View all episodes: http://www.buzzsprout.com/591640
SamTrans’ Director of Real Estate and Property Development, Brian Fitzpatrick, offers insight into the District’s land use over the years along with Caltrain’s new transit-oriented development policy (or as we loving call it, “Tod”) and what it means for the agency’s future.
DAN LIEBERMAN: Welcome to Wheel Talk.
ALEX EISENHART: A show where we dive into the inner workings of Caltrain, samTrans and the San Mateo County Transportation Authority, where your friendly neighborhood public servants and hosts, Alex Eisenhart.
LIEBERMAN: And Dan Lieberman. Join us as we take a wonky ride through the world of transportation and the work we do to keep you moving.
EISENHART: Episode Seven . . .
LIEBERMAN: Wow, that’s a lot.
EISENHART: It is very exciting.
LIEBERMAN: Yeah, I’m excited.
EISENHART: We’re still here.
EISENHART: They haven’t fired us yet.
LIEBERMAN: Very much so.
EISENHART: I . . . and we’re in the month of March, I love March, because it’s not just a month, it’s also a verb.
LIEBERMAN: Mm, that doesn’t happen very often.
EISENHART: Like . . .
LIEBERMAN: You can’t April something.
LIEBERMAN: You have to march it.
EISENHART: No, I mean unless you’re a Parks and Rec fan you can’t April something.
LIEBERMAN: There is that.
EISENHART: But I love . . . one of my favorite dates of the calendar year is March 4th, because it’s also just a sentence.
LIEBERMAN: Yeah, no that is good.
EISENHART: It’s a command.
LIEBERMAN: Thanks English.
EISENHART: March forth continue forward.
LIEBERMAN: And the . . .
EISENHART: Keep it going.
LIEBERMAN: . . . let’s see the Julian Calendar what is, no it’s the Gregorian Calendar that’s the one I’m thinkin’ about.
EISENHART: Oh, yeah.
LIEBERMAN: Thank you Gregorian Calendar for setting up a “that pun.”
EISENHART: Work, anyway all right, before we jump into today’s topic we’re gonna talk about some funny stuff we found on Twitter. Dan, kick it off.
LIEBERMAN: Oh, that we are, this is from Happyjack, which is @jxvks and somehow that becomes Happyjack. Shedding tears over a boy on Caltrain is my new low and I love that for me.
EISENHART: Uh . . .
LIEBERMAN: There is beauty in tragedy in that right there, that’s just wonderful right there.
EISENHART: I’m getting like high school flashbacks right now. This is bringing up past childhood trauma for me. I don’t know about you.
LIEBERMAN: I’m just wondering was this on the morning train is . . . I don’t know. Like for some reason that happening in the morning is a lot sadder than happening in the evening commute.
EISENHART: Well, ‘cause you’re starting your day with crying.
LIEBERMAN: And it’s hard to tell is that crying over a boy or is that just crying because you’re going to work? Like that’s something, yeah, I don’t think that’s anything.
EISENHART: Or is it crying because you don’t have a boy? Yeah, how does a straight . . . Dan, how does a straight man? Can you speak of all the straight men for a hot second?
LIEBERMAN: Oh, absolutely.
EISENHART: How does a straight man?
EISENHART: Interpret this. Do you have a version of this, like, would you have a shedding tears over a girl on Caltrain as a new low?
LIEBERMAN: No, I shove all my emotions down into a sack, which I then throw into the ocean and then it stays there until it explodes out in some terrible tragic fashion.
EISENHART: So you don’t have a new singular low. It just continues to get lower.
LIEBERMAN: Oh, honey you’re watching my low every day. You get a front row seat for the LIEBERMAN low experience.
EISENHART: Okay, well this is a great thing to start with because it’s only going to get happier from here.
LIEBERMAN: There you go.
EISENHART: All right let’s move on to the next one. Next one is from Grace Wong Lynch and that is also her handle @gracehongwonglynch, good news this podcast is really good. Bad news I got an express train and not a baby bullet. #Caltrain.
LIEBERMAN: You know, she didn’t confirm that she was listening to our podcast, but I think it’s pretty obvious that she was.
EISENHART: I think that’s the real takeaway is that this podcast, the one that you and I are egomaniacally speaking on, is the really good one that she’s talking about.
LIEBERMAN: I think that’s as . . . considering we control the message entirely here. I think that is absolutely and 100% true and when you are listening to our incredible podcast make sure to pick the train that really lets you get that whole experience up front.
EISENHART: Oh, yeah, this is the show that makes you crave a local. By the way, not to add to the bad news I got an express train, not a baby bullet. Worse news, we don’t have express trains, we’ve got local, Limited’s and baby bullets, but I support your journey and I support your positivity around what we can only assume is our podcast, so thank you Grace.
LIEBERMAN: Ultimately, we are here to educate and inform. So we are happy to help you out. One more for you @readermeter. New game, start a log of what I see in my morning Caltrain commute during the 30-second window it offers of Brisbane Lagoon. Today’s lineup bufflehead, scalp, great egret, snowy egret, eared/horned grebe, belted kingfisher, coot, golden eye, ruddy duck, and curlew.
EISENHART: See I just see a bunch of potential future trainings here.
LIEBERMAN: There is that, this is . . . we just want to do our outreach to the birder community. If you want to do your bird watching from Caltrain, we fully support that. We understand the 30-second window of the Lagoon isn’t a whole lot, but this guy clearly lined up a lot.
EISENHART: How do you memorize all those names of b- . . . I shouldn’t say that. ‘Cause if you’re a huge fan of birds I applaud your ability to memorize that many birds.
