All posts in “Featured Work”

Can congestion pricing help cities become more equitable?

Written by Jamison Dague, Jee Mee Kim, and Eric Rothman

 
This spring New York City took a major step toward becoming the first U.S. city to charge drivers a fee to enter its central business district by passing the Traffic Mobility Act as part of the 2020 New York State Budget. Following in the footsteps of cities such as Stockholm, London, and Singapore, congestion pricing will reduce traffic in Manhattan and help fund New York City’s crumbling transit system, improving mobility options for the 67% of New Yorkers who take the bus or subway each day. And congestion pricing will likely help New York’s poorest residents, 56% of whom take transit to work/school and 50% of whom don’t own a vehicle.
 
But what works for New York City will not likely apply to all cities—and in some cases, may worsen conditions for a city’s poorest residents (as defined by earning 80% or below Area Median Income). There are a few steps to consider as cities around the country like Portland (OR), Seattle, Philadelphia, and even auto-centric Los Angeles contemplate congestion pricing.
 

  1. Provide appealing and affordable alternatives. The efficacy of congestion pricing depends on providing viable substitutes for driving. Alternatives should be convenient, reliable, and reasonably priced. For example, in advance of starting its congestion charging zone, London made radical improvements to bus service, replaced much of its fleet with new buses, and offered discounted fares on buses for regular commuters. Upon implementing Singapore’s road pricing initiatives, the city-state increased the frequency of public transport and built more than 15,000 public park-and-ride spaces outside the charging zone to encourage drivers to switch modes.
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  3. One size (and shape) does not fit all. Relatively few of New York City’s poorest residents and people of color commute by driving from the outer boroughs into the proposed charging zone. Most use the city’s transit network and failing subway and bus systems disproportionately impact these low-income communities of color. In contrast, 84% of residents in Los Angeles rely on a car, including the 32% of low-income drivers1 who would be affected by any future congestion pricing plan. New York’s model of charging a toll to enter the city center cannot be replicated across the board without thoughtful consideration of local issues and impacts.
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  5. Plan for equity. Early and continuous public dialogue should inform an understanding of the needs of a city’s most vulnerable residents, including low income households, people of color, immigrants, and seniors. In Los Angeles, Metro’s board recommended a motion authored by Supervisor Hilda Solis to consult academics, community groups, and local officials to lessen the impact on low income drivers. Seattle recently released a report to study the potential equity implications of congestion pricing. Like sales and property taxes, congestion pricing can be regressive—with lower income residents paying a higher share of their income to the fee compared with wealthier residents. Upfront planning and engagement can also build coalitions to garner broad support for a typically controversial proposal.
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  7. Beware of unintended consequences. The Wall Street Journal reported that congestion pricing may boost residential real estate values in the pricing zone by making streets quieter, cleaner, and safer. A 2018 study showed homes inside London’s charging zone are valued at a 3 percent premium, translating into a $13 billion windfall for homeowners. Conversely, some have argued that neighborhoods outside of New York’s proposed charging zone will suffer increased traffic as drivers cruise for limited on-street parking.
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  9. Establish an adaptable framework. Despite the political lift necessary to introduce congestion pricing, policymakers should be prepared to revisit and adjust the system to meet policy and equity objectives. For example, Singapore’s congestion pricing system, established more than 40 years ago, has incorporated electronic charging, parking fees, and is currently transitioning to a GPS-based system to refine its dynamic pricing policies. London’s traffic congestion has increased in recent years largely due to a surge in for-hire vehicles, which are exempt from congestion pricing charges and are proliferating with the use of mobile apps like Uber and Lyft. Ensuring the public continues to benefit equitably from congestion pricing requires nimble administration of the system.

 
Jamison Dague supports the firm’s implementation and management of public policy initiatives. Prior to joining HR&A, Jamison worked at the Citizens Budget Commission as Director of Infrastructure Studies where he provided ongoing economic, budgetary, and financial analysis of public sector infrastructure entities.
 
Jee Mee Kim is leader in HR&A’s Transit-Oriented Development and Transportation Practice. She works with clients to develop funding strategies, create corridor and station-area plans, and build public support for TOD.
 
