Title
Light Rail's Impact on Economic Development and Community Visioning - Citywide
Description
This report provides the Economic Development and the Arts Subcommittee with an update on the economic development impact of light rail across the region and community visioning for the future of Phoenix's light rail corridors.
THIS ITEM IS FOR INFORMATION AND DISCUSSION, OR DISCUSSION.
Report
Summary
Light rail is a crucial driver of economic development for any city because it fundamentally transforms urban real estate and labor markets. Its most significant impact is generating Transit-Oriented Development (TOD), which concentrates private investment in high-density residential and commercial projects around stations, substantially increasing the municipal tax base. By offering fast and reliable transportation, a rail system dramatically expands the size of the accessible labor pool for businesses and the range of job opportunities for residents, leading to greater market efficiency. Furthermore, light rail signals a city's commitment to modern infrastructure and sustainability, which is vital for attracting and retaining the talented young professionals who fuel long-term innovation and growth. Ultimately, this investment in connectivity results in a more productive, attractive, and fiscally robust metropolitan area, while offering the City increased opportunities to attract quality companies and high-wage jobs that desire to locate in urban areas, not suburban areas. As the fifth largest City in the country, Phoenix must be able to compete economically with other urban markets in a knowledge based economy and light rail construction makes it possible for the City to compete for these types of economic development opportunities.
The Valley Metro Rail system has spurred a massive wave of development across its three member cities: Phoenix, Tempe, and Mesa. Total capital investment along the rail lines now exceeds $20 billion, with private construction accounting for over $16 billion of that amount. This investment has fundamentally reshaped the corridor, resulting in the creation of over 50,000 new housing units across the three cities. New urban amenities, like full-service grocery stores, have opened in downtown Phoenix and downtown Tempe, while Arizona State University has expanded its presence in all three areas, including opening a satellite campus along the light rail in downtown Mesa.
The Planning and Development Department (PDD) has created transit-oriented community (TOC) plans for seven communities situated along the City’s growing light rail network and is working to create three additional district plans. TOC allows for planning to go beyond traditional (re)development to accomplish connectivity to multi-modal options. These plans are developed through extensive, equitable, and highly purposeful community engagement processes, resulting in visionary yet practical strategies for how these areas can evolve over the next 10-25 years to benefit from high-capacity transit and walkable urban investments.
The planning processes and the resultant plans answer three fundamental questions: Who We Are, What We Want, and How We Get There. The plans are highly customized to the specific physical, social, and economic needs and aspirations of these individual communities, and the plans contain an implementation roadmap that emphasizes short-term actions for the City (and its partners), the business community and developers, and residents and neighborhoods.
These Council-adopted plans provide land use policy guidance, lay the foundation for future transportation and infrastructure investments, establish policy support for pursuing grant and funding opportunities, and guide diverse stakeholders on how they can help implement the vision.
The Community and Economic Development Department (CEDD) has sought to execute the communities’ vision within each TOC Planning Area by attracting private investment for mixed-use development with appropriate urban design and scale. CEDD’s efforts include marketing the light rail corridor opportunities, managing assistance tools and processes to develop city-owned property. When utilizing these efforts, CEDD strives to attract privately led projects that meet the TOC vision, supports existing and new businesses, as well as connects and attracts the workforce to employment opportunities.
Since the inception of Metro Light Rail’s construction in 2005, there has been $11.6 billion of capital investment within Phoenix's TOC Planning Areas. Of the $11.6 billion, 72 percent or $8.4 billion is comprised of private capital investment. Within Phoenix, we have seen that for each $1 of light rail’s capital costs, about $3 of private capital investment has been through projects built along the corridor. While the City did not have an initial snapshot of transaction privilege taxes (TPT) along the light rail corridor prior to construction, we can conclude that light rail has a significant positive impact to the City's tax revenues due to the combination of new construction, businesses, residents, students and visitors using the light rail system and services along the light rail corridor such as restaurants, shops and entertainment venues.
The TOC Areas within Phoenix have seen approximately 12.4 million new gross square feet of commercial space (office and retail), 25,300 new residential units, and nearly 4,100 new hotel rooms developed. Projects such as The Metropolitan, along with several multi-acre City-owned sites for 19 North, the Capitol Extension and South Central, are expected to drive at least another $5 billion in capital investment. CEDD includes light rail as one of our primary marketing details as a key public transportation and community asset that drives further capital investment and connects people to places.
Department
Responsible Department
This item is submitted by Assistant City Manager Lori Bays, Deputy City Managers Amber Williamson and Alan Stephenson, and the Community and Economic Development, Public Transit and Planning and Development departments.