Denton U. Kent

Alexandria 20/20, The Potomac Yards Redevelopment: Private/Public Interactions in The Provision of Infrastructure

As the Chairman indicated, I am on this panel representing the development arm of “challenges in infrastructure,” and I have had experience both on the public and private side in terms of provision of infrastructure. One of my theories is that as local government matures, there is less and less public provision of infrastructure. Today, the public sector is looking more and more toward private entities to provide the infrastructure that was normally the business of the local government, as an exaction, or an exchange for certain development rights. A real quandary exists, for both the development company and the public sector, in trying to balance which infrastructure investments are made publicly and what a private developer should provide.

My other theory based on my public sector experience and one that I still hold as truth, is my belief that there are three issues in infrastructure which form the basis of all growth and development; what I refer to as the three T's–tar (roads), taps (water), and toilets (sewer). If you think through the process of growth and development, having any two of those three keys in combination will stimulate growth. Having any two of these features will affect development patterns and affect the economic base from raw resources to finished resources. I have since



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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Denton U. Kent Alexandria 20/20, The Potomac Yards Redevelopment: Private/Public Interactions in The Provision of Infrastructure As the Chairman indicated, I am on this panel representing the development arm of “challenges in infrastructure,” and I have had experience both on the public and private side in terms of provision of infrastructure. One of my theories is that as local government matures, there is less and less public provision of infrastructure. Today, the public sector is looking more and more toward private entities to provide the infrastructure that was normally the business of the local government, as an exaction, or an exchange for certain development rights. A real quandary exists, for both the development company and the public sector, in trying to balance which infrastructure investments are made publicly and what a private developer should provide. My other theory based on my public sector experience and one that I still hold as truth, is my belief that there are three issues in infrastructure which form the basis of all growth and development; what I refer to as the three T's–tar (roads), taps (water), and toilets (sewer). If you think through the process of growth and development, having any two of those three keys in combination will stimulate growth. Having any two of these features will affect development patterns and affect the economic base from raw resources to finished resources. I have since

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 added a fourth T as a growth factor, because I am working in an in-fill environment now for some of my projects, and that is transit. Transit is becoming more and more the infrastructure of choice and need in in-fill developments in urban areas. So, I maintain that the keys to growth and development are tar, tap, toilets, and if you are working in an urban environment, transit. To familiarize you with RF&P, until 1991 it was the oldest continuously operating chartered railroad company in the United States, actually working between Richmond and Washington, D.C. In 1991, the railroad company was sold to the Virginia Supplemental Retirement System, the public employees' pension system. The pension system is a resource of about $15 billion of investment with approximately 8 percent of the $15 billion in real estate assets. RF&P represents almost $700 million, or about half of that real estate investment. When RF&P was sold in 1991, the rail lines and operating lines were spunoff, and the real estate assets remained. Those real estate assets are in all different phases of development; we have some rather large holdings that, at this point, are good for nothing other than land banking. We have some land resources here in the Washington Metropolitan Area that you may have seen flying into Washington National Airport. Adjacent to National Airport is Crystal City, which is one of our holdings. We hold the land lease under that ground and the Charles E. Smith Company provided the built environment. We have other developments under way in this corridor that are in various development stages. We are going to look today at a 342 acre in-fill development between Washington National Airport and Old Town Alexandria, a former railroad yard, as an example of infrastructure implications. One of the things that I would like to point out, and this has to do with my fourth T, transit, is that several of our assets are impacted positively by the fact that they currently are served by the Metro system or have access to commuter rail. Commuter rail is a relatively recent phenomenon (within the last 5 years) here in the metropolitan area and has developed as an alternative to some fairly heavy congestion in radial corridors. If we look at a depiction of the Washington, D.C. region, this building is not too far from the location that we are discussing. The area includes the City of Alexandria, the Capital

