Union Depot Development and Activation Framework

UNION DEPOT ACTIVATION AND DEVELOPMENT STRATEGY

PREPARED FOR:

RAMSEY COUNTY REGIONAL RAILROAD AUTHORITY

PREPARED BY:

HR&A ADVISORS, INC.

NOVEMBER 2010

2 HR&A ADVISORS, INC.

UNION DEPOT ACTIVATION AND DEVELOPMENT STRATEGY 3

Contents

Executive Summary ....................................................................................................................................................... 4

Introduction: The Union Depot Opportunity ........................................................................................................... 11 A Critical Site for Downtown Saint Paul

Downtown Development Context ............................................................................................................................. 15

Assessing Development Potential ............................................................................................................................. 16 Challenge: Creating External Demand

Opportunity: A Distinctive Destination Case Study: San Francisco Ferry Building Marketplace

Recommended Development Program .................................................................................................................... 22 Using Programming to Enhance Demand

Options for Site Development

Development Implementation ................................................................................................................................... 28 Maximizing the Opportunity for Success

Maximizing the Economic Benefits of Union Depot: Transit + Programming ................................................... 34

Recommended Plan of Action ................................................................................................................................... 37


VISION Union Depot will become a

transit hub filled with a

diverse mix of businesses and

cultural programming.

Investment in the reestablishment of transit uses at

Union Depot and the restoration of this historic building

will provide a new platform for growth in Saint Paul.

Several new and existing transit lines will serve the

region through the building, and its leasable areas and

monumental civic spaces can serve as a vibrant new

civic hall with an active front plaza – the next great

public space for downtown Saint Paul. It will be a hub

of activity for trains and buses, bikes, automobiles and

the Saint Paul skyway system, and can also be one for

downtown workers at the end of their day, for

Lowertown residents looking for culture and an active

urban lifestyle, and for families and visitors from

throughout the city and across the region looking for a

new opportunity to come downtown.

In addition to a multimodal transit hub, Union Depot will

be a public space surrounded by dozens of acres of

developable land – strategic redevelopment sites for

both the City and County, upland in Lowertown and

across much of the downtown riverfront. Over the years

to come, transit riders will help activate the building as

riders board and alight trains or change modes of

transit through the station. Nonetheless, Union Depot’s

remarkable civic spaces also provide an opportunity to

complement and augment transit services by creating a

distinctive destination for culture, entertainment, retail,

and other public services that bring a broader array of

people into the building and into downtown from

across the Twin Cities – a mission that will be core to

the success of the project in fulfilling the four goals

established for this Union Depot Activation and

Development Strategy:

To ensure Union Depot becomes a vibrant and

inviting place for transit riders first and foremost, as

well as for downtown residents, employees, and the

entire Twin Cities region;

To provide a revenue stream to support and sustain

Union Depot operations;

To maximize the economic benefits of Union Depot

redevelopment; and

To engender the continued growth of Lowertown as a

diverse cultural destination and a unique place to

live, work, and visit.

Union Depot should house a distinctive marketplace

and host an intensive schedule of public programs, to

complement its transit services. Based on a robust

market analysis that included assessment of local

demographics and real estate markets, incorporated

findings from the Downtown Station Area Plans and

other recent downtown planning efforts, and

considered best practices in other cities, HR&A

recommends the development of a mix of retail, event

and civic uses in the Union Depot building that could

include up to 95,000 square feet of retail and

programmed civic space, home to a regular schedule

of arts, cultural, and entertainment programs that help

drive traffic to and through the building.

This development program will complement the

transportation mission of Union Depot, and encourage

additional civic and economic activity in the building. It

is a concept has been implemented with great success

for the adaptive re-use of several transit hubs across

the country, including San Francisco’s Ferry Terminal,

New York’s Grand Central Terminal and Washington,

DC’s Union Station, among others. It is a strategy

based in part on the success of these precedents, but

also on the underlying market potential of Lowertown,

targeted to achieve a vision that is uniquely Saint Paul.

Through a phased approach to redevelopment,

beginning with the reactivation of the Union Depot

building as a monument to 21st Century infrastructure

and the people of the Metro region, Ramsey County

and the City of Saint Paul have the opportunity to

realize all four goals of this Activation and

Development Strategy.


Conceptual Reuse Program

Union Depot Building Program

Program Area Square Feet %

Permanent Tenant Areas 24,700 13%

Basement Parking or Tenant Space 31,900 17%

Great Hall 10,100 5%

Concourse 4,900 3%

Waiting Room 22,800 12%

Transit Infrastructure & Services 90,900 49%

Total 185,300 100%

Front Plaza & Lawn 41,100

*Estimated based on design development plans; subject to change through future planning

**Headhouse subbasement and other parking areas not included


UNION DEPOT CAN BE… A multimodal transit hub for millions of transit

riders annually. Beginning with Amtrak and local and

regional bus lines in 2012, the Central Corridor Light

Rail in 2014, and plans for high speed rail and several

other regional rail lines in the decade to come, Union

Depot will be the premier multimodal transit hub in the

Twin Cities region. Ridership is expected to top 4

million people each year within 25 years. The project

also includes new and enhanced infrastructure for

cyclists and pedestrians, along with ample space for

public parking.

A catalyst for economic development. Preliminary

projections show that the transportation components of

the Union Depot project recently approved for

construction by the Ramsey County Regional Railroad

Authority, can deliver nearly $565M in economic

benefits throughout the region over the next 25 years.

Nonetheless, these benefits can be substantially

augmented through the establishment of a diverse mix

of permanent users and temporary programs in the

building’s civic spaces. As documented in several other

cities and other transit hubs, large civic buildings

activated by destination programming and retail uses

have become signature urban amenities that attract

residents, employers and visitors; some have resulted in

double-digit percentage increases in surrounding

property values. If filled with permanent uses and

temporary events that complement and enhance transit

services and the unique character of Lowertown – arts

and cultural programs, restaurants and sustainable

agricultural products, and locally-based small

businesses – Union Depot can also add hundreds of

jobs and result in significant property value increases,

beyond the baseline benefits of transit.

A new anchor for a Lowertown Market District.

The Saint Paul Farmers Market – just one block from

Union Depot – has become a signature asset for

Lowertown, attracting upwards of 20,000 people on a

Rendering of Union Depot and the Central Corridor Light Rail from Wacouta and Fourth Streets. (RCRRA).


given weekend and more than a half million people

each year. The Union Depot building has the capacity

to develop a distinctive small-tenant marketplace that

complements this Twin Cities destination for fresh

produce with artists, restaurants, prepared foods and

other locally-owned small businesses and entrepreneurs

seeking to start new companies or expand business

lines. Such a diverse marketplace – part of a larger

tenant mix and programming strategy for Union Depot

– would bring more traffic into the Depot building to

support retail demand and leasing values, while also

driving additional foot traffic to the farmers market

and businesses throughout Lowertown. Retailers and

other small businesses from throughout Saint Paul and

Ramsey County, representing not only the farm-based

businesses that have shown excess demand for stalls at

the farmers market, but also local arts, culture, and

prepared foods, can be designed to complement the

Farmers Market and Lowertown business community.

They can help provide a vibrant station environment

and amenities for transit riders while also inducing new

demand for transit services at Union Depot,

encouraging ridership outside of regular commuter

hours. While a Union Depot marketplace might start

small, with select market days or programs, done right

and managed by experienced leadership, it could

grow into a permanent market destination for

downtown and Ramsey County as part of a larger

Lowertown Market District.

A hub for arts, culture and entertainment. Union

Depot can become a centerpiece for Lowertown’s high

profile arts community, cultural programming, and

burgeoning entertainment district. Its front lawn and

interior civic spaces can be filled with arts and cultural

uses and events, as well as restaurants and bars that

add critical mass to the Lowertown Entertainment

District. Events, organized programming, and art

exhibitions can be designed and promoted to bring

diverse audiences from local, regional, and global

constituencies that will drive demand for leasable

space. Combined with a distinctive destination events

venue, Union Depot can also become a premier

entertainment and cultural hub in the Twin Cities.

A site for new jobs, homes, and visitors. Greater

accessibility through mass transit connections and a

catalytic development program in the historic Union

Depot building can help turn surface parking lots and

other sites throughout Lowertown and on the Union

Depot property into new mixed-use transit-oriented

development. Augmenting a transit hub with amenities

for residents and workers can lay a foundation for

private investment for decades to come – investment

that will produce new jobs, provide homes for new

residents, and attract new visitors from near and far.

A critical link for riverfront redevelopment.

Positioned below the bluffs of downtown Saint Paul

and stretching nearly to the Lower Landing, the Union

Depot building provides the greatest potential

connection to the riverfront. It lies at the heart of the

17-mile-long Great River Park, currently the subject of

a major master planning initiative. Its programming

and development can become a destination arts,

culture, and food stop along this new signature

economic development initiative for the City, while also

enhancing the value of dozens of acres of government-

owned property stretching from the Bruce Vento

Nature Sanctuary to the Science Museum of Minnesota.