LIEBERMAN: Trust me there are plenty of rail fans that can equally identify engine types and just in eyeballing so . . .
EISENHART: I’m seeing potential drag names in here.
LIEBERMAN: Oh, yeah, no. I love coot and ruddy duck. Ruddy duck has a ring to it doesn’t it?
EISENHART: Like Madam Bufflehead.
LIEBERMAN: Oo, I like that. You know, that’s why I love doing this show with you Alex, your mind is always hard at work.
EISENHART: You think my . . . what about this guy?
LIEBERMAN: And good for you too. Dario Tara Borelli.
EISENHART: I love it. Yeah, I love it. Any opportunity to enjoy the beauty of nature onboard Caltrain we’re in total support of.
LIEBERMAN: And better still now I can use the word grebe in a sentence.
EISENHART: And speaking of things that you’ll see while passing along our corridor. We should jump into this month’s topic. This month, we’re talking housing and taking a dive into how Caltrain is going to be developing properties along its corridor.
LIEBERMAN: We’ll be speaking with Director of Real Estate and Property Development Brian Fitzpatrick about our new transit oriented development policy and what it means for the agency’s future.
LIEBERMAN: We’re back with Brian Fitzpatrick, our Director of Real Estate and Property Development. Thanks for joining us here today, Brian.
BRIAN FITZPATRICK: Good morning Dan and Alex.
LIEBERMAN: So tell us a little bit, about who are you and why are you here?
FITZPATRICK: That’s a bit of an existential question to start the morning.
LIEBERMAN: Yeah, let’s take four hours to answer that please. That’s what the audience is looking for.
FITZPATRICK: I’ll try to do it in less than four minutes. How’s that? So I’m the Director of Real Estate and Property Development for samTrans and I’ve been in this business since 1991. It’s sort of interesting how I started. I was a math major at CAL, University of California at Berkeley. When I graduated I really wasn’t sure what to do with that degree so I went to teaching school and I was getting my teaching credential at San Jose State and about halfway through the program I realized I wasn’t as patient as I thought I would be. So I started looking for another career. Sort of a sad interesting story is my dad had a stroke around that time and when he was recovering from his stroke, he was unable to drive. So instead of driving he took the Dumbarton shuttle from the South Bay over to the East Bay and then took BART to work.
In doing this, he met a blind Social Worker named Doc, no kidding. The blind Social Worker named Doc and my dad became friends and they started talking about me and Doc said, “Caltrans is giving a right of way test.” And what right of way is its property in the Caltrans language.
FITZPATRICK: So long, story short, I took the test, past the test, Caltrans hired me and I bought a bunch of property to replace the Cypress Freeway and that started my career.
LIEBERMAN: So there you have it folks if you need a job just ride on public transit all day and you’ll figure it out pretty quickly.
FITZPATRICK: Or look for blind Social Workers named Doc.
LIEBERMAN: Yeah, that is it . . . are you sure isn’t magic? ‘Cause that sounds like magic.
EISENHART: So you bought a bunch of property for the Cypress? We’re on side two right?
FITZPATRICK: Bought a bunch a property for Cypress. Later on BART came to me and said, “We want you to buy property for the SFO extension. So I was in charge of buying all the property when they extended the project from basically the Daily City BART Station, then they came to Colma. I came on after Colma and we bought all the property for our South San Francisco, San Bruno, Millbrae, and the Airport and that was a cooperative venture. People don’t really know this, but samTrans was extremely instrumental in the funding for bring BART into San Mateo County.
LIEBERMAN: Some people may not know that, but our audience definitely knows that.
FITZPATRICK: Yeah, I hope so. So I was working for BART, but interestingly enough all the property was purchased through samTrans. So I was working for BART, but I was before the samTrans board on a regular basis.
FITZPATRICK: After about four and a half years at BART, samTrans said, “Hey, can you do for us what we did for them?” “We’ve got a position open. We’d like you to apply.” I applied, got the job and I’ve been here for close to 20 years.
LIEBERMAN: All right. Well it’s . . . that does bear . . . that segways into the next question. What exactly does the Real Estate Department do? I think a lot of people when they hear a Transit agency has a Real Estate Department they are generally confused by that.
FITZPATRICK: Well you know, that’s a great question and it’s kind of interesting because it’s sort of manifested into a series of different things since I’ve been here, but basically one of the things that . . . and when I say this agency, I’m gonna talk about Caltrain, right. One of the things that Caltrain did that I think was really forward thinking was back in 1991, December 1991 to be exact. Caltrain purchased the Caltrain Corridor, which was at the time owned by Southern Pacific Railroad.
FITZPATRICK: Who subsequently was bought out by Union Pacific Railroad, which is somewhat immaterial? They purchased that corridor and the reason they purchased the corridor is one obviously because the ultimate plan was for Caltrain to operate trains up and down that corridor, but second what we ended up doing is preserving a large swath of right of way, right through the peninsula for future potential expansion to that corridor. So, what that means is there’s a lot of property from which we need to drive interim revenue so that we can hold the land in, you know we’re not going to divest ourselves of this land. So there’s a lot of property that we need to lease.
Our department leases that property. Our department does transit oriented development on property that the agencies determined is not needed for its long-term future vision. Then the other thing that we do because we support three agencies. We support Caltrain, samTrans and the San Mateo County Transportation Authority; we also buy property to support capital projects they’re doing. Two examples, the Broadway interchange project. It’s a highway project run by the TA. We bought all the property . . .
EISENHART: The Transportation Authority, yeah.