Eric Rothman is a nationally-renowned expert in transportation planning, transit-oriented development, and economic development. Eric works extensively in transportation planning and transit-oriented development and He leads the firm’s work creating transit-oriented development strategies across the United States.

Leveraging Transportation Investments to Create Inclusive Cities

Building transit with neighborhoods in mind

 
Originally published in the October 2018 issue of MyLiveableCity. Written by Amitabh Barthakur and Ignacio Montojo
 
Cities in developing countries are experiencing an astonishing pace of urbanization and rapid growth with an unprecedented increase in transportation infrastructure investment. Around the world, almost 1,500 urban rail infrastructure projects are under construction, amounting to a total of 140,000 kms of new rail lines.
 
The growth of urban transit presents an opportunity to improve the standard of living for countless people, connecting them to economic opportunities and jobs. However, if transportation infrastructure is delivered without thoughtful consideration of the communities it serves, or the critical issue of focusing urban density, cities will be unable to fully leverage these significant investments and miss a once-in-a-generation opportunity to shape vibrant and sustainable neighborhoods through increased transit usage and access.

Transit development
is more than just infrastructure

Transportation agencies are typically incentivized to deliver transit projects at a fast pace. Most capital funding sources for transit usually have strings attached, and fast delivery ensures mitigating against cost escalations. In highly urbanized cities, land acquisition for transit alignments is another key challenge and transportation developers typically want to keep land acquisition requirements to a minimum. As a result, transit projects are often thought of as pure infrastructure, meaning they are planned in isolation from the greater social and physical environment.
 
This strategy follows the path of least resistance. But, if transit lines and stations are planned with the long-term goal of creating dense, walkable, well-connected nodes, the impacts on the use and value of the land surrounding will be remarkably beneficial. Increased job opportunities, knowledge spillovers, and efficient land use leading to higher transit usage are among the many benefits associated with high density, transit-oriented communities. The largest share of this value manifests in the form of private investment, particularly real estate development around station areas and along transit corridors.
 
While transit and associated development is an economic developer’s dream, it can also be a large factor in the gentrification of neighborhoods and displacement of residents who could benefit from transit the most. What some academics have dubbed ‘transit-oriented gentrification’ is occurring in cities around the world. There’s enough evidence showing that transit proximity, in conjunction with an insufficient housing stock, will often increase housing costs and decrease the number of low-income households.

Linking Value capture with
transit-oriented development

Under the right conditions, the public sector can capture the value transit creates, and create funding streams that use different ‘value capture’ mechanisms to not only fund infrastructure and public realm improvements, but also support equity initiatives like affordable housing and workforce development. Doing this requires big-picture thinking and proactive collaboration among city planners, economic development advocates, the private sector, community stakeholders, and infrastructure agencies at the earliest stage of planning.
 
Urban transit is particularly well-suited for value capture because it sparks development and revitalization. In Hong Kong, the rail property model unlocked development potential for over 600,000 public housing units. The success of the Mass Transit Railway system hinged on the proactive strategy of focusing all the city’s urban growth within proximity to its transit infrastructure. The system benefits directly from the private investment on transit-adjacent publicly-owned properties or from the sale and use of air rights above stations. The system also successfully generates ancillary revenues from retail and advertising within stations. With these streams of revenue, the system can invest in transit and other community benefits, completing a virtuous cycle of investments and benefits.
 
Value capture can be a critical element for cities looking to fully leverage their public investment in transit infrastructure in a manner that is economically sustainable and creates transit-oriented communities. But the ability to create value from transit investments in the first place depends largely on better integrating transit infrastructure with its physical surroundings. By integrating planning and value capture strategies early in the process before alignments are set, transit agencies can identify areas where transit is most urgently needed, urban designers and planners can design an interface that optimizes access and adds most value, economic development professionals can design appropriate value capture tools and, most importantly, transit developers can engage with community stakeholders to determine which services and community benefits are most desired.
 

Case Study | Metro de Medellin

A holistic approach to transit-oriented urbanism

In Medellin, Colombia’s second largest city with almost 4 million people, the public transportation agency Metro de Medellin, co-owned by the City of Medellin and the State of Antioquia, has played a significant role in driving an urban renaissance through a series of public investments in elevated rail, light rail, gondolas, and bus rapid transit. A foundational principle of Metro de Medellin was building the Cultura Metro, or the cultural identity and shared purpose for public good, to help develop marginalized sectors of the metropolitan area through transit investment.
 