Appropriately redeveloped, it can be a catalyst for

the regeneration of the city’s waterfront, as other cities

have experienced with comparable projects.

_____

Union Depot can be all of these things for Ramsey

County and the City of Saint Paul, but concerted action

will be needed to make these ideas a reality. As the

infrastructure is laid for Union Depot’s new transit

services, a development and stewardship platform must

be built to ensure Union Depot becomes a vibrant civic

asset for the people of Saint Paul and the region that

maximizes Ramsey County’s return on investment.


Rendering of the Union Depot Waiting Room with modern pavilions that could be used for market tenants. (RCRRA).

Rendering of the Union Depot multimodal transit hub project at night. (RCRRA).


ACTION Ramsey County and the City of Saint Paul should develop a public-private partnership to spearhead Union Depot programming and leasing, adopting a phased approach for success.

Large-scale city-changing development initiatives like

the Union Depot project have benefits that last for

generations and accrue over time. Those projects that

have been most successful focus on a great first phase

of development; the initial years after the ribbon is cut

are often critical to building momentum for the long-

term success of the project. Bringing people into the

building in early years can induce new transit ridership

while also driving new foot traffic to Lowertown

businesses. It can create a vibrant place – an amenity

that people want to live near and around which

employers want to locate.

Ramsey County has taken the first and most pivotal

step in this plan for success: it has committed to the

restoration of the Union Depot building and the

improvement of its site for new transit services; it has

provided the physical platform for growth. Now, with

less than two years before the building is reopened to

the public and the first Amtrak trains rolls into the

station, there are three overarching initiatives that can

help ensure Union Depot becomes a vibrant and

inviting place that encourages transit ridership,

generates revenue to sustain its operations, and

catalyzes economic and real estate development for

Ramsey County and the City of Saint Paul, while

leveraging private resources to the greatest extent

possible to maximize the benefit of public funds.

1. Pursue public-private partnership

implementation of Union Depot programming and

development. While the core transit functions of the

Depot should remain with the Ramsey County Regional

Railroad Authority, private entrepreneurship can help

the County define a realistic development business plan

and realize the greatest public benefit from the project

with the least public cost. Ramsey County should

identify a private not-for-profit or for-profit

development partner through a well-marketed

solicitation process that results either in the designation

of an existing organization as a master-lessee of the

Depot’s programmable space or the creation of a new

special-purpose not-for-profit entity.

2. Pursue efforts to improve the marketability of

the Union Depot building and site. A new

connection from the Waiting Room to the riverfront, a

new anchor tenant for the Union Depot site, a

commitment to the development of a signature linear

park along the Train Deck, all could improve the

chances of attracting a top-quality development

partner for Union Depot. These are but three of a host

of measures outlined in this report that Ramsey County

should pursue to make the site more attractive to

potential developer partners.

3. Establish the parameters for public

programming and the use of civic space. Arts,

cultural, entertainment, educational, and market

programming can help make Union Depot a destination

for residents, workers, and visitors throughout the Twin

Cities, activating the building’s impressive civic spaces,

inducing demand for transit services, and creating

demand for retail and other leasable areas in the

station complex. RCRRA must define the parameters

for the use of spaces within the station complex to

maximize development flexibility while not

encumbering the station’s core function as a multimodal

transit hub.

_____

Ultimately, RCRRA must act swiftly and efficiently to

ensure that Union Depot is an activated, inviting public

place when the station opens in 2012 and as it builds

momentum as the premier transit hub in the region.


Union Depot’s historic Waiting Room has the capacity to become a vibrant civic gathering place – a flexible space for rentals and

development, with small-business public marketplace that complements and augments its function as a mass transit waiting room for

the 21st Century. (HR&A)


Introduction: The Union Depot Opportunity

Union Depot presents a once-in-a-generation

opportunity for Ramsey County and the City of Saint

Paul. As the economy begins to emerge from the

recession, multiple levels of government are making an

investment that will yield substantial returns for

decades to come. The Union Depot construction project

recently approved by RCRRA will have three direct

legacies imperative to downtown development and

local, regional, and national economic growth:

Multimodal Transit Infrastructure: The reactivation of

Union Depot as a multi-modal transit hub will create

a new gateway to Saint Paul for the 21st Century.

Amtrak, local and intercity buses, the Central

Corridor Light Rail, and ultimately several other

transit lines, combined with significant improvements

to bicycle and pedestrian infrastructure in downtown,

will provide alternative means of transportation for

millions of commuter and leisure trips every year,

fostering the sustainable long-term growth of the

Metro region, and making it a more attractive place

to live, work, and play.

A Monumental Civic Building: The Union Depot

investment includes a meticulous restoration of the

landmark 1920 Charles Sumner Frost building, listed

on the National Register of Historic Places. In

addition to serving as a grand gateway to the Twin

Cities, Union Depot can provide a new platform for

economic, cultural and community development to

enhance its mass transit benefits. The monumental

Waiting Room – half the size of a football field –

and the Guastavino-tiled Concourse will be reopened

to the public for the first time since the 1970s. These

distinctive spaces will have substantial capacity for

public and private use that complement and augment

multimodal transit hub functions. In the historic

Headhouse, the Great Hall can continue to serve as a

destination event venue for the region while also

becoming a flexible public space for Lowertown and

the downtown office community – a new “living room”

for Saint Paul. These expansive interior public

spaces, combined with a newly expanded front

plaza and lawn, offer a significant opportunity to

create a vibrant civic gathering place that catalyzes

private investment in tens of thousands of square feet

of potential tenant spaces within the building and on

numerous development sites throughout downtown.

A Catalyst for Economic Growth and a Site for Long-

Term Development: The Union Depot project will

create jobs, augment real estate values, and enhance

the economic competitiveness of downtown Saint Paul

and communities connected to transit throughout the

region, with estimated economic benefits of nearly

$565 million over the next 25 years. Moreover, in

addition to serving as a catalyst for new investment

and development in downtown, the Union Depot site

itself presents a significant opportunity for long-term

downtown growth, covering approximately ten

percent of the entire land area of downtown Saint

Paul; enough land to support the project’s

transportation infrastructure as well as potential

development sites for future buildings. At the

intersection of Lowertown and the Mississippi River,

Downtown and the region, the site holds the long-

term potential for new homes and new jobs for the

City and County.

This Activation and Development Strategy concentrates

on a central element for Union Depot’s success: the

redevelopment of Union Depot real estate as an

unparalleled civic asset for the people of Saint Paul

and the entire Twin Cities region. It addresses:

The development context that will influence Union

Depot redevelopment;

The site’s development potential, including challenges

for serving transit riders and opportunities for making

the most of the Union Depot investment, based in best

practices from comparable projects;

How Ramsey County and the City of Saint Paul can

establish an organizational and financial structure to

advance station development that complements and

supports the Depot as the premier multi-modal transit

hub in the region with vibrant civic and economic

activity; and

The potential economic benefits of the Union Depot

project, and a strategy for maximizing benefits to

City, County, and region.


The public sector owns nearly the entire downtown riverfront in Saint Paul, shaded in yellow. Dozens of acres of development sites

within this area are owned by Ramsey County, while the United States Post Office owns a 750,000 square foot building

immediately to the west of Union Depot. The Depot building istelf lies at the center of the riverfront, granting the opportunity for a

significant development project to catalyze new development all along the riverfront, and on several strategic development sites

throughout downtown identified in the Downtown Station Area Plan, outlined above. (HR&A, Google Earth)

The historic Union Depot building will be restored to its former glory and expanding with a new entrance pavilion along Kellogg

Boulevard and a new loading dock facility. Although the 35-acre Union Depot site will include new rail tracks and platforms for

both rail and bus services, a significant portion of the site will be available for future vertical development as markets rebound and

and Lowertown matures with more amenities, including transit and other uses in the Depot building itself. (HR&A, Google Earth)


A Critical Site for Downtown Saint Paul

The 35 acres that Ramsey County acquired for the

Union Depot project represent approximately ten

percent of the entire land area of downtown Saint Paul

and approximately one-third of the downtown

riverfront. Its assets lie at the heart of Saint Paul’s

past, present, and future economic growth: it was the

confluence of the railroads and river boats at the site

that gave rise to the historic warehouses of Lowertown;

it is the restoration of the building and introduction of

Amtrak, buses, and light rail that are powering job

creation and creating a platform for growth in this

challenging economy; and it will be the confluence of

transit lines planned for the future that will continue to

augment Saint Paul’s ability to attract new jobs,

residents, and visitors.

Investments made today in the Union Depot building

and on its site will lay the groundwork for decades of

economic development. The planned program of the

transportation project can be considered as three

interrelated elements: transit infrastructure and

services, restored station spaces, and site work.

