Small Mixed-Use A 16-unit project with 3,900 square feet of ground floor retail and gross site density of 35 du/ac. The project would be configured

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1 RAIL STATION ANALYSIS 4. Tier 1 Growth (Low) Prototypes Tier 1 Growth is considered the low growth tier because it models prototypical development that is currently allowed by the General Plan. The financial feasibility of these prototypes is discussed in Chapter 3. The Tier 1 Growth prototypes are illustrated in Figure 2-5 and described below: Townhomes A 12-unit project with gross site density of 24 du/ac. Small Mixed-Use A 16-unit project with 3,900 square feet of ground floor retail and gross site density of 35 du/ac. The project would be configured as a three-story building with both surface and podium parking. Large Multi-Family A 27-unit project with gross site density of 35 du/ac. The project would be configured as a two-story building with both surface and podium parking. Large Mixed-Use A 34-unit project with 4,400 square feet of ground floor retail and gross site density of 35 du/ac. The project would be configured as a four-story building with both surface and podium parking. 5. Tier 2 Growth (High) Prototypes Tier 2 Growth is considered the high growth tier because it exceeds the density limits of the General Plan. The Tier 2 Growth prototypes are as follows: Townhomes A 16-unit project with a gross site density of 32 du/ac. Small Mixed-Use A 25-unit project with 3,400 square feet of ground floor retail and a gross site density of 55 du/ac. The project would be configured as a three-story building with surface and podium parking. Large Multi-Family A 54-unit project with a gross site density of 54 du/ac. The project would be configured as a four-story building wrapped around a podium parking structure. Large Mixed-Use A 50-unit project with 6,500 square feet of ground floor retail and a gross site density of 50 du/ac. The project would be configured as a four-story building wrapped around a podium parking structure. 2-27

2 RAIL STATION ANALYSIS E. Land Use Scenarios This section describes three land use scenarios that were modeled to estimate the cumulative impacts of Tier 1 Growth and Tier 2 Growth on the Station Areas. In other words, the amount of development associated with the prototypes discussed in Section C, was estimated using land use scenarios. In the three land use scenarios, appropriate development prototypes were assigned according to a parcel s size and proximity to the Station Areas. The following assumptions were made for assigning each development prototype to a site: Townhomes: assigned to parcels ranging between 0.17 to 0.5 acres and assemblages of parcels up to 0.5 acres. Small Mixed-Use: assigned to parcels ranging from 0.5 to 1.0 acres. Large Multi-Family Residential: assigned to parcels larger than 1 acre and located beyond a ¼-mile radius from the proposed rail station. Large Mixed-Use: assigned to parcels larger than 1 acre and located within a ¼-mile radius from the proposed rail stations. The low and high growth tiers for each prototype, described in Section D, were assigned to parcels within the Station Areas. We assumed buildout of these prototype densities in each scenario. a. Scenario 1: Vacant and Underutilized Opportunity Sites Scenario 1, shown in Figure 2-6, is the most likely to be developed. This is due to two factors: 1) the costs associated with developing vacant and underutilized sites are significantly lower than developing parcels with significant improvements and 2) Scenario 1 includes a majority of large opportunity sites that can accommodate Large Mixed-Use, Large Multi-Family Residential, and Small Mixed-Use developments which yield a greater amount of allowed units and return on investment. Opportunity sites were identified through site visits and GIS analysis of assessor parcel information. 2-28

3 DEVELOPMENT PROTOTYPES FIGURE 2-5: DEVELOPMENT PROTOTYPES TOWNHOMES SMALL MIXED-USE LARGE MULTI-FAMILY LARGE MIXED-USE TIER 1 (LOW) PROTOTYPE TIER 1 (LOW) PROTOTYPE TIER 1 (LOW) PROTOTYPE TIER 1 (LOW) PROTOTYPE TIER 2 (HIGH) PROTOTYPE TIER 2 (HIGH) PROTOTYPE TIER 2 (HIGH) PROTOTYPE TIER 2 (HIGH) PROTOTYPE THE CITY OF REDLANDS

4 RAIL STATION ANALYSIS Back of Figure

5 RAIL STATION ANALYSIS b. Scenario 2: SANBAG Passenger Rail Station Area Plan Change Areas Scenario 2, shown in Figure 2-7, includes areas recommended for land use changes in the SANBAG Passenger Rail Station Area Plan and Scenario 1 and 2 opportunity sites. The feasibility of Scenario 2 being developed is very similar to Scenario 1 because it also includes the vacant and underutilized sites; however it differs in that Scenario 2 adds improved properties that have uses that would need to be relocated. c. Scenario 3: Corridor Development Sites Scenario 3 builds on the sites identified in Scenarios 1 and 2 and adds sites adjacent to major circulation corridors, as shown in Figure 2-8. Based on the high amount of development along most corridors, Scenario 3 is the least likely to be built-out; however, this scenario analyzes the greatest amount of land use changes that could generate the most revenue for amenities. F. Results of Scenarios Analysis This section presents the results of the scenarios analysis in terms of housing and job growth, and sustainability and urban design. The results are also used to determine the capacity of each Station Area for the purposes of the TDR program, as described in Chapter Housing and Jobs The scenarios analysis is used to determine the number of residential dwelling units and jobs that could be added to each Station Area under the three land use scenarios. Each land use scenario is analyzed under low and high growth tiers (Tier 1 Growth and Tier 2 Growth). The results of the analysis are then compared with ridership targets set forth by the Federal Transit Administration (FTA), which are based on growth in jobs and housing in order to receive funding for stations. 2-31