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Beltway, the George Washington Memorial Parkway, and U.S. Route 1. The Potomac Yards are central to the metropolitan area: Fairfax County, Virginia, is to the west; Prince Georges County, Maryland, is to the east; and Montgomery County, Maryland is above the District and Prince Georges County. This site has the advantage of some of the regional infrastructure that has already been provided. I see Al Grant here, and he probably has more information about regional transportation infrastructure than anybody in the area, so he can help us if we get into any concerns about that. Closer to Potomac Yards, within the metropolitan area we include the Pentagon, National Airport, and Old Town Alexandria, which some might be familiar with. This project that we will talk about today is located on 342 acres adjacent to the airport between U.S. Route 1 and the George Washington Memorial Parkway. If we zoomed in beyond the City of Alexandria, this corridor represents our company holdings and major interest here in northern Virginia. In this corridor we have several different sites that we have been dealing with. Over the years, we have tried to look at these properties as a system, since we have a mix of developable land, and developed land that will revert back to us in the mid-twenty-first century. Some people say it is kind of silly to look that far ahead. Maybe Mr. Coates, one of my fellow panelists, will be able to talk to us about whether or not that is a realistic view. For our company, however, this area represents what is called, in real estate, a farming area: an area of our specific interest that we have to manage as part of a unitized whole, even though it is at various stages of development. Potomac Yards from 1906 until about 2 years ago was a very active railyard. It was a classification yard that broke down shipments from the North into specific destinations heading to cities in the South, and vice versa on the northern track. Because of economic pressures, competition largely from over-the-road hauls, air freight, and a not-so-subtle pressure by the federal government to move freight lines from the seaboard into the interior valley system—the five railroads who jointly managed this yard decided to terminate their rail agreements, move forward with the disposition of their individual assets on it, and return the land as previously agreed to the RF&P.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 We have been engaged in a replanning effort on this particular tract since 1989. So we are six years into the process. I sometimes take heart by looking at the most similar project to the Potomac yard in the United States, which is Mission Bay in San Francisco. We have progressed fairly nicely within the 6 years. The Mission Bay project, for example, required 14 years from beginning of planning to receiving development approvals. Much time, effort, and energy has been spent on trying to resolve differences between the public and private sectors relative to infrastructure and the impact of development on infrastructure. I have a couple of interesting examples for you on how the social paradigm of growth and change can be illustrated by one or two infrastructure decisions. In essence, public approaches that put the development process in a fishbowl so that while we are talking about surrogate issues such as infrastructure, we are really using that as “code” for growth versus no growth. The City of Alexandria portion of the master plan for the parcel that we are addressing today was developed in the late 1980s and early 1990s. The master plan is one of our primary concepts in moving the Potomac Yards project forward. Unlike Crystal City, which developed a parcel at a time—there would be a block developed, warehousing still remaining on the rest of the acreage—and then another small acreage block developed sequentially. There was, in other words, no master planning for Crystal City. I will be the first to say I do not think the human environment there is the best. The later parts are better, but if you look at it as a whole, you really can not get a cohesion to it except through an underground retail system called “The Underground.” As we looked at the RF&P corridor of interest and approached this Potomac Yard acreage, we wanted to be certain we did adequate master planning to at least set the major infrastructure processes and development geometry in place. We are not so bold to say, in the 25-year buildout process of this project, that each and every use is going to be as depicted on the conceptual plan. But I am fairly certain that the major infrastructure and organization will be in place and allow the project to develop on a sequential, neighborhood-by-neighborhood basis without losing the benefits of those things that can be accomplished only by looking at the overall site, its implications, and its rewards.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Let me give you a major example of the planning basis for this parcel. Along U.S. Route 1 exists a rail corridor which is served at the moment, by Amtrak and also used for through freight and commuter rail. On the eastern portion of our property is the Metro transit line. It does not take a rocket scientist to look at the potential of moving the rail corridor to the east and putting all those transportation potentials together in one hub location. That is exactly the first principle that is in play here. By moving the rail line, mating it with Metro, and creating a station in that location, access will be provided to either horizontal or vertical transfer within one building; to Amtrak; commuter rail from Manassas on the west; commuter rail from Fredericksburg on the south; the Blue Line of Metro; the Yellow Line of Metro; the regional bus system; two local bus systems; pedestrian; bike; and kiss and ride. That process provides a transportation capacity that can handle at its theoretical maximum, 50,000 people per hour. Those levels will never be realized, but running the shortest headways and the greatest crush loads practicable equals 50,000 people per hour. Only Union Station in this region has, in one place, as much opportunity for intermodal choices and distribution as does this site. The added benefit to that is that we are, in effect, working with land which is a blank slate. Unlike most transit improvements, where you are actually forcing transit into an already built environment, this site allows us to make our plans to take advantage of the transit that is going in before the development actually occurs. The first planning basis is a transit hub: plan the land and organize it in a manner to take advantage of the transit amenities. The second planning basis is that the City of Alexandria, through its public processes, has decreed that U.S. Route 1, which is a federal highway, will never exceed four lanes of capacity through this area. I will describe how the community, because it is located in an area that draws commutation, (People travel from the south through Alexandria to Washington, D.C. and the inner suburbs to work.) chokes down U.S. Route 1 through the design of a bridge to ensure that it would never be expanded. The community's paradigm, if you will, has been, that rather than assimilate or accommodate transportation demand, to try to restrict and discourage it over a 15-year negotiation