Transit Infrastructure and Services: Ultimately, Union

Depot is planned to provide 4 rail platforms leading to

8 passenger rail tracks, a major facility for intercity

and local buses, a welcome mat for the terminus of the

Central Corridor Light Rail, a bicycle facility, more than

650 parking spaces, and enhanced infrastructure for

pedestrians and cyclists across the site. Each of these

uses will have a presence in the Union Depot building

and on its surrounding land. While all of these

program elements are expected to materialize in the

next 25 years, they will be implemented incrementally,

with Amtrak, bus, and cyclist facilities opening in 2012,

the Central Corridor Light Rail debuting in 2014, and

additional regional rail lines following soon thereafter.

Restored Station Spaces: The Union Depot construction

project will include a detailed restoration of the historic

building and its front plaza. Major building areas

include:

Approximately 25,000 square feet of permanent

tenant space in existing building spaces;

Nearly 40,000 square feet of interior civic spaces,

including an expansive 300-foot by 80-foot column-

free Waiting Room, a nearly 5,000 square foot

Concourse with historic Guastavino ceilings, and a

10,000 square foot Great Hall;

A one-acre front plaza, closed to automobile traffic

and reconfigured to welcome pedestrians.

Nearly 32,000 square feet of basement space with

the potential for conversion to leasable area.

Approximately 90,000 square feet of in-building

transportation infrastructure uses and services.

Site Work: Around the Union Depot building, the site

stretches from Sibley Street to the Bruce Vento Nature

Sanctuary, between Kellogg Boulevard and the

privately-owned freight rail lines that border the

southern edge of the site. This land covers more than

30 acres and will include a rehabilitated train deck

with a distinctive edge that leads to the nature

sanctuary, and at-grade parking for more hundreds of

cars. Some of this land can be made available to new

vertical construction in the years to come, as most

recently envisioned in the Downtown Station Area Plan.


Downtown Development Market Highlights

0%

5%

10%

15%

20%

25%

1/2 Mile from Union Depot

City of Saint Paul

Downtown Saint Paul

City of Minneapolis

Downtown Minneapolis

East Metro 7-County Metro Area

13-County Metro Area

Twin Cities Population Growth Rate, 2000-2009

Leading Lowertown Office Industries

Software & Technology

Professional Services

PR & Advertising

Art & Design

Non profits

Smaller government service companies

Food & Beverage Retail Momentum

Barrio Tequila Bar

Bin Wine Bar

The Bulldog

Faces Mears Park

Heartland Restaurant & Farm Direct Market

Vines and Steins

New Residential Development, 2000-2009


Downtown Development Context

Downtown Saint Paul has seen the beginnings of an

urban renaissance over the last decade. Although

downtown still struggles to attract office tenants and

rents for both office space and retail have recently

fallen, residential uses downtown have shown signs of

promise – a critical first step for downtown

revitalization. From 2000-2009, Lowertown was one

of the fastest growing areas in the entire region, with a

rise in population of nearly 23%. Estimates show that

more than 4,500 people now live within ½-mile of

Union Depot, and that they are becoming increasingly

diverse, with Asians and Latinos the two fastest

growing segments of the population. Two thirds of the

neighborhood is non-family households, with an

average household size of 1.5 individuals per home.

Per capita income has grown by 35% to nearly

$43,000. Home prices downtown doubled, with the

creation of 2,265 housing units, and over the last few

years, this development has helped spawn several new

restaurants and bars, particularly in Lowertown.

Over the next decade, American cities will compete to

attract the two fastest growing segments of the

population: people in the 25-39 and 55-74 age

cohorts. Numerous studies have shown these age

cohorts increasingly choose to live in dense, urban

locations where amenities and culture are within

walking distance, and where their carbon footprint can

be minimized. According to one recent study, 77% of

Generation Y homebuyers and renters plan to live in a

central urban location. Office employers in growing

service sectors will increasingly choose urban locations

to cater to the best and brightest within this group. The

core neighborhood assets that have driven Lowertown’s

growth over the last decade consistently rank among

the top factors for young singles and couples’ location

decisions, which in turn influence employers’ decisions.

These same assets will continue to form the foundation

for the next chapter of Lowertown development:

The Saint Paul Farmers’ Market provides the local,

organic foods and the kind of vibrant urban place

that is in high demand among those seeking urban

lifestyles.

Vibrant Public Spaces, including Mears Park, which

has become a world-class urban amenity, complete

with a running stream, diverse plantings, and a

bandshell that hosts frequent cultural programs, as

well as the Bruce Vento Nature Sanctuary, perhaps

the only nature sanctuary in a downtown anywhere in

America, which provides a pastoral park for the 21st

Century within walking distance.

A Robust Artist Community, many of whom live and

work in buildings around Union Depot, have created

a cultural destination in Lowertown, with galleries,

public sculpture, and active programming.

Historic architecture and loft-style apartments

provide a housing form that caters to this

generation’s desire for change from the suburbs.

The Union Depot multimodal transit hub project will

provide an important next step for this neighborhood’s

development, connecting it to the region with mass

transit, reducing residents’ and workers’ car

dependence, and making the area a more

environmentally-friendly place to live and work. It can

support the development of a critical mass of venues

for the burgeoning Lowertown Entertainment District

and can enhance downtown’s ability to attract major

office tenants. Moreover, it can also provide a

significant link to Saint Paul’s riverfront, which is

currently the subject of a major master planning

initiative – the Great River Park project.

A market analysis produced for the 2009 Downtown

Station Area Plan and updated for this project

identifies potential demand for approximately 5,000-

7,000 new homes in downtown over the next three

decades, along with more than 1.8 million square feet

of office space, 100,000-150,000 square feet of

retail, and up to approximately 300 hotel rooms.

Nonetheless, Lowertown will still need to develop more

amenities to attract more people to live, work, and

play in the neighborhood – this lack of amenities is

consistently cited as one of the most pressing

neighborhood needs, and the pace at which they are

developed will be directly correlated to the pace of

new development in downtown. The development of

new amenities for residents and office workers,

including both service businesses and public

programming, can be a central element of Union Depot

to help advance this downtown development context.


Transit Service Implementation Timeline Assessing Development Potential

The Union Depot investment will yield three types of

real estate development opportunities:

In-Station: Development of transit-serving retail and

other revenue-producing uses and public programs in

the Union Depot building;

On-site: Development on the additional 30 acres of

land that Ramsey County owns around the historic

building; and

Surrounding parcels: Development and

redevelopment of public and private lands in the

surrounding neighborhood, including dozens of acres

of County-owned land along the riverfront to the

west of Union Depot.

Each of these development areas must be considered

as a function of local real estate development markets

– they each have long-term development potential, in

line with trends in the growth of Lowertown and

downtown Saint Paul, but have varying degrees of

development potential in the near term while credit

markets are still tight and demand for new product

remains low.

However, development in the Union Depot terminal

building itself creates an additional consideration:

Union Depot will open in late 2012, marking the

beginning of its new life as a restored multimodal

transit hub. From this point on, the project’s success will

be measured not only by the amount of transit service

it provides, but also the quality of the multimodal hub

experience, the amenities it provides transit riders, and

its ability to foster economic activity and growth in

downtown Saint Paul and the region.

Phase I: 2012

Amtrak

Greyhound

Jefferson Lines

Metro Transit

Phase II: 2014

Central Corridor Light Rail

Phase III: 2015-2030

High Speed Rail

Duluth Intercity Rail

Eau Claire Intercity Rail

Red Rock Commuter Rail

Rush Line Corridor

Rochester Intercity Rail

Mankato Intercity Rail

Gateway Corridor

Riverview Corridor

Robert Street Corridor


Challenge: Creating External Demand

The challenge for developing transit-serving retail and

creating a vibrant station for transit riders will be to

create a destination that brings people to the building

for retail and entertainment programming that

complement mass transit services. An analysis of

multimodal transit hubs around the country reveals that

while transit riders create a certain amount demand for

in-station retail, this demand will fall well short of Union

Depot’s capacity.

Stations that rely on demand primarily from transit

riders can support approximately one square foot of

retail for every 1,100 annual riders. In other words, a

station that serves 1 million riders each year can

support approximately 900 square feet of retail –

perhaps one general store that sells coffee,

newspapers, soft drinks, and other goods to serve mass

transit riders. Although this correlation can serve as a

general rule of thumb, there are exceptions, depending

on the particular locational and use characteristics of a

given station.

For example, Union Station in Dallas, Texas, which

serves passengers from Amtrak, local and intercity

buses, and multiple commuter rail lines, does not have

any retail to serve its 4 million annual riders. Station

developers have attempted to provide retail services

for these riders – from coffee stands to a general store

to a shoe shine – without success; station developers

says commuters are well served by these amenities in

and around suburban stations where they board transit

in the morning, and retailers have not perceived an

opportunity to capture demand from these commuters

on their way home for such retail as groceries or

restaurants.

On the other hand, some multimodal hubs support retail

well in excess of this typical ratio of 1,100 riders per

square foot: stations such as New York’s Grand Central

Terminal, Union Station in Washington, DC, and the

Ferry Building on the San Francisco waterfront have

each created dynamic retail destinations with active

programming to attract demand from residents and

workers in their surrounding communities.

