Nashville’s TOD Plans Consider Placemaking, Economic Development Components

As Nashville prepares to turn its vision for a $6 billion, 25-year regional transit plan into reality, public and private sector representatives are exploring how transit can address other pressing issues, including improving access to workforce housing and spurring investment in transit-oriented development (TOD) with the potential to bring new vitality to surrounding neighborhoods.

“The value comes from the places you’re making, not the transit,” said Marilee Utter, president and founder of Citiventure Associates in Denver, speaking at a ULI Nashville event. Joining her were Ben Collins, senior managing director for Crescent Communities in Charlotte, North Carolina, and Tony Kuechle, senior vice president of development for Doran Companies in Minneapolis.

They discussed TOD tools and financing, and offered examples of successful projects, all of which have a common link. “These are great people places,” Utter said of the best TOD. “They are destinations you want to go to—and, by the way, the transit gets you there.”

The stakes are high for Nashville and its surrounding region, which since 2010 has had the eighth-highest growth rate in the United States and ranks third in job creation. An estimated 82 people move to the region each day, adding to congestion and lengthening commute times. A study by Texas A&M University showing that commuters lose 45 hours annually to traffic delays placed the economic cost at $1 billion.

The success of the transit plan is “critical to the success of the region,” said Bert Mathews, president of the Mathews Company, a Nashville-based commercial real estate firm. “If we don’t solve this, we won’t be able to grow and compete as we have in the past.”

Mayor Megan Barry wants to hold a referendum next spring asking voters to approve new taxes to finance implementation of the transit plan, which will be funded by a combination of federal, state, and local dollars. That option was only made available earlier this year when Tennessee Governor Bill Haslam signed legislation giving cities the ability to raise local taxes to pay for transit initiatives. A poll by Vanderbilt University found two-thirds of Nashville residents support the idea.

Nashville also won approval to use tax increment financing (TIF) for transit-related developments. Previously TIF was restricted to blighted redevelopment districts.

“The real estate and development communities are a critical component” in the transportation plan’s success, said Mathews.

The $6 billion multimodal transit plan proposed by Barry and regional leaders includes bus rapid transit, bus-on-shoulder (also known as bus bypass shoulder operations), commuter rail between cities, and, for the first time, light rail in Nashville.

“If done right, it will make a huge difference in the quality of our city,” said Jimmy Granbery, chairman and chief executive of H.G. Hill Realty Company and chairman of ULI Nashville.

By linking neighborhoods to job centers, transit could help address another of Nashville’s growing pains: the city’s red-hot housing market has left behind workers who cannot afford to live close to their place of employment. Multimodal transit would open up new housing choices.

“We may not have an affordable housing issue as much as a connectivity issue,” said Granbery.

TOD can have a direct impact on housing availability. Charlotte’s light-rail system has spurred construction of 10,000 residential units since its launch in 2005. In its first year of service, the transit system exceeded its 25-year ridership goal and continues to attract new users, Collins said.

As residents move into their new apartments in the city’s TODs, new services often follow, including downtown Charlotte’s first full-sized grocery store, he said. “Whole Foods would not have gone into this location without transit,” Collins said.

Offices and retail space are following in the footsteps of some new rail stations, but those developments take time, he said.

TODs can take a number of years to design, finance, and build, and their cost can be as much as 20 percent higher than other developments. In addition, developers should envision them as connected parts of the transit corridor, with each having a different focus, said Utter. “You don’t want them competing with each other,” she said.

It takes effort to include affordable housing in a TOD, and achieving the necessary density to make the project work requires working closely with neighborhoods to overcome pushback.

“Why would a developer bother?” Utter asked. In answer to her own question, she noted that in the long run TODs are stable investments that withstand economic cycles and can generate 25 to 50 percent premiums on lease rates.

The most successful developments connect to their surrounding neighborhoods with sidewalks and bikeways, she said. In Charlotte, thousands of people use a “rail trail” walking path between stations, Collins said. “TOD design is about creating a walkable, safe environment,” said Kuechle.

The best TODs emphasize authenticity by incorporating existing or historic buildings, noted Utter. “Everybody wants to be in a place that’s real,” she said. Perhaps TODs “should be called ‘development around transit,’” she said. “It’s about making places.”

TOD works best when associated with rail systems, which represent a permanent investment in infrastructure, rather than bus rapid transit (BRT), which can shift routes. “You invest for 40 or 50 years. The permanence is important,” said Collins.

BRT’s “gold standard,” which includes dedicated traffic lanes, can cost almost as much as light rail to construct but does not attract the same level of private sector interest, said Kuechle. “Light rail is a prime economic development system,” he said.

TODs allow developers to cut the expense related to constructing parking spaces. And because they attract residents who may not need a car, TODs are stable investments capable of weathering economic downturns, said Kuechle. “Not having a car can save 15 to 20 percent of personal income. During a recession, you don’t have to choose between your car and giving up your apartment. It’s a safer investment,” he said.

Utter agreed that “the beauty of a TOD is you can cut that parking” because residents do not need it. “People self-select to go to transit stations, especially to live there. For them, it’s an identity. They want to ride their bike, take transit.”

But there is one feature essential to success, she said. “If you do a TOD, for God’s sake put in a dog wash.”

Nashville is one of the cities selected by Bloomberg Philanthropies and the Aspen Institute to prepare for the emergence of autonomous vehicles (AVs). Other participating cities are Los Angeles, Austin, Paris, France, and Buenos Aires.

An audience member asked whether transit represents an investment that might be obsolete in a few years. Utter said she was skeptical of that. The emergence of AVs “might encourage sprawl,” she said, “but it’s not going to put transit out of business.”