6 R CHURCH ST JUDSON ST TEXAS ST CALIFORNIA ST LUGONIA AVE NEVADA ST BROCKTON AVE 6TH ST ORANGE ST COLTON AVE KANSAS ST IOWA ST TENNESSEE ST CITRUS AVE VINE ST STUART AVE FORD ST PIONEER ST UNIVERSITY ST REDLANDS BLVD n n UV 210 UV 38 n n n CENTRAL AVE SAN GORGORNIO DR NEW YORK ST 3RD ST GROVE ST COLTON AVE REDLANDS BLVD CAJON ST OLIVE AVE BROOKSIDE AVE FERN AVE MARIA CYPRESS AVE ALABAMA ST REDLANDS BLVD Source: City of Redlands, SCAG ALABAMA ST n! Proposed Stations Rail Alignment TDR Receving Areas Downtown Specific Plan Boundary Development Prototypes Townhome Small Mixed Use Large Multi-Family Residential Large Mixed Use CITY OF REDLANDS ( Miles FIGURE 2-6 LAND USE SCENARIO 1!!!

7 R CHURCH ST JUDSON ST TEXAS ST CALIFORNIA ST LUGONIA AVE NEVADA ST BROCKTON AVE 6TH ST ORANGE ST COLTON AVE KANSAS ST IOWA ST TENNESSEE ST CITRUS AVE VINE ST STUART AVE FORD ST PIONEER ST UNIVERSITY ST REDLANDS BLVD n n UV 210 UV 38 n n n CENTRAL AVE SAN GORGORNIO DR NEW YORK ST 3RD ST GROVE ST COLTON AVE REDLANDS BLVD CAJON ST OLIVE AVE BROOKSIDE AVE FERN AVE MARIA CYPRESS AVE Source: City of Redlands, SCAG ALABAMA ST REDLANDS BLVD ALABAMA ST n! Proposed Stations Rail Alignment TDR Receving Areas Downtown Specific Plan Boundary Development Prototypes Townhome Small Mixed Use Large Multi-Family Residential Large Mixed Use CITY OF REDLANDS ( Miles FIGURE 2-7 LAND USE SCENARIO 2!!!

8 R CHURCH ST JUDSON ST TEXAS ST CALIFORNIA ST LUGONIA AVE NEVADA ST BROCKTON AVE 6TH ST ORANGE ST COLTON AVE KANSAS ST IOWA ST TENNESSEE ST CITRUS AVE VINE ST STUART AVE FORD ST PIONEER ST UNIVERSITY ST REDLANDS BLVD n n UV 210 UV 38 n n n CENTRAL AVE SAN GORGORNIO DR NEW YORK ST 3RD ST GROVE ST COLTON AVE REDLANDS BLVD CAJON ST OLIVE AVE BROOKSIDE AVE FERN AVE MARIA CYPRESS AVE Source: City of Redlands, SCAG ALABAMA ST REDLANDS BLVD ALABAMA ST n! Proposed Stations Rail Alignment Major Circulation Corridors TDR Receving Areas Downtown Specific Plan Boundary Development Prototypes Townhome Small Mixed Use Large Multi-Family Residential Large Mixed Use CITY OF REDLANDS ( Miles FIGURE 2-8 LAND USE SCENARIO 3!!!

9 RAIL STATION ANALYSIS a. Overview of Analysis The existing zoning in the Station Areas designates most areas for commercial development, except in the Downtown Specific Plan Area, which allows mixed-use. Land Use Scenario 3 was the most intensive land use scenario analyzed, which assumes development on 1,471 acres within the Station Areas. The existing zoning, or Baseline Growth, plans for approximately 32,238 jobs and 2,673 dwelling units on these 1,471 acres shown on Figure 2-8. Under Tier 1 Growth there would be approximately 2,914 jobs and 25,085 dwelling units added, under Tier 2 Growth there would be the same number of jobs added and approximately 42,887 dwelling units. These numbers are shown in Table 2-4 and they include dwelling units and jobs planned in the Downtown Specific Plan, as shown in Table 2-3. TABLE 2-3 DOWNTOWN SPECIFIC PLAN BUILDOUT Jobs Dwelling Units Residential 1,421 Retail 941 Office 952 Civic 93 Total 1,986 1,421 Note: The following assumptions were used to calculate new jobs: Retail = 1 job/300 SF, Office = 1 job/300 SF, Civic = 1 job/300 SF. Hotel and Cineplex jobs not included. b. Comparison to FTA Funding Ridership Targets The FTA provides funding for the construction of new transit stations provided there is adequate ridership projected at each station. Table 2-4 below, lists the targets for new dwelling units and jobs in the Redlands Station Areas in order to receive FTA funding. Table 2-4 also shows the number of units and jobs estimated to be required for FTA funding is approximately 19,945 dwelling units and 81,653 jobs. The City of Redlands is relying on FTA 2-35

10 RAIL STATION ANALYSIS funds to construct the proposed stations, and therefore it is important to understand how each land use scenario compares to the FTA targets. TABLE 2-4 TOTAL DWELLING UNITS AND JOBS Jobs Dwelling Units Federal Funding Target 81,653 19,945 Baseline Growth Tier(Existing) Land Use Scenario 3 32,238 2,673 Tier 1 Growth (low) Land Use Scenario 1 3,405 12,952 Land Use Scenario 2 2,566 17,102 Land Use Scenario 3 2,914 25,085 Tier 2 Growth (high) Land Use Scenario 1 3,405 21,645 Land Use Scenario 2 2,566 28,568 Land Use Scenario 3 2,914 42,887 Although the number of jobs added in Scenario 3 under Baseline Growth meets 40 percent of the FTA target for funding, the number of dwelling units is far lower than the target. Therefore existing zoning does not plan for the residential growth that is needed to receive FTA funding for the Station Areas. The opposite is true for each land use scenario under Tier 1 Growth and Tier 2 Growth, which are units-rich and jobs-poor. Tier 1 Growth (low) models residential and predominately residential mixeduse development prototypes that would stay within the density limits of the 2-36

