By Cheryl Weber. Orenco Station is a thriving, mixed-use pocket of suburbia, an urban-style utopia on the outskirts of Portland in Hillsboro, Ore. Residential neighborhoods in most of the still-evolving, 200-acre community are less than half a mile from the light-rail station, which links Hillsboro with downtown Portland. The master plan features a mix of walkable streets, specialty shops, and community parks, evoking the blended neighborhoods of eras past.

Developers are on top of the trend, keeping tabs on plans to bring rail into new communities in Cincinnati, Las Vegas, Salt Lake City, and elsewhere. And there's another side to the silver dollar; namely, baby boomers, 20 million of whom will turn 55 within the next two years.

"Developers understand that the demographics are changing dramatically in the U.S.," says urban designer Peter Calthorpe, of Calthorpe Associates in Berkeley, Calif. "It mixes the empty-nesters with the young people and childless couples, so several big markets now are looking for more-urban lifestyles." It's about not having to hop into the car and drive.

These trends figured into master developer PacTrust's decision to create Orenco Station. Although the region is a hot spot for high-tech jobs, there was no precedent for such high-density, mixed-use suburban development along light rail, and no zoning for it either. "We were all over the country looking for role models," says Rudy Kadlup, CEO of Costa Pacific Homes, PacTrust's residential partner on the project. But the venture was not as high-risk as Kadlup had feared. Market research showed that 47 percent of the households in the region were headed by a single person. "It encouraged us," Kadlup says, "because being required to do higher density near light rail means smaller lots and products with fewer bedroom counts."

Added Value

The homes Costa Pacific built ranged from single-family detached to condos. The townhouses and detached homes were the first to sell out, at a pace of about eight per month. Overall, Kadlup says, the houses are selling for 20 percent to 30 percent more per square foot than those in Costa Pacific's conventional subdivisions.

Photo: Courtesy Costa Pacific Homes/PacTrust

Well-Blended: The master plan for Orenco Station includes about 430 homes and townhouses, 1,400 rental apartments, the six-acre Town Center, a regional shopping center, and a central park and pavilion. Down the coast, in Northern California, light rail has been good for developer Chris Kober, owner of the Castle Group in San Mateo. His company recently completed Whisman Park, a $150-million, mixed-use community next to the new light-rail Whisman Station in Mountain View. The 500-plus units, some on low-density parcels bought by KB Home and Shea Homes, sold swiftly. Currently on the boards for Castle is a 200-unit project at Tamien Station in San Jose. And the firm has just begun construction on that city's Plant 51, next to a rail-transit hub, where it's converting a 1920s Del Monte plant into loft apartments and adding 350 new units. The story is similar in Dallas, where the values of properties adjoining the city's light-rail stations have grown 25 percent more than those of similar properties not served by light rail, according to a study by the University of North Texas' Center for Economic Development.

What's the Attraction?

Transit-oriented development is a fairly complex story to tell. According to University of California at Berkeley professor Robert Cervero, we've overstated the benefits of transit in America, because the quality of the rail services is generally poor. "Unless trains come by every five to 10 minutes, most Americans who have the option of driving won't stand there and wait," he says. The success of light rail depends, too, on congestion levels. "If they're not bad, it's not advantageous for many folks to be near transit." The impact of Dallas' DART system on residential development is yet to be seen, says Don Dillard, vice president of Galatyn Park Corp. His latest project, Galatyn Park, wraps around the light-rail Galatyn Park Station in Richardson, Texas, which opened in July. Situated one rail stop away from restaurants and other popular night spots, it includes a 27-acre urban park with a new hotel and the Eisemann Center for the Performing Arts. "The New Urbanism philosophies about walking — we haven't gone overboard toward that," Dillard says. "Light-rail development here may take on the look of New Urbanism, or it may take on something else."

Ken Hughes, another Dallas developer, says the layout of the DART stations doesn't encourage residential development. Most transit agencies, owned independently from the city, want parking as close to the station as possible, which is not amenable to walkers. Despite that, Hughes says, the 211 loft apartments that are part of an eight-story building at his new Mockingbird Station development exceeded market rate by 25 percent.

The Economics

It took four years, working collaboratively with public and private agencies, for PacTrust to map out densities and write a code to support the structure of Orenco Station, with its narrow streets and close setbacks. Construction commenced in early 1997, and the light-rail station opened in the fall of 1998.

While the $200-million project's risks were not as high as they seemed at the beginning, there are some diseconomies in this kind of development, says Mike Mehaffy, Orenco's project manager. Mixed-use is more expensive to build, requiring more management and more design to do well. To help mitigate the risk, PacTrust put up a big-box retail center at the edge of town. It also sold off a large multifamily site, a key parcel between the rail station and the six-acre Town Center — a mix of retail, office, and residential space the developer still owns. "In hindsight, that was a strategic mistake," Mehaffy says. "We lost the appreciation on the property that came from its proximity to the Town Center, and we lost the ability to control the timing of development. A large portion of the site remains unbuilt today."

One clear advantage of rail-based development, says Kober, is that it eases traditional NIMBY reactions against density. "People have said, 'If we're going to have high density, it seems logical to put it at a rail station.' " Even so, Whisman Park's density got down-zoned because of community pressure. "People have the idea that density brings the wrong element into cities," Kober says. Although the city approved commercial building for 8,000 new jobs, it whittled the Castle Group's 1,200 planned units to 510. "So, there's no way the transit system will ever get the usage it needs," Kober says.

Although light-rail projects generally increase ridership by a small percentage, he adds, the truth is that most people won't use public transit on a regular basis. "A bigger issue for us in this area is the use of high-density housing on infill sites. If the use of density changes a 50-mile commute to a three-mile commute by forcing everyone into a hub, it has more impact than simply encouraging people to use light rail."

By contrast, Orenco Station has boosted rail use. A survey of residents by Bruce Podobnik, of Lewis and Clark College in Portland, shows that while 75 percent of respondents continue to commute by car, 22 percent use public transit to get to work and school — 69 percent higher than the regional average. In addition, 94 percent of respondents consider the community's design to be superior to that of conventional suburbs.

Who Pays?

The price tag for light rail is a huge piece of this issue. The 10-mile system under construction in Dallas, for example, will cost about $450 million, and an eight-mile Denver spur that opened two years ago cost $180 million. Stories of cost overruns — such as with the Charlotte-Mecklenburg rapid-transit system in North Carolina, now expected to cost two and a half times the 1998 estimate — threaten to stifle rail projects. Future development may depend on creative solutions that keep costs down, such as the Nevada proposal to run a rail line linking Henderson to downtown Las Vegas north to Apex, where a 30,000-unit residential development is being considered. Putting the trains on an existing line, thus eliminating right-of-way costs, would bring costs for the initial 11-mile section to less than $60 million.

"There's a general sense that the whole agenda of smart growth and transit-oriented development is something that has broad ideological and political appeal," says Robert Cervero. "The era of 90 percent of the money going to road construction is over. Federal funding will ensure that the money is there. It's up to the communities as to whether to use it or not."

Published in BIG BUILDER Magazine, October 2002