleveland Regional Transit Authority agree that collaboration was necessary—among city agencies, the transit authority, local institutions, and local developers—to move its system forward and bring MidTown back to life. “No one entity could have done this on their own,” says Tracey Nichols, the city’s director of economic development. “It’s really about this public, private, philanthropic partnership.”

An early test of that collaborative spirit resulted in the stakeholders uniting behind BRT. The decision eventually came down to an $800-million rail line along Euclid Avenue or the $200-million HealthLine BRT. “If it were all or nothing, it would be nothing,” says Mary Shaffer, a spokesperson for the RTA. “We would prefer that we have this revenue generator and connector between the two job centers and the ability to be the catalyst [for growth].”

The 9.8 mi HealthLine opened in 2008. As the study bears out, government assistance was crucial in priming the pump for the successful revitalization of the area. ITDP’s Weinstock notes that while it’s hard to say if there was one kind of specific government support that was most important, good zoning practices were key.

One of the best examples of this partnership involved the redesign of the street itself. “It wasn’t just building a lane for our buses and building medians and building all of our systems,” says Shaffer. “It was working with the city to redesign the entire street. Those seven miles on Euclid [have] new fiber optics, new pavement, new sidewalks, everything.”

Ridership on the HealthLine is up 60 percent over the previous, traditional Euclid Avenue bus line, and the new BRT buses have double the capacity over the older vehicles. The work required a lot of unglamorous, behind-the-scenes work: assembling parcels of land, remediating those that were brownfields, and getting them ready to sell to developers—all the while “overcoming perceptions and helping people understand this could be a great area.”

After a bumpy start, the city is reaping rewards. The city had persuaded a developer to construct a building along the route “on spec” in 2008, but banks refused to finance it. So the city put in $10.7 million in low-interest loans, and has gone on to spend $77 million to leverage more than 300,000 sq ft of new space and more than eight acres of shovel-ready land since 2011. Nichols says 86 percent of it is now leased.

In a part of the transit corridor dubbed the Health Tech Corridor, some 1,940 jobs have been created, and what was at one time a 58 percent decrease in tax values in the area has become an increase of 325 percent since 2006. “There’s a return on investment,” says Nichols. “It’s not just putting in $77 million and saying ‘isn’t that nice.’ We’re making an investment in Cleveland’s future.”

The ITDP report also cites Pittsburgh as a city in which BRT is helping to revitalize a once neglected area. The long-impoverished East Liberty district of city boasted a BRT line that opened in the 1980s right at the edge of East Liberty’s retail district, the city’s second largest. But poverty and disinvestment in the surrounding neighborhoods had made the place a shell of itself, a situation that has reversed itself over the last decade or so. Ironically, the $900 million in investment in East Liberty was not directly related to BRT—until now.

“BRT has been kind of a locked-up asset,” says Mark Minnerly, the director of real estate development for The Mosites Company, a Pittsburgh developer. “The complexity of the land ownership around it has made maximizing value difficult—kind of isolating it from the business district in East Liberty.”

So although the line is heavily used, for years the city wasn’t able to leverage it to stimulate retail development, even though the BRT was likely a spur for growth in the adjacent neighborhood of Shadyside.

What changed? Minnerly says three things had to happen in East Liberty: Assembly of the land that could bridge the gap between the bus line and the East Liberty business district a few blocks away; the emergence of a market of consumers in Shadyside that could drive private investment; and the continuing success of the BRT itself.

The neighborhood finally has all three elements. For the first time, Minnerly says, “We have lenders and investors and other project partners voluntarily acknowledging the value, in their mind, of the adjacency of the transit.”

The Mosites Company has been working in the neighborhood since the late 1990s, crafting a 16-acre strategy to bridge the seam between East Liberty and Shadyside. Since 1999, the four phases of this development have become progressively denser, growing from a 32,000 sq ft Whole Foods grocery store project on two acres to a five-acre, 143,000 sq ft Target project. These larger anchors have lured in many so-called “junior anchors,” like Starbucks, Walgreens, Fed Ex Kinko’s, and T-Mobile, as well as restaurants and cafes.

Minnerly says the company is preparing to start an even larger project, one that will finally directly leverage the BRT station itself, with help from a $15-million federal TIGER IV grant, part of $60-million worth of shared infrastructure investments that will include a refurbishment of the transit station. (The project has leveraged an additional $75 million in adjacent private investments and Minnerly expects it to leverage even more in the near future.)

The new four-acre, 350,000 sq ft project will include market-rate residential and retail establishments, as well as a 300,000 sq ft, 500-car parking garage integrated into the BRT station. These developments will, in effect, “extend the East Liberty business district and the urban fabric right over to the bus station,” Minnerly says.

Minnerly adds that promoting the idea of shared infrastructure—a project that serves transit riders, city residents, development users, and commercial users of the business district—is what brought both public and private investors together.

In both cities, government assistance was important to get the ball rolling and convince private developers of the merits of investing in regions near BRTs. “It can be low-interest loans, it can be some small grants,” Nichols says. “You’ve got to start somewhere. You’ve got to show that there’s some promise and then you’ve gotta build on it.”



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