TOD Market Feasibility Study Says $Millions to be Spent Won’t Create New Development

Slager/Visclosky Regional Transformation Plan is going to require lots of tax money according to a Market Feasibility Study performed by Strategic Economics.

May 29, 2017-The Northwest Indiana Regional Development Authority (RDA) plans to spend at least $400M* of your money on transit oriented development (T.O.D.). According to the website Reconnecting America, “Transit-oriented development, or TOD, is a type of community development that includes a mixture of housing, office, retail and/or other amenities integrated into a walkable neighborhood and located within a half-mile of quality public transportation.” As part of the plan to move forward, the RDA commissioned a “market feasibility study.” The study was conducted by Strategic Economics, a Berkeley based company that is staffed by planners, not economists. According to their “Who We Are” page, virtually every staff member graduated from UC Berkeley with a Masters in Planning.

While the study is short on actual data, the authors repeatedly make two things clear: That any T.O.D. is going to require tax dollars and that there is currently little demand for a train in Munster. According to the report, just 2% of those who live within 1/2 mile of the south Munster station work in Chicago.

The report reiterates what others have said throughout the country, that T.O.D. requires massive public investment for little return. Ft. Wayne Council Member Jason Arp recently examined spending in his City and found that the Redevelopment Commission was spending $300,000 to create land on which to develop each residential unit. The land is then sold at a steep discount or given away free to developers. According to Councilman Arp, the average price of a home in Ft. Wayne is about $100,000. Similarly, the RDA Market Feasibility Study found that tax dollars will have to prop up the grandiose RDA plans for residential development:

“Since developing a unique product creates additional risks and costs for developers, the West Lake Corridor communities may need to provide incentives and subsidies to accelerate development that matches a vision for
higher-intensity TOD.” Section 3.2, p. 32

The author goes on to point out that infrastructure “investments” are not enough:

“Planning, investments, assistance, and incentives will be needed to help leverage the value of new transit access. Station area planning sends market signals to developers by showing the community is ready for
a new type of growth. Complementary investments in connective pedestrian, bicycle, and road infrastructure can indicate the public sector’s financial commitment to achieving a successful transit oriented district. And development incentives can spur early development activity, while “proving” market appetite for new models of housing and commercial uses.” Section 1.1, p. 6

The sentiments echo those of a recent conference held by The Congress for a New Urbanism, an organization which RDA Architect Doug Farr is closely aligned:

“In the world of Transit Oriented Development, “build it and they will come,” is not always an accurate prediction of the future. Quite often the ambitious plans for redevelopment at new or expected transit stations drawn up by cities and towns fail to gain traction in the marketplace even when it is proposed as part of a corridor improvement program into which the municipality has committed funding.

Interestingly, the construction of affordable housing can sometimes be the instrument to catalyze the municipally proposed redevelopment at the same time as it provides homes for those unable to afford market rate units. If the affordable housing is designed with the architectural and urban quality imagined for the whole of the redevelopment, i.e., if it is designed help create ‘place’ by establishing walkable streets, and livable public place, then it can provide the catalyst for market rate development to occur later. Moreover, unlike the Not in My Back Yard objections that often greets proposers of affordable housing in established neighborhoods, there are usually few neighbors to object in such redevelopment areas, and therefore entitlement can be swifter.”

Thus it is clear that the Slager/Visclosky Regional Transformation Plan is not only going to be extremely expensive to build, it will be a continuing tax burden for eternity. But as NIPSCO’s Don Babcock says “Get on board or get out.”

You can read the full report at the Westlake TOD Civic Page

*Editor’s Note: The number $400M in tax money to be spent on T.O.D. is derived from the Policy Analytics estimate of funds to be captured in the first 20 years under House Bill 1144. You can see that analysis, broken down by station area, in the series of slides below. As always, click for full sized images:

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