TRANSIT ORIENTED DEVELOPMENT:
MOVING FROM RHETORIC TO REALITY
By: Dena Belzer and Gerald Autler
A Discussion Paper Prepared for The Brookings Institution Center on Urban
and Metropolitan Policy and The Great American Station Foundation - June 2002
Three major trends characterize metropolitan America at the beginning of the 21st
Century. The first trend is the resurgence of investment in America's downtown areas.
We are seeing a re- inhabitation of our urban centers at a level that has not been
experienced since the World War II. Data from the 2000 Census and analysis by the
Brookings Institution Urban Center and the Fannie Mae Foundation show that this
urban rebirth is a function both of people moving back to cities, and of immigrants
choosing cities as destinations. Urban centers are once again seen as attractive,
lively places to live and work, and as centers of intellectual and creative capacity.
The second equally powerful trend is the continuing growth and emerging maturity
of America's suburbs, many of which are struggling to become cities in their own
right. Suburban areas are increasingly diverse in race, ethnicity and income, and
increasingly experiencing the travails of rapid growth. These growth issues include
the need to diversify land uses to build more solid revenue bases, the need to create
urban centers, and the growing problem of traffic congestion along overtaxed suburban
arterials, compounded by the many cul de sac neighborhoods. Suburbs are increasingly
vital and also increasingly challenged to become more than bedroom communities.
The third trend is a renewed interest in transit use and transit investment. Virtually
every major city in America is planning some form of urban rail or rapid bus system,
and states across the country are joining together to plan and build high-speed
rail systems linking metropolitan regions in the West, the Midwest, the Northeast
and the South. In fact, the wait for federal mass transit funding for a new project
is estimated at almost fifty years. New rail or rapid bus systems have opened in
the past ten years in such nontraditional places as Dallas, Denver, St. Louis, San
Diego, Sacramento, Los Angeles and Salt Lake City, with substantial system expansions
underway in virtually every traditional rail city.
At the convergence of these three trends is the realization that a substantial market
exists for a new form of walkable, mixed-use urban development around these new
rail or rapid bus stations and transit stops. Changing demographics are creating
a need for a diversification of real estate projects, and for the type of development
known variously as transit villages or transit-oriented development is beginning
to receive serious attention in real estate markets as diverse as the San Francisco
Bay area, suburban New Jersey, Atlanta, Dallas and Chicago. These transit-oriented
developments have the potential to provide residents with improved quality of life
and reduced household transportation expenses while providing the region with stable
mixed income neighborhoods that reduce environmental impacts and provide real alternatives
to traffic congestion. New research clearly shows that this kind of development
can reduce household transportation costs, thereby making housing more affordable.
Sadly, a review of the projects emerging across the country reveals that many of
the first phases of the new transit towns fail to meet these objectives. Most often
they have conventional suburban single use development patterns, with conventional
parking requirements, so that the development is actually transit-adjacent, not
transit-oriented. Failures of design and planning abound, with many projects being
traditional suburban developments that are simply located near transit. Institutional
issues include unfriendly zoning codes and parking ordinances. Difficulties in dealing
with the institutional complexities are prevalent, with much confusion resulting
from the conflicting roles of local jurisdictions and transit agencies. Financing
is difficult as well, given the current lack of consensus on how to fund mixed-use
projects being one key issue and the lack of assistance available to non-profits
and localities pursuing transit-oriented development that include affordable housing
and minority owned business.
In short, the amount of hype around transit-oriented development far exceeds the
progress to date, with many transit proponents selling new transit investments on
the basis of land-use changes yet to come. The result has been that transit opponents
have begun to brand transit- oriented development a failure by critiquing the performance
of flawed projects.
This paper is an attempt to bring clarity to the debate around transit-oriented
development by placing current projects in a historic continuum, by creating a performance
oriented definition, and by analyzing the challenges encountered in attempting transit-oriented
development around the country. The research, which has been sponsored by the Great
American Station Foundation as part of its National Initiative on Transit-Oriented
Development, takes an initial step toward bringing transit-oriented development
to scale as a recognized real estate product in the United States. The project seeks
first to understand the challenges faced, then to document the state of the practice,
and finally to assemble the resources necessary to assist cities, transit operators
and community groups who wish to undertake these kinds of projects. A manual for
practitioners is also planned.
