Transit and Transportation

It may not occur to you, when you walk from the bus stop to your office, that you are taking part in a form of “multimodal” transportation. Again, if you get off the train in Minneapolis and pick up a Nice Ride (bicycle) for a tour of Nicollet Island with visiting friends, you are taking part in multimodal transportation. Almost every trip we take requires multiple forms of transportation; car, transit, carpooling, biking and walking.

Leveraging multimodal transportation in the development arena was the focus of one of two panels sponsored recently by Larkin Hoffman and the Minneapolis/St. Paul Business Journal. Panelists included Lucy Galbraith, transit oriented development director at Metro Transit, Mark Fabel, executive vice president at McGough Construction, and Jaci Bell, director of development for Kraus-Anderson Realty.

Until the 1980s, most developers viewed transit as the way people got to work in the central cities. Planners and designers changed all that by creating incentives to partner on transit oriented development (TOD), locating transit stops in or around private offices, shopping centers and multifamily sites. Green space, parks, bike sharing and other public amenities were added to many TOD projects more recently. TOD has created some of the most vibrant urban environments here in the Twin Cities and around the country.

Take a look at Bloomington Central Station (BCS), a 45-acre campus developed around a transit station and public park. Planned by McGough, the project combines the headquarters for Health Partners, with condos, apartments, a new Hyatt hotel and structured parking facilities. BCS is just two station stops from Mall of America, a pioneer in transit-oriented development, which was constructed more than 25 years ago with a transit station built into its east parking deck. More than 10 years ago the last station for the blue line added light rail transit (LRT) to Mall of America and what is now the busiest transit station in the state.

Panelists also pointed to more than $2 billion of commercial development along the green line which runs in the center of University Avenue between downtown Minneapolis and downtown St. Paul. Adult bookstores and movie houses have been pushed out by successful ethnic restaurants and groceries, student housing, senior housing and new employers, all connected by LRT.

Galbraith noted that 40 percent of employees don’t drive to work, so good transit and multimodal facilities are essential to attracting employees from an increasingly tight labor pool. Sometimes employee incentives take the form of free- or reduced-price transit passes. Other employers offer bike racks, showers or preferred parking for carpools. Today’s smart phone apps, like ZAP, even create opportunities for friendly competition among coworkers who uses transit or bike to work. The entire environment for TOD has improved dramatically in 30 years.

For a complete review of the TOD panel, follow this link to the Q&A published by the Business Journal.

So, the government knocks on your door and says, “We’d like to locate a transit station on your property.” Access to transit and workers who use transit is usually a boon to an employer or commercial property owner, if you can navigate the potential pitfalls and risks associated with transit leases, easements, funding, management, operations and security.

What You Need to Know

Transit stations and park-and-ride facilities are usually built for the long term. Once you grant rights in your property and service begins, it is often difficult to reverse course or modify the location and scope of transit operations.

Public funding typically follows the decision to construct transit facilities on private property, but beware of hidden costs and other hidden impacts to your property. For instance, would a transit station displace parking and render the site in noncompliance with local parking requirements? Or will local authorities provide a credit against parking counts based upon the proximity to transit?

What happens if “park and riders” create queuing or access problems as a result of peak hour demand for access to transit? What if the transit operator doesn’t lease parking spaces from the owner? Will the property become a de facto park-and-ride location nonetheless?

Who owns the improvements – the government or the private property owner? Usually the transit operator leases land or acquires an easement and owns any improvements constructed for transit service. Be clear in your agreements about who owns what because it is important when the time comes to remodel, relocate or remove transit facilities.

What about exhaust emissions, particularly in enclosed or semi-enclosed structures? Make sure the transit operator is responsible for air quality.

Depending on the size of the facility, who would secure the location? Transit authorities employ transit police. However, the level of service is often dependent upon the number of riders in a particular location. If your property is on the edge of town, it is unlikely to be secured by transit police.

Would the private property owner have the opportunity to brand transit facilities or provide wayfinding? For instance, some agreements give private owners review and approval of the design and exterior treatment of transit facilities located on private property.

What happens if the facility is damaged or abandoned and who is responsible for maintaining liability insurance? Private owners assume this is the obligation of the transit operator, but that is not always the case.

Of course, any transit opportunity presents more routine legal issues that are negotiated as part of any long-term arrangement, but some of the considerations above will keep you on the right side of a good transit deal.

Property owners in the path of light rail and bus rapid transit projects are now eligible to receive the full protection of the state’s eminent domain laws, thanks to legislation passed in 2017 by the State Legislature.

Before passage of this legislation, the Metropolitan Council (Met Council) had been taking the position that it was a public service corporation. This status would have exempted the Met Council from extending to property owners certain compensation rights normally available under Minnesota law when private property is taken for public projects.

Because of this new legislation, the following property owner rights are now available to those whose property is taken – in whole or in part – by the Met Council for a light rail or bus rapid transit project:

• Attorney fees under Minn. Stat. § 117.031, which provides that the court may award attorney and expert fees if just compensation recovery is at least 20 percent, but not more than 40 percent greater than the Met Council’s last written offer. The statute further provides that the court must award such fees if the just compensation recovered is more than 40 percent greater than the last written offer.

• The Met Council must provide property owners with a written offer, along with a copy of an appraisal. The council must also make a good faith attempt at negotiating with the property owners and reimburse them for appraisals up to $1,500 for single and two-family residences and $5,000 for other types of property.

• Property owners must now be advised by the Met Council of certain rights in the petition filed with the district court to commence the condemnation proceedings. These rights include their right to challenge the public use, purpose or necessity of the project for which their property is being taken and their appeal rights from any adverse determination on such a challenge.

