Project: Valley Metro Rail (Phase 1)

1.0 Synopsis

The Valley Metro Rail is a 26.3-mile light rail line in the Phoenix Metropolitan Area, Arizona. The first phase of the project (which is the focus of this study) comprises a 20-mile long line with 28 stations that stretches from Downtown Phoenix to west Mesa, AZ. Construction of the first phase of the project began in early 2005 and service started in December 2008. Formerly known as the Regional Public Transportation Authority (RPTA) of the Phoenix Metropolitan Area, Valley Metro is organized into two groups: Valley Metro Bus and Valley Metro Rail.  In 2002, Valley Metro Rail Inc. was created as a non-profit to oversee the construction, operation, and maintenance of the light rail line. Valley Metro Bus oversees the area’s bus system in collaboration with the City of Phoenix.

The capital cost of the first phase was $1.55 billion (in 2013 dollars), which was covered by a combination of local and regional sales tax and the Full Funding Grant Agreement (FFGA) provided by Federal Transit Administration (FTA). The Valley Metro Rail’s operating cost is about $35 million per year (2013 data) and is covered through local funds as cities pay from their revenue of local sales taxes, based on the miles of rails located in their territory.

Immediately after the first phase of the line opened in 2008, the weekly ridership reached 40,000 riders, exceeding the projected weekly ridership of 26,000. In 2013, the average weekday ridership in the three cities of Phoenix, Mesa and Tempe was 41,845. The 2013 annual ridership of the Valley Metro Rail was more than 14 million. The motivations for development of a light rail line in the Phoenix Metropolitan Area were to increase the regional mobility, provide more travel options for transit-dependent groups, and encourage economic development along the transit line.

Since 2005 (when the construction started), more than 302 development projects have been completed or are currently (as of 2017) under construction along the Valley Metro light rail line. These projects are mostly commercial, residential, and public space developments which attracted a total of $10.1 billion of public (25%) and private (75%) investment to the area.

As of 2013 (which is the post-study year of this project), new businesses have created an estimated 16,305 jobs as a direct result of the transit-oriented developments along the Valley Metro Rail project.

2.0 Background

2.1 Location & Transportation Connections

The Valley Metro light rail starts at the 19th Avenue/Dunlap station in Phoenix, passes through the City of Tempe and ends at the Main Street station in Mesa. The first section of the line runs roughly parallel to the Arizona Veterans Memorial Highway (Interstate 17) and then turns eastward, running parallel to Interstate 10 and Red Mountain Freeway towards Tempe and Mesa.

Of the total 35 stations of the light rail line, 23 stations serve the City of Phoenix, 6 serve the City of Tempe and 6 are located in the City of Mesa. All the stations are located within the boundaries of the Phoenix Metropolitan Area in Maricopa County.

The light rail stations are typically located in the center of the streets and nine park-and-ride-stations provide free parking for riders. The Valley Metro Rail trains operate 18 to 20 hours per day, seven days a week.  Trains run every 12 minutes during peak hours and every 20 minutes during off-peak periods.

Phoenix Sky Harbor International Airport (PHX) is accessible through the 44th Street/Washington station. Airport trains (PHX) transport passengers from the light rail station to parking lots and terminals adjacent to the airport. 

2.2 Community Character & Project Context

The Phoenix Metropolitan Area, also known as the Valley of the Sun, consists of the City of Phoenix, eight other cities in Maricopa County (including Tempe and Mesa), and 3 cities in Pinal County. Although the Valley Metro light rail is completely located within the boundaries of Maricopa County, future extensions will expand the line service to cities located in Pinal County as well.

The Phoenix Metro Area has more than 14,500 square miles of land area, but only 8% of this land has been developed into to urban areas. The first Phase of the Valley Metro project is in what is considered an Urban area. In 2004, the metro area had a population of more than 3.6 million, only slightly more than the 3.4 million of residents in Maricopa County and the state of Arizona has 5.6 million residents.   Between 2004 and 2013, population at the metro, county, and state level increased by 21%, 17.4%, and 17% respectively. During the same time the combined population of Phoenix, Tempe and Mesa increased by about 5%. The difference in population growth between these three cities and the Phoenix MSA is because the population growth was primarily concentrated in the suburbs, outside the densely populated urban cities, where more housing was being built due to lower real estate prices.