Today, areas managed by Metro are perhaps some of the best cared for public assets in the region. While part of this is related to the operational efficiency of Metro as an organization, for the most part it is a manifestation of Cultura Metro. Metro’s goal, as an urban infrastructure provider and city-builder, is to ensure that Cultura Metro permeates the entire urban realm, not just within the transit system, but starting with the station areas and surrounding neighborhoods. To do this, Metro has taken steps to proactively think about integrating transit with its surrounding communities using a range of strategies, but three of them stand out in particular:
 

1. Bring everyone to the table to start thinking about land use from the very beginning.

Develop close collaboration and coordination between transit agencies, city planning and land-use authorities. If a broad range of stakeholders is not communicating prior to implementation of complex infrastructure projects, you cannot leverage your investments. A variety of people must be involved in implementation to ensure that transit infrastructure will be integrated rather than disruptive.
 
Collaboration between several public institutions was a key factor of Metro’s success in completing complex projects that complement its core transportation initiatives. Over time, Metro has also built internal capacity for interdisciplinary collaboration. Its urban development team of more than 30 planners, architects, real estate and financial analysts work closely with the transportation planning team and the City of Medellin’s department of city planning, to deliver integrated projects.
 
The agency is expanding its system, and for each line like the new Ayacucho Tram and H-Line Cable Car, they have started to define influence and intervention areas around stations and alignment. Intervention areas are immediately adjacent to transit stations and slated for physical interventions by Metro, particularly in terms of public realm, signage and access improvements. Influence areas, within the larger surrounding neighborhood, are planning areas that will directly benefit from new transit investments, generate ridership and present value capture opportunities.
 

2. Give transit agencies greater control on land-use along alignments.

The City of Medellín is in the process of granting Metro formal status as an urban development corporation, which will give the agency greater jurisdiction over land use issues, proximate to transit. Beyond defining design guidelines, open space projects and pushing transit supportive zoning, Metro will have the jurisdiction to apply eminent domain, collect revenues from certain value capture mechanisms in special financing districts, and manage the open space and public realm within intervention and influence areas. While empowering transportation agencies to implement station area development may not work everywhere, Metro’s demonstrated commitment towards a better urban environment combined with their intellectual and technical capacity to accomplish their goal of integrated transit use, can be very effective.
 
This approach ensures that planning for station areas happens early on and mitigates any conflicts between transit infrastructure delivery, operation, and the surrounding environment, in turn supporting greater ridership and enhanced economic benefits.
 

3. Strategically acquire land for alignments to support better integration of transit stations with the surrounding station area.

Trying to integrate surrounding land uses with transit infrastructure, once the infrastructure is already built, can be a challenging if not an impossible task. Metro’s approach to transit planning includes proactive strategies to acquire land, particularly around stations, that have the scale and capacity to be developed later. As transit stations are the primary interface between the transit system and the rest of the Metropolitan Area, this approach ensures station areas can support transit-oriented development, as well as safe and easy access to stations. The end goal is to have active station areas and higher ridership. Planning around Medellin’s Metro system also involved developing land in areas with little or non-existent public investment, with a focus on improving public infrastructure and amenities such as parks, libraries and streets.
 

Seeing the benefits

Medellín’s integrative planning process has helped the city harness the value of transit not just in dollars, but also in improved quality of life and transformed the city for many generations to come.
 
Medellin is a narrow valley and Metro operates a range of interconnected modes to maximize transit access to all communities. This includes heavy rail that forms the backbone, connected by trams to the edge of the valley, which are further connected to cable cars that provide access to dense neighborhoods on the hillsides. People living in mountain areas surrounding Medellin have benefited by having their travel time to the city center reduced from an hour to less than ten minutes – improving their access to employment opportunities and other resources in the formal city.
 
The MetroCable planning exemplifies how transit can be used to benefit those who have low access to transportation in the first place. Public safety is another aspect of quality of life that has been improved for countless people in Medellín – the murder rate in the city has fallen by more than 80% since 1991, the decade before many of the integrative planning projects were introduced.
 