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 period. In order to offset that restriction, RF&P needed to come forward with a new six-lane facility that parallels U.S. Route 1 to provide the necessary capacity for north-south ingress and egress. We then decided that we would develop around a grid system, which many of you may have heard described as neotraditionalism, the new buzzword in land development practice and theory. Back to the future, if you will. One of the resulting transportation characteristics is, instead of having one major collector road that enters and exits the site, you have a number of capillary roads. The parallel between the arterial and capillary parts of your physical system, also hold true here. There are a number of different roads on a grid system so that people can take alternative routes and have many ways of access between areas instead of just one choice. Once the principal roadlink and transit system was structured, we could consider ancillary uses and supporting infrastructure. For example, some of the underlying formative infrastructure investment that will be required is a completely new sewer system, not only to serve this site, but to serve the city areas adjacent to it. Alexandria 's sewers are old and part of a combined sewer overflow system. That means, when a storm or a rain event, occurs, drainage goes into the sewer system, basically overloads all the treatment facilities, and somewhat diluted sewage flows into receiving streams. The city maintains that they do not have the funds to make that sewer investment, and therefore are looking toward development to provide a system not only for its own needs, but a system the city can tap into to take advantage of the new construction. That is the basic geometry of this project. Note that about one-third of the developable area is allocated to open space and recreation facilities. I will not belabor this, but will say again, the form and structure of this development was largely based on what could be done in terms of transportation infrastructure and transportation impacts, as well as what level of development would be needed in order to generate the returns privately to provide that infrastructure and still make a profit. As you look at the private provision of infrastructure in a public arena, that is one of the greatest friction points. The problem is, that if someone is concerned about growth, or the amount of growth that is going to take place, one way to intervene is to impact the provision of infrastructure. One way to impact the provision of

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 infrastructure is through various studies, observations, and such to determine whether or not an infrastructure system will work. I have to tell you, that is not always a scientific determination. The plan that we have put together focuses not only on some of our obligations, but some of the benefits: such as a privately financed Metro station and transit hub. The hub I mentioned was looked at for a number of years, but was not part of the original system of transit stations in the Washington Metropolitan Area. Congress provided funding to Metro based on a 103-mile system that was specific as to which stations would be included. The station described to you is not included in that. Therefore, if that station is to be implemented, it must be underwritten privately. We looked at it and thought that the benefits of such a station would in fact generate a response to this project that would justify its cost. It is a pretty simple connection. In terms of a broader social theory, what we think is at work here is that northern Virginia, like many urban areas, is soon going to be at the point–if it is not already–where you are going to start defining quality of life as access to transit alternatives. In our site, we think we have both work and living opportunities that can capture that kind of advantage. RF&P will provide a new, privately financed six-lane road paralleling U.S. Route 1–there is no funding federally, state, or locally, to provide that road. So if that road is to be provided, we must do it. We will be providing 50 acres of park and a new sewer system, which I mentioned, to relieve combined sewer overflow, and a new storm water system. One of the benefits to the city of this plan is the creation of 10,000 part-time and 12,500 full-time jobs; bringing about $25 million in annual revenue to the city in terms of positive cash flow. There was no point in time in the projected development at which there was negative cash flow from the city. Again, that was because the public arena was not providing infrastructure costs. The private side does that here. Other benefits are a commitment to affordable housing, accommodation of transportation infrastructure and a design concept that, in effect, not only offsets the impacts of our development, but improve transportation in the entire eastern part of Alexandria compared with a no-growth development scenario. I will talk about that a little more. Also provided, through the rail right-of-way we control, is the possibility of a limited-access road to our development

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 from the southern Beltway, which would traffic wise not impact the developed areas of the City of Alexandria al all. Our projected infrastructure cost is based on the City's analysis. They determined that to provide what we believed was necessary, would cost $245 million. That was broken down into an Arlington portion–$25 million–and the Alexandria portion–$220 million. That is $220 million divided by 300 acres, or $733,000 per acre in infrastructure costs. That is a very, very tough nut, especially if one has to provide the infrastructure up front, where you are laying out money before you receive any of your benefits from development. That is a very big development hurdle. Part of the cost was from rail relocation, which includes not only the stripping of the rails and distribution and grading of the site, but also the provision of the complementary uses of Amtrak commuter rail, in addition to the Metro station which will cost $22 million. Without getting into more details, the point is that in looking at an operation like this, there is $250 million of private investment on the infrastructure side. I will say that the current estimate has come down somewhat because we have been able to look at the services in different ways. I now want to share with you the kind of rigor that one has to go through to identify some of the major issues in development from a transportation infrastructure standpoint. I mentioned earlier that the major hurdle on this project, as far as public acceptance, was transportation. People did not want to have their transportation system overburdened. Many things have to be examined in order to look at transportation infrastructure and how it is organized, and how it can be provided to improve, or at least not negatively impact, the public environment and service to the local residents: signalization, intersection design, in this case Route 1 improvements, and the new road, Potomac Drive and transit. Realizing Metro's potential, for the site was a very important issue, at the time we started out there was only one line of Metro there; (now there are two.) So we worked in that regard to extend the Blue Line. We looked at bus access; on-site light rail or people movers to distribute people on the site; satellite parking and shuttles; car pool staging areas; parking policies, getting in commuter rail. We looked at high-speed ferry service, because we are adjacent to the Potomac River and the airport. We proposed adjusting the Monroe Avenue