Union Depot ridership is projected to be

approximately 4 million by 2035, likely supporting

approximately 4,000 square feet of transit-serving

retail, or approximately one-quarter of the existing

tenant areas on the building’s main floor and less than

15% of the total existing tenant areas in the building.

Moreover, this demand will materialize incrementally

* Dallas Union Station has 4 million annual riders but no retail space.

* 0

500

1000

1500

2000

2500

3000

3500

Annual Multimodal Hub Riders per Square Foot of Retail

Mean


over the next twenty five years only as new transit

services at the Depot come online.

Absent the attraction of significant external demand, it

will be challenging for RCRRA to provide basic retail

services for Union Depot transit riders. When the

station opens in 2012, its ridership will be

approximately 175,000, much of which will be on

Amtrak trains that depart early in the morning and

arrive late at night. By 2014, when the Central

Corridor Light Rail opens, ridership is expected to

grow to approximately 925,000, yielding potential

transit-serving retail demand of approximately 900

square feet. However, these riders will board and

alight in front of the building on Fourth Street and may

not have reason to enter the historic building itself.

Moreover, Union Depot’s expansive indoor civic spaces

will also create a challenge and opportunity for RCRRA

and the City: they are too big for transit riders alone.

Unless other people are given a reason to come to the

building, these spaces are at risk of becoming

desolate, with little contribution to – and potentially

negative impressions for – the transit rider experience

and economic development for the city or region.

Multimodal transit hubs across the country have an

average of 300-850 annual riders per square foot of

civic space. Union Depot will have three times this

amount of space, considering the projected ridership

for 2035. Before additional transit services are

introduced, this ratio of transit riders to civic space will

be substantially lower – less than 5 annual riders per

square foot in 2012, and approximately 25 riders per

square foot even after the Central Corridor Light Rail

rolls into the station.

Union Depot’s success as a civic space and vibrant

transit hub depends on bringing non-transit riders into

the building. If Union Depot is to achieve its goal of

creating a vibrant place that not only serves the needs

of its transit riders, but also encourages growth in

ridership, RCRRA must aggressively pursue a strategy

that creates demand for people to come to the

building for reasons other than transit, and to spend

money while they are there. Building these

constituencies that encompass broader segments of the

population can help induce additional demand for

transit, creating a vibrant station environment and a

leisure destination at the confluence of the region’s

transit services.

0

500

1000

1500

2000

2500

Annual Multimodal Hub Riders per Square Foot of Civic Space

Median


Opportunity: A Distinctive Destination

Despite these challenges, Union Depot will be one of

the most impressive civic spaces in the Twin Cities. Its

expansive civic spaces and renewed front plaza create

a tremendous opportunity for RCRRA to consider a

combination of temporary, interim, and permanent

programming for the Depot that:

Activates the building to create a more welcoming

environment for transit customers and enhance the

array of retail and other services available to them;

Generates revenue both by filling leasable area

within the Depot and by attracting more transit

customers with vibrant, activated civic spaces and a

pleasant commuter experience;

Provides amenities to the growing downtown

residential community and supports the development

of a critical mass of restaurants and entertainment

venues in Lowertown;

Strengthens the relationship between transportation,

downtown riverfront recreation and Lowertown

residents, artists, and entertainment opportunities;

Respects and enhances the historic architecture of the

Depot; and

Creates value for surrounding development parcels,

including RCRRA-owned land.

Other multimodal hubs around the country have

leveraged comparable civic space resources for real

estate and economic development purposes. Where

transit riders no longer fill the monumental spaces of

the stations from the Union Depot era, station

developers have repurposed these spaces to their

advantage. From the expansive spaces of Grand

Central Terminal and the Washington, DC, Union

Station, to the smaller-scale spaces of Union Station in

Dallas or the San Francisco Ferry Building (see case

study on following page), these distinctive spaces have

been the centerpiece of major redevelopment efforts.

The first critical question for the success of Union Depot

is: what combination of temporary, interim, and

permanent programming will maximize external

demand to meet the project’s objectives?

Grand Central Terminal’s Vanderbilt Hall hosts a wide

variety of public and private events that serve as a

destination within the station for surrounding workers as well

as residents throughout the city and region. Here, it hosts a

squash tournament. (Suzy Allman)

In San Francisco’s Ferry Building Marketplace, the buildiing

was reconfigured around a long central nave that serves as

both a public gathering place and a main street for the

building’s small-shop retailers and food service providers.

(Aaron Kohr)


Case Study: the San Francisco Ferry Building

Marketplace

San Francisco’s Ferry Terminal – a multimodal transit

hub on the city’s waterfront served by ferries, buses,

light rail, and Amtrak – has succeeded by creating a

unique retail marketplace in the city, attracting workers

and residents from the downtown core, gourmet and

local food shoppers from throughout the city, and

tourists from across the country and around the globe.

Mission: To develop a retail destination to enhance a

multimodal transit hub, amenitize office space, and

bring people to the waterfront.

Programming: The Ferry Building Marketplace has

succeeded by drawing on demand from San

Francisco’s major farmers market and creating a

permanent home for retailers and restaurateurs

inspired by the market’s focus on food from the Bay

Area. A diversity of local uses helps establish a

distinctive destination that can attract people from

local, regional, and global constituencies, while four

large restaurants, a private events space, and office

tenants create a diversified stream of revenue that can

maintain stability.

Design: The developers of the marketplace made

significant changes to the building’s interiors and

waterfront façade, carving a new public “nave” that

serves as the building’s central organizational axis,

with a double-loaded retail corridor of small, open

storefronts and frequent entrances and exits.

Management: The Ferry Building was developed by

Wilson Meany Sullivan, a San-Francisco-based

developer, and Equity Office Properties, owner of one

of the largest portfolios in the country. Equity Office

manages the property through a lease with the San

Francisco Port Authority, while the outdoor farmer’s

market, which activates the building’s exterior and

brings people inside, is operated by a separate not-

for-profit organization.

(onlyinsanfrancisco.com)


Funding: The $110 million private development project

leveraged approximately $30-40 million in public

infrastructure funds surrounding the building, and was

financed by the projected value of the office space in

the building and the strength of the Equity Office

balance sheet. Retail development was initially

perceived as speculative given low levels of foot traffic

along the waterfront and the psychological divide

lingering from the elevated Embarcadero Freeway.

Timing: The San Francisco Port Authority first

attempted to redevelop the Ferry Building in the mid-

1970s. After its initial failed attempt, the 1989 Loma

Prieta earthquake that precipitated the demolition of

the freeway helped make a new redevelopment effort

possible. A request for development proposals ten

years later led to the selection of a developer that

would take nearly six years to complete the project.

Three years later, more than thirty years after the

initial development attempt, and a decade after the

second, the Ferry Building marketplace became the

fifth most visited tourist destination in the city.

Economic Benefits: The Ferry Building’s distinctive retail

environment has created a more attractive atmosphere

for the building’s mass transit customers and – more

significantly for local economies and public benefit –

helped activate the waterfront for pedestrians and

cyclists, making this new frontier of the city’s

development a premier destination not only for tourists,

but also for high-value office jobs. The pier adjacent

to Ferry Building is now home to the San Francisco

headquarters of Bloomberg LP and commands the

highest office rents in the city. Its developers note that

that building’s success – and even its development –

would not have been possible without the innovative

redevelopment of the Ferry Building.

The building underwent major renovations, as its historic

spaces were augmented for a modern program. (Equity

Office)

The marketplace creates a vibrant civic space in the Ferry

Terminal, with a double-loaded corridor of small-space

tenants. (Aaron Kohr)

The plaza in front of the building is activated on a regular

basis with public markets and cultural programming. (Ed

Anderson)


Recommended Union Depot Development Concept


Recommended Development Program

Driven by the four goals for Union Depot development

identified at the beginning of this study, the unique

development opportunities and challenges inherent to

the Union Depot site and Lowertown, and best

practices from comparable projects across the country,

HR&A recommends RCRRA adopt a reuse strategy for

Union Depot that includes a diverse mix of civic,

cultural, entertainment, and retail uses in the building

first and foremost, to serve as a catalyst for

surrounding development and increased transit

ridership. The program – a comprehensive

“marketplace” concept, built on the top quality

products and programs distinctive of Saint Paul and the

Twin Cities, within a top quality work of Saint Paul

architecture – should include:

A mix of locally-based tenants in approximately

25,000 square feet of permanent tenant spaces, with

the option for expansion into the Headhouse

basement, and potential use of space within the

subbasement for support – tenants that can

complement the Farmers Market and Lowertown

businesses, creating more opportunities to bring

people downtown; Examples of such complementary

tenants could include vendors of local products that

are restricted from the existing Market, but that

showcase the best of the region,

An event space in the Great Hall, comparable to, but

more robust than, the current use by Christos’

Restaurant, with opportunities for events to occupy

the front plaza, Concourse, and potentially other

Union Depot spaces;

Expansion of leasable areas into the building’s civic

spaces, including for restaurant tables and other uses

in the Great Hall, as well as for the development of

a small-tenant public marketplace in flexible, high-

quality and historically-sensitive market pavilions in

the Waiting Room – uses that can activate the space

and provide revenue without compromising its public

nature or transit functions; and

Significant public programming throughout the

building’s civic spaces and front plaza, including

regularly scheduled events that bring local residents

and workers into the building on a weekly basis, and

larger exhibitions and festivals that attract a

broader array of visitors from throughout the Twin

Cities and the region.