The construction and opening of the Valley Metro Rail coincided with the nationwide economic recession (2007 to 2010) which strongly affected the state of Arizona.  At the end of the year 2005, Arizona had 3.22 million jobs which had been increasing by 4% annually until 2007.  Employment levels were not only high across the state (3.47 million), but were also at record levels in Maricopa County (2.34 million), and the Phoenix Metropolitan Area (2.43 million).

. According to data from the Bureau of Economic Analysis (BEA), between 2007 and 2010, the number of jobs decreased annually by 2.9% for Maricopa County and 2.9% for the state of Arizona. Job recovery began to emerge after 2011, but very slowly.  In 2013, the county and state employment just returned to 2008 employment levels (2.29 million for the Maricopa County and 3.37 million for Arizona) and full recovery to 2007 levels of employment jobs did not occur until 2016.

The three cities of Phoenix, Tempe and Mesa had a combined employment of more than 1 million in 2004, which decreased annually by 5% to 961,989 in 2013. In 2004, the combined per capita income of Phoenix, Tempe and Mesa was $22,638. Between 2004 and 2013, the combined per capita income increased by 5.6% to $23,910. During the same period, the state and county (Maricopa) also saw increases in per capita income of 22% (to $36,558) and 19.6% (to $39,301), respectively.

In 2004, Maricopa County’s major industries were retail trade, state and local government employments, administrative and support services, construction and health care. By 2013, the county’s reliance in construction industry employment reduced by more than 25% while share of healthcare and finance industry from the total employment increased by 45% and 31% respectively.

Service, tourism, real estate and construction were known to be the major industries of the Phoenix Metropolitan Area during early 2000s. In the 2007 economic recession, the construction industry jobs started to collapse, bringing down the real estate businesses as well. Since then, the local business leaders realized that a more diverse economy is key to surviving economic recessions. After 2010, the area started to decrease its reliance on construction and real estate, and local government support increased employment in education and manufacturing.   

Currently the economy of Phoenix has a diverse list of major employers in both public and private sectors. As of 2017, the city’s major employers are the state of Arizona (around 50,000 jobs), Walmart Stores, Inc. (more than 30,000 jobs), Banner Health (around 25,000 jobs), and the City of Phoenix (more than 15,000 jobs).

3.0 Project Description & Motives

In 1985, the state of Arizona passed a law enabling the voters of Maricopa County to increase sales taxes to fund local highway improvements and establish a Regional Public Transportation Authority (RPTA). Maricopa County voters approved a “one-half cent” raise in the sales tax in the same year and the raised money were to fund RPTA annually ($5 million per year through 2005).  To consolidate several city-wide transit systems into a unified transit system in the Phoenix Metropolitan Area, the organization changed its name to Valley Metro in 1993 branding the public bus system and consolidating all future transit developments under one local authority.  

Later in 1996 and 1998, the cities of Tempe and Mesa increased their respective sales tax to provide funding for transit system improvements. By late 1999, a light rail system was being considered and an environmental impact review report (for compliance with the National Environmental Protection Act) was published in 2003. 

Meanwhile, in the year 2000, the city council of Phoenix developed a public transit plan called “Transit 2000”. This plan aimed to improve the bus system, provide “Dial-a-Ride” services, introduce bus rapid transit (BRT), and light rail (LRT)to the area. That same year, the city increased the sales tax again to support this Transit 2000 plan and many other small cities in the Phoenix Metropolitan Area began to allocate some portions of their sales tax to public transportation improvements.

The primary motivation for adding a BRT and LRT corridor to Phoenix’s transit system was to improve mobility in the areas with high demand for bus service, especially in places with high employment concentrations and student population. Also, a LRT system would not only provide additional support for the bus system, but would also attract the private sector investments along light rail corridors and spur economic development.

Planning and design of the light rail system began in 2003 and the construction of the first phase of the Valley Metro Rail project started in March 2005 financed by funds from local and federal sources for approximately equal amounts. The first phase opened in December 2008, with the rail line starting at Downton Phoenix (19th Avenue/Montebello station), passing through Tempe (providing service to Arizona State University) and ending in Mesa, at the Sycamore/Main Street station. The 20-mile line served 28 on-street stations for a capital cost of $1.55 billion (in 2013 dollars).