The new stations themselves have also transformed neighborhoods into resource-laden cultural and social hubs, with many libraries, schools and sports facilities built around transit stations. Investment in holistic transportation planning that accounts for improved connectivity and quality of life has worked to transform the social fabric of Medellin into one of Colombia’s most livable cities.
 

How can this work in my city?

Urban planning and design professionals have a responsibility to advocate that their respective cities build capacity around inclusive and integrative planning by engaging public, private and civic actors. Lack of cooperation and communication are major roadblocks to creating plans for transit that will encourage efficient, dense and inclusive growth, which in turn can support the long-term economic sustainability of cities.
 
We need to recognize that transit infrastructure development, economic development, community development and real estate development are not discrete activities that contribute to city building. They are interrelated processes that have symbiotic relationships with one another. While there may be a set of private and public actors who appear to have discrete roles in these activities, the lines between them need to dissolve if we are to create livable cities.
 
Amitabh Barthakur is a leading land-use expert and development economist. He’s worked with cities and transit agencies around the world to design value capture opportunities through real estate development and land use for transit systems and cities.
 
Ignacio Montojo advises cities and transit systems on public-private partnerships and innovative financing strategies for real estate and urban infrastructure projects in the United States and Latin America and the Caribbean.

Mayors Rebuild Puerto Rico

On September 20th, 2017, Hurricane Maria made landfall on Puerto Rico. Electricity was knocked out across the island and the accumulated damage was widespread and unprecedented. Already burdened with weak physical and economic infrastructure, the island is still struggling to restore basic services and recover from the staggering storm-related death toll, which is in excess of 4,600 lives.

 

To support those on the front lines of recovery, HR&A has partnered with the Open Society Foundations to design, manage, and execute the Mayor Exchange, a peer exchange and technical assistance program to improve the capacity of and resources available to Puerto Rico’s mayors. Through the exchange, we have matched 14 mayors from the US mainland with 14 Puerto Rican mayors to create a network of support through knowledge sharing and a series of reciprocal visits.

 

The Exchange also facilitated two day-long technical assistance workshops to build the capacity of Puerto Rico’s mayors and municipal staff on topics such as resiliency planning, fiscal health, and economic development.

 

 

HR&A’s is honored to be leading the charge on this work. “We are already making an impact,” says partner and lead of the Inclusive Cities practice, Andrea Batista Schlesinger, “influencing the ways Puerto Rican cities think about resilience, bringing mayors across party lines together for the first time to advocate for their interests, and offering technical assistance that would otherwise be unavailable. It’s work to be proud of, but the needs are so profound that we are but scratching the surface.”

 

The Exchange is co-chaired Mayor Pedro García Figueroa of Hormigueros, Mayor Javier Jiménez Pérez of San Sebastián, and former Mayor Mitch Landrieu of New Orleans, whose deep understanding of the important role that mayors play in leading their cities through recoveries from disaster has been an invaluable resource to this program. See below for the list of mayors matched to date.

 

 

Puerto Rico Mainland US
José Santiago Rivera, Comerío Rahm Emanuel, Chicago, IL
Roberto Ramírez Kurtz, Cabo Rojo Gary McCarthy, Schenectady, NY
Nelson Torres Yordán, Guayanilla Jorge Elorza, Providence, RI
Ángel Pérez Otero, Guaynabo Tom Tait, Anaheim, CA
Pedro García Figueroa, Hormigueros Mike Duggan, Detroit, MI
Carlos Delgado Altieri, Isabela Stephen Hagerty, Evanston, IL
Julia Nazario, Loíza Rahm Emanuel, Chicago, IL
Jesús Márquez Rodríguez, Luquillo Chris Cabaldon, West Sacramento, CA
Jorge Márquez Pérez, Maunabo Catherine Pugh, Baltimore, MD
María Eloisa Meléndez Altieri, Ponce Mitch Landrieu, New Orleans, LA
Carmen Yulín Cruz, San Juan Jim Kenney, Philadelphia, PA
Javier D. Jiménez Pérez, San Sebastián Mark Stodola, Little Rock, AR
Bernardo Márquez García, Toa Baja Paul Soglin, Madison, WI
Luis Javier Hernández Ortiz, Villalba Ravinder Bhalla, Hoboken, NJ

 

Interested in learning more about the program? Contact Partner Andrea Batista Schlesinger.

