Joint Development is the use of public transportation property originally acquired with Federal grant dollars for transit-related development. This may occur in the form of development in air rights above a transit station, or it may involve the use of land area adjacent to the station. A 1992 study commissioned by the Federal Transit Administration identified 117 projects nationwide, involving a combination of air-rights and ground lease arrangements.[29] These projects have generated ground rent, lease, or one-time access rights revenues for the public transportation provider. In these projects, the public transportation agency makes land or air rights available to a developer. In some instances, the agency is not able, under its charter, to participate in development activity (which would produce lease revenue), so it undertakes a cost-sharing agreement with the developer, who agrees to perform certain functions such as station maintenance, security, or access control, in exchange for the development opportunity. In most cases, however, the transit agency has collected substantial revenues. The Washington Metropolitan Area Transit Authority (WMATA) air rights agreement in Bethesda, Maryland for example, produces $1.6 million in rents annually.
A survey undertaken in 2003 by Robert Cervero for the Transportation Research Board[30] revealed that, among 29 transit systems responding, over 100 joint development projects were identified. Of the respondents, 17 were rail systems and 12 were bus only systems. While the rail system projects predominated, nevertheless, 18 joint development projects were identified around bus facilities. These included mixed-commercial development, office, institutional, residential, and civic facilities. One such example is the Center Station at John Deere Commons in downtown Moline, Illinois. Developed around the MetroLINK bus transfer center, it includes offices, a convention center, hotel, parking structure, and various pedestrian amenities. MetroLINK receives a ground rent, as well as a negotiated private contribution, and construction and operating cost sharing.
Another, more complex example, is the Memphis Area Transit Authority's (MATA) Central Station redevelopment on South Main. This began as one of two exemplary train stations in Memphis, then a major railroad hub. However, by the end of the 1950's one station-Union Station-had been torn down and Central Station was in severe decline. It was not until the early 1990's that the station, the last structure designed by Daniel Burnham, finally became the focus of a major redevelopment effort. Using a combination of Federal transit grant funds, investment from a tax credit corporation, and a contribution from Amtrak, MATA undertook an historic preservation project. An integral part of the financing came from historic preservation tax credits. As a public agency, MATA could not realize these credits. It therefore created a limited liability partnership that would own and develop the station and other historic buildings on its 17-acre site. The developer for the project was the Alexander Company.
The Central Station project produced 63 one- and two-bedroom apartments, 12,000 square feet of storefront commercial space, a restored Main Hall and conference space which is offered for rent, a new station for the Main Street Trolley, and an eight-bay, canopy-covered bus transfer center for MATA. Amtrak received a new, canopy-covered platform for the City of New Orleans train, as well as state of the art ticketing and baggage facilities. The apartments were fully rented before the refurbishment was completed, and the project has led the revival of the South Main historic district. Rents and development revenues generated by the MATA subsidiary return to MATA as part of its local funding base.
The public-private partnerships do not always involve the public transportation agency directly. In Washington, DC, for example, the Union Station redevelopment took place through an act of Congress, under the leadership of the U.S. Secretary of Transportation. In 1981, Congress enacted the Union Station Redevelopment Act of 1981, which called on Transportation Secretary Elizabeth Dole to develop an ambitious plan for the commercial development of the station with the goal of making it financially self-sufficient. A unique public-private partnership was formed to faithfully restore the building to its original state and create a viable mixed use transportation center.
Following three years of renovation at a cost of $160 million, Union Station reopened on September 29, 1988. Union Station was redeveloped as a bustling retail center and intermodal transportation facility, connecting the Washington Metro with Amtrak, the Maryland Area Rail Commuter, the Virginia Railway Express, intercity buses, and Metro bus service. In addition to over 130 unique shops and restaurants, Union Station is the hub for Amtrak's headquarters and executive offices.
Today, Union Station is one of the most visited destination in the nation's Capitol with over 25 million visitors a year. World-class exhibitions and international cultural events are hosted here for the public to enjoy. Private special events such as the Presidential Inaugural Ball and citywide galas are celebrated in the grand halls. In 2003, the Union Station operation generated over $1 million in lease revenues from the retail and food establishments within its confines. WMATA's involvement is in the form of a fee simple ownership of the ground-level entrance to the subway station, and a connection agreement from within Union Station.