To:

File

From: Jerri Horst
Date:

April 26, 2010

Re:

CENTRAL MESA LRT EXTENSION, ENVIRONMENTAL ASSESSMENT
Economic Impacts Evaluation

Once operational, the Build Alternative is likely to have a positive influence on property
values, tax revenues, and employment as well as commercial, retail, and residential
development. This memo discusses each of these factors in more detail.
Effects on Property Values
Economic studies conducted on the LRT system (DART) in Dallas, Texas showed
property values 25 percent greater than those in a control group of neighborhoods not
served by rail. A second study between 1997 and 2001 showed the median value of
residential property increased 32.1 percent near DART rail stations compared to 19.5
percent in the control group, while office building values near fixed guideway stations
increased 24.7 percent compared to 11.5 percent in the control group.1 Another study
also found that even up to ten years beyond opening year, station areas still attract
more development, particularly for office space, than areas beyond the DART
alignment. 2 A 2001 study of property values in Santa Clara County, California (San
Jose and surrounding vicinity) found that light rail accessibility increased commercial
land values by $4 per square foot for properties within a quarter-mile walk of a station.3
Findings for three other rail systems are summarized in Table 1.
TABLE 1: EXAMPLES OF EFFECTS OF RAIL PROJECTS ON PROPERTY VALUES
City/Project
Atlanta/MARTA East Line

Added Value
Homes: +$1,000 for each 100 feet closer to station (working class
neighborhoods).
Accessibility offsets potential noise issues.
Portland/MAX Eastside Light Rail Line
Homes: +10.6% for homes within 1,500 feet of light rail stations.
DC and Atlanta
Office rent: +$3 per gross square foot. Vacancy rates were lower and
average density higher.
Source: Light Rail Pumps Up Values, Personal Real Estate Investor, July-August 2007.

1

An Assessment of the DART LRT on Taxable Property Valuations and Transit Oriented Development, University of
North Texas, September 2002.
2
Bernard L. Weinstein and Terry L. Clower, The Estimated Value of New Investment Adjacent to DART LRT
Stations: 1999-2005, University of North Texas, Center for Economic Development and Research, Dallas, TX,
September 27, 2005.
3
Transit’s Value-Added: Effects of Light Rail and Commuter Rail Services on Commercial Land Values, University of
California, Berkeley, November 2001.

Central Mesa—Economic Impacts Analysis
Page 2
Effects on New Development Locally
As of December 2008, approximately $5.4 billion in new development has been
completed or is under construction along METRO’s LRT Starter Line (within ½ mile of a
station). This development contains over 13,000 residential units and nearly 10 million
square feet of new commercial space. This private development has been supported
by an additional 500,000 square feet of government and educational space. An
additional $2.0 billion in projects have been proposed or are in the planning stages and
includes over 1 million square feet of commercial space, more than 8,500 residential
units and over 275,000 square feet of government and educational facilities (Table 2).
While the current economic climate has certainly slowed the realization of these
projects, they remain poised for development as the economy recovers.
TABLE 2: DEVELOPMENT ALONG ENTIRE EXISTING LRT ROUTE1
Complete or
Proposed
Under Construction
Number of Projects
110
70
Residential Units
13,059
8,566
Commercial (SF)
9,589,931
1,170,389
Hotel Rooms
2,142
1,118
Dollars Invested
$5.4 billion
$2 billion
Total Investment
$7.4 billion
1

Data as of December 2008.
Source: Transit Supportive Development Analysis, Central Mesa Light Rail Extension, METRO, September 2009.

The Tempe/Mesa portion of the existing LRT Starter Line is likely to be a good indicator
of how future development may proceed along the Central Mesa LRT extension since
developments will draw from some of the same or similar markets as new station areas
open and transit supportive development continues eastward. Along this portion of the
route, approximately $1.2 billion in development has occurred since December 2008.
Proposed projects would nearly double this total (Table 3).
TABLE 3: DEVELOPMENT ALONG TEMPE/MESA SEGMENT
OF EXISTING LRT LINE1
Complete or
Proposed
Under Construction
Number of Projects
30
30
Residential Units
7,478
3,757
Commercial (SF)
3,109,710
1,008,167
Hotel Rooms
377
833
Dollars Invested
$1.2 billion
$1.1 billion
Total Investment
$2.3 billion
1

Data as of December 2008.
Source: Transit Supportive Development Analysis, Central Mesa Light Rail Extension, METRO, September 2009.