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Bridge to improve traffic flow and evaluated an internal bridge system versus curvi-linear roads. We considered how the open-space system would affect the transportation and mitigate development requirements for the site; established a transportation management assistance program; developed a pedestrian network, and proposed the southern connector. Finally, we looked at how we could mix land uses to create the least impact on peak-hour traffic. This example is offered in the spirit of the size of the task when you take on, in this case, just one of the infrastructure determinations to try to make a development work. We did three transportation studies on this project, because it was such a key point. We did one, and the results came out very well. We turned that over to the City, and the City said, “Well, thank you very much for your effort, but we do not believe you. This looks too good.” We said, “Well, we are sorry, but this is what it is, and this is how we can defend it.” They said, “We are going to do our own transportation study.” So they hired another transportation expert who came in, and their results were just about the same as ours. In some aspects, theirs were better: citywide, 300 fewer peak-hour vehicles with the plan we had than with the no-growth scenario. In Old Town and inner city, the difference between the Alexandria 20/20 Plan and the staff plan is 1 percent or, 8 vehicles per street per peak hour which is deminimus. The proposed two-lane, reversible roadway called the Southern Connector helps ease traffic in Old Town, the inner city, and neighborhoods to the west. Western neighborhoods had less traffic with the 20/20 Plan than with no-growth. In addition, the neighborhood traffic protections that were proposed further improved the future outlook. We were very optimistic when that was published. The problem was, however, that the City council said “We do not believe our own study.” They were getting political pressure to keep down growth. Regardless of what the transportation study said, they had to find the hook to lower growth. There was a political dynamic, or the social paradigm here between benefits to the City of the City Plan, and the political reality of trying to keep down development and its aspects. The third transportation study we did was with Arlington County to the north, on a joint basis with them, and, lo and behold, that study came up with the same kind of conclusions that both our study and the City's study reached. One of the most interesting lines I have ever seen in a city's comprehensive plan