FITZPATRICK: . . . needed for that. The Transportation Authority. We bought all the property for that and then any Caltrain capital project, which would be the Great Separations in San Bruno, 25th Avenue, and now, of course, the Electrocation project. We buy property for those projects. We really do three things.
EISENHART: Okay, so you mentioned part of my next question, which is, why does samTrans and Caltrain have so much land? Can you talk about the decision to purchase the land that they did? I mean, obviously there’s the tracks and whatever maintenance property, but there was more as well wasn’t there?
FITZPATRICK: Yeah, so the corridor isn’t just the property that’s needed to run the train. When we purchased that property from Southern Pacific or SP. We did purchase additional property. Not a lot of additional property, but additional property that creates a wider corridor. A somewhat recent example is when this agency instituted what they called at the time Baby Bullet service.
FITZPATRICK: Those are the express trains. We needed to put in four tracks in selected locations. Well it turned out that again, when the board in 1991 was so forward thinking, that the property they ended up purchasing allowed forward track passing segments in certain areas. So there is some in Sunnyvale, there is some in Redwood City, there is some down in Brisbane and that’s allowed for the increased service and the Baby Bullet service, which has obviously been a wild success for this agency. So, we have those extra properties. Now, we have certain other property that I like to say is being held in trust for future potential transit expansion. You know, you’re forward thinking when you grab this property and you hold it. You’re also forward thinking when you make sure that when the agency or when the region needs expanded service we’ve got the property to do it.
EISENHART: So it sounds like that’s the reason why, even though we have land that’s not being used on a regular basis. That we’ve kept it that way because of potential future expansion?
FITZPATRICK: Yeah, I’d like to say we’re sold of holded in trust for potential future expansion. I think that’s a . . . again, railroads are forward thinking, right. This railroad corridor has been in operation since 1863. So now as the public agency entrusted with this corridor we need to think long-term. Railroads are a long-term endeavor and again, you can’t say enough about what this board did in 1991 to set that tone.
EISENHART: Right, and so part of the reason why I wanted to frame it that way was, we can’t talk about property on our right of way without talking about Transit Oriented Development. We have built some property, or some Housing and Development on our property. Can you talk a little bit about that?
FITZPATRICK: Sure. It’s a little bit of a fairly long story but it’s tied directly to what we just talked about, right.
FITZPATRICK: So, historically this agency on Caltrain property they’re basically two Transit Oriented Transit Development Projects that are in some level of ongoing effort, right. Caltrain partnered with samTrans for the Transit Oriented Development Project, The Trestle Project in San Carlos. It is probably about a stone’s throw from where we’re sitting right now. That project is currently finishing up being built. It’s actually somewhat occupied, it’s about 80% or so occupied. Then other buildings are being finished and they’re starting to fill up. So that’s one project that we’ve done. Then another project that we’re working on right now is the Hayward Park TOD project, Transit Oriented Development Project in San Mateo at the Hayward Park Caltrain Station. That projects more on a planning stage. We’re working with the City to get what we call entitlement or the ability to build the project.
Now, these projects are very important because before we engaged in these projects we were able to do work with our engineering department to ensure that development on this land wouldn’t preclude the agency’s future vision out there, right. I call these properties the low hanging fruit because it was very obvious that we were able to do both, preserve property for the future of the railroad and develop. The rest of the Corridor it’s a little bit more tricky. The rest of the Corridor we had to engage in a formal process called the Rail Corridor Use Plan that talked about what could be made available for development.
We can maybe talk about that in a little bit more detail, but the two projects that we’ve done to date, we were able to verify before we built them that the development of those lands were compatible with the rail and the future of the rail.
EISENHART: Yeah, because both those stations had sizable parking lots that weren’t really used to their full capacity so it was clear that it was developable land.
FITZPATRICK: Hayward Park in particular, Hayward Park has north of 230 parking spots and by our parking counts when we started this project, about seven to 14 passengers were parking there. Not only was that station wide enough to accommodate a future vision of potential extra tracks, but also the parking was underutilized enough that we could develop those parking lots and effectively now bring a number of riders to the doorstep of Caltrain. Where we had seven to 14 people parking there before, now we’re gonna have almost 200 units, 189 units of people living at the doorstep of Caltrain. From a ridership perspective, from a perspective of getting people out of their car. That station is sort of a no brainer to develop and a big victory for all of us who wanna get people out of their car and on transit.
LIEBERMAN: Do you have some more insight I mean we’ve seen these developments go up like at San Carlos and Colma. What kind of revenue are these bringing in?
FITZPATRICK: So when we build these Transit Oriented Development Projects we do relatively complex business deals and I’ll try to make it relatively simple here, but basically, what the agency does is we don’t sell our land. We enter into what’s called a long-term land lease. In San Carlos, it’s 65 years with two options that could take it to 99 years. What that means is that the Transit agency owns the land and we’ve partnered with a developer who owns the buildings that are on that land. That developer runs the buildings as she would run any other development project. We then get a percentage of the revenue created through that development. So, there’s a couple other mechanisms in there. One, there’s what we call a base rent, which means our rent can never go below a certain number. We call that sharing in the developer’s revenue and we share in his gross revenue not his net revenue. That means every dollar that he gets we get some of it. We call that participation rent.
Then we have another way that we share in the revenue is that when the buildings are sold. If that development is ever sold to, another developer we participate at the rate of either 1 or 2% in the net proceeds generated from that sale. So right now, flat rent when this thing is just operating what we call the base rent we are going to be getting about $750,000 a year. Then as we move forward we’re gonna get a percentage as we talked about, of these things. Then other sweeteners as it moves forward. We as a transit agency are directly tied to the success of that development on our land. It creates a great partnership with the private sector.