Ultimately, this program can yield up to approximately

95,000 square feet of potential rentable areas within

the Union Depot building, as well as the programming

and retail activation of the front plaza, to support and

be supported by transit uses. It aims to generate the

demand necessary for Union Depot development

success the same way other civic spaces have been

activated and retail projects developed in comparable

situations: by drawing on local, regional, and global

constituencies.

Recommended Areas for Program Development

Program Area Square Feet

Great Hall Tenants 12,500

Concourse 2,200

Waiting Room 900

Concourse 2nd Floor 5,900

Headhouse Basement 3,200

Headhouse Basement Parking or Other Tenant 31,900

Potential Permanent Tenant Areas 56,600

Great Hall 10,100

Concourse 4,900

Waiting Room 22,800

Total Civic Space for Programming & Rentals 37,800

Total Building Area for Program Development 94,400

Front Plaza & Lawn 41,100

*Estimated based on design development plans; subject to change through future planning

**Headhouse subbasement and other parking areas not included


Tapping into Lowertown’s Programming Success

Saint Paul Farmers Market (HR&A)

The Saint Paul Farmers Market: This public programming

initiative for a site owned by the City of Saint Paul can bring

more than 25,000 people to Lowertown on a given Saturday,

averaging 20,000 visitors each weekend from April through

November. Not only has this market been pivotal to the

resurgence of Lowertown, most recently creating the impetus

for a significant private investment in the 18,000 square-foot

Heartland Restaurant and Farm Direct Market, but it has also

supported more than 150 farm-based businesses from the

Twin Cities region.

The Saint Paul Art Crawl: This festival showcasing the best of

the region’s artists brings 40,000 people to Lowertown

during two weekends each year and helps reinforce

Lowertown’s status as ground zero for contemporary culture

in Saint Paul.

Twin Cities Jazz Festival: Now in its 12th year in Mears Park,

this lively music event draws more than 75,000 people to

Lowertown each year.

Music in Mears: Over the last six years, this regularly

scheduled concert and movie series in Mears Park has

expanded from 4 shows during the summer to 12.

Concrete and Grass: Initiated just three years ago by the

Ordway’s Arts Partnership and Mayor Chris Coleman’s office,

this new music festival features on two stages in Mears Park.

Twin Cities Jazz Festival in Mears Park (razoo.com)

Using Programming to Enhance Demand

Where cities have too few residents or workers to

support new retail development or to activate new

public spaces, distinctive destination programming –

both in terms of retail merchandising and, more

significantly, cultural and entertainment events – have

become the primary driver of demand. From

temporary events and festivals like the Twin Cities Jazz

Festival in Mears Park or the Winter Carnival, to

regularly scheduled happenings like the Saint Paul

Farmers Market or Music in Mears, to privately-

produced programs like concerts at Barrio or art shows

at Black Dog, these programming initiatives have been

produced by investors both public and private to bring

people to emerging neighborhoods, and to cultivate a

stable base of customers. Their key to success has been

drawing on demand from layered geographies:

Local: Any programming initiative must serve local

constituents first and foremost – in this case, the

nearly 80,000 residents and workers of Lowertown,

downtown, and the Capitol District. Investors

recognize that although these users may be smaller in

number, and sometimes in purchasing power, they are

the most frequent and reliable customer base. Their

presence creates an aura of authenticity – that a

particular program is of the community or

neighborhood in which it is produced. Once

developed and stabilized, this local base of

constituents for a given program or place helps

ensure its long-term vibrancy and sustainability.

Regional: Building on a local base, investors try to

attract a more regional audience – in this case,

residents throughout the City of Saint Paul, Ramsey

County, Minneapolis, and potential day-trippers from

across the region. Although it is more difficult to

attract people in this group, and they come to

programs less frequently, their numbers are much

larger, they will be connected to Union Depot by

every major form of transportation, and they

generally spend substantially more (a study in Saint

Paul found that cultural program attendees from

throughout the region spend more than twice the

amount per program than local users, including

nearly twice the amount on meals and three times the

amount on program-related goods).


Global: When programming is truly exceptional, its

demand profile is expanded to visitors from across

the country and throughout the world, as local and

regional users bring their extended families, friends,

and business partners to see their favorite hometown

events and places. These out-of-towners are often

prepared to spend even more per trip than regional

constituents and bring the added benefit of civic or

project brand development as they tell their friends

at home about their trip. Successful public places

and programs – from destination parks to large-

scale festivals – can attract up to one quarter or

more of all visitors from these “global” constituents.

Saint Paul has begun to have great success in

leveraging its public spaces and City-owned land for

public programming over the last decade.

Approximately 6.5 million people came to downtown

Saint Paul in 2008 for cultural programs and major

events. People come to Lowertown in particular not

only to visit, but also to live and work because of the

neighborhood’s focus on fresh food, fresh art, and fresh

culture within a distinctive setting of historic architecture

and the lush Mears Park. These programs include

attractions for people from the neighborhood and the

Twin Cities as a whole, with occasional events like this

year’s Saint Paul Poetry Slam that bring people from

across the country. Moreover, Lowertown’s small

business owners and neighborhood artists are also

producing programs in their own spaces as private

entrepreneurs. For example, Barrio, Black Dog,

Bulldog, and other local retailers sponsor concerts and

exhibitions to bring in customers, while artists host

Lowertown First Fridays in five of the neighborhood’s

studio buildings and three different art galleries on the

first Friday of every month.

Union Depot will succeed in creating and capturing

external demand the same way these other Lowertown

places have: by producing dynamic public programs

that cater to local, regional, and global constituencies

and providing an outlet for the spending potential

generated by these programs.

Ultimately, RCRRA should pursue a development

program for the Union Depot building focused on the

best of Lowertown: intensive cultural programming and

a high quality small business marketplace. The

recommended flexible development program –

structured as a highly interactive mix of uses that

optimizes the building’s architecture and is intended to

engender a vibrant station environment during morning,

afternoon and evening – will serve as a first phase of

Union Depot development. It is an ambitious vision to

enhance transit services and catalyze mixed-use

transit-oriented development on soft sites throughout

Lowertown, as well as RCRRA’s dozens of acres of

riverfront property both to the east and west of the

Depot building. But it is also a vision that is pragmatic:

it optimizes the use of the building’s impressive

architecture and civic spaces, creating opportunities

both for activation and increased revenue; it maximizes

the opportunity for RCRRA to leverage the private

entrepreneurship that has helped countless comparable

projects succeed across the country, enhancing

opportunities for capturing demand from layered

geographies; and it allows RCRRA to focus on its core

mission of providing the best transportation services

that Union Depot can offer, without diluting the civic

purpose of the project.

Union Depot’s Front Plaza can be activated with programs that bring people downtown and into the building. (RCRRA)


This distinctive colonnade can become the heart of a signature urban park stretching from Lowertown and Union Depot to the Bruce Vento Nature Sanctuary. (HR&A)

The Bruce Vento Nature Sanctuary, a spectacular new park at the eastern edge of the Union Depot site. (HR&A)


Options for Site Development

While the reuse of the Union Depot building should be

aggressively pursued for its catalytic potential, RCRRA

should maintain a flexible approach to future vertical

construction on the site, with two particular

enhancements to current design-build plans to organize

and catalyze future development. Based on best

practices both in Saint Paul and around the country, as

well as the unique attributes of RCRRA’s 30-acre site

surrounding the Union Depot building, HR&A

recommends RCRRA begin to two mutually supportive

options for developing the site in the near future to

create additional value for its property and for

Lowertown and downtown as a whole:

A new signature linear park. Current Union Depot

designs include an elevated bike path along the

northern side of the train deck. This concept should

be expanded. The edge of the train deck east of

Broadway, with its distinctive industrial colonnade

and wide truck ramps, presents an ideal opportunity

for a new destination linear park both on top of and

below the elevated deck. Cities across the country

have been seeking opportunities for the creation of

such linear and elevated parks since the world-

renowned High Line Park opened in New York City

last summer, and, like the High Line, this portion of the

Union Depot site provides a distinctive industrial

remnant that is already endowed with a lush planted

area that has grown over the years.

