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Oakland, Sacramento Dominate 1st Round Of TOD, Infill Grant Awards

The state has gone into the infill and transit-oriented development business for the first time. But it is hard to say whether the state government's newfound interest will reshape California.

Using money from Proposition 1C, adopted by the voters in 2006, the Department of Housing and Community Development (HCD) recently awarded almost $500 million in infill infrastructure grants and transit-oriented development (TOD) grants. No, it's probably not enough to alter the state's growth patterns. But it is enough to get some projects off the ground that otherwise might have languished in the real estate downturn. And the TOD grants in particular gave HCD the opportunity to concentrate the money in transit-rich areas.

There is a natural conflict at work here. The political impulse is to spread government money around and try to make everybody happy. But in the infill/TOD arena, spreading money around won't be much good. The money has to be concentrated to have an effect.

The Schwarzenegger Administration was clearly careful to spread the money around geographically. But the TOD funding in particular had such strict geographical criteria that the money actually is concentrated in a few transit-rich areas of the state, especially San Diego, Oakland, and central parts of Los Angeles. The infill funding was spread around more widely, but because HCD attempted to pair up infill and TOD money wherever possible, the net effect was that TOD grants "leveraged" infill grants in a number of locations. Surprisingly, Sacramento not widely known as transit-rich scored big with the funds as well. So it will be interesting to see how well the administration survives politically the delivery of so much money in so few locations.

Proposition 1C contained $850 million for the infill infrastructure program and $300 million for the TOD program. The criteria were pretty vague in the bond itself, but as HCD worked out the kinks, the program became more clear. The infill grants were designed to support roads, parks, and anything else in infill areas that could be defined as "infrastructure." The TOD grants were earmarked to help subsidize development projects in close proximity to transit stations. HCD generally required either a rail stop or a bus rapid transit stop to qualify, meaning that the TOD grants were inevitably tilted toward big cities.

The two biggest winners in the first round of Proposition 1C funding were the MacArthur transit village in Oakland and the Railyards project in Sacramento. MacArthur got $34 million, and the Railyards the biggest single winner got $47 million. That means close to 20% of the money given away in this round by HCD is flowing to these two transit hubs.

The MacArthur transit village is a one-square-block development project at the MacArthur BART station, bounded by Highway 24, MacArthur Boulevard, 40th Street, and Telegraph Avenue. It is planned to contain 4- to 6-story buildings with close to 700 housing units, a BART parking garage, and a small amount of retail, as well as upgrades to the existing BART plaza. Ironically, a lot of the grant money will be spent on you guessed it the new parking garage. The project's proponents say structured parking is a necessary first step to make the rest of the TOD work and get people out of their cars.

Unlike the MacArthur project, The Sacramento Railyards money was sought directly by the project's developer, Thomas Enterprises. (Money could be awarded either to public agencies or to private developers under the terms of the bond.) Again, the money will be used mostly for infrastructure. The Railyards involves the redevelopment of the old rail yards adjacent to downtown Sacramento, alongside Interstate 5 just south of the American River. It is by far the biggest infill project in a not-so-big city, and it is getting piles of public money. In April, the California Transportation Commission gave the city of Sacramento $20 million in Proposition 1B money to realign the railroad tracks on the site.

Although Southern California also received a lot of money, Los Angeles projects did not do as well in scoring from both programs. High-profile projects such as the Figueroa Corridor and Grand Avenue in L.A. received grants but not as much money as the MacArthur and the Railyards projects. And the L.A. projects did not win grants from both programs.

Don't think that all the transit villages are in Oakland, though. The Palmdale Transit Village got $12 million, partly from the TOD program and partly from the BEGIN (Building Equity And Growth In Neighborhoods) program. Palmdale can surely use a new multi-modal transit center, but it's a little hard to imagine the Fruitvale BART Station program getting transplanted from Oakland to the High Desert suburb.

San Diego did well too, but on a smaller scale. The proposed mixed-use project at the intersection of Commercial and 22nd got grants from both programs totaling more than $26 million. This development is not located downtown, but, rather, east of I-5, more than a half-mile from Petco Park.

In addition to the geographical balance and the geographical concentration the first round of grants also provides a couple of other interesting lessons in the politics of infill development in California. The first is that big nonprofit housing developers do well. BRIDGE Housing will get a chunk of both the MacArthur and the Commercial and 22nd project. The second is that not all of our transit-rich cities are in the same boat. The most mature transit-oriented places Oakland and San Diego among them are seeing money flow not to downtown, but to outlying neighborhoods well served by transit. L.A. and Sacramento see most of their money flow downtown.

The last lesson? It helps to be near the HCD office building. Both the Railyards project and West Sacramento's Triangle project just across the river from downtown Sacramento and a recipient of $17 million in grant funds are within walking distance of the HCD building. So Director Lynn Jacobs and her deputies will be able to keep a close eye on where their money is going.
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