In the year 2013, annual ridership was 14.2 million passengers for the 20-mile segment of the first phase of the project.  The highest number of boardings (960.000 annual) was at the Sycamore/Main Street station in Mesa and 19th Avenue/Montebello station in Phoenix. 

In 2015, the City of Phoenix voted for a 35-year transportation plan with an estimated cost of more than $30 billion to fund transit and highway improvements. Funded by a portion of the local sales tax and the Federal Transit Administration (FTA), a 3.1-mile extension expanded the Valley Metro Rail further into the city of Mesa (Sycamore/Main Station to Mesa Dr. Station) adding 4 more stations in the city in 2015. Another 3.2-mile extension of the line opened in 2016 connecting the 19th Ave/Montebello station to the 19th Ave/Dunlap Park and Ride Station in Downtown Phoenix, increasing the total length of the system to 26.3 miles and adding three new stations along 19th Avenue in Phoenix. However, given their recent completion (2015 and 2016), impacts of these line extensions are not included in this case study.  

A 1.9-mile extension from the Main Street station to Gilbert Road in Mesa is scheduled to open in 2019. Currently, Valley Metro Inc. has multiple light rail extension projects at the planning or construction stage, and (scheduled to open in 2023).

As of 2017, Valley Metro Rail, Inc. has seven extension projects at the planning and/or development stage. In 2019, a 1.9-mile extension east of Mesa Dr. Station on Main Street to Gilbert Road is scheduled to open. The 50th street station in Phoenix will also open in 2019. A southward 5-mile extension from downtown Phoenix to Baseline Road, a 1.7-mile extension from 19th Ave/Dunlap station to Metro Center Mall, a three-mile streetcar project in Tempe, and a 1.5-mile westward extension from downtown Phoenix to the state capitol area are scheduled to open in 2023. A 9.5-mile extension along the Interstate 10 from the state capitol area to 79th Ave. station in the Tolleson area is scheduled to open in 2030. A 5-mile extension in downtown Glendale area in a feasibility study stage. 

4.0 Project Impacts

4.1 Transportation Impacts

4.2 Demographic, Economic & Land Use Impacts

According to data provided by the City of Phoenix, since opening of the Valley Metro rail, a total of 302 projects have been completed or are at the planning/construction stage. These projects have brought more than $10 billion in capital investment to the Phoenix Metropolitan Area. Of these investments, 75% has come from private investors and the remaining 25% are public investments. When completed these projects are expected to result in 22 million sq. ft. of residential housing, around 17 million sq. ft. of commercial and office spaces, and more than 6.5 million sq. ft. of public and educational buildings. As of 2017, more than 70% of these developments are completed.

Most of these developments have selected to be near the light rail stations located in the cities of Phoenix (54% of the projects) and Tempe (37% of the projects) primarily due to availability of land and the fact that stations located in these cities are larger than others.  Development near stations in downtown Phoenix are primarily for commercial or office use. The Osborn Road/Central Avenue station has seen the largest job growth in the area within a 0.5-mile radius (7,000 new jobs between 2008 and 2013).

Transit Oriented Development (TOD) tracking data provided by the city showed that between 2008 and 2017, more than $1.5 billion in public and private investments (93% public and 7% private) resulted in the completion of around 60 residential and mixed-use projects. A total of 7,437 residential units have been developed adjacent to the light rail in the Phoenix, Mesa, and Tempe, and 15% of these residential units are affordable housing.

During the same period, more than 2.5 million sq. ft. of educational spaces, 200,000 sq. ft. of medical and healthcare-related spaces, 3.3 million sq. ft. of office spaces, 610,000 sq. ft. of commercial and retail spaces, and 1,158 hotel rooms were developed adjacent Valley Metro light rail stations. Based on interviews and data analysis, it is estimated these developments have created 16,305 new jobs as a direct result of the new light rail and supporting TOD plans.

5.0 Non-Transportation Factors

Phoenix city planners played an important role in the economic success of the Valley Metro light rail line. City planners received local community support and worked in collaboration with planners in the suburban cities of Tempe and Mesa to develop a modern transit-oriented metro area. Their efforts were enabled by legislative funding that designated a portion of the sales tax revenues for transit investments. Most of the project area was already urbanized therefore, no major infrastructure improvements were required to support economic development.