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 is one that exists now in the City of Alexandria plan. This was a staff comment upon adoption which said, although there is nothing more than anecdotal evidence to the contrary, the City has rejected the results of its own study. This is an interesting but sad social comment as far as I am concerned. The City was using infrastructure consideration in the following way. The City's theory was–the less infrastructure a developer has to put into the project, the less return they have to have. They therefore wanted to lower our costs in order to have less development. From our standpoint, if you lower some of the infrastructure costs, you are going to lower the quality of the development. The City said to us, “You are proposing parks of too high a quality. The cost of your parks is beyond what the average cost of a park is in the City of Alexandria. Therefore, in the analysis of your development we are going to discount the amount of money that you are proposing to put into parks, so you can lower your return.” We had a system for mass transit distribution within the site. After you arrived by Metro or by car, you would not have to use your vehicle during the day. The City's response to that was, “That is too expensive, so cut that out, and therefore you will have to not consider as much development as you would have if that infrastructure system was put together.” Our quandary was, if you lower the cost for some of those things, not only do you lower quality, but in our sense, you also lower value. This is a pretty simple economic process but this is the mire we found ourselves in for over two years; trying to work these infrastructure-type issues with the City. Fortunately, this is not the end of the story. If you look at what we had put together in terms of the development package for this project, we were looking at 14.5 million square feet more or less, of mixed-use space on this site. That was the basis, for example, for our transportation studies, sizing of our sewer system, and other demand based infrastructure. Because the city staff was somewhat tardy–a year and a half late coming out with their plan–the City Council had an election between the time that we produced our plan and the city staff was to produce their plan. So in response to some no growth actuals, the City Council members came up with their own plan; which unfortunately was not based on any analysis or technical work. Six million square feet is what they saw as the development capacity for that site. We were at 14 million square feet; they were at 6 million.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 After a lot of analysis and a foray into a new planning theory in the United States called minimum economic viability, the City of Alexandria finally adopted a plan of 9.2 million square feet. The good news for us is that from the time they voted for 9.2 million square feet, a couple of things happened. After the City came out with that 9.2 million square feet, we said there is no way economically that we could develop this site with the needed infrastructure investment so our only solution was to try to take you to court and have the court system agree with us that you have in effect rendered this piece of ground nonviable for development. And we proceeded to file those suits. Approximately 3 weeks after we filed the suits, the Governor of Virginia and the owner of the Washington Redskins football team announced Potomac Yards as their choice as a site for a new stadium. We were off to the races with a stadium. If the development proposal for 14 million square feet stimulated the citizens, you can imagine what a proposal for a 72,000–seat stadium did. They literally went ballistic. What was attractive to us about that proposal was that the State, in siting the stadium here, would pick up almost $90 million of the infrastructure that has already been required in the Alexandria 20/20 project. So if they were going to put the stadium here, they knew they needed a Metro. They knew they needed some of the roads. They needed a new sewer system, etc, and they were willing to discuss a commitment of $90 million of state funds to get over that initial hurdle. If you take that $90 million off the top with the stadium and mixed-use development is available on the rest of the site, the revenue projections are on a very attractive curve. The community defeated that proposal for a stadium. However, in the process, the city indicated that if the stadium would go away, perhaps they would reexamine their decision on the development capacity of the site. They saw their way clear to simply declare that another million square feet of commercial space and another thousand housing units could be added to the development capacity. As the stadium faded, those capacities came back to us. We now have a total of 16 million square feet of development capacity, slightly less than we requested to start with; about 12 million square feet of that total in the City of Alexandria, which is about 2 million less than we started out with in Alexandria.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 What we have said in this instance is that when you get to the 12 million square foot development level, the economics of proceeding with the infrastructure that we think is required on this site starts to make sense. However, you do not have the same quality in every respect. For example, in the first plan we had a restructured canal system that served as a front door to several residential units. We can no longer afford to reconstruct that canal system, but can afford to leave it as open space with a nice buffer. Those kinds of quality changes were made as a result of this process of lowering development capacities. I will just wrap up here with a couple of final points and I would look forward to your questions. The Monroe Avenue Bridge, on the southern end of our site, is the only modern bridge I know of on a U.S. highway system that has rumble strips at the access points in order to keep people alert that they are going over some dangerous curves on the bridge. Why was it constructed that way? It was constructed after a 15-year negotiation period between the City of Alexandria, led by citizens' groups who wanted to restrict traffic in the same area in which the Potomac Yard project is located, and the Virginia Department of Transportation (VDOT). The Virginia Department of Transportation theory was, “Here is Route 1; let us cut straight across the Yard, smooth out the traffic flow, and make an easy transition across. The City took the position that the passage should be as difficult as possible. For 15 years that debate raged. VDOT finally gave up in the face of the citizens' and the City's persistence and built the new bridge with this convoluted orientation. The only explanation for this design is to make it more difficult for people to traverse the City of Alexandria. We were bold enough when we came out with our plan to again suggest this alignment. There would have been two bridges required as far as spanning the rail yards, as well as a new span itself: about $13 million in costs. When that came up for consideration, we were told that it was a great transportation solution, but a lousy political solution, so “save your money.” That is another aspect of how one gets caught up in the public debate between infrastructure, growth and development, and actual quality of life, because quality–of–life issues that are viewed differently by different parts of the social paradigm, as this session points out. I think our plan has been well structured, well thought out, and debated. It is now about to get under way. But we still cannot afford to put in infrastructure to the magnitude that is