EISENHART: And where does that income go for the agency? What fund is that put into?
FITZPATRICK: Basically, that goes directly into operating funds.
EISENHART: Then, what about Colma? When was that development? ‘Cause that’s been around for a while, right. So how did that one come together?
FITZPATRICK: Yeah, so that’s a great question, Alex. Now, we’re switching what we call business units in this agency. We manage the three agencies we talked about before. So, the two projects along the Corridor, obviously we’re talking about the Caltrain Corridor. Now when we’re talking about Colma we’re talking about samTrans. Different business unit, we had said at the beginning how samTrans worked to help fund BART come into San Mateo County. SamTrans ended up buying the property for BART and then transferring it to BART pursuant to a number of funding agreements. Well what happened in Colma, is we had a piece of property that was needed for the Colma station and we only needed half of it and the property owner came up and said, “Well if you take half my property you’re devaluing the rest of my property.” Which is something in my business is a valid complaint, right. You can’t devalue somebody’s property by taking part of it.
SamTrans at the time did something I think is really creative which it said, “We will bring some local money to the table.” The project was Federally financed. “We will buy the remainder with the local money, we will use the Federally financed money to buy what’s needed for the project and when we’re done we’ll have a piece of property that’s a developable piece of property. Then the agency entered into a partnership with the developer akin to what we talked about here in San Carlos and ended up building a set of apartment units, 250 plus units. Again, we own the land, the developer owns the property. Then we collect rent from them on an annual basis. It right now is about $500,000 a year, but it will increase as time moves ahead.
LIEBERMAN: When did we purchase this parcel of land?
FITZPATRICK: That parcel of land was purchased, I’ve been here 20 years, so when I say before I got here, I often say even before I got here ‘cause it’s so long ago. That was done before I was here and it was actually done even before I was at BART. So I got to BART in 1996 so that was in the early ‘90s when that occurred.
LIEBERMAN: So that’s probably easily doubled in value since we picked it up.
FITZPATRICK: Probably more than that and it was purchased then we opened that development in about 2000, 2001. So we’ve been driving revenue for close to 20 years on that sight.
LIEBERMAN: All right, good job Transit Oriented Development, or as I like to call it TOD. I feel Transit Oriented Development is kind of a bloodless term. But TOD everybody likes TOD.
EISENHART: He’s becoming increasingly popular.
LIEBERMAN: Good move TOD.
EISENHART: Yeah. So, we talked about what has been done. Can you talk about the future plans for development at Hayward Park?
FITZPATRICK: At Hayward Park. Yeah, so that’s a great question. Previously, we had mentioned that it’s a project that is in the process of moving forward.
FITZPATRICK: What’s happened there is that we have partnered with a developer. We have developed business terms with the developer to, again, allow to have a land lease of the property and the developer will then own the product, the building that’s built there. When we do these projects, the other partner that we have here is the City. The City that the projects in and it’s absolutely necessary to partner with the City for a number of reasons. Besides the fact that it’s obviously the right thing to do. The City zoning of that property applies when Caltrain is doing development. So as another public entity, we don’t have rights that allow us to come in and say we want to do X,Y, and Z. We have to do what the city wants to do in that area.
Right now, before we wrote the RFP. We partnered with the City and said, “Let’s talk about what it’s gonna take, once we bring a developer on, to entitle the site. What’s it gonna take to get the ability to build what we envision happening on that site?” There’s a process that’s set forward. So now that we’ve engaged with a developer and we have business terms with a developer, they’re working with the City to entitle the site. Which means just like any other development that’s happening in a local city the developers are gonna go out and have community meetings. The developers are gonna go out and work with his vision with the City staff and the community and we’re gonna look to get the approval to get something.
I’ll add one other thing too is the City of San Mateo has also been forward thinking in this area. They’ve done work for a Corridor Area plan and this was done probably 10, 15 years ago. Where they set forward what kind of development they wanted to see in the Caltrain Corridor. Our plan is consistent with that, which does two things, right. One, the City’s already set a vision. So it makes it really easy for us to fold into what that vision is. Then secondly, it makes the approval process a little bit more smooth because there’s certain things that everybody’s already agreed upon. Again, the City agreed that areas next to transit are areas where they should allow more density.
FITZPATRICK: Which is consistent with our vision as well.
LIEBERMAN: So yeah, certainly in the neighborhood that’s not far off from the old K-Mart Development as well. Like that area has really changed dramatically in the last few years and it does seem considering it’s right there on top of the station it’s clearly transit oriented.
FITZPATRICK: You know, the station Park Green is the old K-Mart Development.
FITZPATRICK: They’ve got 600 units there. They’ve got housing units. They’ve got a whole lot of commercial retail. They’ve got some offices. Our development is between Station Park Green and the tracks. So what we’ve envisioned and we’ve always envisioned this. We’re a little bit behind them in development schedule, but the City and we have always envisioned that the connections that will come through our development will make Station Park Green even more locked in and close to transit. The other thing in that area is there used to be a Denny’s right on the other side. Right in the little slope of Highway 92. That area they’re putting about 300,000 square feet of office. Then there is another proposal down where the Trader Joe’s is for some more units. So that . . .
LIEBERMAN: They’re not taking away my Trader Joe’s?
FITZPATRICK: Well, you know, you sound like my wife. When Station Park Green took that . . .
LIEBERMAN: I’m gonna have to drive another five minutes to get to the next Trader Joe’s, Brian, come on.
FITZPATRICK: Station Park Green took out Michaels and she had the same reaction. So you guys will have to commute.