11 RAIL STATION ANALYSIS General Plan. A total of 25,085 dwelling units would be built at Tier 1 Growth density under land use Scenario 3, which meets the dwelling unit target for funding. Both Tier 1 and Tier 2 Growth however fall far short on meeting the jobs target and this is due to the assumption that the commercial component of all mixed-use projects would be built to 0.25 FAR. Tier 1 Growth, built at relatively low density for TOD, would use more land than Tier 2 to meet both jobs and residential unit targets. This would result in a greater impact on existing land uses in the Station Areas. Under Tier 2 Growth (high) all three land use scenarios would exceed the dwelling unit target. Tier 2 Growth plans for density higher than the General Plan. This higher density meets the residential unit target within Land Use Scenario 1, which uses substantially less land than Scenario 3. Tier 2 development would meet the unit target for funding while conserving the most land for employment-generating uses. 2. Capacity for Amenities This section discusses the amount of amenities that could be provided given Scenario 3 is developed under Tier 1 Growth and Tier 2 Growth. Under Tier 1 Growth, prototype projects would be built up to 35 du/ac. Under Tier 2 Growth, prototype projects would be built up to 55 du/ac. Under Tier 1 Growth, Scenario 3 would add 21,645 dwelling units and under Tier 2 Growth it would add 17,440 dwelling units, totaling 39,085 possible units for Scenario 3. Chapter 3 estimates that a developer would be willing to pay about $10,000 per unit in Tier 1 Growth and $30,000 per unit in Tier 2 Growth. We use this information to guide the following discussion about the amount of amenities that could be provided in exchange for these residential densities. a. Tier 1 Growth In this growth tier a developer would be willing to pay $10,000 per bonus unit. 25,000 units worth $10,000 each would raise approximately $250 million in revenue for amenities. 2-37

12 RAIL STATION ANALYSIS The financial feasibility analysis determined that Townhomes and Large Multi-Family projects would not have sufficient revenue to pay the additional fees for amenities. Based on Land Use Scenario 3, 25,085 units could be built, but only 11,500 of them would be in Small and Large Mixed-Use projects with the ability to pay for TDR. This means that the land assigned for Townhomes and Large Multi-Family projects in Scenario 3 would not have adequate incentive to be developed into these projects. However, developers of these sites could: 1) Build to the permitted underlying zoning and avoid bonus amenity requirements. 2) Modify the Townhome and Multi-Family projects so that they are financially feasible and can afford to pay for amenities. 3) Build a mixed-use project that is financially feasible and can afford to pay for amenities. 4) Build a commercial project up to 2.0 FAR that can afford to pay for amenities. 5) Develop shared-parking structures for Multi-Family projects to reduce construction costs. We assume that a developer would choose number 2 or 3 and that the amount of revenue available to spend on amenities would be $10,000 per unit. Tier 1 Growth requires only Tier 1 amenities, which are shown in Figure 2-2 and summarized below: Mid-Block Pedestrian Crossing 5:1 Mid-Block Vehicular Crossing 5:1 TDR Purchase: 1 per 24 units Orange Blossom Trail Easement 3:1 Public Plazas or Parks 3:1 Looking at the Bonus Amenity Menu it is impossible to accurately predict which amenities a developer would choose to provide, and the amenities chosen would vary by site, project type and developer. On the one hand a devel- 2-38

13 RAIL STATION ANALYSIS oper would want to include features that increase the sale value of the project, such as open space in the form of mid-block crossings and plazas. On the other hand these features would also occupy valuable site area that could otherwise be developed and sold. For a developer looking to maximize the number of units on a site and avoid additional work planning and installing design amenities, the TDR bonus amenity option provides a method to get approval of multiple bonus units with little effort because it provides 24 bonus units for one transaction. b. Tier 2 Growth This Growth Tier assumes that, with a density increase up to around 50 units per acre, there will be more revenue to pay for bonus units. A developer would be willing to pay $30,000 per bonus unit and 17,800 built units would raise approximately $534 million in revenue for amenities. Tier 2 Growth requires Tier 1 and Tier 2 amenities for bonus units, which are shown in Figure 2-2 and listed in Table 2-2. Looking at the Bonus Amenity Menu in Table 2-2, with over 30 amenities to choose from under Tier 2 Growth, it is impossible to accurately predict which amenities a developer would choose to provide. For a developer looking to maximize the number of units on a site and avoid additional work and construction costs, the TDR option would provide the simplest method to get multiple bonus units with little effort. G. Regulatory and Policy Recommendations for TOD Design This section describes the recommendations for TOD design based on the results of the analysis presented in this chapter. 1. Recommendations for Station-Area Development under Tier 1 Growth The Redlands Zoning Code should be amended to include the following changes for the Station Areas. These zoning changes would increase density and permit residential mixed-use on land currently zoned for commercial use. 2-39