In our view, transit-oriented development must be mixed-use, walkable, location-efficient
development that balances the need for sufficient density to support convenient
transit service with the scale of the adjacent community. The project strives to
develop techniques to assure that transit-oriented development incorporates a range
of income levels.
This paper was written by Dena Belzer and Gerald Autler of Strategic Economics,
but it is the result of a collaborative intellectual effort of a team of people,
all of whom are partners in the National Initiative. Core team members include Scott
Bernstein, Jacky Grimshaw, Sharon Feigon and Bill Eyring of Chicago's Center for
Neighborhood Technology, Gloria Ohland and Janice Varela at the Great American Station
Foundation, Judith Espinosa and Matt Baca at the Alliance for Transportation Research
Institute of the University of New Mexico and Shelley Poticha at the Congress for
the New Urbanism. The Surdna Foundation, the Turner Foundation, and the Environmental
Protection Agency provided critical funding support. The paper benefited from the
support of Bruce Katz and the incisive comments of Rob Puentes at the Brookings
Urban Center, and we learned a lot from Mary Nelson, Josh Simon, Rich Juarez, Daniel
Hernandez, G.B. Arrington and a host of people around the country who submitted
to our interviews. All work on transitoriented development stands on the shoulders
of Peter Calthorpe's ground-breaking practice and Bob Cervero's research.
President ~CEO Great American Station Foundation
TRANSIT-ORIENTED DEVELOPMENT: MOVING FROM RHETORIC TO REALITY
A number of factors have begun to bring about a reconsideration of our metropolitan
landscapes. Commuters in many regions of the country are increasingly frustrated
with congestion and arduous commutes. Concern over sprawl and the loss of open space
is growing. Air pollution, greenhouse gas emissions, and pressure on foreign and
domestic oil supplies are in the public spotlight. Disillusionment with auto-dependent
suburbs is on the rise, at least anecdotally, especially among parents frustrated
by the need to shuttle their children to activities. And rising housing prices in
many metropolitan areas have limited the residential choices and homeownership opportunities
of a large part of the population, including many who are solidly in the middle
Although many neighborhoods offer residents the opportunity to spend less time in
their cars and to experience the vitality of a mixed-use area, these are still the
exception rather than the rule. However, there is growing interest in retrofitting
existing neighborhoods and creating new ones to give residents more
options in terms of the type of housing they buy, the mode of transportation they
use, and the places they shop. Transit-oriented development (TOD) intense,
comprehensive development around transit stations has garnered attention as
a logical place to start.1
1 Although transit-oriented development can be based on bus transit as well as rail,
particularly when systems such as bus rapid transit are used, this paper focuses
primarily on development around rail transit, and within that category primarily
on high-frequency systems, i.e. light rail and metro-type heavy rail, as opposed
to commuter rail. Nevertheless, the conclusions are valid for all types of transit
and the framework presented is meant to encompass a variety of different contexts.
Transit-oriented development is not a panacea. However, at its best it has the potential
to contribute to improvements in all the areas mentioned above. More intensive mixed-use
development alone can allow an increase in walking and bicycling within the neighborhood;
when a transit connection is added to the mix then auto-free travel to other parts
of the metropolitan area become more feasible. Less automobile use means less consumption
of fossil fuels, less air pollution, and lower spending on transportation. When
the characteristics of a particular place are recognized as supportive of lower
personal transportation costs, the monetary benefits can be captured by both individuals
(in the form of greater mortgage borrowing power) and the community (in the form
of lower development costs stemming from reduced need to build expensive parking).
In short, transit-oriented development can be a central part of a development paradigm
that is more environmentally sustainable and more socially just, and that contributes
to both economic development and quality of life.
If the benefits of transit-oriented development are so compelling, why is the number
of transit-oriented development projects still relatively small? And why do many
of those projects seem to fall short of their potential? This report argues that
although transit-oriented development is now starting to be recognized as a viable
type of development, there is still a widespread lack of understanding of its nature,
its potential, the challenges it faces, and the tools needed to overcome these challenges.
This report represents a synthesis of the ideas gleaned from several main sources
of information. The first is a review of the literature on transit-oriented development
(as well as other relevant literature). An annotated bibliography at the end of
this paper describes the most important literature reviewed. While there is an extensive
body of literature about transit-oriented development, much of it is more descriptive
than analytical. Relatively little attention has been focused on the issue of why
TOD is not more solidly in the mainstream and on the barriers, obstacles, and challenges
confronting these projects, and there is even less information available about the
best ways to overcome these challenges.