LIEBERMAN: Fair, I think I can make it. I’ll embrace change but watch it TOD don’t push your luck.
EISENHART: Oh, my God. I love it that we’re referring to new policy as TOD. So, talking about a future development currently in the works is incredibly timely and relevant now because the Caltrain board just approved a new policy for Transit Oriented Development on our property.
LIEBERMAN: Wow, we’re really smart to have an episode about this aren’t we.
EISENHART: Brian can you just give us the overview?
FITZPATRICK: So the transit Oriented Development policy that the Caltrain board just adopted really is one of three or four linchpin policies that this agency’s been working on. I’m gonna try to sort of build this all up to make it fall together because I think the agency has done a very good job if we do tip our own hat of pulling together how the vision for the Railroad ties into Transit Oriented Development and ties into balancing access at our stations.
FITZPATRICK: Which this ultimately is, right. So, I think one of the most important things Caltrain’s done since purchasing this Corridor is to do work on what we call the business plan. In a very simple sense as it relates to the work that I do, what the business plan did is it created a vision for future Caltrain service. I am sure you guys have talked ad nauseum about that with other folks, but it set a basis for future Caltrain service vision. To achieve that service vision the agency may need to do a series of infrastructure projects that may include widening of the right of way in certain select areas while strategically chosen. It would also include grade separations in different places and a variety of other capital projects. So, business plan ties to a policy we have called the Rail Corridor Use Plan. Where the Rail Corridor Use plan basically takes the projects that are necessary to implement the business plan. Lays them on our right of way and basically says, “Brian, you can’t develop in any of the areas where we need to build a project in the future.” We’re not gonna undermine the ability for this train to serve the community in the future by developing in those areas. As much as we value TOD right?
LIEBERMAN: Yeah, well, and certainly if we develop a piece of land and then have to buy it back at a steep premium that’s not doing anybody any favors.
FITZPATRICK: Yeah, it be crazy right? My little TOD joke is there’s a reason T is first and D is last. We are a transit provider first and we’re a developer secondary to that. We’ve now gotten through this multiyear process of business plan and then the adoption of this rail corridor use plan, which then shows the property that we can develop. We always felt when looking at a policy for developing land, the most important thing to know before you enter into a series of policy decisions about developing land, let’s understand what we have to develop. It would be crazy to develop a series of policies in a vacuum not knowing if we have one parcel or 500 parcels.
One of the things we learned from this arc up, is that the holdings that this agency has that are available for development are relatively limited. Because this agency is forward thinking and wants to make sure that we don’t do exactly what Dan said, which is build a development somewhere and five years later we’re knocking it down to build a grade seven.
EISENHART: What are the key components of the new policy that the board approved for developments moving forward on our right of way?
FITZPATRICK: Sure. The objective of the TOD policy was to set goals for development of the land. I think the one thing that’s vitally important that we all think about when we do TOD is that transit agency doesn’t view a piece of land that it’s going to develop as just a piece of land out in space. We view it as a way of getting people to the doorstep of transit. The first thing that we talk about when we do this is a balance of different types of access. When we’re developing a piece of property, sure, we’re bringing people to the doorstep of transit, but we also need to look at that specific site and make sure we have enough parking, we have enough access for shuttle, we have bike and pedestrian connections into the community that draw people to the station.
A transit oriented development project isn’t just a development project, it’s really an access project in the eyes of a transit agency. One of the things we said is a balance of access. We do a development, we want to create better access. Second thing we talk about is what’s the agency’s vision and whether its values in terms of a business transaction? Going back to the concept of a . . . we probably and the board verified this, we probably don’t want to sell land and get a big chunk of dollars for it. We want to enter into a long-term land lease for two reasons. One, we’re creating an annuity stream for the agency into the future.
That annuity stream is gonna go up as the years go on. As we bring more service and spend more dollars to bring service to an area, we think that’s going to increase the value of that land. By having, a land lease scenario we participate in that value, so the agency is recapturing some of the investment it’s put in the corridor from both the service and the infrastructure perspective.
LIEBERMAN: Yeah, and that makes a lot of sense when you consider, currently are you moving in there? Yeah, you’re gonna have some regular service, on the weekends you’ll have a train coming in every 90 minutes. Post electrification, once we start upping our frequency, all of a sudden you’re connected to a much larger transit network with a lot more flexibility, so I have to think that’s gonna add value.
FITZPATRICK: Absolutely. I like to make the joke that in our project up in Colma that we talked about before, that you’re right on the BART line. You can be in downtown San Francisco in about 20 minutes from that project. You’re actually closer living in Colma on that BART line, you’re closer to San Francisco than if you lived in San Francisco.
LIEBERMAN: Yeah, no, absolutely, if you’re driving in from the Richman versus hopping on BART in Colma, that’s not a question. Colma’s gonna win that race every day.
FITZPATRICK: Even taking MUNI.
FITZPATRICK: You’re gonna win that race taking BART and the same can be said of the Caltrain right of way. It’s a very efficient way and of course, because we’re a bidirectional commute, you could live in Hayward Park, you can be in San Francisco very quickly or in San Jose very quickly, so there’s a number of options that you have. The other reason we wanna hold on to land and do these land leases is because of the first reason. We want to be able to have the control of that site to make sure this doesn’t become a development driven project. It’s a transit driven project. We’re gonna make sure that the bike lanes and the bike infrastructure that’s in the community comes seamlessly into our station.
FITZPATRICK: By doing a land lease, we control that, we control shuttle access, parking access, a variety of different things much more strongly than if, we just went out and sold land. The board again, long term vision, that’s where they’re coming from, so we have business terms.