14 RAIL STATION ANALYSIS Land uses and design standards should be modified to be compatible with TOD, consistent with Tier 1 Growth. Consistent with the Downtown Specific Plan, remove light industrial (M- 1), and Commercial-Industrial (CM) zones. Remove Heavy Industrial (M-2) and Commercial Industrial (EVIC). Modify one or more zones to accommodate TOD development that allows for the conversion of commercial land to mixed-use and residential uses. In areas currently zoned for commercial and industrial uses apply the Town Center (TC) district overlay that was implemented in the Downtown Specific Plan. The TC overlay should correspond to the list of permitted uses for this zone in the Downtown Specific Plan and limit land uses that would impact nearby residential areas. We recommend the TC code regulations mirror those set forth in the Downtown Specific Plan with the following exceptions: Limit residential density to a maximum of 30 units per acre net or gross density of 27 units per acre. Limit commercial FAR to a maximum of 2.0 in 100-percent commercial projects or up to 0.25 in mixed-use projects. Keep maximum building height at 55 feet but permit up to five stories rather than three. Exclude delineated architectural features from this calculation. Reduce parking requirements to one parking space per 1 bedroom unit and 1.5 spaces per 2 to 3 bedroom unit. Apply the list of nonconforming uses currently prohibited under the TC District in the Downtown Specific Plan. Leave the land use to the discretion of property owners, with the caveat that changes from the underlying zoning that result in additional commercial floor area or residential units are required to purchase Tier 1 bonus amenities. Modify existing residential zones to permit higher densities within the Station Areas. Consistent with the Housing Element recommendations, 2-40

15 RAIL STATION ANALYSIS modify the R-3 zone within the ½-mile radius of each Station Area to permit parking and setback requirements that provide incentives to build up to the maximum residential density permitted under the General Plan (30 units per gross acre, or gross density of 27 units per acre). These changes include: Reduce the number of parking spaces required for condos and apartments to 1 space per one-bedroom unit and 1.5 spaces per 2 to 3 bedroom unit. Remove front, side and rear yard setbacks, except when the nonresidential use abuts a residential use, 5-foot side setbacks should be required. Permit a maximum height up to 55 feet or five stories. Up-zone the R-2 zones located within the ½-mile radius of each Station Area that do not abut R-1 zones, to the modified R-3 zone, described above, to permit parking and setback requirements that provide incentives to build up to the maximum residential density permitted under the General Plan (30 units per acre net density, or 27 units per acre gross site density). 2. Recommendations for Station-Area Development under Tier 2 Growth A General Plan amendment may be required to achieve densities necessary to receive FTA funding for station construction. This analysis determined that in Scenario 1, under Tier 2 Growth, densities ranging around 50 units per acre would be sufficient to meet dwelling unit targets while preserving land for employment targets. Both the real estate market and local politics need more time to align behind densities around 50 units per acre before the Large Mixed-Use and Multi-Family projects discussed in Section D3 would be feasible. When the market and politics align for higher densities, the TC, R-2 and R-3 zoning districts discussed above, will need some modifications to permit higher densities. The height limits and parking requirements discussed above 2-41

16 RAIL STATION ANALYSIS could accommodate the higher densities. The following modifications would be required: Density of Development: Modified from 2,000 3,000 square feet in R-2 zone and from 1,500 square feet in R-3 zone down to 1,000 square feet of lot area per dwelling unit. Maximum Lot Coverage: Increase from 45 percent of lot area to 55 percent, excluding parking structures. Reduce on-site open space requirement to 1 square foot of open space per every 5 square feet of floor area. 3. TOD Overlay Recommendations a. Amend Redlands Downtown Specific Plan Density bonus incentives in exchange for sustainable design and affordable housing included in the Mandated Standards Chart in the Downtown Specific Plan conforms to goals of the Bonus Amenity Menu for the Station Areas included in Section C2. The FAR bonus menu in the Downtown Specific Plan should be amended to include a bonus for TDR. b. Amend East Valley Corridor Specific Plan The East Valley Corridor Specific Plan (EVCSP) allows some density bonuses that permit FAR up to 0.5. The EVCSP bonuses should be amended as follows to be consistent with the TC Zone in the TOD Overlay Zone: Density Bonus Changes: General Commercial FAR: Permit density bonus to reach a maximum FAR of 2.0 as permitted in the TC Zone. Multi-Family Residential: Permit density bonus of 15 dwelling units per acre to reach a maximum residential density of 30 dwelling units per acre as permitted in the TC Zone. Limit or transfer light industrial, industrial, manufacturing and warehousing land uses that have low concentrations of jobs and would prohibit residential uses nearby. 2-42

17 RAIL STATION ANALYSIS 4. General Planning and Design Recommendations a. Coordinate Amenities in the Station Areas As development occurs within the Station Areas, it will be important to coordinate the location of bonus amenities that may be provided off-site. The amenities listed in the Bonus Amenity Menu should be calibrated with a Station Area Plan or other plan that identifies appropriate locations for amenities and ensures that off-site amenities work together to improve the Station Areas. b. Orange Blossom Trail The Orange Blossom Trail is a valuable asset for TOD development that should be incorporated in the development of the Station Areas. The following recommendations are intended to provide a high level of service and ensure a high level of activity on the trail. Interface between the trail and adjacent uses: Residential, office and retail redevelopment projects should front on or have visual access to the trail. They should also provide a smooth transition between the private and public realm through passive and/or active transitional spaces, such as pocket parks, landscaping buffers, benches, water fountains, bike racks and community gardens. When the trail is adjacent to land uses in conflict with the trail, such as industrial or manufacturing uses, landscaping buffers should be adequately provided to increase safety and improve the aesthetics of the trail. Gateways to the trail: Sites should be identified for gateways onto the trail and improvements should be made to create attractive and welcoming gateways. Improvements could include directional signage, landscaping and benches. Coordinate trail improvements: Trail improvements identified in the Orange Blossom Trail Conceptual Alignment Study should be coordinated with the Bonus Amenity program to ensure amenities and improvements are provided where they are most needed. Connect the TDR Sending and Receiving Areas: An alternate route should be provided to continue the trail one mile east along Zanja Creek 2-43