Second, interviews with key actors, including transit agency and municipal staff,
developers, community development groups, and academic researchers have provided
additional information. Nearly 30 interviews (and a number of other less formal
conversations) were conducted with people in various regions of the country that
possess a range of transit systems, including Chicago, with one of the oldest transit
systems in the country; places like Atlanta, Miami, Portland, San Diego, the Bay
Area, and the Washington D.C. area, which built transit systems in the 1970s; regions
such as Dallas where rail systems were built relatively recently; and communities
that are just now planning for new light-rail systems, such as Seattle.2
Finally, two workshops and regional conferences organized in Chicago and the San
Francisco Bay Area as part of this project were valuable in the process of testing
and refining the ideas in this paper.
The paper proceeds as follows. The next section places transit-oriented development
within a broad historical setting and shows why traditional "barriers"
discussion yield few insights into why TOD has not fulfilled its potential in the
United States. It also offers an expanded definition of transit- oriented development
that focuses primarily on functions and outcomes rather than on physical form and
project configuration. Section 3 identifies the main challenges that must be addressed
to achieve optimal TOD projects. Section 4 provides recommended actions that each
key actor in the TOD process can undertake to ensure that more TOD projects are
built and that these projects will be more viable and effective than their predecessors.
A conclusion and annotated bibliography follow at the end.
II. DEFINING TRANSIT-ORIENTED DEVELOPMENT FOR THE 21ST CENTURY
In order to understand why transit-oriented development is not more prevalent, we
must first consider what it means. One of the first things that becomes apparent
with a scan of the literature and interviews is that there is no universally accepted
premise about exactly what TOD should accomplish. Many projects that fail to provide
the full range of synergies and benefits made possible by TOD are proclaimed successes
because there is no standard benchmark for success. For example, some developments
are labeled TOD by virtue of their proximity to a transit station, regardless of
how well they capitalize on that proximity.
The following discussion of transit-oriented development presents a framework that
can be used for planning and analysis of projects. Specifically, it creates a framework
that allows the following:
1. A focus on the desired functional outcomes of TOD, not just physical characteristics.
Although appropriate physical qualities (e.g. density, distance, and urban form)
are essential for making TOD work, an exclusive focus on these characteristics can
obscure the main goal of transit-oriented development, which is not to create a
particular physical form but to create places that function differently from traditional
development. TOD projects should capitalize on the synergy that results from a functional
integration of land use and transit, such as reduced auto dependency, which in turn
leads to other benefits. Physical characteristics are a means of achieving those
desired ends, not ends in and of themselves.
2. Acknowledgement of a continuum of success. The degree to which a TOD project
achieves desired functional outcomes can vary depending on the quality of the project
and the characteristics of the place. This provides criteria that can be used as
performance measures to assess how well projects fulfill certain goals. A high-density
development within one quarter mile of a transit station may fail to take advantage
of the full range of synergies made possible by TOD, even if it is better in some
ways (e.g. mode split3) than more conventional development. Focusing on functional
outcomes allows such a project to be labeled a partial success rather than wholly
labeling it TOD on the basis of physical characteristics.
3. Adaptation to different locations and situations. Transit systems and locations
vary greatly in their characteristics and their suitability for TOD. We should not
expect the same results from a project in the core of a metropolitan area and one
in the distant suburbs, just as we cannot necessarily hope for the same outcome
in Dallas as in Chicago. Focusing on quantifiable functional outcomes accounts for
both different degrees of success and the uniqueness of individual places. Just
as a project can be judged as more or less successful TOD, so two projects with
the same functional outcomes in very different places can be assessed within the
context of those places. 3 Mode split refers to the percentage of travelers who
use different travel methods (e.g., car, bus, walk, etc.) and can be measured by
a variety of means and groups. A theme that is evident throughout the history of
transit that proves equally important to understanding the challenges facing TOD
today is the distinction between places and nodes. The role of transit in creating
a link between individual places and the broader region means that transit- oriented
development, unlike other forms of development, should explicitly perform a dual
function as both a node within a larger regional or metropolitan system and a good
place in its own right. Station areas must provide access to transportation services
and in many cases function as regional trip destinations, but the same areas must
also serve as trip origins and, ideally, as coherent neighborhoods that do more
than simply serve the station. While this is, on the surface, a relatively simple
insight, it proves powerful when it comes to understanding some of the reasons that
transit- oriented development can yield unsatisfactory outcomes.
