TTA Enters Development Deal
By Bruce Siceloff and Jack Hagel, The News & Observer, Raleigh, N.C.
Mar. 7–A new partnership between the Triangle Transit Authority and a Raleigh-based equity firm could open the way for a mingling of private capital with publicly owned real estate to build urban clusters of homes and businesses around proposed rail stops in Durham, Research Triangle Park, Cary and Raleigh.
Officials with TTA and Cherokee Investment Partners signed the agreement Tuesday. They said they would wait at least 12 months, while community leaders work out new transit priorities for the region, before launching any development plans.
TTA shelved its proposal for an $810 million, 28-mile commuter train line last summer, citing high costs and tough federal standards. Local officials and civic leaders will spend the next year deciding whether to revive TTA’s plans for trains or to make other plans for transit improvement in Wake, Durham and Orange counties.
Cherokee specializes in buying contaminated properties and cleaning them up to sell to developers, and it has orchestrated transit-oriented projects in several states and Canada. Its master developer agreement with TTA is intended to funnel some of the Triangle’s growth into a transit corridor, slowing the spread of highway congestion and building ridership for the trains.
“We feel that transit is an important priority for the community — not just for moving people around but in establishing sustainable development patterns,” said Lee Norris, Cherokee’s managing director. “This is a very high-growth area. The people are not going to quit coming.”
TTA, a public agency operated by local governments in the three counties, owns 28.6 acres worth $24 million at eight of its 12 proposed rail stops. Cherokee would put up cash, and TTA would contribute real estate in partnerships to develop land around station sites, while preserving the property’s use for transit service.
Rail lines in cities such as Atlanta, Washington, Denver and Dallas have been credited with stimulating transit-oriented development worth hundreds of millions of dollars. David D. King, TTA general manager, said TTA’s partnership with Cherokee could launch similar projects even before the trains start running, generating revenues to defray the cost of transit service.
“We are simply launching the ship today, and we’ll see whether it sails or not,” King said. “A lot depends on the [local planning] process. A lot will depend on the market and the continued growth.”
Norris said it was too soon to predict which of the TTA rail sites would be developed first. Downtown Raleigh is undergoing massive renewal.
“There’s a lot of stuff on the market down there,” he said. “You don’t want to get too far ahead of yourself.”
Cherokee could be competing with itself in downtown Raleigh. The company is expected to partner with Cary developer Hamilton Merritt in the redevelopment of 3.6 acres on the block bounded by Wilmington, Blount, Martin and Davie streets. Plans there could include a skyscraper with offices, condominiums, apartments, shops, restaurants or hotel rooms.
Joe Bryan of Knightdale, a Wake County commissioner, said TTA and Cherokee were right to delay action until local leaders can agree on transit priorities for the next 50 years. Bryan is chairman of the Capital Area Metropolitan Planning Organization, one of two regional boards overseeing the transit planning effort.
He said the TTA-Cherokee deal offers a rare chance for taxpayers to share in the economic growth stimulated by government spending on public improvements.
“For transit to work, we do need the public-private partnership potential that this is intended to offer,” Bryan said. “We need a way for the community to capture some of the value that is generated when we make this investment in infrastructure.”
It would behoove Cherokee and TTA to get started as soon as possible, said Brian Reece, managing partner of Karnes Research, a Raleigh company that tracks commercial real estate trends.
“There’s a window of opportunity now within the next six to eight months,” Reece said. Beyond that, “we don’t know what the demand would be.”
Reece added, “Getting a TTA site up and running would be great exposure for the future of the TTA.”
Staff writer Bruce Siceloff can be reached at 829-4527 or bruce.siceloff@newsobserver.com.
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Copyright (c) 2007, The News & Observer, Raleigh, N.C.
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