18 RAIL STATION ANALYSIS where it connects with Sylvan Avenue and the fringes of the TDR Sending-Area boundary. This route would provide an educational opportunity for the community to experience the conserved open space provided by the TDR Program. c. Freeway Barriers Interstate 10 and State Route 210 are major freeways that create connectivity barriers within and between the Station Areas. However improvements could be made to improve pedestrian connections between the different sides of the freeways. Features to accomplish this could include: Stamped concrete overpasses; Continuous sidewalks with pedestrian-scaled lighting; Low decorative fencing to create barriers between automobile traffic and the pedestrian realm; Artwork and/or murals; Gateway features that provide identification and create a sense of walking towards a destination. d. Industrial/Manufacturing Land Uses There are often conflicts when residential uses are developed adjacent to industrial and manufacturing uses, including issues with noise, light and glare, and traffic. For this reason, industrial and manufacturing uses should not be located in the Station Areas. However, industrial and manufacturing uses generate stable employment that pays well, and therefore these uses should not be removed; but rather shifted to areas outside of the Station Areas where they will not conflict with residential land uses. e. Commercial Land Uses Commercial land uses, including retail and office, are less likely to conflict with residential uses as is demonstrated in mixed-use developments. In addition, commercial uses generate a high number of jobs and can be designed to 2-44

19 RAIL STATION ANALYSIS be compatible with residential uses. Therefore, commercial land uses should continue to be permitted within the Station Areas. f. Identify Process for City Council Vote for additional density Development projects greater than 18 dwelling units per acre or over 2 stories in height require a 4/5 approval by the City Council. The City should indentify a process to expedite the additional density vote for projects in the Station Areas that participate in the Bonus Amenity program to ensure new projects can achieve the maximum density permitted under the General Plan. 2-45

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21 3 This section describes the results of the TDR program analysis completed by DC&E. Included in this section is a discussion of the keys to success of a TDR program; regulations and policies related to a TDR program in Redlands; an analysis of the supply and capacity of development rights in the sending and receiving areas; recommended ratios; management recommendations; funding and legal considerations. A. Keys to Success In several years of both crafting and assessing TDR programs throughout the United States, we have found that most successful TDR programs have five proven components. These five proven components of success are: 1. Clear TDR Program Goals 2. Suitable Receiving and Sending Sites 3. Adequate Incentives for Sending- and Receiving-Area Landowners 4. Inter-Jurisdictional Cooperation and TDR Service Area Size 5. The Use of Banks and Other Market-Making Mechanisms 1. Clear Program Goals A TDR program is not a policy in and of itself. Rather, it is a tool used to implement a planning policy goal. A TDR program cannot be expected to bear the entire burden of implementation on its own, but rather must work in concert with other tools including open space and land conservation tools to support the vision. 2. Suitable Receiving and Sending Areas It is not usually difficult to identify sending areas; indeed, a TDR program often emerges from a strong political consensus to preserve a certain set of properties by removing development potential from them. On the other hand, it can be extremely difficult to identify politically-acceptable receiving areas because local resistance to increased density is so common. 3-1

22 3. Adequate Incentives for Sending- and Receiving-Area Landowners Financial incentives are the primary tool to get landowners and developers to participate in TDR programs. Without adequate incentives, a TDR market simply will not work. Both sending- and receiving-area landowners in traditional TDR programs are given a voluntary alternative to the conventional development approval process. Therefore, both sets of landowners must view the TDR route as a more attractive alternative. For sending-area landowners, selling development rights must be equally profitable and more feasible than pursuing development of their property. For receiving-area landowners, building at higher densities (or building with a TDR-linked commodity bonus) must be more profitable and feasible than building under baseline regulations. Obtaining permission to build at higher densities by buying TDR must be more attractive than seeking such permission by any other means. If both developers and landowners are not simultaneously motivated to participate in a TDR market, the program is unlikely to succeed. 4. TDR Service Area Size TDR programs tend to work better economically, and gain more political acceptance, when the sending and receiving areas are close to one another. In these situations, the receiving-area residents recognize that they are sharing in the benefit of the land preservation in the sending areas. This is why the examination of the geographical scope of the TDR program is so important. 5. Using Banks and Other Market-Making Mechanisms It has been our experience that, in many cases, banks or other mediating institutions are necessary to even out the market. If market players are misinformed or unaware, they will not participate in the market in an effective manner. In addition, land markets frequently do not function in the same way as other markets. Often there are only a few market players, especially in undeveloped areas, and frequently those market players do not respond to typical economic signals. 3-2

23 B. Regulations and Policies Related to TDR The following documents regulate and guide land uses in the TDR receiving areas and TDR Bank Area: The County of San Bernardino General Plan, the City of Redlands General Plan, the Redlands Downtown Specific Plan, The East Valley Corridor Specific Plan, the Orange Blossom Conceptual Alignment Trail Study, and the Redlands Passenger Rail Station Area Plans. Only the Downtown Specific Plan and the Passenger Rail Station Area Plans provide specific recommendations for TOD in the transit Station Areas, which are the TDR receiving areas. Other plans, including the Redlands General Plan, Zoning Code, and East Valley Corridor Specific Plan, will need to be amended to address the Redlands Rail Passenger Line Station Areas. Each plan is briefly described below. 1. County of San Bernardino General Plan The County of San Bernardino General Plan was adopted in The Plan contains policies to preserve open space and defines a vision of rural character and a sense of distinct communities, among other goals. The County General Plan addresses three diverse planning regions: the Valley Planning Region, the Mountain Planning Region, and the Desert Planning Region, of which the unincorporated TDR Bank Area is located within the Valley Planning region. 1 Policy CO 6.1 in the Conservation Element of the San Bernardino General Plan calls for protection of prime agricultural lands from the adverse effects of urban encroachment, particularly increased erosion and sedimentation, trespass, and non-agricultural land development. 1 County of San Bernardino, 2007, County of San Bernardino 2007 General Plan, pages I-9 and I-15 to I