In the context of transit-oriented development, a good place can be defined on the
basis of measurable functional characteristics such as a choice of transportation
modes, housing types, and lifestyles; access to jobs and services; fewer negative
impacts of the automobile; and a high degree of satisfaction in residents and visitors.
A. Transit-Oriented Development: A Historical Context
It is helpful to trace the history of the relationship between transit and development
in order to see how the place and node equation has evolved over time. For purposes
of this discussion, different names have been given to each historical TOD phase
to distinguish past from present and future. For the remainder of the report the
term transit-oriented development will be reserved for the ideal TOD of the future
rather than past or present examples. Most of what is called "transit-oriented
development" today actually falls short of its full potential, and therefore
should not be confused with the more ambitious concept to be defined shortly.
1. The Early 20th Century: Development-Oriented Transit
The streetcar suburbs at the turn of the last century evolved in a setting that
no longer exists today. Typically, the streetcar lines and their adjacent residential
communities were developed by a single owner who built transit to add value to the
residential development by providing a link between jobs in an urban center and
housing at the periphery. Indeed, the phrase "development-oriented transit"
more aptly describes these places than does "transit-oriented development,"
since private developers built transit to serve their development rather than vice-versa.
As part of this formula, streetcar stops often had small retail clusters to serve
commuters as well as local residents. These small commercial districts are, to some
extent, the precursor of modern TOD and represent a good balance between place and
However, the interdependence between housing, jobs, and transit inherent to the
early streetcar suburbs was broken apart by the automobile. Starting in the 1930s,
roads, including highways, became the preferred transportation infrastructure in
America. Development was no longer dependent on transit, the link between transit
and development was severed, and developers got out of the business of building
2. The Post-War Years: Auto-Oriented Transit
The post-World War II period saw a precipitous decline in transit use and the dismantlement
and abandonment of many rail systems. To the extent transit was still in operation,
it relied much more heavily on buses as the primary mode in most regions. Bus systems
were subservient to the automobile, using the same streets and experiencing the
same congestion, and in most cases bus service had less influence on land-use patterns
than fixed-rail transit. With the exception of some of the commuter suburbs around
older cities such as Boston, New York, and Chicago, which continued to function
reasonably well as transit-based communities, most transit had become a last resort
rather than a reliable transportation option tied to development.
As congestion worsened, a new generation of transit systems was planned and built.
The San Francisco Bay Area Rapid Transit (BART) system, MARTA in Atlanta, and Metro
in the Washington, D.C. area were opened in the 1970s. These systems were built
with an entirely different rationale than their predecessors. They were built primarily
to relieve congestion, funding was provided entirely by the public sector, and little
or no additional land was purchased by the transit agencies to ensure that there
would be any link between current transit investments and future development patterns.
These systems were also designed explicitly to work with the automobile, with the
assumption that most people would drive to suburban stations rather than walking,
biking, or riding feeder-bus systems. In this case, these systems were viewed as
primarily serving a regional purpose, and the stations were considered nodes within
this larger system, with little regard for the local place where each station was
located. Because of the philosophy with which they were built, many stations are
now characterized by large amounts of entrenched parking rather than intimate connections
to vibrant neighborhoods. Large expanses of surface parking or parking structures
create barriers between the station and the surrounding community.
While these systems all play an important role it is difficult to imagine
Washington, D.C. without the Metro or the San Francisco Bay Area without BART
they are showing their limitations. Although these systems undoubtedly can claim
real successes, they fall short of providing the full range of benefits that transit
can potentially stimulate. In general, they do not contribute to neighborhood revitalization
along all its stations as much as they should, reduce automobile dependency to the
extent that they could, or encourage more efficient regional land-use patterns as
well as they might. Land-ownership patterns remain fragmented, and the idea that
development should be linked to transit does not generally prevail, even when transit
infrastructure is already present.