Such a development would not merely be a park for

civic benefit, however; it would also serve as a value

creator for Union Depot’s developable area, as well

as for Lowertown. The practice of utilizing parkland

as a value generator for master-planned

developments is nearly two centuries old, and the

phenomenon has grown ever more important as

downtown real estate developments seek to compete

with their suburban counterparts. Indeed, both major

master-planned developments in downtown Saint

Paul over the last decade – Wacouta Commons and

Upper Landing, which accounted for half of all new

downtown housing construction during this period –

leveraged public investments in parkland during their

initial phases, and success in attracting major

corporate tenants has also focused on downtown’s

spectacular urban parks. RCRRA should actively

pursue strategies to make this portion of the site a

destination in its own right, as well as a critical

connection to the Bruce Vento Nature Sanctuary and

a new element in the Great River Park project, while

also adopting a design that is sensitive to the historic

value of the train deck, which is eligible for listing on

the National Register of Historic Places.

A new development site for an anchor. The area

adjacent to the new Kellogg Boulevard entrance

pavilion, between its eastern edge and the bus ramp

at Broadway, should be considered for new vertical

development. This site, which might include the use of

air rights over a portion of the bus waiting platform,

is larger than the footprint of the Headhouse and

could be of significant future development value to

RCRRA. It could be endowed with a direct indoor

connection to Union Depot (and the entire skyway

system of downtown Saint Paul) through the new

entrance pavilion, and would also be a site that could

house floorplates larger than any other building in

the immediate area.

Although many potential users will likely be eager to

develop this site in the long-term, RCRRA should

target an anchor institutional or commercial that can

serve as catalysts in their own right, providing a

stable base of users of the Union Depot building and

infusing new activity along Kellogg Boulevard. One

potential user group that was suggested by the local

redevelopment corporation in the past – an

expansive higher education facility – could be a

particular boon to the site and should be pursued

aggressively, although other large-scale tenants

would also be of substantial value in activating the

site and serving as a value-creator for downtown

Saint Paul and the remainder of RCRRA’s property.

In the interim, before an anchor tenant can be

attracted to this site, RCRRA can leverage this

expansive portion of the deck for temporary

programming. It is an ideal site for temporary

outdoor public markets that can help bring new

activity into the building, and it might also be used

for larger civic festivals and site rentals, as the train

deck was when Cirque du Soleil came to Saint Paul.


Development Implementation

RCRRA is implementing the Union Depot multimodal

transit hub project and is best positioned to manage

and maintain the project’s transit infrastructure, in part

through agreements with transit service providers. In

analyzing potential implementation structures for the

development and stewardship of the recommended

Union Depot development program, HR&A evaluated

the extent to which different mechanisms and entities

met the following criteria imperative to the success of a

project like Union Depot in the short-, medium-, and

long-term:

Create a great first phase of development. The

development schedule of the Union Depot

transportation project establishes parameters for the

timing of development implementation: the station will

open in late 2012, garnering widespread publicity

and marking the official beginning of Union Depot’s

new life; two years later, the Central Corridor Light

Rail is scheduled to bring nearly one million people to

Union Depot’s doorsteps every year; and in the

decades to come, several other transit connections

are slated to serve the Depot. This timeframe, set by

the transportation projects that are at the heart of

Union Depot’s revitalization, creates implications for

development phasing, particularly in light of the

current economic environment. As evidenced by other

comparable projects, the extent to which these initial

years of redevelopment are successful will be

directly related to the long-term success of the

project in meeting stated goals. Different

implementation structures bring different capacities to

achieve a great phase I by the time the station is

operational.

Maximize revenues and minimize costs to RCRRA.

The Union Depot building is expected to cost up to

$1.5-2.3 million annually to maintain, based on

preliminary projections provided by RCRRA. The

capacity to offset these costs with revenues derived

from uses in the Depot building will be a result of the

implementation entity’s ability to optimize the

development program, attracting quality tenants and

effectively managing the building’s programs as a

critical business venture for the success of the Union

Depot project – both in terms of serving transit riders,

and complementing and catalyzing new development


RCRRAMaster Lessee

Public-Private Partnership

RCRRA

Tenants

Baseline Scenario

in downtown. Nonetheless, maximizing revenues,

especially in early years of operation, may also be

tied to the organization’s capacity to win grants and

philanthropy from both government and institutional

players, as is typical of public markets and highly

activated urban civic spaces.

Preserve long-term development flexibility. As new

transportation connections are planned at the Depot,

RCRRA will require flexibility of the site’s design and

management responsibilities in order to

accommodate potentially unforeseen needs of these

new users. As local and national economies improve,

the economics of site development will change. As

downtown and Lowertown continue to develop, local

constituencies, politics, and economic development

policies may proscribe alternative uses for the

undeveloped portions of the site. Decisions made in

the near future about stewardship structure will have

significant impacts on RCRRA’s ability to maintain its

desired level of programmatic flexibility and fiscal

control in the decades to come.

Guided by these three criteria, the overarching goals

for the Union Depot project, and best practices from

other comparable projects, HR&A recommends RCRRA

pursue a public-private partnership structure to guide

implementation of the Union Depot development

program in the building. Private entrepreneurship,

guided by specific public aspirations, will provide the

most efficient means for maximizing Union Depot’s

benefits and the greatest opportunity for eliminating

RCRRA’s building management costs over time, while

also allowing RCRRA to maintain long-term flexibility

for the site.

RCRRA should structure a master-lease agreement for

real estate development components in the Union

Depot building. Master-leasing approximately 95,000

square feet or more of the Union Depot building will

minimize RCRRA’s cost obligation for the operations

and maintenance of the building, while also providing

its private partner with the flexibility necessary to

make development within the building work. By

master-leasing this space to a third party, RCRRA can

reduce its operations and maintenance costs by more

than 40%, or approximately $540,000 each year,

based on third-party management costs.

Conceptual Responsibility for Union Depot

Operations & Maintenance Costs

Although entering into a master-lease agreement

provides the greatest opportunity to meet Union Depot

project goals, RCRRA will have to establish parameters

for potential uses, new construction, and maintenance

responsibilities within this 95,000 square foot master-

lease, as well as parameters for activating and

deriving revenues from the site outside this master-

leased area. For example, a development agreement

will have to include provisions to ensure the Waiting

Room is optimized for its transit functions, while also

being used as an activity and revenue generator, and

that allow RCRRA’s private sector partner to make the

best use of the Union Depot site for programming and

space rentals.

$760,000 $730,000

$210,000

$1,270,000


Conceptual Real Estate Development Economics

(stabilized year)

$500,000

Conceptual Net Annual Revenue from Leasable Area

$180,000+

Annual Net Revenue from Parking

(does not include parking under the train deck)

$250,000 Conceptual Master-Lessee Building Management Costs

(Net of subleasable areas;

front plaza maintenance not included)

$1.5 - $4.0+ million Order-of-Magnitude Capital Required

HR&A’s conceptual analysis demonstrates that through

a public-private partnership for real estate

development within the building, RCRRA’s partner and

master-lessee could achieve nearly $500,000 in

revenue from triple-net-leased space upon

development stabilization, if the lessee is able to use

portions of the Waiting Room and Great Hall as

rentable area – for restaurant seating, retail kiosks,

and market pavilions, as well as temporary events.

Significantly more revenue could be achieved should

the developer create sufficient demand for space in

the Headhouse basement to produce more revenue

than parking uses. Revenues from parking across the

entire site, currently approximately $180,000

annually, net of operating fees, with significant room

for growth both in terms of rates and pending demand,

can also be used to create a financial structure

attractive to private investors, while still preserving

RCRRA’s flexibility for new construction in the future ,

should the need or market arise. Although these

revenues may take several years to stabilize, they

should be sufficient to cover the master-lessee’s annual

operating costs – including the cost of providing public

programming – within its first 5-10 years of

operations.

Significantly, capital costs for implementing new real

estate uses in the building will be limited, thanks to the

substantial investment being made to restore the Union

Depot building. This project will yield a building with

significant leasable area delivered as “white box”

space, complete with basic utility infrastructure for

tenants. While this space will be prepared to begin

leasing to potential Union Depot tenants, certain

additional improvements may be required to expand

leasable areas and maximize the leasability of the

Union Depot building. On an order-of-magnitude

basis, these costs could be less than $1.5 million or up

to $4 million or more, including typical tenant

improvement allowances, depending on the final

building program selected and spaces to be used,

based on preliminary projections provided by the

Union Depot design-building team.


There are two ways that RCRRA can ensure the success

of the Union Depot development project through a

public-private partnership structure:

Option 1: Issue a competitive solicitation and

encourage a range of not-for-profit and for-profit

developers to respond. Although competitive

solicitation process would require substantial

marketing of the project to potential developers and

stewards both locally and nationally, it would

encourage entrepreneurship in assessing the specific

revenue generating and programming opportunities

necessary to achieve RCRRA’s vision for Union Depot.

This structure could also result in a swift and efficient

implementation process, if qualified development

partners are enticed to respond, leading to a great

first phase of development. It would also maximize

the amount of private investment generated from the

Union Depot project in the next few years.

The challenge with such a structure, however, is that

there may be a lack of qualified respondents as a

result of the current development climate and the

distinctive mix of uses the Depot will house, which

require a sophisticated development organization.