Each city implemented its own land use policy to support economic development adjacent to light rail stations. The cities of Phoenix and Tempe developed special land-use and zoning plans such as overlay district zoning (or TOD zoning) to support densely populated and transit-dependent neighborhoods around the stations. The City of Phoenix started its TOD plans even before the construction of the light rail broke ground. The city implemented TOD zoning for parcels near some of its future stations around 2003, and the City of Tempe started the TOD plans in 2005.

In 2012, the City of Phoenix started the Reinvent PHX project in collaboration with the U.S. Department of Housing & Urban Development, Arizona State University, Vitalyst Health Foundation and many other organizations. Reinvent PHX is the comprehensive planning effort behind the creation of the five-year TOD policy action plans for the Gateway, Eastlake-Garfield, Midtown, Uptown and Solano TOD districts located along the light rail system. This comprehensive initiative encouraged many new developments and provided a positive business incentive for more investments along the light rail, especially in Downtown Phoenix.

The City of Mesa also created a bike sharing plan for its stations, and the City of Tempe specified an overlay zone along the light rail that covered most of the non-residential property within the station areas. To support the transit oriented developments, these zones provide density bonus for residential developments that take part in affordable housing program.

6.0 Resources

6.1 Citations

1. Valley Metro, Inc. (2012, June). Comprehensive Annual Financial Report. Phoenix, AZ. [Online]. Available: http://www.valleymetro.org/images/uploads/lightrail_publications/Rail_CAFR_12.18.12FINAL.pdf
2. Valley Metro, Inc. (n.d.). Annual Ridership report, Fiscal Years 2009-2017. [Online]. Available: http://www.valleymetro.org/publications_reports/ridership_reports
3. Valley Metro, Inc. (n.d.). Economic Development Highlights Brochure. [Online]. Available: http://www.valleymetro.org/images/uploads/misc_reports/Economic_Dev_Highlights_2017.pdf
4. City of Phoenix. (n.d.). The Phoenix Transit Plan. [Online]. Available: https://www.phoenix.gov/publictransitsite/Documents/d_043453.pdf
5. Valley Metro, Inc. (n.d). Valley Metro Fact Sheet. [Online]. Available: http://www.valleymetro.org/images/uploads/station_ridership_030614.pdf
6. B.Goth.(2015, Aug. 26). Phoenix Prop. 104 transit plan: What happens now? AZ Central. [Online]. Available: http://www.azcentral.com/story/news/local/phoenix/2015/08/26/more-police-officers-phoenix-prop104-transit-tax-passes/32380113/
7. Phoenix Relocation Guide. [Online]. Available: http://www.phoenixrelocationguide.com/Top-Major-Employers-and-Businesses.
8. Valley Metro, Inc. (2015). Valley Metro Green by Design. [Online]. Available: http://www.valleymetro.org/images/uploads/2015_Valley_Metro_Green_by_Design_-_Web_Friendly.pdf
9. APTA. (2015). Public Transportation FACT BOOK. [Online]. Available: https://www.apta.com/resources/statistics/Documents/FactBook/2015-APTA-Fact-Book.pdf
10. Arizona PIRG Education Fund. (2014). Transportation Trends in Arizona. [Online]. Available: http://arizonapirgedfund.org/sites/pirg/files/reports/FINAL%20Bikes%2C%20Trains%20%26%20Less%20Driving%207-14.pdf
11. W. Cox. (2014, Sept. 27). New Commuting Data Shows Gain by Individual Modes. [Online]. Available: http://www.newgeography.com/content/004538-new-commuting-data-shows-bain-individual-modes
12. Reinvent Phoenix Program, City of Phoenix, 2012. [Online]. Available: https://www.phoenix.gov/pdd/topics/reinvent-phx

6.2 Interviews

Organization, , Name, Position

Valley Metro, Joshua Matthews, Urban Planner

Greater Phoenix Chamber of Commerce, Taylor Gillings, Economic Development Specialist

City of Phoenix, Albert Santana, Director of High Capacity Transit

City of Phoenix, Jay Fetherston, ‎Transit Oriented Development Program Manager

City of Phoenix, Jodi Strohmayer, Light Rail Planner

Footnotes

Case Study Developed by University of Maryland