3. Today: Transit-Related Development
Rail systems generally create value for adjacent land, and transit agencies and
the federal government see large-scale real estate development on transit agency
owned property as a way to "capture" some of that value. While this return
is not necessarily sufficient to pay the total cost of the rail investment, it represents
at least a partial reimbursement to public coffers. For this reason, transit agencies
and the federal government have an interest in promoting intense development around
transit stations. This "joint development" approach has been used successfully
in some notable locations around the country including downtown San Diego, Washington,
D.C., and Portland, although there are other examples of attempts that have not
This form of transit-related development is problematic because it almost inevitably
leads to a narrow definition of the relationship between transit and development.
The emphasis of most joint development projects which until the 1990s were
virtually the only form of "transit-oriented development" that was pursued
has generally been on dense, profitable real estate development aimed at generating
revenue for the transit agency and the federal government. Projects were predicated
on a purely financial rationale rather than a broad vision of how transit could
work in tandem with surrounding development. As later sections will explain, the
goal of maximizing revenue from ground rents often works at cross-purposes to other
goals of transit-oriented development. In other words, the "highest and best
use" in financial terms is not always the best in transit or neighborhood terms.
Recently, interest in TOD has broadened beyond the possibility of financial return.
Increasing evidence now exists that transit-oriented development can yield many
more benefits than merely increased land value. The last decade saw subtle but promising
shifts in the landscape of transit and development, with the convergence of a number
of trends: growing transit ridership, increased investment in transit (even in traditionally
auto-dominated cities like Los Angeles and Dallas), frustration with congestion
and sprawl, the smart growth and new urbanism movements, and a generally greater
recognition of the advantages of linking development and transit.
Despite these encouraging trends, a closer look at "transit-oriented development"
projects around the country shows that most still fall short of their full potential.
Projects that clearly could take advantage of being adjacent to transit to reduce
parking still use standard parking ratios, indicating an underlying assumption that
these projects will be primarily auto-oriented. Projects that contain a variety
of uses still lack an "appropriate" mix of uses that generates an internal
synergism as well as responds to market conditions. And, in other cases, residential
projects fail to include units targeted at a mix of income groups or household sizes,
but focus solely on one particular market segment, be it subsidized dwellings targeted
at lower income households or luxury units for young singles and empty nesters.
Many of the examples examined in this paper constitute good projects. Most of them
are significantly better than traditional development. However, the interviews conducted
over the course of this project suggest that there is little understanding of the
full range of benefits that can be achieved with transit-oriented development. This
is reflected in both the combination of land uses included in most built projects
and their physical design. Many projects are relatively unambitious in what they
hope to accomplish, or overly narrow in their view of the potential impacts of TOD.
Even when the aims are broader, the fact that modern transit and development are
built by several different actors unlike the old streetcar suburbs introduces
several additional layers of complexity.
The goal of this project is to bring transit-oriented development up to scale not
just in name but in terms of the impact it can have on cities, the environment,
communities, and individual lives. For this reason we must set the bar high and
describe a vision of transit-oriented development that is ambitious without being
unrealistic. Most current projects fall short of this vision, and as a result we
have chosen to call them transit-related development, a name that acknowledges the
connection they have made between transit and development while still recognizing
their shortcomings. Not all projects in all places will or even can meet the standard
by which true transit-oriented development should be defined. But without a benchmark
there will be no way to judge the quality of projects or even to think clearly about
the tradeoffs that must be made when pursuing a project.
4. Tomorrow: Transit-Oriented Development
Transit-oriented development can realize its full potential only if it emerges as
a new paradigm of development rather than a series of marginal improvements. TOD
cannot be and should not be a utopian vision: It must operate within the constraints
of the market and realistic expectations of behavior and lifestyle patterns. However,
the market and lifestyle patterns can and do change as a result of both policy choices
and socio-cultural trends. The automobile was not always the dominant form of transportation,
and suburban living was not always the lifestyle of choice. These changes in American
life have been fostered in part by government policy such as the mortgage interest
tax deduction and generous subsidies to road infrastructure at the expense of alternative
forms of transportation.
Already there are clear signs that these trends are not permanent. Growth in transit
ridership and renewed interest in urban living are two indicators that preferences
may be changing. Federal legislation in the 1990s5 has helped shift government investment
priorities away from the automobile. Transit-oriented development can respond to
these changes by offering an alternative that is at once viable in the marketplace
and socially beneficial. Transit-oriented development in the 21st century can be
a central part of the solution to a range of social and environmental problems.