24 2. Redlands General Plan The Redlands General Plan was adopted in 1995 and amended in 1997, when Measure U was added. Policies in the Redlands General Plan reinforce the following themes relevant to TDR and TOD: A Freestanding City. These policies define visible edges by preserving citrus groves at prominent locations. Citrus Heritage. These policies preserve Redland s citrus groves as an aesthetic asset and reminder of Redland s past. Small Town Feeling. These policies create two communities, the East Valley Corridor and the Downtown area. These communities are to be uncrowded, friendly, and small-scale while maintaining the natural surroundings. Sense of History. These policies preserve landmark buildings and modest bungalow neighborhoods, as well as elements of Redland s natural history. Quality of Life in the North and South. These policies evenly distribute public amenities throughout Redlands. Revenues to Support Facilities and Services. These policies assure that new development will contribute its fair share of funds toward City facilities and services. 2 a. Section 1A: Principles of Managed Development This section is an amendment to the General Plan as a result of a voter initiative called Measure U that passed in Measure U identifies six key growth-management principles listed below. Exemptions from these requirements include development that is directly related to the proposed Metrolink stations and development in the Downtown Specific Plan Area with a 4/5 City Council vote. 2 City of Redlands Plans & Codes, community/general_plan1.htm, accessed on December 15,

25 Principle 1: New development must pay for itself. Principle 2: New development must conform to City standards. Principle 3: Reinforce Land Use Designations in General Plan. Principle 4: Agriculture Preservation. Principle 5: San Timoteo Canyon Preservation. Principle 6: Limits on traffic, signage and hillside development. b. Section 2: Growth Management Element Section 2 of the General Plan contains provisions for Measure N. This is a zoning ordinance that caps residential development at a maximum of 400 units per year within the city. Up to 50 single-family units are permitted and the remaining unit mix is decided by a point system. Additionally, sewer and water service can only be provided for 150 units per year within the SOI. c. City Design and Preservation Element This element focuses on areas for new development. Mentone is identified as a vibrant up-and-coming neighborhood with infill development opportunities. San Timoteo and Live Oak canyons are identified as areas where signature ridges should be preserved and where slopes over 50 percent are excluded from development. A citrus greenbelt separating Redlands from Loma Linda is discussed as a possible boundary between the two cites, located between the rail line and Interstate 10, on the east side of California Street. Relative to the TDR receiving areas, this element discusses the fact that the East Valley Corridor Specific Plan may reconsider non-residential uses located north of the Morey Arroyo for mixed-use. d. Land Use Element The Land Use Element defines land use designations and provides the basis for zoning that regulates development. Residential land use designations from section 4.40 are summarized in the following bullets. Housing units for lowincome residents can be included in any land use category in exchange for density bonuses. 3-5

26 Rural Living: Intended to preserve agriculture and open space, up to 0.4 units per gross acre are permitted on slopes less than 15 percent, and 0.2 units per gross acre on slopes greater than 15 percent. Very Low Density: Intended to encourage limited, low-density residential development in flat areas. Up to 2.7 units per gross acre are permitted on slopes less than 15 percent, 0.4 units per gross acre on slopes between 15 and 30 percent, and 0.2 units per gross acre on slopes exceeding 30 percent. Low Density: Provides for single-family development and is not intended for hillsides. This designation permits up to 6 units per gross acre. Low Medium Density: Provides for infill development in the Mentone area and near the University of Redlands. Density up to 8 units per gross acre is permitted. Medium Density: Provides for a mix of attached and detached units with a range of densities and types. The maximum density permitted is 15 units per gross acre, but the low- to mid-level range of this value is the most suitable for development. High Density: Provides for a mix of unit types. Although densities up to 27 units per gross acre are technically permitted, projects built at densities greater than 18 units per acre, or over 2 stories or 35 feet in height, require 4/5 approval by the City Council, along with a series of compatible use findings. Section 4.6 describes that the East Valley Corridor Specific Plan plans for 90,000 jobs at buildout in 2028 that will shift the balance of residents who commute out of the City on a daily basis. This section also outlines the Downtown Specific Plan as the tool that will regulate land uses in the city s retail and entertainment activity center, permitting the highest densities in the city. For example, Policy 4.61e encourages mixed-use projects which integrate, retail, restaurant or office uses along with urban housing permitted at a density up to the High Density Residential standard, which is a maximum of 27 units per acre. 3-6

27 e. Housing Element The Housing Element identifies parcels for low-income housing in the Downtown Area. Policies 6.30c and 6.30e call for amendments to the Zoning ordinance to include standards for single room occupancy housing within the Downtown Specific Plan Area and to create a new multi-family residential zone consistent with the High Density Residential designation that permit up to 27 units per acre. Policy 6.30f identifies a SCAG requirement to annex 150 units per year from the SOI. f. Open Space and Conservation Elements This element outlines reasons to preserve the TDR Bank Area. There are no policies calling for the use of TDR as a tool to preserve open space. g. Economic Development Element The Economic Development Element provides policies that encourage development in the Downtown Area. Policy 11.0k promotes redevelopment and rehabilitation of older commercial and industrial areas to make them more efficient, accessible, aesthetically appealing, and economically viable. 3. Redlands Downtown Specific Plan The Draft Redlands Downtown Specific Plan calls for a cohesive pedestrianoriented downtown that builds upon the existing urban form of historic State Street. Civic improvements and new development will include vibrant streetscapes with a well-defined hierarchy of blocks and building forms that enhance the unique character of Redlands. The Specific Plan seeks to avoid freeway-oriented development and focuses on amenities and commercial uses on underdeveloped land around the planned rail station site. The plan recognizes that TOD will promote an economically dynamic downtown with appropriately scaled mixed-use infill and integrated transportation infrastructure. 3 page 5. 3 City of Redlands, 2008, City of Redlands Draft Downtown Specific Plan, 3-7