EISENHART: There’s other requirements that go with that too, density is one of them, but also a certain portion of designated affordable housing units within developments on our corridor. What formed the decisions that were made and what are the requirements?
FITZPATRICK: One of the things that we talked about the TOD policy that the board really wanted to focus on is what’s Caltrain’s role in solving the housing crisis in the Bay area?
FITZPATRICK: One of our board members at the very beginning of this said something I thought was very valid, which is first and foremost the housing crisis is about supply and demand. The board wanted to put its money where its mouth is and we set minimum density levels for developments. Any time we do a residential development, we want to see at least 50 units an acre. It’s a tough decision here because you can imagine if we’re developing in San Jose or Palo Alto or San Francisco, the vision of what density should be is gonna be different in all these other different corridors. Setting a policy wide objective is great because it sets a minimum. It also puts the message out to us and to all developers that we want to see density. We want to try and solve that with supply and demand.
The other thing that the board did is it stated very strongly its value and support for affordable housing. One of the things that we felt we needed to do at the staff level was provide data that would show the balance between revenue generation and on the other hand the ability to provide affordable housing. We think we did a fairly good job of outlining that and I think the board then had to do a really good job of making a policy decision that balanced it. Where we ended up is every place where the agency does residential development on its property, a TOD residential development, we have to have a minimum of 30% affordable housing on that site. Just to put that in context, BART and VTA are brothers in transit, have a 20% requirement per site, but they also have a 35% portfolio wide objective.
We had recommended at the staff level because our portfolio is limited, portfolio wide may be a little bit more difficult to achieve, so let’s look at what we can do per project, so we’re 50% higher than they are on a per project basis. Our board has directed us to be very aggressive with partnering and creating affordability in the peninsula.
EISENHART: Basically what you’re saying is VTA and BART have more land that they can develop on than we do, so they can produce a higher raw number of affordable units whereas we can at least put ourself in a position of a higher percentage for a fewer number of units that we could create on our land?
FITZPATRICK: Absolutely right.
FITZPATRICK: Absolutely right, Alex. Another interesting component of what we did at the very, very beginning of this rail corridor use plan, again, arc up work that we did that’s directly tied to our TOD policy, one of the things that we showed to the board was how we are a different agency than let’s say BART. The reason I choose BART to draw this comparison is because everybody knows who BART is. You go anywhere in the country and people are gonna know who BART is. Anybody in the Bay area knows that BART’s been very aggressive in doing a great job of creating transit area into development.
The difference between us and BART is that BART was built in the 1970s and the vision for BART at that time were gigantic urban centers with parking lots of 1,500 to 2,600 parking spots. Millbrae has 2,600 parking spots as we’re speaking right now. With Caltrain, this line started running in the 1860s. In 1863, we ran the first train up and down this line. These parking lots were built for completely different things. There wasn’t a vision of a sea of cars driving to these stations. The average station up and down the peninsula, the number of spots there are in the 100s. If you’re over a hundred, you’re a highly parked station on the Caltrain line.
What this means is when you look at the property that BART has available to develop, they’ve got these gigantic parking lots and we have these teeny little parking lots. My favorite graphic that I would show was in Millbrae.
FITZPATRICK: You could look at an overhead photo and you see the BART parking garage, it’s this huge 2,600 spot area. They’ve got surface parking in their garage. Then we’ve got about 100 spots on the other side and it’s just dwarfed. The amount of land that I as the real estate director have to develop over here is significantly different than you would if you were BART or even VTA who are more modern. They were implemented in the more modern day. Different things.
LIEBERMAN: Yeah. Oddly enough, a modern day that is now a standard we’re moving away from. In the 70s, it was like, yeah, now everyone’s driving everywhere so of course you have a mammoth parking lot. Whereas now, I think both cost and environmental concerns, yeah, that’s not we don’t want to design everything with the intention that everyone’s driving here anymore. But it is particularly wild to think that our trains, yeah, our parking lots, that was designed for a horse and buggy. That was designed on someone coming up on horseback, hitching them to a post and hopping on the train.
FITZPATRICK: It’s funny, in Millbrae that 2,600 spot lot, that’s property I bought for BART. Now BART is developing that land, so all the surface parking out there is turning into transit oriented development. BART’s really been a leader in that and they’re doing that transformation at a very big scale. We were trying to do that transformation at a smaller scale both in terms of individual lots and in terms of the number of sites, we have to do this development.
LIEBERMAN: I think that’s the perfect segue into talking about what we do have in the portfolio. The two ideal sites at Redwood City and Mountain View tell us about what those look like and what they could turn into.
FITZPATRICK: The interesting things about these sites is that they are currently both parking lots. We’re gonna be a little bit more challenged than we’ve been previously because in Hayward Park we have again, 230 spots with seven to 14 people driving there, we’re gonna minimize the amount of replacement parking we put there because we don’t need replacement parking.
FITZPATRICK: We need people at the doorstep to transit. Redwood City and Mount View, those stations are regional stations. We’re gonna need some level of parking there. Those stations are both heavily served and Mountain View by VTA buses and in Redwood City by SamTrans. There are also areas where there’s heavy shuttle use. When we talked before about this balance of uses at every station, these ones really are gonna be complex stations where we’re gonna have to really talk about balancing development, balancing various modes of access and pulling it all together into a cohesive plan, while partnering with a private sector developer. They are exciting great sites, they’re also gonna be really, really challenging to pack everything into those sites.
EISENHART: Right. With both Redwood City and Mountain View, there are surface parking lots. It’s not like Sunnyvale where there’s a big parking garage. Is something like that on the table? I think that’s a common question someone would ask.