Better Incentive Policy

Today, cities across the United States use incentives to drive job creation, capital investment in buildings and infrastructure, and neighborhood revitalization. For many jurisdictions, incentives represent substantial public expenditures, whether these occur in the form of direct loans and grants, foregone tax revenue, or pledges of local government credit. In 2012, the New York Times found that the total value of annual state and local incentives granted exceed $80 billion.[1] The ongoing courtship of Amazon by cities vying to host the company’s second headquarters – with economic incentives cited by Amazon as a key criterion – has again brought such incentives to the forefront of national policy conversations. Given the scale of the investments involved, local policymakers and members of the public are increasingly concerned with ensuring that incentives deliver progress against core economic development objectives and generate the greatest public benefit for the least cost.

 

Aligning Incentives to Advance Public Policy Objectives

 

In most cases, cities’ incentives toolkits are legacy policies that were developed within a different market and policy context, with programs oftentimes rooted in underlying state statutory frameworks. For this reason, the toolkits that exist today may be more reflective of past environments instead of present conditions. In cases where cities have begun to see the fruits of successful efforts to attract investment in their downtowns and core adjacent neighborhoods, many are re-evaluating the need for subsidy in new development projects in strong submarkets. As cities look toward promoting greater inclusivity, local administrations are also looking to how their incentive programs can best support equitable investment across a wider range of neighborhoods.

 

Cities must periodically reassess their toolkits to ensure that the structure and deployment of their incentives advance policy objectives and address current-day market challenges. In assessing their incentive toolkits, city leaders must ask themselves a fundamental question:

 

How effective are our incentive policies in advancing progress against the critical economic and community development challenges we confront as cities today?

 

Agreeing on economic and community development policy goals is an important starting point. In some cases, doing so requires cities to find ways to reconcile potentially conflicting goals. For example, cities may need to consider how best to balance a desire for the greatest aggregate job growth with an interest in supporting quality jobs that offer living wages and viable career ladders.

 

Answering this question also requires accurate measurement of the costs and benefits of incentive deals, including the opportunity cost of foregone tax revenue and an understanding of the public benefits delivered. In many cases, this requires careful efforts to collect and verify data on incentivized projects, a clear methodology to measure program outcomes, and a willingness to revisit approaches to project evaluation metrics and tracking processes.

 

Finally, a constant concern in managing incentive programs is ascertaining that the level of incentive provided is commensurate with the need – “but for” the provision of the incentive, a given project would not have happened. Asymmetrical information issues can frustrate public sector efforts to ensure the efficiency of their programs, as businesses and developers seeking incentives have better knowledge of their capital and operating costs and the corresponding need for public subsidy to fill any financial gaps. In some cases, cities will rigorously “gap test” projects to assess the level of subsidy required. In other cases, economic development departments can periodically evaluate the relative need for incentive support citywide, studying different types of development projects within a range of submarket conditions. Cities can then vary the level of subsidy to better reflect market realities and encourage delivery of public policy objectives. In some cases, cities have leveraged this knowledge to directly address matters of equity; one example is a “recapture” of excess tax increment for incentive deals within strong submarkets, to be reallocated for investment in historically underserved neighborhoods.

 

Innovative Approaches in Cincinnati, Columbus, and New Orleans

 

With assistance from HR&A, the cities of Cincinnati and Columbus, Ohio, and New Orleans, Louisiana, have all undertaken strategic reviews of their incentives programs within the past two years.

 

Cincinnati sought to assess the relative effectiveness of its incentive programs in achieving its economic development goals, as well as identify how to adapt its incentive regime moving forward, given the city’s growing momentum as a place to live and work. HR&A helped Cincinnati develop a strategic framework defining when and how to deploy specific incentive programs, including creating a standardized set of metrics, based on historical data, to enable deal comparison within and across programs. We also helped create a single database for all incentive programs, building on the data we compiled for our study, as well as user-friendly tools and reports for project evaluation and performance tracking, streamlining project review by staff and City Council and more clearly communicating the public benefits of projects.

