|East end of tunnel (silverspringtrails.org)|
(Update: the Washington Post reported on February 25 that the MTA has rejected proposals to put the trail in the tunnel.)
In order to fully appreciate this proposal, we have to accept a couple of assumptions that I believe are true:
1) It is cheaper to build the Purple Line and the trail if there are no buildings and/or building supports in the way during construction
2) It is cheaper to build commercial buildings when there is not an operating transit line below them.
3) Conclusion (to accept for the sake of argument) - It would be less expensive for the Purple Line project AND the building developers to design and build everything at the same time.
As long as there is agreement on these assumptions, then the question of putting all the pieces together in the most cost-effective and beneficial way possible becomes a question of creative financing more than one of engineering. The problem, of course, is that these different projects are paid for by different parties and occur at different times, which can make it very difficult to achieve savings in ways that benefit all the various players. Regardless, let's forge ahead and think through the hypothetical.
The Purple Line is a permanent piece of infrastructure. Commercial office buildings are temporary structures; both of those buildings will eventually be replaced. When they are, they will have to be built with an operating transit line essentially in the way. This will make construction costs higher; it has to. By how much? I don't know.
The Air Rights Center building in question was built in two parts, 1964/1976, is assessed at $19 million and pays about $250k-$300k/year in property taxes.
The Apex building (7272 Wisconsin Ave.) was built in 1990, is assessed at $40-45 million and pays $550k-$600k/year in property taxes
These buildings are located on absolutely prime real estate in the center of downtown Bethesda and will literally sit on top of the Purple Line when it's completed. It's hard to imagine more valuable real estate in Montgomery County.
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By redeveloping these properties at the same time as the Purple Line, the construction costs of the Purple Line can be reduced (no columns in the way) and the design might be improved. Undoubtedly the design of the bike trail can be improved and costs reduced, since the columns are the biggest impediment. (I'm not the first to suggest that the Air Rights building could be demolished and rebuilt as part of the project. The Silver Springs Trails blog contains lots of detailed information about the tunnel and the issues surrounding it)
Constructing new building supports will allow for larger buildings to be built on the air rights above the tracks and the supports can be modernized to incorporate the latest engineering features. These supports can be designed and constructed to allow for more optimized Purple Line operations and also for redevelopment of the properties in future generations.
So this would mean that the current buildings would be razed and rebuilt. That's a big deal, but could ultimately be beneficial to the neighborhood.
Let's assume that each of the new buildings could be redeveloped at a current assessed value of $100 million. That would double the value of the Apex building (since it's only 5 stories now, that seems quite possible). The Air Rights building is already getting a bit tired, so one could imagine a state-of-the-art replacement. The additional taxes based on that higher assessed value would be:
Apex Building: $500k-$700k/yr.
Air Rights Building: $700k - $900k/yr.
Total: $1.2M to $1.6M/yr. in today's dollars
I'm no real estate expert, so these numbers may be mushy.
Given that the Apex Building would likely not be redeveloped until 2030 at the earliest, Montgomery County could allow the owners to pay taxes on their current assessed value for 20-25 years. The county would still collect what it would collect anyway, the developer would save $10M or more in taxes, but also have a larger property that would collect double or more of the current revenue.
Likewise with the Air Rights Building. Its expected life might be shorter, so perhaps the county would give it 15 years at the current assessed value. But again, the developer would have a much better building to collect higher rents.
Both of these developers would also save millions of dollars on the redevelopment costs for the reason stated above: they would not have to shoehorn their construction in around the operating Purple Line. Determining what these savings might be is admittedly extremely difficult. But just because the costs are hard to quantify does not make them zero. They are real. Future, but real. Also, whatever redevelopment occurs would likely be constrained by the current capacity of the support columns. Making those columns capable of supporting larger buildings will increase the value of the properties. As part of the overall package, Montgomery County could allow for increased density, further enhancing the value of the properties to the owners.
So the total savings for each building in reduced taxes and construction costs may be as high as $15-$20M, plus increased property values. Purple Line savings for building the trail through the tunnel are substantial--perhaps as high as $40 million. Additional design and construction savings for being able to work without the buildings in the way may be even greater than that. Some of those savings could be used to incentivize the owners of the properties.
We know that eventually these buildings will be taken down and rebuilt. Doing it now will bring those improvements to downtown Bethesda right away, not at some point in the distant future. So there are community benefits to this solution as well. For instance, additional entrances to both the trail and the station, and direct access from the buildings, could be designed in. Light tubes or atriums or other features could be incorporated to bring natural light into the tunnel. Streetscape improvements could be built in and the plaza at the west end will be improved, because of no need to build a big ped/bike switchback. There are likely other advantages, too.
Finance 501 informs us that lower costs, even out in the future, can (theoretically) be monetized into the present. The total costs of this 1100 feet of tunnel and air rights can be substantially lower than currently projected, with improved resultant design. The creative financing trick, however, is to figure out how to share those savings across ownership and across time to make it a win-win for everyone. The savings are real. It can be done. But it requires extremely creative thinking, cross-jurisdictional cooperation and a large scale vision.