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 needed on a front-end basis. I wanted to share with you just a bit of how we plan a site or develop a phasing plan so that the infrastructure can be there when the needs arise, but not necessarily go in on the front end and have upwards of $150 million sitting in the ground waiting for the market to catch up. Various neighborhoods will be sequential developments in this plan. The Metro station, which is in the final contract negotiations now, will probably go into service in the year 2000. We have reserved a 1,200-foot arc around the Metro station, which encompasses about 65 acres, that will be the core development area that will initially receive ultimate development efforts. So if Metro comes, in the year 2000, we will have 65 acres here within which to absorb about 4 million square feet of commercial space. If you are optimistic, which we are in this case, and project 400,000 square foot a year in terms of absorption, that will absorb 15 years from now; by 2010 we will have that acreage completed. The area outside of the Metro area, both to the north and to the south, is now ready for what we call interim-use development. Our term “interim use” is 15 years or more. For some, that is a generation of use, but in terms of our master plan, interim use is 15 years. We just announced a 600,000-square foot value retail center that will open in the spring of 1997 in the area north of the Metro core, and a 500,000-square-foot technology park that will be primarily flex space and warehousing and technology space south of the core. This combination will help provide cash flow on an interim basis, again to start the infrastructure needed to put the Metro in, by the year 2000. Two other areas are, in effect, severed from the main body of the yard when we move the rail corridor. They are oriented much more to the George Washington Memorial Parkway. So part of our method to accumulate money for the infrastructure that is required here is to sell outlying parcels. I just finished a sales contract on 23 acres that will generate about 400 housing units. That money will help offset the cost of the Metro. Before the Metro is built in the year 2000, we will have sold Slater's Lane, South Monroe, and Potomac Greens neighborhoods, leaving us with the 220 acre main body of the yard and basically enough funding to put the infrastructure in that we need, to start that ultimate development in a time frame that is compatible with the advent of Metro.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 My final point is that there are many things that you have to look at and do before you can get to the ultimate development when you are talking about this size and magnitude of infrastructure investment. In our case, there is an incremental phasing, and incremental use of this resource, all directed toward the ultimate development that will take place further in the future. I hope you found this somewhat interesting, and I was at least a little bit on point in trying to illustrate some of the concerns and pitfalls of infrastructure provision in a public/private sense. We are very excited about this project. We are convinced that it will be, as we have built it, a prototype city of the twenty-first century. For those of you who come back in 20 or 25 years, I hope you see the fruits of our labor and enjoy it. Thank you very much. QUESTION: You have obviously had a lot of involvement of politicians and various other groups in Alexandria through this whole process. My question, though, goes to two things. One, who did the master plan? Is that in-house or is that out of house? Who did it? And how much was the sort of common citizen involved in the process? Or if not, could they have been? ANSWER: Good questions. First, who did the master plan? We did have a complete team of consultants that basically worked under my direction. When we started off, there were two of us, myself and a secretary and about $400,000 a year spent in terms of consultants. So we organized the team. We explored various concepts, and as a group kind of ratcheted up what would work, what would not work. We looked at schemes and had people in from around the country that had worked on major projects like this, and tried to help us shape it. So it was more internal than external. But as we were moving along, shaping this plan, we also had asked the city and the county to establish a citizens' advisory group for us, made up of whoever they wanted to appoint, mainly from citizens surrounding the area who lived there to work with us as we went through this planning process. So we met with them every 2 weeks for over one year, reporting back to them our findings, what our ideas were. We tried to get impacts and this type of thing sorted out. We had some people in that group who came in with the sole idea of spiking the project. They wanted nothing to occur there. They wanted the city to take it over as a park. There was active

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 discussion about how the city could condemn, or how the city could zone it for a utility transportation district instead of any mixed use. So there was a small group of these citizens there. There were others who were growth advocates, who wanted to see it take place–the Chamber of Commerce, certain merchants' associations, and this type of thing. Their representatives were saying, let us go ahead. And then there was a large group in the middle who were waiting to be shown what could or could not happen. The way that broke down is that our plan was completed just before the city staff's plan. Unfortunately, as I mentioned, the city staff was a year and a half late in producing theirs. So our plan came out as a proposed and recommended plan. In the middle, a City Council election took place, where people got political advantage from saying there should be less as opposed to more growth. And that started to skew this process. In addition to the citizens' committee itself, there was a frequent public outreach. We gave over 300 presentations. Anybody who would listen–civic groups, business groups, professional groups, four guys in a phone booth. We did a lot of that. We did advertising. We did store front processes to have people come in and look at it. We got on cable TV. We had a very active outreach program. We counted up not too long ago we had over 2,000 one-on-one discussions with people about this program. So it was a very open process. I will tell you that in public hearings and in letter campaigns, and you get into all sorts of campaigns and petitions and this type of thing, the proponents outnumbered the opponents mostly about two to one. And we could not understand why these votes and actions were taken the other way, because we would have 30 proponents at a meeting and 10 opponents, and the planning commission would be very uneasy and say, well, you have to do more, we are not satisfied, and this type of thing. We were finally told we just did not have the right 20 people. That was a little discouraging, but there again, political situations inhere that the average citizen kind of gets caught up in as well as a development. QUESTION: I had two questions. One is relatively simple, and that is, did you get or are you getting or have you gotten any public money for infrastructure? The second question is-