• Business property owners are now eligible to seek compensation for “loss of going concern” under Minn. Stat. § 117.186, and to seek minimum compensation under Minn. Stat. § 117.187. Minimum compensation recognizes that when a business owner must relocate, the damages, at minimum, must be sufficient to allow the owner to purchase a comparable property in the community.

• The Met Council cannot require a property owner to accept as part compensation a substitute or replacement property and cannot force the owner to accept the return of property that has been acquired.

• Displaced business property owners are now also eligible for relocation assistance in the form of reestablishment expenses up to a maximum reimbursement of $50,000. All displaced property owners also now have the right to challenge their eligibility for relocation assistance and to challenge the amount of such assistance through a contested case proceeding before an administrative law judge.

These are significant statutory rights that the legislature adopted to ensure that property owners displaced by a public project would have the opportunity to receive “just compensation” for the taking of their property, as the state and federal constitutions require. The 2017 legislation restores these rights to property owners who find themselves in the path of transit projects carried out by the Met Council.

Depending on your politics, you may regard transit investment and transit-oriented development (TOD) as “government boondoggle” or “essential building blocks” for livable communities. Setting aside politics for a moment, let’s look at what TOD is and what it can do for a developing community or region.

At its core, TOD is urban development that harnesses public investment in transit infrastructure to leverage private development, usually with a mix of uses and amenities, within walking distance to bus stops or train stations. In most major urban areas, transit investment and TOD is commonplace and not the least bit controversial. Look what happens on the East Coast or in Chicago if commuter trains stop for weather, accidents or labor problems – people can’t get to work.

Here in Minneapolis-St. Paul, or in places like Denver and Seattle, where a renewed focus on transit has led to new lines, light rail transit (LRT), bus rapid transit and commuter rail, the controversy rages. And it usually centers on how best to maximize use of limited transportation dollars. Still, even here TOD has proven its value.

In Bloomington, Mall of America and Bloomington Central Station are two successful examples of TOD that were planned over years, built in phases and primed with transit investments, first in bus stations, and later in LRT stations, park and ride and related amenities. Each project has much higher transit ridership, lower parking costs, less congestion and programs that support employees who choose transit.

In St. Paul and Minneapolis, the once dying commercial areas along University Avenue now thrive with more than $2 billion in investment in retail, restaurants, entertainment, housing and employment since construction started on the Green Line in 2013. Critics say the demand for development would have occurred without the Green Line; supporters claim University Avenue would be home to adult bookstores and empty storefronts without it. And soon, Major League Soccer will replace a once-polluted bus garage within walking distance of an LRT station.

On a national scale, transit development and transit investment may go up or down, depending on who is in power in Washington. Still, the success of this model is proven and business leaders overwhelmingly favor transit investment for one simple reason: Millennials are attracted to urban work environments with transit options. With a growing labor shortage, our major employers compete for coveted workers to fill the jobs of the future. Without good transit, cultural amenities, affordable housing and livable communities, we will lose this contest for the best and brightest.

I don’t know why funding for transit and transportation is controversial – it’s not an either/or proposition. We need both. Billions of dollars in reinvestment in roads and bridges has been deferred and bottled up in the process. More recently, politicians have campaigned on transit versus transportation. Meanwhile, drivers and commuters suffer in gridlock. It’s time to find a long-term solution for all modes of transportation if this metropolitan area is to remain competitive. Let’s face it, we can no longer rely on our great weather to attract people to our region.

The Twin Cities of Minneapolis and St. Paul, and surrounding metro region, are experiencing a surge in large public transit projects, most notably the long-awaited Southwest Light Rail Line (SWLRT), which extends the existing Green Line from Minneapolis to the southwest suburbs, terminating in Eden Prairie, MN. In addition to light rail, several other fixed transit ways are being constructed or are in the planning stage.

What does this mean for a property owner with land potentially in the path of any work required to construct a new transit corridor? Uncertainty, confusion, frustration, anger and anxiety are just a few of the emotions that landowners, including business owners, experience when they discover their property may be taken through a future condemnation action. The consequence could be to force a wholesale relocation of a business and its employees to an unknown new location, with all the risks associated with such a move.

The public agencies do a reasonably good job of providing base-level information about a major public project, including broad estimates of timing, and SWLRT is no exception. However, when it comes to the specific project location, impact, land payments, relocation and especially timing, such agencies often themselves have no answers on which to base a plan.

In the case of SWLRT, the involved public agencies and their hired contractors have been waiting literally years to throw the switch and get started on land acquisition and construction of the new approximately 15-mile corridor.

The “promised” start date has been a moving target, frustrating the planning efforts of affected parties. This means landowners and business owners have been riding a roller coaster of emotions as they anticipate a firm start date. The practical consequence of this uncertainty is that an affected business owner might be forced to hedge a bet and speculate about a new location, sometimes even committing to buy land or another building for a future relocation if and when it occurs.

This means they are forced to expend time and precious capital to research new location options, evaluate the value of their existing property and make concrete plans for the future. The alternative is not a good choice either: delaying a search process to secure a new business home could place an affected business at risk of losing its current home without having secured an acceptable replacement.

For those with special site needs, such as extended parking or outside storage, the challenge to find a location is further frustrated by municipal zoning restrictions affecting such uses. The prudent step is to initiate the planning process presuming the outcome and secure as much lead time as possible before making a hard commitment to the new location. If you have a particular urgency to act, the Metropolitan Council has been cooperative in confirming eligibility for relocation assistance ahead of formal condemnation proceedings.