The Chronicles Nancy Sarnoff writes in this article about the Metropolitan Transit Authority‘s latest venture to do something other than what it is chartered to do, which is to provide a flexible and effective mass transit system for citizens of the Houston metropolitan area:
[Metro] has selected Houston-based Transwestern Commercial Services to build [a $105 million building above the transit center on Fannin near the Medical Center], which could include condominiums, a hotel, office and retail space in the Texas Medical Center.
Metro hopes the project will increase ridership, create a neighborhood-friendly sense of place and generate revenue from its real estate assets.
“We want to do things where people can live, work and play that enhance their quality of life,” said Todd Mason, vice president of real estate services for Metro.
The development plan calls for a 175-room hotel, 30 condominiums, 35,000 square feet of shops 168,000 square feet of medical office space and a 15,000-square-foot wellness center.
Transwestern and Metro will spend the next year looking for a hotel operator and tenants to fill the space.
Chip Clarke, president of Transwestern’s southern region, said the project details are “fluid” and that its ultimate uses will be driven by the market.
Construction, which could take three years to complete, is expected to begin in the second half of 2006.
The article goes on to describe how Metro plans similar projects for other parts of the light rail line.
H’mm. We already know that Metro does not perform particularly well at that which it is chartered to do. In view of that, it’s not a good idea for Metro to be getting into the notoriously speculative real estate development business, where it can lose even more money. Indeed, our local government already has a dubious record of boondoggles in that area. Finally, given Metro’s governmental subsidy for this project, how on earth are private developers — who risk their investment based on market conditions — supposed to compete with such projects when they must rely on higher-cost private financing?
Consequently, count me as skeptical that this approach to spurring development along Metro’s rail line makes sense. When this type of thing gets started, we’re not very far from having to deal with this even bigger problem.