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 ANSWER: I can answer that now–no. QUESTION: The second question is are there any issues related to contamination on the land? And if so, do you have a sense of how much that is going to cost? Are there any sort of issues regarding your getting your own financing in order because of that? ANSWER: Good question. There are environmental issues on the land. We are currently in our third study. And I can tell you, much as in the transportation studies, each of those studies has come to the same conclusions. We are feeling pretty good about this. Currently, EPA has before it our latest extent-of-contamination studies. There are three processes that one goes through on this–extent of contamination, risk assessment, and then remediation. Our extent of contamination is in. Our risk assessment goes in the end of this month, actually next week. And then, after their review, they will look at remediation. All of those studies have capped our liability at about the $13 million range, which is very good news for us. This site has contamination much more similar to a normal industrial site than it does a rail site. We benefit because we really did not have any large-scale electric train operations there, so PCBs are not an issue. We have some petroleum contamination from fueling and refueling sites. And although I never saw it, it had been described to me many times; some of the old diesel engines, for example, had a hose with three nozzles. There were three fuel tanks on them. And they hooked up three nozzles, and if one tank happened to fill up before the other, fuel was cheap enough that it just started spraying out of that nozzle until the rest of them filled up. Over the years, that makes a big impact. The other issue that we are somewhat mystified about is that EPA has raised the issue of cinder-based ballast. Cinder-based ballast is a by-product of old steam engines. When you burn coal and this type of thing, there would be cinders and ballast. And traditionally that was used to fill in the site. And in some cases–in the case of Alexandria actually–a lot of it was taken off site to be used for fill. Encapsulated in cinder-based ballast is some arsenic and some lead, but it is contained processes. It does not leach. It does not travel. It is relatively inert. If you ate it, you would

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 pass it before anything got out. But they are raising an issue about that, and that is right now our major contention with them, because it passes no hazardous material tests. No one has ever found it harmful. But the examination is going on with some rigor as to whether or not this is the site where they declare that element as something of special concern. QUESTION: I was curious as to the figures you gave. If I understood it correctly, you had 10,000 part-time jobs, 12,000 full-time jobs. And that is an elegant distribution, and I wondered what you had in mind. ANSWER: Well actually those were forecast for us by a combination of Urban League, Alexandria employment figures, and the state employment service, looking at construction jobs phased over time. QUESTION: So the part-time are construction jobs? ANSWER: A lot of them were construction jobs. Some of them were retail jobs, or there are proportions within every industry, for example of retailing. Let us say we had proposed about 600,000 square feet of retailing, which we are now going to implement on an interim basis. Almost 40 percent of those jobs are part-time jobs, as opposed to full-time jobs. Anytime you put restaurants or this type of thing on, there are a large portion of part-time jobs. So what those statistics represented is over the life of the development of the project from construction, as well as part-time on the industry categories that were forecast for the land use, there is a part-time proportion labor people can forecast, and that was the result of that forecast. QUESTION: That would not be a mature community 30 years from now. ANSWER: The full-time employment would represent a capacity of full-time employment at build-out. The part-time would be the summation of both part-time construction work and part-time work up to building. QUESTION: If I may ask a question, what happened to the schools, for instance? Was this one of the considerations that made the city seek a lower development? ANSWER: Good question. No, it was not. One of the interesting things about Alexandria demographically is that the average household size is less than 2. Alexandria is a community where a lot of single people and a lot of two-member families live. As does everyone

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 in the normal course of examining this kind of development, you have to visit fire people, library people, school people, this type of thing, and say, okay, here are our projections. What does that mean in terms of your infrastructure; what you are providing publicly? And each of those will respond saying, I need a new firehouse here. I need a new electrical substation here. I need a new school, or whatever. In this case, there was no need for a new school. There were neighborhood schools in the area that were actually not at capacity. And the thing that the school system was interested in really was our providing some space on an offsite, nonhours classroom basis for adult education. QUESTION: Two questions. How would you quantify the quality of life? That is question number one. And number two, did you consider any technological innovations in developing the planning process; for example, like high-performance materials or construction automation? ANSWER: Your first one: If I could quantify quality of life, they would have a limousine waiting for me outside to take me home. Quality of life is such an intangible issue, and it means different things to different people. My theory is that there is a combination of quality of life of both satisfiers and dissatisfiers. And traffic happens to be one of the main dissatisfiers. And you can have a lot of positive things that impact your community, ranging from great schools to parks and a nice living environment and this type of thing, and a lot of that can be destroyed in your mind by having to fight to get out of your driveway every morning, or fight to get in to your job. I do not know how to weigh that, because I think different people view that differently. It is the age-old quandary about why people are willing to locate in the suburbs to get a better house, better quality of life than they can in the city, and yet have to put up with two hours of commutation each way. So I am sorry, I can not answer your question. I do not know how one does that. In terms of building technologies, we are looking at a variety of things there, ranging from gradient differential, unified heating systems, through the process–different construction