 

Columbus sought to understand the need for incentives to catalyze development in different submarkets, as well as the overall competitiveness of its commercial incentives. HR&A helped the City identify opportunities to re-calibrate its current incentives in different market contexts to maximize public benefit. We recommended recapturing a portion of the value offered by incentives in more prosperous submarkets to support investment in distressed areas, strategically leveraging funds and targeting them where they are most needed. In addition, we reviewed the City’s portfolio of commercial incentives, and identified opportunities to use incentives to support the creation of higher-wage jobs and drive place-based investment.

 

For New Orleans, HR&A is currently leading a comprehensive assessment of the City’s incentive portfolio to enhance its alignment with broader economic and community development policy goals. HR&A conducted a deep dive assessment of four priority incentive programs to identify their relative efficiency in achieving desired outcomes for different types of projects. We are providing the City with a strategic framework for deploying its incentive toolkit, consisting of initiatives to streamline oversight of incentive programs, create program-specific mandates that help to maximize delivery of public goods such as affordable housing and workforce development, and expand program access and deepen incentives for underserved communities.

 


 

If you’re interested in how HR&A can help your city maximize the value produced by your incentive policies, please contact Partner Cary Hirschstein.

 


 

[1] Story, Louise, “As Companies Seek Tax Deals, Governments Pay High Price,” New York Times, December 2, 2012.

 

High-Speed Rail Meets High-Speed Growth

California’s proposed high-speed rail (HSR) system has the potential to spur dramatic economic growth throughout the state. While public attention is largely focused on the benefits of three-hour commute from Los Angeles to San Francisco, the biggest beneficiaries of HSR might be California’s smaller towns and cities. At this year’s Rail~Volution Conference, HR&A Principal Judy Taylor examined how stronger connections between California’s major economic hubs and its mid-sized cities will drive economic growth.

 

  1. Access will attract new residents, but mid-sized cities must revitalize their downtowns to remain competitive. Palmdale and Bakersfield are mid-sized cities within a two-hour drive of Los Angeles that will benefit from high-speed rail. These cities will automatically attract new residents by offering shorter commutes and more affordable housing options than the suburbs of Los Angeles. However, each city can drive additional growth by reorienting commercial and residential development around new rail stations to draw regional economic growth from the periphery to the city center.

 

  1. Targeted development strategies and public improvements around station areas will go a long way. Many smaller cities face physical barriers to growth due to decentralized economic activity; these challenges are often compounded by years of under investment in their downtowns. Through targeted investments around station areas, and land-use policy prioritizing density and infill development, these cities can create competitive urban environments that offer desirable housing, jobs, and connectivity.

 

  1. The creation of a new type of central coordinating body would help drive additional growth. With the termination of California redevelopment agencies and their broad range of redevelopment powers, there is a need to establish a new type of independent entity, likely a public-private partnership, with the ability to coordinate investments. In addition to managing current growth, such a body could also help to advocate for future investment and provide a precedent for future high-speed rail stations to serve as economic anchors for these cities.

 

HR&A is advancing station area planning high-speed rail in both Bakersfield and Palmdale, California. Currently, we’re identifying market opportunities to develop competitive, transit-supportive amenities with the goal of transforming station areas into attractive downtown destinations with new residents, businesses, and visitors from around the region. Learn more about HR&A’s approaches to transit-oriented development across the nation.

Great River Passage Parks Master Plan Approved

 

The St. Paul Parks and Recreation Commission unanimously passed the Great River Passage master plan on June 28, 2012. HR&A prepared the management, funding, and implementation strategy portion of the plan, which was developed by Wenk Associates. The central recommendation of the plan is to unify 17 miles of parkland along the Mississippi Riverfront (an area totaling 3,500 acres) to create a more connected, more natural, and more urban park. The plan also suggests creating an “urban promenade” along portions of the downtown riverfront, offering additional tourism and river-oriented recreation opportunities.

 

When implemented, Great River Passage will remake the Mississippi Riverfront as a world class amenity for St. Paul’s residents, workers, and visitors, and will transform the city as a whole by sparking economic development in downtown and in surrounding residential neighborhoods. It will be managed by a new division of the Parks Department, implementing one of the key outcomes of HR&A’s work on the project.

 

The City and County will review the master plan in the next stages of the approval process, expected to conclude in December 2012. The full master plan is available here.