28 4. Passenger Rail Station Area Plans The Passenger Rail Station Area Plans is a document that provides land use and economic development recommendations for TOD station areas in the cities of San Bernardino, Loma Linda and Redlands. This document was completed in 2007 and was funded by the San Bernardino Associated Governments (SANBAG), the lead agency planning the Redlands Passenger Rail that will operate between a proposed San Bernardino Transcenter and the University of Redlands station. The Rail Plans document provides recommendations for a total of five other station areas en-route to four station areas in Redlands. The New York Street Station Area was not included in this study. For each station area, the Area Plans document proposes a vibrant mix of uses with employment and housing. 4 The land use data generated in this report were fed into a SCAG transportation model to estimate ridership potential. 5. The East Valley Corridor Specific Plan The East Valley Corridor Plan was adopted by the City of Redlands in The plan area includes about 4,300 acres located in eastern areas of Loma Linda and western areas of Redlands. The plan represents an interjurisdictional agreement between the City of Redlands, the City of Loma Linda, and San Bernardino County. The purpose of the plan is to develop large projects at the primary geographic gateways to East San Bernardino Valley, along Interstate 10 in Redlands and Loma Linda. Key components of the plan address design standards, land uses, safety and preservation overlay districts, and infrastructure that will work in unison to balance land use regulations pertaining to the future size, shape, and character of areas planned for industrial commercial and residential growth. The East Valley Corridor Specific Plan is intended to facilitate future industrial, commercial and residential growth, by attracting major businesses to the East Valley. 5 4 San Bernardino Associated Governments, 2007, Draft Redlands Passenger Rail Station Area Plans, pages 1-1, 1-4 and City of Redlands, 2004, East Valley Corridor Specific Plan, pages F-1, F-2, and F

29 The plan area includes parts of the California Street and Alabama Street station areas. The following density regulations apply: General Commercial: FAR between 0.25 and 0.40 Multi-family Residential: Up to 15 units per acre 6 The plan allows the following density bonuses which are not to exceed 50 percent of the total permitted FAR: 20 percent FAR bonus for structured parking. 15 percent FAR bonus for buildings with amenity areas and visual features. 20 percent FAR bonus for open space amenities. 15 percent bonus for a transportation management plan. 6. Orange Blossom Trail Conceptual Alignment Study The Orange Blossom Trail Conceptual Alignment Study was completed in The Study identifies issues and options for the 7½-mile-long Orange Blossom Trail project. The Class I trail will provide a non-motorized transportation and recreational corridor for local residents. The goal of this study was to provide strategies that will assist the City of Redlands in building and maintaining a trail that will be an asset to the community. To that end, the Study provides general design guidelines for the construction of the trail, as well as identifies possible funding sources for construction and maintenance. 7 The trail will pass through most of the station areas and should be integrated with station-area design recommendations. Trail easements could be added to the TDR Bank Area. 6 FAR is the ratio of floor space to site area. 7 City of Redlands, 2008, Orange Blossom Trail Conceptual Alignment Study, pages 1, 21 and

30 C. Sending and Receiving Areas Analysis This section provides an explanation of the supply of development rights in the TDR Sending Area and the capacity for development under various development growth tiers for the TDR Receiving Areas. A summary of the existing land uses, zoning and development projects in the TDR Sending Area are included in this section. The capacity for development in TDR Receiving Areas is based on the analysis described in Chapter 2, Rail Station Analysis, which includes a summary of existing land uses and zoning in the station areas. 1. TDR Sending Area The TDR sending area consists of 11,547 acres of land. Of that, 6,072 acres are located within the City of Redlands and 5,474 are distributed throughout the City s eastern sphere of influence (SOI) and on County land, as shown in Figure 2. The TDR sending area can be broken into two sub-areas, one 6,072 acre sub-area located within the southern area of the City, in the vicinity of San Timoteo and Live Oak Canyon areas (South TDR sending subarea), and the other 5,475-acre sub-area located east of the city, in Mentone (East TDR sending sub-area). The boundary of the TDR sending area has been revised from the original version to omit areas that are already developed, including an area zoned for industrial use, and a reservoir on Federal land. The revised map in Figure 2-1 illustrates the sending-area boundary used as a basis to estimate the supply of TDR available within the City and surrounding County lands. a. Existing Land Use and Zoning Existing land uses within the TDR sending area are primarily vacant undeveloped greenfields. The South TDR sending sub-area contains San Timoteo and Live Oak Canyons. This area has sprawling grassy hillsides and oak-studded canyons mixed with sparsely populated rural residential. The residences consist of a mixture of ranches, large-lot single-family homes, and estates. This area provides the city with access to scenic natural areas. Land uses in the South TDR sending 3-10

