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49 CHAPTER 5 Case Studies This section presents four case studies that explore policy Each case study is organized into four sections: setting, decisions and their impacts in greater detail. The intent of the stakeholders, policy actions, and policy impacts. case studies is to help readers better understand the back- ground and factors that led to a policy action, the positions of Case Study 1: Local Land Use stakeholders on the issue, and the impacts of the policy action Policies Affecting Port Facilities on the freight system. and Other Freight Terminals The policy actions selected for case studies are those that the research team believes have had, or will have, impacts that Setting are unexpected or unintended by the policymakers. They are After decades of predominantly outward growth, many U.S. cities are now experiencing redevelopment along their 1. Local Land Use Policies Affecting Port Facilities and Other waterfronts and in their urban centers. In part, this trend is a Freight Terminals result of "smart growth" policies that promote infill develop- 2. Local Truck Access and Parking Policies ment as a way to reduce congestion, improve accessibility for 3. Air Cargo Screening Requirements residents, and reduce air pollutant emissions. In some cases, 4. State and Federal Climate Change Policies the areas targeted for infill development have historically been used for manufacturing and warehousing but now have high The first two case studies cover primarily local government vacancy rates, as firms involved in these activities have gone actions with a similar purpose. The policies occur in cities out of business or moved elsewhere. In other cases, however, throughout the United States, most noticeably in large metro- there may be continuing demand for industrial and ware- politan areas but sometimes in smaller cities. In both cases, the housing space in the same areas targeted for infill housing or freight system impacts are often not considered by the policy- retail. Such is the case in portions of the South Bay Cities north makers or are considered but ignored. of the Port of Los Angeles. The third case study covers a single recent policy decision Rezoning land previously set aside for industrial or freight- with direct and potentially large impacts on the air cargo sec- related activities can be appealing to local actors, both public tor, and potentially the trucking sector as well. This case study and private. Freight-related or industrial land uses generally illustrates how broad public and Congressional objectives (in produce relatively low rents, translating into low land values. this case, security from terrorist attacks) can trigger specific Rezoning of such property often means that property owners policies, and the challenges confronting the government and will earn higher rents or proceeds from property sales. An the freight industry to develop and implement a policy that analysis conducted for the San Francisco Bay Area's Metropol- achieves broader public goals without overly burdening the itan Transportation Commission found that local government freight industry. tax revenues for retail, office, and housing developments were The fourth case study covers a collection of state and Fed- 2 to 10 times higher than for warehouse use (see Table 5-1).65 eral policies concerning climate change, some of them enacted but many just proposed. Although the discussion of policy 65Hausrath Economics Group, "Task 4 Report: Existing Conditions and Trends impacts in this example is mostly speculative, it was selected Regarding Real Estate, Land Use and Community Factors with Implications for as a case study because of its high degree of relevance to cur- Goods Movement Industries," prepared for the Metropolitan Transportation rent policy debates and its potential for freight system impacts. Commission, October 2003, pp. 4853.

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50 Table 5-1. Tax revenue estimates for hypothetical development, inner east bay of San Francisco bay area. Annual Local Tax Revenues Tax Revenues Per Land Use to City General Funds Sq. Ft. of Land Warehouse $61,000 $0.28 Light Industrial/Manufacturing $57,200 $0.26 R&D Flex $80,600 $0.37 Retail $306,300 $1.41 Business Park/Campus $189,700 $0.87 Office 3-story $286,600 $1.32 Office 8-story $687,400 $3.16 Townhouses $99,300 $0.46 Apt./Condos/Lofts 45/acre $169,600 $0.78 Apt./Condos/Lofts 100/acre $384,200 $1.76 Source: Hausrath Economics Group, "Task 4 Report: Existing Conditions and Trends Regarding Real Estate, Land Use and Community Factors with Implications for Goods Movement Industries," prepared for the Metropolitan Transportation Commission, October 2003. Local governments are likely to see tax revenues increase State and local economic development agencies also can be (although demand for public services will also grow). Rezon- involved--either as proponents for preserving land for freight- ing of freight-related property is likely to increase costs to users related uses or for converting the land to other uses. Local of the freight transport system, but these cost increases are elected officials are usually involved in some way; local legis- more widely dispersed than the perceived local benefits. lation may be required for some land use changes. State and Sometimes it is not so much the promise of financial gain local transportation departments are involved in that they are as it is the adverse impacts of goods movement that prompt responsible for managing any infrastructure improvements or local governments to make land use decisions that discourage modifications that may be needed to