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 techniques, especially on the Metro and some of the spans that we will make. This will be an above-grade station that spans a 120-foot rail corridor plus the Metro system. There is an opportunity for us to get up above that and have some pretty dramatic station and entrance processes on that. We are working with structural people now to see how we can do that most eloquently and elegantly. So there are a number of things that are coming up. But as far as saying that we have now adopted a number of technologies or innovations, I can not represent that to you. I can tell you that as it is developed, we will be looking at every advantage we could take in terms of new techniques and materials, and see how they could best work with the urban design. QUESTION: I would like to talk to you afterwards off line about your remediation work and the estimate for it. And the other two questions I had were pretty much addressed by previous questions. The third question I had has to do with the integration of your development with the rest of the social fabric that is surrounding it. On the northwest side is a lot of old, auto-oriented car places–parking lots, refurbishment, etc., some of them well past their normal life. You get a block or two beyond that and you get into some early twentieth century single-family dwellings. In 1997, putting this phase 1 and then subsequent phases in there, it seems to me you could very easily create a wall there that does not register with the rest of the development that is going on, on the other side. If I am incorrect, please tell me how that is going to work. ANSWER: I think you are correct. And I think what has happened here, again if you can visualize it, the city long ago, along U.S. Route 1 basically put an industrial buffer along the facing highway to protect the neighborhoods to the west. And that industrial buffer has, in most cases, gone downhill. It is an eyesore. I will tell you that there have been some purchases in there by people like the IBM pension fund and this type of thing, that have purchased large blocks of that industry land, that are currently in interim use– industrial–and it is their hope, according to my information and discussion with them, that as soon as development starts on our side with the Metro station and this type of thing, that they can change the use of that edge.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 We proposed a couple of different things on that. One of them was to change U.S. Route 1 into a boulevard that would provide a planted median. If you can envision now a four-lane road, two lanes going in each direction with no median separation, what we proposed was that we would move the northbound lanes, which are on the east side, over to our property, and use those two middle lanes then for a planted median. The community was so suspicious that our endgame on that was to put in the median, and then later come back and use it for an expanded two more lanes, that they would not entertain it. We went so far as to get letters of agreement with Virginia Department of Transportation that we would dedicate that, and it would be ever controlled by a public process, and it did not work. Outside of that buffer in terms of a boulevard, we have not been able to look at how those communities would integrate other than provide certainty that there would not be cross traffic to our development from the west. There is no cross-street connection from the west side to the east side across U.S. Route 1. There is pedestrian and bike access, so that people could walk to the Metro and walk to the park system and that type of thing. But that is about as far as we have gotten, and probably is an area that needs to be considered a lot more. QUESTION: My question has to do with future arrangements for management and operation of the infrastructure part, given that you would provide them. But who would be in charge of operating them? ANSWER: For example with Metro, we will build this facility to their specifications, on the basis of their inspection, and at the day turn the keys over to them. So it will become part of their entity. The same way with the sewer system. We put the sewer system in. It will be dedicated to the public, and the public will take it over. Again, you have to build to specifications and requirements that meet their maintenance standards, and then one basically transfers that publicly. There will probably be some roads or parks or this type of thing that might be a combination of what is called community area maintenance, CAM charges, where a certain area has an amenity that is not typical to the entire thing, so there is a special tax district or contribution in that area. The other thing that we are looking at seriously now with public entities and the legislature is the possibility of creation of special tax districts to basically finance–somebody

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 asked about environmental and financing; I think I did not approach that yet–but to provide a public financing mechanism to float bonds so that the payment for this infrastructure is at the lowest level, using the public interest rate in order to move it forward.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 ABOUT THE SPEAKER Denton U. Kent, is President and Chief Executive Officer of the RF&P Corporation. RF&P Corporation is a real estate company with nearly $700 million in assets including over 5,000 acres of land and development activities encompassing nearly 9.5 million square feet of building space. He has held numerous high level public sector positions including Deputy County Executive for Planning and Development with Fairfax County, Virginia, Chief Administrative Officer for the Metropolitan Service District of Portland, Oregon, and the Director of Community Development of Tulsa, Oklahoma. He holds a B.A. from Wittenburg University and a Masters in Government Administration from the Wharton School of the University of Pennsylvania. He has attended post-Masters programs at Princeton and Harvard Universities and the Federal Executive Institute and taught at the undergraduate and graduate levels.