Moreover, developers – particularly profit-oriented

organizations – may request an amount of control

over the building that is less favorable to RCRRA,

potentially including a long-term lease and

development rights outside the Union Depot building.

Significant outreach to potential local and national

development partners could mitigate this risk.

Option 2: Create a new private not-for-profit

development organization in partnership with the

City of Saint Paul, local business leaders, and

institutional and foundation sponsors. Creating a new

not-for-profit entity to implement the Union Depot

development program can maximize RCRRA’s ability

to maintain control over the development and

programming of the building, both through

representation on its board of directors, and through

a potentially shorter master-lease term, with more

flexible provisions to allow RCRRA to change certain

parameters of the rights of the master lease. Such a

structure would also have the additional advantage

of a direct relationship with the County and City that

would create certain leverage for the pursuit of

sponsorships and foundation and philanthropic grants

for public market development and programming in

the building, as well as grants from State and

Federal government resources.

However, it is generally quite challenging for a

government organization to create and foster the

entrepreneurship that Union Depot needs, as

implementation quality relies on a sophisticated

development organization. If RCRRA and the City

chose to pursue the creation of s special-purpose not-

for-profit for real estate development and

programming in the Union Depot building, it would

require a powerful board of directors, filled with

high-profile business and civic leaders, and the

recruitment of highly talented executive leadership.

This task of creating a new organization would also

require additional start-up funds for the hiring of new

staff. Moreover, even if such an organization could

be efficiently structured and the right team put in

place, it is likely that RCRRA would risk becoming the

funder of first resort if a subsidy were required or if

revenues fall short of initial projections.

Either structure can work financially. HR&A’s analysis

indicates that over approximately 10-15 years, the

recommended Union Depot development concept

should generate sufficient revenues to cover

implementation costs, as well as operations and

maintenance of a significant portion of the Depot on

a triple-net-lease basis, and the provision of

substantial public programming. The extent to which

this program will be successful, however, will be

directly correlated to both the quality of the entity

chosen to steward Union Depot development, and the

capacity of that organization to leverage grants and

other public funding sources and programs during the

implementation process.

In either scenario, however, this public-private

partnership should be limited to the Depot building; it

will be prudent for RCRRA to maintain control over

the surrounding site as infrastructure needs may shift

over time. Moreover, preservation of the site for

future development will allow momentum in the Union

Depot building and on surrounding sites in Lowertown

to create additional value for RCRRA’s in the years to

come, as markets rebound and mature.


A direct connection between the Union Depot Waiting Room

and Saint Paul’s riverfront parks system can enhance both of

these economic development assets for the City and County,

allowing people to move more easily from train station to

riverfront and bringing additional foot traffic and spending

power into the Depot and Lowertown as a whole. (HR&A)

Maximizing the Opportunity for Success

Regardless of which implementation approach proves

most viable – a lease to an existing development

organization, or the creation of a new one – there are

several ways RCRRA can make the site more attractive

to potential partners and investors, including:

Site Improvements and Considerations

A direct connection from the Waiting Room to the

Riverfront. Two previous plans for the area, one

adopted by the City and the other presented by the

Lowertown Redevelopment Corporation, have

envisioned bridges from the end of the Waiting

Room over the freight rail tracks to Lower Landing.

Although a bridge may prove quite difficult for the

site, the idea of connecting the Waiting Room to

Lower Landing is powerful: it would encourage the

flow of traffic through the Waiting Room – the most

difficult of Union Depot’s spaces to activate –

bringing additional spending power through Union

Depot and increasing the likelihood of retail success.

A direct connection between the southern end of the

waiting room and the riverfront below can therefore

create significant economic value for the project. If a

bridge is not feasible, RCRRA should explore

alternative connections such as from the southern end

of the Waiting Room to the riverfront below the

freight railroads, through the former Warner Road

loading dock.

Commitment to linear park development and anchor

tenant attraction. The two recommended

improvements to the Union Depot site outside of the

building footprint – the establishment of a signature

linear park that has the potential to lead to the Bruce

Vento Nature Sanctuary, and the attraction of a

major anchor tenant for new vertical construction

adjacent to the Kellogg Boulevard entrance pavilion

– would improve the value of the site for potential

investors by bringing additional foot traffic and

disposable income to the area, as well as create an

additional marketing opportunity. An RCRRA

commitment to realizing these visions could help

effectively market the project to investors.

Flexibility for the use of civic spaces and for building

signage. The ability of potential private partners to


help RCRRA fulfill its vision for Union Depot will

depend in large part on the rights that can be

established for the use of civic spaces and site areas.

The Depot’s primary function is that of a multimodal

transit hub and real estate uses or public

programming should not be allowed to disrupt this

core function. However, transit ridership is expected

to use only one-third of interior civic spaces by 2035,

leaving ample room for uses that complement and

augment transit services. Nonetheless, RCRRA must

clearly define the parameters for reuse that will

allow the building to function as a multimodal transit

hub and that give potential investor partners

assurance of their development rights. Since the

building is also a monumental civic edifice, designed

as a railroad station and not a marketplace

development venture, potential investor partners will

need a level of assurance that they can outfit the

building with historically-sensitive retail signage.

Business Planning Refinement

A marketplace vendor demand analysis and

feasibility assessment. The success of Union Depot’s

retail program may depend to a large extent on the

supply of high-quality small-business marketplace

tenants that desire to open or expand their business

in Union Depot. Since marketplace development is

often locally-driven, particularly for public markets, a

more detailed assessment of the potential for

establishing one in Union Depot – from temporary or

seasonal markets to a year-round permanent market

– could both augment demand for the space by the

development community and attract other

government and philanthropic funds.

Letters of interest from potential tenants. There are

several potential tenants that could add value to

Union Depot both as a civic asset and as a

development venture, including a permanent bicycle

store and facility, an outlet of the Twin Cities Model

Railroad Museum, and an office and visitors center

for the National Park Service, whose presence could

enhance connections to the Great River Park. While

RCRRA should not commit to any particular tenant

before selecting a partner, letters of interest could

also help market the project to potential investors.

Financial Tools and Public Funds

Legacy Amendment Funding. This landmark state

program, supported by an increase in the state’s

sales tax of three-eighths of one percent, has four

separate funds, three of which should be considered

to support Union Depot’s potential capital needs and

ongoing operating expenses: the Arts and Culture

Heritage Fund, targeted to arts, arts education, and

arts access, as well as to preserve Minnesota’s history

and cultural heritage, is expected to provide $54.5

million in grants in 2011, and would be well-suited to

the recommended program for Union Depot

development; the Parks and Trails Fund, estimated to

be $39 million in 2011, is intended to support parks

and trails of regional or statewide significance, and

could support the development of Union Depot as a

critical component of the state’s current premier park

initiative, Great River Park; and the Clean Water

Fund, estimated to be approximately $91 million in

2011, is intended to protect, enhance, and restore

water quality in lakes, rivers, and groundwater, and

could be leveraged for Union Depot’s public realm

development projects and linear park connection to

the Bruce Vento Nature Sanctuary.

Government grants. There are several sources of

grants from the federal government that can be used

for the development and operations of public

markets, including from the Departments of

Commerce, Housing and Urban Development,

Treasury, and Agriculture. Exploration of these

funding sources, and a commitment to aggressively

pursue them can help bring potential public market

developers to the table. Other grants secured from

City, County, and State governments will also

increase the project’s chances for success

Low-cost loans. RCRRA or the County or City could

choose to make low-cost loans available to its

implementing partner to ease the burden of the

capital costs and other start-up funds required for

project success.


Summary of Economic Benefits from

Union Depot’s Transit Infrastructure

($ millions, discounted at 7%)

Source: AECOM

Maximizing the Economic Benefits of Union

Depot: Transit + Programming

The Union Depot multimodal transportation hub project

is estimated to produce significant economic benefits to

Ramsey County and the City of Saint Paul. In addition

to reducing vehicle miles traveled by more than 150

million annually by 2034 and saving commuters more

than 630,000 hours of travel time each year – valued

at nearly $12 million – an analysis by AECOM

concluded that the present value of the project’s

development benefits in Ramsey County will be nearly

$450 million, and that total economic activity in the

region will be nearly $565 million as a result of the

project. These benefits include the construction of the

Union Depot transit hub and the ongoing operations of

its transit infrastructure, as well as the construction of

projected development of more than 1,600 units of

housing and nearly 1,600 new office and retail jobs.

Although these projections are significant, they are

based purely on the reactivation of the Depot as a

multimodal transit hub; they do not consider the value

that the recommended real estate activation and

development strategy within the building can have on

local economies.

The Center for Transportation Studies at the University

of Minnesota notes that the value increment of transit

occurs not just from accessibility, but rather from

accessibility to “desired destinations.” Without

significant development and programming in and

around the building, the Union Depot project will solve

accessibility challenges, but will do little else to make

Lowertown, downtown and the county more of a

desired destination. The core development concept

recommended for the Union Depot building – a

distinctive mix of locally-based small-businesses

combined with significant public programming – is

driven not only by market factors that show the

potential for development success, but also by its

capacity to maximize the economic development

benefits and catalytic potential of the Union Depot

project, drawing on the power of cultural programming

and public markets for success.