accommodate changes freight-related uses. These adverse impacts include air and noise in land use. pollution, lights from nighttime operations, poor aesthetics, With regard to property near the urban waterfront, port and traffic congestion from truck and train movements. authorities have a strong interest in preserving adjoining Although it is not usually an intended result, local land use land for freight uses, and their interests are usually closely decisions of this kind can limit the ability of urban ports to aligned with those of freight carriers and shippers. However, operate or expand and can have a similar effect on other types as owners of waterfront property, they may benefit finan- of freight facilities such as truck and rail terminals. Although cially from the ability to use that property for higher value, ports are limited to land with access to deep water and usually non-industrial uses. cannot relocate, owners of truck terminals or distribution cen- Private-sector stakeholders with an interest in the location ters can respond to changes in land use by moving to outlying of urban freight facilities include areas. The new location of a terminal may be farther from freight destinations such as ports, retail centers, and manu- Freight carriers and facility owners. Development pres- facturing plants, resulting in an increase in truck VMT and sure on centrally located property pushes freight facilities to empty miles traveled. other, usually outlying, locations where rents are lower and In exceptional circumstances, a local government will pur- space is more abundant. However, the more remote loca- posely arrange for the relocation of a freight facility out of the tions also likely entail increased travel times, greater num- urban center. Such an action may be motivated by the freight ber of miles traveled, and higher fuel costs. In the extreme, facility's contribution to local congestion and air pollution. freight facilities may move to another jurisdiction. This last case differs from the first two in that the deliberate Freight shippers and receivers. Shippers and receivers aim of the action is to relocate freight facilities--the relocation benefit from faster and less costly transportation services. is not a side effect of local land use decisions. Changes in the location of freight facilities may increase costs to them or decrease the quality of freight service, but Stakeholders unless they rely heavily on a particular freight facility, they are not likely to engage actively in this type of land use debate. In most U.S. cities, numerous agencies have a role in these Owners of property near freight facilities and real-estate kinds of land use decisions. Local planning and zoning author- developers. Alternative land uses offer the possibility of ities are the primary actors in these situations, although some financial gain for owners of industrial property and real- states have authority over local land use decision-making. estate developers.

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51 Residents in the vicinity of freight facilities. Urban resi- from a rail line running through the Orlando region to dents near freight facilities are affected by traffic and other another rail line running west of it, while providing CSX quality-of-life issues such as noise, dust, odors, and emis- with a new terminal to replace the existing one in Orlando.67 sions from trucks or from on-site industrial activities. These The reasons behind this are: to reduce street congestion in concerns may also draw the attention of environmental and Orlando due to trains blocking grade crossings and to make public health advocates. the lines currently used by CSX available for commuter rail. A similar proposal has been put forward in Colorado--the Colorado Department of Transportation is studying a pro- Policy Actions posal to shift freight trains out of the Interstate 25 corridor Three key ways in which local land use policies affect the through Denver to a new alignment on Colorado's eastern freight system are as follows: plains.68 1. Zoning decisions that limit port expansion and redeve- Policy Impacts lopment. In making decisions regarding the use of water- front property, local officials and their constituents may When local government land use policies prohibit the con- prefer other land uses such as retail, office, or residential struction or expansion of freight facilities desired by industry over industrial uses. For example, land near the Port of New or encourage redevelopment with non-freight-related land York that was previously vacant or used for freight ware- uses in areas close to ports or other major terminals, these houses has been redeveloped into high-value commercial policies can result in negative impacts on the freight system. and residential property. Freight distribution centers have Travel distances and transit times may increase for trucks, therefore, moved away from New York to the New Jersey thereby raising operating costs. For example, if a truck termi- suburbs and eastern Pennsylvania where land values are nal is relocated so as to increase average one-way port dray by lower, although access to the container ports in the New 25 miles per load, using the national average figure of $1.73 for York area is more difficult.66 truck per mile costs, a conservative estimate for increase in 2. Land-use decisions that discourage non-port-related drayage costs would be $43 per truckload.69 Assuming 500 truck freight facilities in the urban core. Local land use decisions trips into and out of the terminal per day, the increase in truck- may result in other freight facilities such as truck terminals ing costs would be at