Here at the ULI Fall Meeting in Denver, it is two steps forward and one step back for TOD projects in the city and region. In 2004 Denver metro voters approved a sales tax increase called FasTracks to pay for $4.7 billion of investments for several passenger rail lines to be built by the middle of the present decade. Lo and behold the recession hit and sales tax revenues declined. Coupled with material cost increases, the $4.7 billion now will take a little longer to raise and pays for approximately just two-thirds of the original planned lines.
All is not lost, of course, and there are several lines currently under construction or contract, including the West Corridor set to open next year and the East Line that will connect to Denver International Airport. As well, the $500 million Union Station project is near three-quarters complete, and will be the main hub of the entire system.
With 50-plus rail stations come opportunities for significant TOD investment, with much already occurring. The Regional Transportation District (RTD) has plans in place for most station areas, including four pilot programs that seek to jump start projects.
The Urban Land Conservancy is a non-profit in Denver that is working to help purchase land, finance and otherwise put complex TOD deals together, particularly those that provide affordable housing. They estimate demand in the next decade or generation of development to be for more than 40,000 affordable units in the Denver metro. They have successfully pieced together seven transactions so far creating or preserving nearly 500 units of housing. A project soon to be started is Mile High Vista, which will not only include 80 affordable housing units but also ground floor commercial space and a new city library.
A local developer, Medici, has completed several TOD projects and has another under construction now. While the market for housing units has remained strong, particularly affordable, developers face the usual issues of providing enough but not too much parking and making ground floor commercial work. In one development, Medici’s pro forma for the ground floor retail space assumed 50% vacancy and they report those expectations have been met. Medici also indicates that the City of Denver is easier to work with recently, thanks in part to its new zoning code, with more built-in friendliness to transit and mixed-use development, not to mention form-based.
There is plenty of reason for optimism new opportunities for TOD in the Denver area. It has been six years since I wrote about TOD for the 2006 ULI Fall Meeting held in Denver. While the region hasn’t overcome all of the hurdles brought on by the recession, the new rail openings and TOD projects, particularly Union Station, are reason to celebrate.
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