FITZPATRICK: Sure. I think that the general strategy that you’re gonna look for when you’re talking about parking and I always tell people every time I talk to somebody about replacement parking, I say when you say parking I think access. You say parking, I think bus, shuttle, bike, ped, probably in the opposite order. I think ped, bike, shuttle, bus, drive. That’s the value system of Caltrain, it’s that order. We value that, but you’re absolutely right, we are gonna need to think about at each one of those stations how much parking we need and how we’re gonna build it? Really, the only way of doing that is to do some level of structured parking that frees up area for development, or some area of structured parking that goes below development. All those sites, those are gonna be issues we’re gonna look at.
We’re also gonna look at how do we get the buses and the shuttle in that area. We’re gonna look at connecting pedestrian and bike paths that currently run through those cities and bringing them seamlessly into the Caltrain area, so it’s a big challenge, but it will also be really fun.
EISENHART: The other thing that I think a lot of people, I mean everyone always wants more parking, but I feel that parking is something where there’s really a lot of hidden costs in there where we don’t see what it really costs to do that. How much more expensive does development get once you add in the cost of parking, particularly if it’s a garage?
FITZPATRICK: We had our consultants look at the very thing that you asked. Because one of the things that we wanted to be able to tell the board is when we’re doing development on these two sites, we’re gonna have to do some level of replacement parking. We want to figure out the right amount. It’s like Goldilocks, we don’t want too much or too little, but we asked our consultants, okay, if I wanted to build structured parking like Alex was saying, what’s it cost? Our consultant came back and said, look, just a ballpark range, building structured parking is about $65,000 a spot, so there is a cost to that. Of course, it’s not all driven by cost because we want to make sure that we can serve our patrons, but before we do any of this work we have models that we can run that help us right size, if you will, the amount of parking to make sure that we’re building the right amount.
I think it’s worth saying right now that our highest ridership station in San Francisco has no parking because San Francisco is TOD . . .
FITZPATRICK: . . . in and of itself, so as we’re building more of this development and doing more densification, probably parking is going to be something we’re gonna need less and less of. We want to make sure that we create the right balance, but recognizing that density is gonna drive ridership.
LIEBERMAN: I’m pretty sure you just made up the word densification, but it sounds good so I’ll let it slide.
EISENHART: Well, we made up TOD.
FITZPATRICK: There you go. That might be the word of the year in the Washington Post next year. Watch out.
LIEBERMAN: Fingers crossed folks.
EISENHART: High transit oriented development.
LIEBERMAN: There you go, I love it. It says Redwood City and Mountain View there’s also these seven other sites that are not necessarily ideal for development, but are on the table. Can you tell us a little bit more about the challenges associated with those?
FITZPATRICK: Yeah, that’s a great question.
LIEBERMAN: Don’t patronize me, sir.
FITZPATRICK: That’s a terrible question. But I’ll answer it anyway.
LIEBERMAN: Much better.
FITZPATRICK: The other sites that we looked at were less than ideal for independent development. One of the things that we asked the board to do when we developed this policy was in our policy to give us some flexibility to develop these oddball sites. Again, if you’re BART and you’ve got 26 sites that are all about five acres, your policy can be applied fairly uniformly to these sites. If you’re us and you’ve got two sites that are between one and four acres, then you’ve got seven other sites that are a little bit more unique, the policy needs to be flexible. I’ll give you an example of some of these other sites. One of the sites we have is at the Hillsdale station and it’s not independently developable because there’s no direct access to that site. To get to it, you need to drive through somebody else’s property. That means we need to be a little bit more creative in how we develop. We’ve got another site that’s just a really small site. It’s a beautiful site, it’s in downtown, but it’s very small. We need different techniques to develop that site. We may not do a land lease, maybe we need to be more flexible.
In south San Francisco, we wanted to be very clear to put the south San Francisco site in our report because south San Francisco, we’ve got an acre and a half of property, which is big for us. It’s right under the highway.
FITZPATRICK: It’s hard to develop. A lot of these sites, we wanted to make sure that when people are looking through our maps and say what about this one or what about that one, what about the other? We wanted to proactively talk about the challenges of developing these sites. Another site, beautiful site for housing and in San Francisco on top of one of our tunnels, we call it tunnel four. Two challenges, one on top of a tunnel. We want to make sure that we don’t hurt the tunnel or procure future maintenance of the tunnel. The other challenge is there’s a community garden thriving community garden on top of that tunnel, so when we develop that site, if we do, we have to balance a variety of values that the city has, that the neighborhood has, and that our agency has.
Can we find a way to make a community garden work with maybe some affordable housing? Does community garden better reflect the values of the neighborhood and our agency? These are things that we need to work with people to determine, and of course, our partners and cities.
EISENHART: Stepping back from individual projects, what do you see or I guess what does this agency see as its role in addressing the housing crisis?
FITZPATRICK: I won’t tell you that’s a great question. Because I don’t need another smartass answer. In terms of Caltrain’s role in solving the housing crisis, I think it’s multi-faceted. I think the most obvious and easiest answer is the one we talked about before, which is when we have sites that we can develop, let’s talk about developing them at high levels of density and talk about the appropriate levels of affordability there, but we’re limited. We have a finite number of sites, two is finite, so there’s only so much we can do in that realm. I think generally we’re a transit agency.
We provide connections up and down this peninsula and we’re able to make sure that somebody who’s living in San Jose can have a viable job in San Francisco or vice versa by providing this housing. SamTrans as well, we always tend to forget that SamTrans is running robust service up and down El Camino Real, plus we have connector and feeder service that brings people the rail line. The connection between transit and housing and development is vital. To get people from where they live to where they work is absolutely vital, so just our provision of a transit service makes a variety of different areas that maybe we don’t own, but it makes development viable there, and it makes those logical housing sites that can be built.