"Transit-oriented development" may seem like a remarkably prosaic and
unevocative term given such lofty goals. A label like "people-oriented neighborhoods"
comes closer to capturing the goals outlined in this paper. Moreover, the term transit-oriented
development raises problems because it already enjoys wide currency, but refers
to a wide range of projects that have little in common with each other or with a
more rounded vision of TOD. However, it makes more sense to clearly define a term
that has already acquired significant currency than to introduce yet another phrase
into an already expansive jargon, and for this reason we will continue to use the
term transit- oriented development.
As the environmental, social, commuting, and land-use trends described above progress,
it is likely that the type of neighborhoods we envision will become increasingly
attractive. But although defining a vision of transit and development that function
complementarily is a crucial first step toward advancing that agenda, it is not
enough. The next step is to move that vision in concept and reality
into the mainstream of real estate development. This requires an understanding of
why relatively few projects get built, and why so many of those that do get built
fall short of their potential.
The remainder of this report will clearly define a vision of TOD, examine the challenges
facing that vision, and recommend specific actions. Collectively, these steps will
provide a starting point for bridging the gap between ideal and real projects.
B. Defining Transit-Oriented Development for the 21st Century
Transit stations offer a unique opportunity for development to be simultaneously
locally and regionally oriented. This powerful combination is fundamental to what
makes distinguishes transit- oriented development from other types of urban infill
projects. However, it is not always clear how best to create synergy between these
Definitions of transit-oriented development often focus on built form. For example,
Bernick and Cervero (1996) emphasize the role of the "three Ds" (density,
diversity, and design) in the success of TOD. Although proper built form is a necessary
element, that alone is not sufficient for achieving all the benefits of TOD. For
example, units per acre is a measure of physical form that tells us very little
about the way a place functions: a high-density area can easily be less pedestrian-
friendly than a low-density one. In contrast, the ability of residents to make fewer
trips, own fewer cars, breathe cleaner air, and enjoy more parks are all functional
outcomes that can be measured.
Because most definitions of TOD focus on built form, many projects that are billed
as successful transit-oriented development don't function very well. They may have
overcome the main barriers to creating dense mixed-use development next to a transit
station, but they fall short when measured by performance rather than physical characteristics.
A focus on outcomes allows a better benchmark of success and a better measure of
the tradeoffs that most projects must make. It permits a subtler assessment of projects
that judges them as more or less successful in different areas rather than simply
built or not built.
This section presents a definition in the form of six performance criteria that
can be used to evaluate project function and outcomes. The major departure from
previous thought on TOD is not so much the novelty of these performance areas, since
many have been addressed in one way or another, but rather the emphasis on their
use as a planning tool.
The six performance areas contain significant overlap, but have been separated into
distinct discussions in order to emphasize the core principles that organize this
vision of TOD. Probably no single project can excel in all these areas. Complex
projects involving multiple actors often generate conflicting and irreconcilable
goals, and are subject to the constraints of the particular location and circumstances.
However, with this comprehensive and ambitious definition as a starting point, it
will be possible to distinguish necessary tradeoffs from sub-optimal outcomes that
result from other causes, identify other challenges confronting TOD, and formulate
a meaningful set of recommendations that will truly impact the future of TOD in
1. Location Efficiency
Ample evidence demonstrates that, on average, residents of denser urban neighborhoods
own fewer cars, drive less, and walk and ride transit more than residents of suburban
areas (see "Travel Patterns and Behavior" subsection of Appendix). This
is true even when controlling for income. This suggests that reduced auto dependency
will result from an effective blending of convenient and efficient transportation
links (node functions) with enhancements of the ability to carry out most everyday
tasks close to home (place functions).
This connection can be captured in the concept of location efficiency. Simply put,
location efficiency converts driving from a necessity into an option. This permits
households that take advantage of the characteristics of the neighborhood to spend
less on transportation by driving less or even by owning fewer cars. The concept
of location efficiency has been incorporated into the location-efficient mortgage
program, which allows homebuyers who spend less on transportation by choosing a
location-efficient neighborhood to borrow more money than they would qualify for
under conventional mortgage lending practice.
