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To Buy or Not To Buy 

Report says more subsidies needed to make transit work; planners disagree

A report that's been gathering dust at the Charlotte-Mecklenburg Planning Commission since February contains surprising, and expensive, news about what it might take to make the light rail line along South Boulevard work.

The bottom line of the report, which was prepared by consultant Robert Charles Lesser & Co., is that without large government subsidies, much of the corridor isn't likely to attract the kind of development needed to make the rail line a success.

Planning Commission Director Martin Cramton, however, says the report's conclusions are wrong and that no such government subsidies will be needed since developers will find enough demand for development along the corridor to justify their investment.

According to the study, in order to attract development along the future rail line, much of which is currently pockmarked with old, low-density, unsightly development, local government may have to condemn or acquire hundreds of acres of land around transit stops so it can be given or resold to developers to help them combat the high cost of redeveloping the corridor.

Again according to the report, if local government wants the kind of office, commercial, residential and retail development around the transit stops that it will take to produce rail ridership, officials may have to act as a developer in joint-venture deals with private sector developers, provide gap financing, build parks and plazas to anchor development and provide parking and other infrastructure.

Local developers interviewed for the Lesser & Co. report echoed the same sentiments. The report made no suggestions as to how much this might cost or where the funding might come from other than that the resources "might not be available to the City and/or County."

But it did paint a stark picture of the difference city participation in development around the transit stations could make. If the city took the proactive approach described above and limited development outside the transit corridor, the seven stations along the south light rail line could attract 3.4 million square feet of office development and 8,200 jobs over the next two decades. Without city help, the consultant forecast only 1,700 jobs and 861,250 square feet of office development around the stations.

Six years ago, when public officials were debating the transit plan, it was largely assumed that the transit corridors would attract development if the city made some relatively minor infrastructure improvements to the area. But the Lesser & Co. report, which is based on analysis of trends in rail corridors across the country, argues it could be more complicated. According to the report, light rail has been shown to have little or no impact when it comes to attracting development density to areas that don't already have it, although it can add some momentum to areas near high-end housing that are already experiencing significant development without it, like the South End area, which will be home to what the report predicts will be one of the line's most successful stations.It also helps if already vacant, undeveloped land, called "greenfield" land, is available. Since most of the land around the other seven proposed station areas along the South Boulevard line is "brownfield," or already developed land with low-density, aging properties and no high-end residential development, redeveloping it would likely require developers to acquire and rip down acres of pre-existing development around the sites.

Because the zoning is already in place for 8 million to 10 million more square feet of office space on as-yet-undeveloped greenfield land in southern Mecklenburg -- and because the office market in the county as a whole is already saturated and suffering from 15 percent vacancy rates -- attracting office development to the corridor over the next decade or more will be "more difficult and costly to undertake," according to Lesser & Co.

So far, the city and the planning commission's response to the report has been to largely ignore it, which may be why the public hasn't heard much about it. When asked how the city should address the challenges described in the report, Planning Commission Director Martin Cramton vehemently dismissed its findings.

"I don't care what the report says, I don't agree with it," said Cramton. "If you go down the south corridor right now, we're out as far as the 3030 South project (at South Boulevard and New Bern Street) and you can see a big hole in the ground where they're building a mixed-use development. If you went back to 1997, the conventional wisdom was that that area was dead as a doornail, no developer was interested in it, nothing could ever happen, don't bother. The city took a very aggressive role in working with some landowners. We used $1.5 million of money to invest in sidewalks and new curbs, providing those improvements along South Boulevard. That ignited that and it took off, so I would suggest that you can't look at conventional wisdom that says oh, it's too hard, nothing is going to happen. That transit investment is going to change the market. Ten years from now it's going to be a much different market."

But Lesser & Co. and the unnamed local developers interviewed for the report, contend that the development success of South End is due to other market factors, with light rail transit being "an additional benefit, but not a growth driver."

Because the south rail corridor lacks nearby interstate access, Lesser & Co. argues that serious office development opportunities may be limited and retail development could be limited by access and visibility problems. But the station could still be home to 173,000 square feet of office, 250,000 square feet of retail and nearly 2,500 residential units if the city "gains control" of an older business park to the west of the station that contains a number of properties that may be "difficult for developers to assemble," relocates the Pepsi bottling factory, and addresses old, decaying industrial properties in some fashion. This would mean acquiring and "redeveloping" 93 acres around the station. The report recommends acquiring another 300 acres around the six other stations and conducting environmental testing on the property to make sure it's developable.Part of the problem, according to the report, is that developers need larger tracts of land for high density developments, yet the land necessary for this development is currently in many small parcels owned by owners who might not want to sell unless forced to, or who might charge prices that would make development unaffordable.

But Cramton isn't worried. Despite what developers told Lesser & Co., he believes that if left to their own devices, there will be enough demand for development along the South Boulevard transit corridor to prod developers to assemble the land themselves without city help and develop the rail corridor without city financing.

"The market is sufficiently strong in Charlotte that the city can play a very small role as sort of a catalyst to sort of get things going," said Cramton. "We have a strong market and strong private sector that can step in and take advantage of those market opportunities. We have been doing that for the past 25 years again and again and again. It's not some untried crazy idea somebody has."

Cramton says the city's role will include infrastructure improvements that will pave the way for development like sidewalks, street connections and water and sewer improvements, which will be funded not with transit funds, but with city capital improvement dollars.

"I would suggest that the assumption that the city has to acquire land, that's just somebody's opinion," said Cramton. "That's not part of any plan."

Cramton also says it's not necessary to restrict growth outside the transit corridors, as the report suggests, to make transit work, although some in the business community have argued that that's exactly what new general growth policies proposed by the planning commission do.

Cramton says the new policies reflect a natural inherent restriction on how much development can be built outside transit corridors based on available infrastructure. Transit corridors like the south light rail line won't have to compete for residential development with areas outside the corridors, he says.

"There's more than enough residential demand for high-density development over the next 20 years that that's not a choice we have to make," said Cramton.

Contact Tara Servatius at tara.servatius@cln.com.

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