31 sub-area are regulated by the City of Redlands Zoning. This sub-area contains agricultural and single-family residential zoning designations, as well a few areas that require specific plans for development. The East TDR sending sub-area in Mentone is characterized by a belt of citrus groves defining the urban fringe. Developed residential areas lie west of the groves and undeveloped greenfields in the Crafton Hills ascend in the east. Some of the citrus groves are under Williamson Act contracts. The Williamson Act is a conservation tool that provides State tax incentives for farmers. The citrus groves are a cultural resource for the city. Land uses in the East TDR sending sub-area are currently under County jurisdiction, but most areas lie within the City s SOI. Within this unincorporated area, single-family residential zoning is predominant. There are also significant tracts of land zoned for open space, agriculture, industrial, commercial, and public/institutional uses. Preservation of open space in these zones designated to accommodate growth could trigger a General Plan update. b. Development Projects The approved and planned development projects within the TDR sending area are discussed below. These projects illustrate the demand for singlefamily units. The following bullets briefly describe the projects in the TDR sending area. 1. Single-Family Residential Project: Approved by the Planning Commission in February, 2005, this project calls for 10 single-family units on a 26.8-acre site. 2. Single-Family Residential Project: Approved by the City Council in January, 2009, this project plans to subdivide 44 acres into 27 singlefamily lots. 3. Single-Family Residential Project: Approved by the City Council in February, 2006, the 15-unit single-family residential project sited on 60.1 acres will be planned by a Specific Plan. 3-11

32 c. Supply The analysis of development rights available in the TDR sending area is based on the Redlands General Plan and County of San Bernardino General Plan rather than the Redlands Zoning Code. The Zoning Code limits development intensity in the TDR sending-area and would thus limit the supply of development rights to be transferred to the station areas. We estimate the total supply to be 5,141 total development rights 1,861 development rights are located in the Canyon sending area (South TDR sending sub-area) and 3,280 development rights are located in the Mentone sending area (East TDR sending sub-area). 2. TDR Receiving Areas (Station Areas) As explained in Chapter 2, the TDR receiving areas, illustrated in Figure 2-1 consist of five ½-mile-radius rail Station Areas planned along the Southern Pacific rail line. In all, the receiving area totals 2,347 acres. For the purposes of this analysis, the Alabama Street Station Area, New York Street Station Area, and Downtown Area have been combined into one TDR receiving area for the analysis of capacity, since the boundaries of these areas overlap. D. Recommended Ratios This section provides pricing and transfer ratio recommendations for TDR in Redlands. The costs and revenues to develop the following five hypothetical prototypes were modeled: Prototype 1: Townhome Project Prototype 2: Small Mixed Use Prototype 3: Large Multi-Family Prototype 4: Large Mixed Use Prototype 5: Rural Residential 1. Methodology Prototypes 1-4 that were described in Chapter 2 were evaluated to derive the financial feasibility of developing these prototypes under 100 percent buildout in two growth tiers: 3-12

33 Tier 1 Growth (Low): General Plan Consistent TOD. Tier 1 Growth evaluates revenues available to build mixed-use and multi-family projects in the station areas. This scenario assumes that density bonuses can be sold to build up to the 35 dwelling unit per acre maximum contained in the General Plan. Tier 2 Growth (High): Bonus TOD Prototype. Tier 2 Growth evaluates revenue available to pay for bonus units beyond the amount of density currently permitted under the General Plan. This may be the density required to receive Federal funding to build the rail line. Prototype 5 was evaluated in order to estimate the value of a development right in the TDR sending areas. This is the zone planned for conservation through development right purchases. Prototypes 1-4 were modeled to determine the amount of revenue that would be available for amenities including TDR. We analyzed each prototype, first at a density consistent with the existing General Plan (Tier 1 Growth), and then at a density-bonus level higher that the General Plan (Tier 2 Growth) in order to answer the following two questions: 1) Are these prototypes financially feasible in the Station Areas? If so, would a developer make sufficient profit to purchase amenities that include TDR? 2) How much revenue would be available to pay for the right to build a multi-family residential project on a currently nonresidential-zoned site? How much revenue would be available to pay for bonus density units? Each prototype was analyzed using developer proformas to identify project revenues beyond the standard 13 percent of cost developer profit margin that is an industry accepted standard. This amount can theoretically be used to buy density or other bonus amenity menu items listed in Chapter 2. Under Tier 1 Growth the amount of profit above 13 percent can be divided by the number of planned units to estimate the revenue available to pay per bonus 3-13

34 unit. Under Tier 2 Growth, the amount of profit above 13 percent is divided by the number of bonus units that are in addition to the number of units in each prototype under Tier 1 Growth. If all of the profit over the 13 percent margin is spent on the right to build units with TDR, this would be the highest value threshold for which a developer would be willing to pay. These steps above were used to identify the low and high range that a developer would be willing to pay. The proforma methodology used to recommend the ratio is described in Section II. 2. Estimate Value of a Sending-Area Development Right Prototype 5, Rural Residential, would be built in the area targeted for conservation. The analysis estimated that the value of a development right in the sending area is $235,000. This means that a landowner is likely to accept $235,000 in exchange for an agreement never to develop a residential unit on a 1-acre site. 3. Estimated Revenue Available to Pay for Bonus Amenities Prototypes 1 4 would be built in station areas planned for passenger rail. When a site is developed it could be built under Tier 1 Growth or Tier 2 Growth. Developer pro forma economic analysis was used to model the costs and revenues required to construct the four hypothetical development prototypes under Growth Tiers 1 and 2. The revenue generated from each project that is above 13 percent developer profit is theoretically the maximum amount available to pay for TDR and amenities. These revenues, per unit, are summarized in Table 3-1 under the Revenue per Unit columns. The results of the economic analyses reveal that the value of a bonus residential unit that is, a unit that makes the gross site residential density higher than the baseline density permitted by right under the existing zoning ranges from $0 to $42,500. For the purposes of determining the TDR value per unit we ad- 3-14