Location efficiency requires neighborhoods that provide high-quality transit, a
mix of uses, and pedestrian-friendly design. Proximity to transit is just one of
several key variables that determine the location efficiency of a neighborhood.
Other critical factors include net residential density, transit frequency and quality,
access to community amenities, and a good quality pedestrian environment (good sidewalks,
safety, reasonable topography). Location efficiency can be enhanced by the introduction
of additional mobility choices such as car sharing, which makes it even more feasible
for residents not to own a car.
Even with all these features, however, it is probably not realistic to expect suburban
residents to develop the same travel patterns as urban residents no matter what
type of neighborhood they live in. Although there has been little comprehensive
research on the ability of location-efficient design to affect overall travel behavior,
a number of studies have focused on retail behavior. These studies make clear that
not all residents of location-efficient neighborhoods will own fewer cars per family
or give up car ownership entirely. Not all will work within walking distance of
home or do all their shopping locally.
However, none of these findings undercut the logic of transit-oriented development
or the desirability of building location-efficient neighborhoods. The key idea remains
choice: Location- efficient neighborhoods make these choices possible and even encourage
them whereas most standard development types do not. The very presence of this choice
is a positive contribution of this development type, and many residents in walkable
or location-efficient neighborhoods cite the existence of mobility choices as a
quality of life feature and an important factor in their choice of neighborhood
(see, e.g., Handy and Clifton 2000).
Location-efficient neighborhoods can provide the following types of outcomes:
* Increased mobility choices (walking and bicycling as well as transit).
* Increased transit ridership.
* Good transit connections to the rest of the city and region.
* Reduced auto use and reduced auto ownership.
* Reduced transportation costs to individuals and households.
* Sufficient retail development (quantity, quality, and diversity) to satisfy the
basic daily needsof residents and employees working in the area.
* Ability to live, work, and shop within the same neighborhood.
2. Value Recapture
The benefits of location efficiency can translate into direct savings for individuals,
households, regions, and nations. It seems intuitive and it has been demonstrated
that residents of denser, transit-rich neighborhoods spend less on automobile
transportation than people in auto- dependent areas. This same effect is visible
at the metropolitan level. Average household spending in auto-dependent metropolitan
areas such as Houston, Atlanta, and Dallas was over $8,000, compared to less than
$6,000 in New York, Boston, and Chicago and slightly over $7,000 in Washington,
D.C. and San Francisco. Equally striking was the difference in transportation spending
as a percentage of total household expenditures, which ranged from less than 15
percent to over 20 percent. The cities where households spent the highest percentage
of their income on transportation were Houston, Atlanta, Dallas, and Miami, while
the lowest spending was in Washington, D.C., Boston, San Francisco, Chicago, Baltimore,
New York, and Honolulu (Surface Transportation Policy Project and Center for Neighborhood
Overall, residents of denser, more transit-rich metropolitan areas pay less for
transportation than their counterparts in auto-dependent metropolitan regions
even when the cost of public investments in transit is included in the calculation.
In 1990, American cities spent 13.2 percent of gross regional product on transportation,
compared to 8.1 percent in European cities and 4.8 percent in wealthy Asian cities
(Kenworthy and Laube 1999). Every dollar invested in transit can move far more people-if
land use is supportive-than a dollar spent on automobile transportation. Remember
that the full cost of automobile transportation includes not only household expenditures
but also public spending on roads and bridges, public and private spending on parking
(for example, the construction of hundreds or thousands of free parking spaces at
a shopping center), and such
hidden subsidies as public land given over to automobiles rather than higher-value
development. Despite high household spending on automobile transportation, households
are only paying a portion of the total cost of driving directly; the rest is paid
for indirectly through public funds. These calculations do not even include the
cost of externalities such as the health effects of air pollution, the economic
impact of traffic accidents (more than 40,000 deaths and hundreds of thousands of
injuries every year in the United States), and so on. It is clear, then, that reduced
automobile dependence could yield significant savings for individuals and for society
as a whole. The question is not just how to reduce that spending, but also how to
capture the value of the savings.