I think the other thing to note is that the whole concept of TOD is driven around the fact that we do need to bring people to the doorstep of transit. Because we own a finite amount of land does not mean that transit oriented development is limited. What it means is that there are private sector partners who can work to develop private sector land and achieve value from our service and they’re motivated to develop there. One of the things that we’ve found in doing transit oriented development is there are a bunch of developers who want to be at the doorstep of transit. We’re not the only ones who own that land. As cities start doing corridor area plans like we talked about San Mateo doing, or station area plans that a lot of other cities have done, you’re gonna find demand for these private properties to be developed and we’re right there to provide service.
EISENHART: When talking about the housing crisis in general, you can’t really talk about it without addressing opposition to the kinds of more dense developments that we are trying to encourage. On our property, as well as near stations in general.
FITZPATRICK: It’s interesting. I think first and foremost, we live in California, people wanna be here. They don’t want to only be here because what its February right now and 65 degrees outside . . .
FITZPATRICK: . . . but they also wanna be here because we have a super robust economy and because there are jobs in all realms from the service economy to the public sector, to obviously, tech. I think one of the things we have to realize is that if we’re in an area that where we want to live, other people wanna live here, too. I think it’s a function of first and foremost, I think we need to acknowledge that we need housing to support the people who wanna be here. I think that’s vitally important. I think the other thing that’s vitally important is that different people like to live in different ways. I think that a lot of us, I think, grew up in suburbs that we had to drive ‘til we grew up the hill that we grew up in, single family residences.
I think a lot of us have then had the opportunity to live in places that are a little bit more dense and a little bit more exciting, and I think we’ve learned that a number of people congregated in an area is extremely valuable. It creates good restaurants, it creates good bars, it creates nightlife, it creates entertainment, it creates culture, because you have people that are supporting that culture. One of the things that I think is now happening on the peninsula is people are seeing there’s a need to solve that housing need that we talked about and there’s also some people who maybe want to see a little bit more of that culture and those entertainment options where they live.
We don’t necessarily want to come in and supplant people, single and family residences, what we may want to do is develop in the right place, which I would argue is along the transit corridor. Bring the densities there, bring it near the downtowns, allow somebody to walk from San Carlos to one of these great restaurants in downtown San Carlos, get on the train, go to work, minimize their use of the car. I think people sometimes forget how all these things that they want, the culture, the restaurants, the bars, the entertainment, the various options, more entertaining and different types of people, they all come from density, so I think that’s one thing I’d say. Then the other thing, I think is kind of interesting is years ago, I heard this guy talk and I think his name was Jack Foster. He’s basically the guy who purported to build Foster City, where he took a bunch of dirt from Highway 92 and threw it in the Bay and created Foster City and built a bunch of single-family residences there.
LIEBERMAN: Man, the 70s were wild times, weren’t they? We’re gonna build a city here and then they did.
FITZPATRICK: One man’s trash is another man’s gold. Where do we put this dirt? Under my house.
EISENHART: There we go.
FITZPATRICK: He said something that I thought was both a little shocking to me, but also really, really interesting from a 1970s hardcore developer. He came up and he said look, we can solve this housing issue if we just take one or two percent of all the open space that we have and put a bunch of houses on it, problem solved. When you think about that way, that we take away something that everybody values, which is the ability to live in your house and drive 15 minutes up the hill and have a beautiful open space area, a walk, a preserve. We take that away to solve the housing issue or we just think about giving people the choice to live in more dense housing along El Camino Real, then get in Caltrain and go to work. To me it became a no brainer.
I think people were shocked that somebody would even say that, but I think the link then is if we don’t wanna take away that open space, what do we do? We develop on El Camino Real that we all know is underdeveloped and we let SamTrans, Caltrain, VTA, and in some instances, BART, get you where you need to go. Makes sense to me.
LIEBERMAN: Yeah, in particular when you consider how many American cities, Chicago, Denver, Phoenix, just have sprawled out, like, infinitely, so they’re just like you can drive from the suburbs in one side of Denver to the other and it’ll take you two hours to get there. That’s the other way to go. If you don’t go dense in places where it makes sense, where you have transit connections, you’re gonna have either a huge block of sprawl and/or you’re gonna have just miserable traffic conditions because the only option people have is to drive.
FITZPATRICK: Then those miserable traffic conditions kick in when you wanna go to downtown Denver or downtown Chicago to go to a play or a baseball game or whatever. If you’re already living there and you can just walk to the opera house or you can walk to the Golden Gate Theater or you can walk to the ballpark, some people, not all people, think of that as the kind of lifestyle they wanna have. I think that’s what we ultimately provide here is housing choice. Nobody is saying move out of the suburb, move down here, but if that’s the value system that you bring to the table, we need to be able to build to address that.
EISENHART: Brian, thank you so much for being on our show.
FITZPATRICK: I’ve enjoyed it. It’s been a lot of fun chatting with you guys and maybe we’ll do it again one day.
EISENHART: Yeah, we’d love that. Say hi to TOD for us. Absolutely, yes.
LIEBERMAN: That’s the end of this month’s episode of Wheel Talk. On behalf of everyone at Caltrain, including TOD, we thank you for listening.
EISENHART: Remember to give us a shout out on social media with the hashtag wheel talk. We really want this whole TOD thing to stick, so we’re counting on y’all to make that happen.
LIEBERMAN: We’ll see you on the next episode of Wheel Talk.
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