least $21,000 per day, or over $5 million being located far from residential and retail districts, as well a year, assuming 250 working days. In reality, however, the as from areas zoned for light industry or warehouses. This impacts of such a relocation would not be this simple. The may be the inadvertent effect of allowing land uses near negative impacts of a location farther from a port could be at existing terminals that drive up rents and push the terminal least partially offset by lower property taxes and closer access owners to relocate. Alternatively, it may result from delib- to warehouses or other destinations. These impacts would erate attempts to keep truck traffic away from particular change over time if other terminals relocate in response to the locations. For example, during interviews, trucking indus- same development pressures. try representatives said that some local governments have Because of the interconnected nature of land use and the encouraged construction of distribution centers (DCs), see- transportation system in a metropolitan area, determining the ing them as a source of taxes and employment, but have not impacts of a land use policy would be impossible to quantify allowed a trucking terminal as part of the DC cluster. The without use of regional land use and travel demand models. result can be longer runs for trucks going to and from the Although many MPOs have used their models to test the DC cluster but no reduction in local truck traffic. impacts of alternative regional land use scenarios, the research 3. Intentional relocation of freight terminals. In rare cases, team is not aware of any regional modeling exercises that a local government takes direct action to relocate a freight sought to understand impacts of freight facility relocation. terminal out of the urban center. This occurs in situations Transportation infrastructure generally has great visibility in which there are no more cost-effective ways to further and large local impacts. Because of network effects, the negative mitigate the adverse impacts of freight activity such as con- gestion and pollution. For example, Florida has proposed spending as much as $650 million to divert freight trains 67"Hopes for Rail Renewed," St. Petersburg Times, July 13, 2009, http://www. tampabay.com/opinion/editorials/article1017557.ece and also http://www.sunrail. com/ 68"Study: Benefits of Rerouting Freight Trains Across Plains Outweigh Costs," 66 GAO, Freight Transportation: National Policy and Strategies Can Help Improve Denver Business Journal, February 10, 2009, http://www.bizjournals.com/denver/ Freight Mobility, GAO-08-287, January 2008, p.14, http://www.gao.gov/new.items/ stories/2009/02/09/daily24.html d08287.pdf 69ATRI (2008). An Analysis of the Operational Costs of Trucking.

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52 impacts are largely local, while many positive impacts are dis- proposed changes related to land uses along the Miami River. tributed throughout the transportation network.70 This being In particular, the state agency found that, as amended, the the case, it is not surprising that local land use authorities are city's comprehensive plan did not include strategies for pre- more attuned to the local benefits of their decisions than to serving recreational and commercial working waterfronts, as the costs imposed on carriers, shippers, and all those who required by state law.73 ultimately benefit from efficient freight transport. The city, the Florida Department of Community Affairs, Over time, legal, financial, and institutional mechanisms and the Miami River Marine Group are now scheduled to enter have been developed to balance the broader economic inter- formal mediation in October 2009. If mediation is unsuccess- ests against local economic and quality-of-life interests. Some ful, the case will go before an administrative law judge. Ulti- of these mechanisms are Federal (e.g., cost-sharing for trans- mately, if the city does not bring its comprehensive plan into portation infrastructure improvements), while other mecha- compliance with state law, the state can withhold infrastruc- nisms are in place at the state or regional level. The following ture funding from the city.74 two examples illustrate some of these legal, financial, and If the City of Miami succeeds in its efforts to redevelop the institutional mechanisms. Port of Miami River area, it is unlikely that most of the marine terminals could relocate to other nearby locations. Even with the crash in residential real estate values in South Florida, land Port of Miami River values are unlikely to support creation of new marine termi- The Port of Miami River is a collection of 32 private marine nals. Some of the marine traffic currently served by the ter- terminals that serves as a shallow-draft port for smaller vessels minals could shift to other port facilities, including those at the coming from the Caribbean and Central and South America. neighboring deep-water Port of Miami. Ultimately, some ship- These terminals handled nearly 500,000 short tons of freight pers would likely see an increase in freight transportation costs in 2007, compared to the roughly 7 million short tons handled as a result of the redevelopment, and the region would most by their neighbor, the deep-water Port of Miami.71 In 2007, the likely lose some of the associated business activity. city of Miami lost three consecutive court decisions over land use designation changes that it made so that large-scale resi- Port of Baltimore dential developments could be built along the Miami River. The lawsuits were brought by the Port of Miami River's termi- The recent experience of the City of