DALLAS — With more than $1 billion of road and rail projects in the works, the Dallas suburb of Irving is pressing ahead with the nation’s largest transit-oriented development despite economic challenges.
The so-called TOD will ultimately include the site of the Dallas Cowboys’ former stadium and is expected to surpass development in Arlington, Va., considered the largest and one of the most successful in the United States. One major difference is that the Washington corridor was built in better economic times.
“The current economic climate does make it difficult to jump-start these projects or see them to fruition,” said Drew Casey, liaison for the public policy consulting firm of Dean International Inc. in Dallas. “But Irving has a unique set of resources and location.”
Casey last week gave an overview of Texas’ current projects at the Irving Transit-Oriented Development Forum, whose participants included Dallas Area Rapid Transit.
DART’s Orange light-rail line is under construction through Irving en route to Dallas-Fort Worth International Airport and will include several stops, including one at Irving’s newly opened convention center. The convention center, financed with $133 million of bonds issued in 2009, has already hosted 122 events in its first six months.
Amid legal challenges, the triple-A rated city is also continuing plans to finance a $250 million entertainment center adjacent to the convention center with bonds backed by hotel occupancy tax revenue.
The convention center and most of the TOD are located in the Las Colinas district of Irving, built by developer Ben Carpenter in the 1970s to coincide with the construction of nearby DFW Airport. Las Colinas, home to six Fortune 500 companies, including Exxon Mobil and Kimberly Clark, was designed with transportation in mind, with an elevated “people mover” connecting major office buildings.
In addition to the office towers, the area includes luxury hotels and lower-priced lodgings, apartment buildings, single-family homes, and numerous retail outlets and restaurants. It provides a roadmap for today’s TOD, according to Casey.
“You must have an end product in mind that is sort of non-compromisable and a commitment to a long-range implementation of that project,” he said. “In the 1970s, Ben Carpenter had a motto of 'never settle’ for less than you expected. He really set a standard for waiting and seeing what the best potential was.”
Amid hard economic times, Irving has shown a relentless commitment to its development plans. When DART floated the idea of delaying the Orange Line due to falling sales tax revenue two years ago, city officials went on the warpath, demanding a return on years of support for the transit authority. DART managed to find the resources to build the line, now expected to begin service in 2012.
DART is also partnering with other governments to develop the so-called Cotton Belt Corridor, which would provide a second commuter rail line to Irving in addition to the current Trinity Railway Express that connects Dallas and Fort Worth.
The North Central Texas Council of Governments recently completed a study of financing the project using public and private sources with a goal of beginning service sometime after 2025.
In addition to the rail corridors, Irving is in the midst of major redevelopment of its multiple freeways and tollways. In the last session of the Texas Legislature, lawmakers approved funding for redevelopment of U.S. 183, also known as Airport Freeway, which bisects Irving. The new project will include tolled and free lanes. A new interchange is also in development linking U.S. 183 and Texas 114 at the site of Texas Stadium, which was demolished in 2010 after the National Football League’s Dallas Cowboys moved to a new facility in Arlington.
The former stadium site is now under lease to the Texas Department of Transportation as a staging area for the highway construction, which is providing more revenue than the football stadium did, according to city officials.
After TxDOT’s lease expires, Irving is planning to convert the site to high-density transit-oriented development featuring pedestrian pathways to a new station on the Orange Line. As the name implies, TOD is a two-way street, providing riders for the mass transit system and a growing tax base for the city that promotes it.
A 2004 study for the Federal Transit Administration found commercial land-value premiums near light-rail stations were 30% along San Diego’s North Line, 24% in San Jose, and 60% for some properties in downtown Denver. Land near Dallas’ light-rail stations increased in value 14% to 34%, while comparable properties’ value increased by only 3% to 7% over a four-year period.
While the ever-tightening leash on public finance could limit TOD in the short term, an Arizona real estate expert sees it as one pathway to recovery from the collapse of the housing market.
Mark Stapp, a real estate developer and executive director of the master of real estate development program at Arizona State University’s W.P. Carey School of Business, last month cited TOD as an example of how local sources could help unravel the funding snarl for affordable housing.
“In order to achieve community redevelopment, we need to look at the uniqueness and sense of place involved in different properties,” Stapp said. “We need local lending sources that are willing to help individuals and small businesses, that aren’t dependent on the formulas used by larger banks and decisions made far from the actual real estate locations.”
Stapp said the advent of mortgage-backed securities and the bundling of dissimilar properties in varied regions of the country led to a disconnection between local property values and their value on the securities market.
“Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale,” Stapp said. “Still, the financial world took properties with fundamental differences and bundled them together. This overlooked the nuances of the individual properties, which may work well when markets are good, but makes it really difficult to fix problems when the market is bad.”
In Arizona, Phoenix, Mesa, and Tempe are in the early stages of financing transit-oriented development along the Valley Metro light-rail line to Sky Harbor International Airport.
“We are trying to develop a bridge between community leaders and the real estate industry that helps focus on financing sustainable projects that will endure in and benefit our communities in good times and bad,” Stapp said.