About 7,500 residential units, representing well over one-half of the 13,000+ residential
units along the entire line, have been built or are under construction along the

Central Mesa—Economic Impacts Analysis
Page 3
Tempe/Mesa portion of the route. This concentration of residential development is
indicative of the suitability and demand for denser housing in the area over the past few
years. Access to downtown and other Phoenix job markets makes the area attractive
for commuters. The presence of pedestrian scale commercial areas along the route
provides further destinations. Arizona State University also serves as an attraction for
students, staff and many others. New development is generally mixed use and transitoriented in nature.
Figure 1 displays development (recently completed, under construction, and planned)
along the LRT Starter Line in West Mesa as well as along the proposed LRT extension
into Central Mesa. The figure shows the considerable development along the recently
completed LRT line further pointing to the high potential for LRT to spur additional
development along the planned extension.
FIGURE 1: DEVELOPMENT ALONG EXISTING AND PROPOSED MESA
PORTION OF LRT LINE

Source: Transit Supportive Development Analysis, Central Mesa Light Rail Extension, METRO, September 2009.

Effects on Tax Revenues, Employment, and Overall Economic Growth
Since relatively few full property acquisitions (15 vacant parcels for park-and-ride) will be
required along the proposed route, there will be a small but temporary reduction in the
county’s and city’s property tax bases. In the long term, the additional development
spurred by the presence of rail could result in an overall increase in the county’s tax
base.

Central Mesa—Economic Impacts Analysis
Page 4

Since no businesses will be displaced as a result of the project, there will be no losses
in sales tax revenues. Given the anticipated redevelopment trends in the project
corridor, assumed based on observable trends as discussed previously, the long term
effect on sales taxes is likely to be positive due to: 1) gains from businesses relocating
to station areas and along the alignment; and 2) potential increases in sales revenues
for current area businesses.
The project also provides benefits by creating long-term employment opportunities.
Additional jobs will be needed to operate and maintain the extended length of the LRT
system. In general, the higher the costs of operations and maintenance, the more jobs
will be generated. Long-term employment opportunities are likely to be only partially
driven by operations and maintenance of the system, but more likely due to indirect
employment opportunities in retail, service and municipal services sectors (such as Fire
and Police services) that would result from the anticipated population growth and
increased densities within one-half mile of the four station locations, and consistent also
with the anticipated Maricopa Association of Governments (MAG) growth projections,
independent of the project.
The enhanced access to jobs and area-wide mobility that LRT offers, coupled with
potential investment in pedestrian-oriented development and implementation of transitoriented development policies measures already adopted by the City of Mesa as well as
additional measures now being considered, are likely to generate additional jobs within
the study area. This would serve to not only create new businesses but would boost the
economic activity of existing businesses in the vicinity of the alignment. Thus, operation
of the Build Alternative would result in indirectly fostering the economic growth that the
community desires.
To further exemplify the proposed project’s overall expected impact on the economy, a
report prepared for the American Public Transit Association (APTA), cites the findings
summarized in Table 4 regarding public transportation’s effects on the economy.
TABLE 4: TRANSIT PROJECTS EFFECTS ON THE ECONOMY
• In the year following the transit capital investment, 314 jobs are created for each $10 million invested in transit
capital funding.
• Over 570 jobs are created for each $10 million invested in transit operations in the short run.
• Business sales increase $32 million for each $10 million in transit operations spending.
• Business sales increase 3 times the public sector investment in transit capital, i.e., a $10 million investment
results in $30 million gain in sales.
• For every $10 million invested in transit in a major metropolitan area, over $15 million is saved in transportation
costs (operating, fuel, congestion costs) to both highway and transit users.
• A typical state/local government could realize a 4 to 16% gain in revenues due to increases in income and
employment generated by transit investments.
Source: Public Transportation and the Nation’s Economy, A Quantitative Analysis of Public Transportation’s
Economic Impact, Cambridge Systematics, Inc. with Economic Development Research Group for APTA, October
1999.

Since the overall impact of the project on the economy is expected to be positive, no
mitigation measures are required.

Central Mesa—Economic Impacts Analysis
Page 5

Any Differences Between the Downtown 2-Lane and 4-Lane Options?
No. The overall impact of the project, regardless of which downtown option is selected,
is expected to be similarly positive.