Baltimore, Maryland, nal operators, who sought to retain the waterfront for marine provides an interesting contrast to that of Miami and demon- industrial uses. In the court decisions, the judges held that the strates the ability of a larger port and its industrial partners to separate amendments to the city's comprehensive plan, when preserve waterfront property for marine industrial uses. The taken as a whole, amounted to changing the character of the Port of Baltimore is a major East Coast port, handling more waterfront without proper long-range planning or input from than 41 million short tons in 2007.75 In 2004, Baltimore created appropriate agencies, departments, and citizen groups.72 a maritime overlay zoning district (see Figure 5-1) that largely In response to the court rulings, the Miami City Commis- prohibited residential and commercial development on water- sion approved amendments to the city's comprehensive plan front property adjacent to deep-water shipping channels. The that would permit residential and mixed-use development zoning district was intended to help streamline the develop- along the river, despite objections from the marine industry ment process by avoiding costly and time-consuming delays and the city's Planning Advisory Board. Those amendments associated with site-by-site decision making regarding change were then forwarded to the Florida Department of Commu- of use. It was also intended to prevent the "leapfrogging" of nity Affairs, which is responsible for ensuring that local com- mixed-use development into maritime areas that had begun to prehensive plans and amendments comply with the state's occur.76 Growth Management Act. In July 2008 and again in January However, by as early as 2007, terminal operators and port- 2009, the department rejected the city's amendments. Among related industries began arguing that the 2014 sunset date for other issues, the state agency expressed concern about the the zoning district was not far enough into the future and was 73 70Genevieve Giuliano, "The Changing Landscape of Transportation Decision Florida Department of Community Affairs, "Objections, Recommendations, Making," lecture presented to TRB 2007 Annual Meeting. and Comments for City of Miami, Amendment 08-1ER," July 18, 2008. 74 71U.S. Army Corps of Engineers, 2007 Waterborne Commerce of the United Jacquelyn Weiner, "Battle over Miami River Designation Headed for October States, http://www.ndc.iwr.usace.army.mil/wcsc/wcsc.htm Mediation," Miami Today, July 23, 2009. 75 72Risa Polansky, "Miami Changing Land-Use Plan After Court Defeats on River U.S. Army Corps of Engineers, 2007 Waterborne Commerce of the United States. 76 Uses," Miami Today, November 15, 2007, http://www.miamitodaynews.com/ City of Baltimore Planning Department, Maritime Industrial Zoning Overlay news/071115/story3.shtml District: 2007 Annual Report.

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53 Source: City of Baltimore Department of Planning. Figure 5-1. Baltimore maritime industrial overlay district. therefore discouraging facility upgrades and expansions.77 Port trict to 2024. The legislation allows landowners to petition the interests argued for moving the sunset date further into the City Council for removal from the zoning district starting in future or making the zoning district permanent. In contrast, 2014, but they will have to prove that removal of a particular property owners and the real estate development community property will not adversely affect the district. sought to add more flexibility to the zoning district. For exam- It is too early to discern the impacts of extending the sunset ple, they asked that property owners be allowed to request date of the zoning district. However, had it not been extended, removal of property from the district. In particular, they wanted it is reasonable to conclude that capital investment in the indus- to be able to redevelop locations within the zoning district that trial facilities in the zoning district would have slowed as the industrial tenants were no longer using. Industry advocates said original 2014 sunset date approached. Other factors, such as that giving property owners such an option would break up the market conditions and the cost of relocating, would also affect integrity of the district and allow development to creep in. the investment decisions. The relative importance of each fac- Industrialists, developers, and city officials worked for more tor could differ greatly from firm to firm. A 2006 report by the than a year to develop a compromise. The City Council com- Baltimore City Department of Planning highlighted several missioned a study by a local foundation, whose conclusions firms that had relocated to, or expanded operations near, the on how to balance the interests of industry and development Port of Baltimore because of land use conflicts at other ports.79 helped in developing a solution.78 In May 2009, Mayor Sheila Dixon signed a bill to extend the sunset date of the zoning dis- Summary 77 Scott Dance, "Port in a Storm: Financing Scarce for Waterfront Industry's The relatively small Port of Miami River apparently does not Expansion," Baltimore Business Journal, December 21, 2007. have the political or economic clout to convince city leaders to 78 Scott Dance, "Mayor Dixon Signs Bill Protecting Port of Baltimore's Maritime Zoning until 2024," Baltimore Business Journal, May 12, 2009. The Abell Foun- dation's report, Charting the Future of Baltimore's Industrial Waterfront is avail- 79City of Baltimore Planning Department, Maritime Industrial Zoning Overlay able at http://www.abell.org/pubsitems/CD_BaltWaterfront_0109.pdf District: 2006 Annual Report.