Economic Benefits Ramsey County Region

Union Depot Construction $27.7 $109.7

Union Depot Operations $5.6 $7.9 Surrounding Development Construction $10.7 $42.3 Permanent Jobs in Surrounding Development $404.9 $404.9

Total $448.9 $564.8


Leveraging Culture for Economic Development

Cultural programming has been proven to generate

new economic activity and fiscal revenues in Saint Paul.

The nonprofit arts industry alone generated more than

$184 million in audience spending in 2004 – spending

that helped the industry support more than 8,200 full-

time jobs in the city, generate $243 million in

household income to local residents, and produce $35

million in local and state government revenues. The

Winter Carnival in downtown produces between $3.5

and $5 million in economic activity each year. These

programs also have a profound impact on civic

engagement and local pride: More than 13,400

volunteers donated nearly 300,000 hours to the city’s

nonprofit arts and culture organizations in 2004.

Artist communities and the spaces they occupy also

have significant impacts on property values. This story

has rung true from the artist revitalization of New

York’s SoHo neighborhood to downtown development

around the music and arts scene in downtown Austin,

Texas, to medium and small-sized cities across the

country. Lowertown has become a prime example of

this arts-oriented economic development: a recent study

found that the opening of the artist spaces in the Tilsner

Artists’ Cooperative had an impact $20,000-$25,000

– 16-19% – per residential unit within a one-mile

radius of the property. The neighborhood’s success in

this regard was most recently lauded by Chairman of

the National Endowment for the Arts, Rocco Landesman,

who called Lowertown “Exhibit A” for how “art works”

in developing local economies.

Although development of new small businesses is often

farther along the regeneration curve, arts districts are

also becoming attractive neighborhoods for

restaurants, retailers, and the companies of creative

class service economies, as employers try to attract the

best and brightest talent through neighborhood culture

and amenities. This phenomenon has been particularly

true in Lowertown, where the primary office tenancies

are in software and technology, professional services,

public relations and advertising, arts and design,

nonprofits, and smaller government service companies

– industries whose employees are often attracted to

the types of arts and cultural amenities on offer in the

neighborhood.

The Tilsner Artists’ Cooperative in Lowertown, an ArtSpace

project, has had double-digit impacts on surrounding

property values, according to a recent study, through its

provision of space for local artists. (mnartists.org)

Patrons of the Saint Paul Art Crawl enjoy a multifaceted arts

and cultural space at Peach Gallery in Lowertown, which

National Endowment for the Arts Chairman Rocco Landesman

called “Exhibit A” for the arts as an economic driver of

downtown revitalization. (HR&A)


Public Markets: Driving Local Economic Growth

Public markets exist – and have existed for thousands

of years – to provide local goods producers an outlet

to sell the fruits of their labor. They are small business

incubators – places where entrepreneurs can go to

start or expand retail and wholesale business ventures.

But they are also a form of programming for public

space – the most productive place-makers of the

business world. They create vibrant, active civic spaces

that attract people from all social, geographic, racial,

and economic strata.

It is hard to overstate the economic development

potential of vibrant public markets. Although few data

exist on the quantitative economic benefit of public

markets, these benefits can generally be described as:

Small Business Development and Job Creation: Public

markets tap into demand for small business creation

and expansion. For example, Pike Place Market in

Seattle was home to the first locations of Starbucks,

Sur la Table, and other national retailers; it currently

houses an average of 1,900 jobs annually, producing

3,600 more throughout the region.

Real Estate Value Increments: Public markets add

value to surrounding properties both as vibrant public

spaces and as amenities for residential, office, hotel,

and retail spaces. This value creation potential was

most recently seen in Lowertown, where the farmers

market helped create an impetus for Heartland

Restaurant to invest in 18,000 square feet adjacent

to the market.

Increased Local Spending: Public markets provide

opportunities to keep spending local, allowing the

City and County to capture a greater percentage of

the region’s spending capacity as market goers buy

products and services produced in the local economy.

They engender a virtuous cycle for local and regional

economic development.

Augmented Fiscal Revenues: Ultimately, the new

businesses, jobs, residents, and spending reinforce

local tax rolls. New revenue is generated from sales

taxes, property taxes, business and income taxes,

hotel taxes, and other local government revenue

sources, including public parking lots and ramps. A

study of Pike Place Market found that properties in

the market area generated approximately $3.9

million in local tax revenues in 2002.

These clear economic and fiscal benefits that can be

attributed to the development and operation of public

marketplaces accrue in addition to their often more

substantial, if less quantifiable, cultural and social

impacts. These vibrant urban places and showcases for

local products have significant potential to build civic

pride and encourage healthy, sustainable lifestyles;

social benefits that make public markets frequent

recipients of government and philanthropic grants.

Nonetheless, public markets can also often support

higher leasing revenues than baseline rents command,

due to their spatial configurations, management

structures, and ability to establish critical mass in and

of themselves.

For the Union Depot project, a public marketplace

would have an additional level of impact: done right, a

public market would complement and drive traffic to

the Saint Paul Farmers Market and Lowertown

retailers. This phenomenon has been at the heart of

the revitalization of downtowns and neighborhoods

both large and small, as a critical mass of shopping

typologies creates an identifiable destination district.

A distinctive public market at Union Depot can help

establish a “market district” in Lowertown that increases

the demand profile for all Lowertown retail businesses.


Recommended Plan of Action

RCRRA should pursue four overarching steps to realize

this vision over the next two years, by the time the

ribbon is cut for the grand reopening of the Union

Depot building. These actions are outlined in the order

in which they should be taken, but all should commence

as soon as possible:

1. Define the parameters that will govern the master

lease of station areas, including parameters for the

development of new pavilions within the Waiting

Room and use of other civic spaces for leasing

and/or events. This task will require careful

planning with the design-build team and

conversations with future transit tenants. The goal

should be to maximize the flexibility of the

building’s civic spaces for uses that can complement

and augment transit uses. This task should be

complete by the beginning of 2011.

2. Commence significant outreach to potential master

lessees, including development organizations in

Saint Paul and the Twin Cities region, as well as

national and international development

organizations – both for profit and not-for-profit.

This project marketing task should be spearheaded

by leadership both from Ramsey County and the

City of Saint Paul, each of whom will be critical

players for the success of the real estate

development components of the project.

Discussions should be held with major not-for-profit

and for-profit development organizations, as well

as with potential partner institutions and

foundations that could provide additional support

or be interested in helping to establish a new

organization for Union Depot development.

3. Pursue efforts to make the project more

marketable, including those related to site

improvements, business planning for a public

marketplace, and potential financial tools for

project implementation listed earlier in this report.

4. Develop a solicitation process based on findings

from initial outreach to potential private partners.

A solicitation to potential developer partners

should be issued no later than the end of the

second quarter of 2011 in order designate a

development partner with sufficient time to

implement the first phase of the recommended

program by the time the building opens in late

2012. Should demand from existing development

organizations not come to fruition, explore the

creation of a new not-for-profit in partnership with

the City of Saint Paul and local business leaders,

philanthropists, and foundations.



Report Authors

This report was written by HR&A Advisors, Inc., whose

project team was led by President Eric Rothman and

Senior Analyst Daniel Hochman Fuchs. Its findings and

conclusions were developed by HR&A’s staff and a

team of local consultants that included:

Cassidy Turley Martin Tucker, real estate market

consultants;

Lake State Realty Services & Joe Urban, residential

real estate specialists;

106 Group, historic preservation and development

consultants;

The Bloom Companies, engineering consultants;

Ehlers & Associates, leaders in public finance; and

Urban Strategies, planning consultants.

Previous Plans Analyzed

The study considered several previous planning

documents for the station area, the riverfront, and

downtown, including, in chronological order:

1994 – Lowertown Small Area Plan

1997 – Saint Paul on the Mississippi Development

Framework

2003 – LOCATE Task Force Report

2005 – Downtown Development Strategy

2005 – A Lens for the Future

2005 – Urban Village Vision*

2007 – Central Corridor Development Strategy

2008 – Economic Development Strategy

2009 – Downtown Station Area Plan

Stakeholder Consultations

The study included outreach to dozens of government

officials and civic leaders, as well as private

developers. Discussions held include, alphabetically:

Capital City Partnership

Capital River Council

City of Saint Paul Councilmember Dave Thune

City of Saint Paul Department of Planning &

Economic Development

City of Saint Paul Office of the Mayor

Dakota County Regional Railroad Authority

Lowertown Entertainment District

Lowertown Masterplan Task Force

Lowertown Redevelopment Corporation

Metropolitan Council

Ramsey County

Saint Paul Area Chamber of Commerce

Saint Paul BOMA

Saint Paul Riverfront Corporation

Urban Land Institute-coordinated real estate

roundtable

Washington County Regional Railroad Authority