Some methods for doing so have appeared in recent years. The disparities in transportation
spending among different locations have been recognized in the form of a new financial
instrument called a location efficient mortgage (LEM). LEMs are underwritten by
Fannie Mae and are currently available in Chicago, Seattle, Los Angeles, and the
San Francisco Bay Area. They allow people who live in location-efficient neighborhoods
and who take advantage of that fact to reduce their spending on transportation by
owning no cars or fewer cars. Savings on transportation allows qualified borrowers
to obtain a larger loan than they would be eligible for under the standard underwriting
formula. For many, this can make the difference between being able to buy a home
or not, or at least the difference between an adequate home and one that is too
small for the family's needs.
The location efficient mortgage is the most explicit way of capturing the value
from reducing automobile dependence, but there are others. Parking is a significant
but generally under- recognized component of high spending on transportation. However,
the cost of parking is not always reflected in the cost of driving; rather, parking
is often paid for indirectly. The financial analysis in the section on financial
return below shows that reducing parking requirements can have a significant impact
on housing costs. In San Francisco, a 700-square-foot unit that would sell for $320,000
with parking would sell for roughly $280,000 without parking. This is in line with
empirical research that has found that the average increase in the price of a housing
unit with a parking space in San Francisco was $39,000 to $46,000 (Jia and Wachs
1997). While it is not feasible in most cases to eliminate parking altogether, individuals
can still reap benefits if they can choose whether or not to purchase or rent a
parking space. This involves "unbundling" parking from housing and creating
a separate market for it.
These savings from reduced parking costs (whether in residential units or other
development) can be captured by households, developers, and local governments. They
can be invested in assets, like housing, that appreciate in value over time and
allow for individual household wealth accumulation. Collectively, they can be investment
in better design and place-making amenities, parks, and other elements that improve
the quality of development and the built environment overall.
Measurable outcomes associated with value recapture include:
* Increased homeownership rates or more adequate housing, especially among borderline
income groups. This can be accomplished through:
* Increased use of location efficient mortgages.
* Creation of housing units with lower-than-average parking ratios where the cost
savings from parking reductions are passed on to consumers.
* Reduced individual and community spending on transportation and therefore greater
discretionary individual and community spending. This can include spending a portion
of the collective savings on enhanced public amenities such as streetscaping, parks,
or better transit.
At its core, transit-oriented development strives to make places work well for people.
While to some livability may conjure up the idea of vague and unimportant concepts
irrelevant to such "nuts and bolts" issues as prosperity, in fact livability
and quality of life are increasingly viewed as closely connected to economic development.
Moreover, much evidence indicates that many people are increasingly frustrated with
air pollution, long commutes, traffic congestion, and the difficulty of running
errands. Quality of life has emerged as a critical concern for its own sake (see
"Quality of Life and Livability" subsection of Appendix).
Livability is subjective and defies easy definition. No definition can be completely
"objective" or value free. Nevertheless, it is possible to arrive at a
definition of livability that is based on collective subjectivity rather than the
values of a particular individual. Numerous attempts have been made to define, measure,
and track the livability of places over time using indexes defined by citizens on
the basis of what they feel is important. These indexes focus on livability or quality
of life generally rather than TOD specifically. Nevertheless, they usually contain
a variety of criteria that are directly or closely related to land use and transportation
This paper's focus on the functional qualities of TOD rather than on form ties in
well with standard livability indicators. Many of the central outcomes of TOD as
defined herein would contribute directly to improvements in livability as defined
elsewhere. For example, decreased auto use would help improve air quality, decrease
gasoline consumption, and reduce congestion. Well- designed, balanced neighborhoods
with good transit would improve mobility, access to retail and services, and the
ability of children and adolescents to participate in activities without the constant
assistance of their parents.
TOD may take different forms in different places. Ultimately, though, the question
becomes: Can, or does, TOD help improve the quality of life?
Measures of livability that relate directly or indirectly to transit-oriented development
include the following:
* Improved air quality and gasoline consumption.
* Increased mobility choices (pedestrian friendliness, access to public transportation).
* Decreased congestion/commute burden.
* Improved access to retail, services, recreational, and cultural opportunities
(including opportunities for youth to get involved in extra-curricular activities
within the neighborhood).
* Improved access to public spaces, including parks and plazas.
* Better health and public safety (pollution-related illnesses, traffic accidents).
* Better economic health (income, employment).
4. Financial Return
Successful TOD projects typically mix of public and private development projects.
The public sector generally builds the transit station and the surrounding streets
and public spaces, while private development may include housing, office buildings,
and retail. Parking garages may be built by either the public or private sector.
In some instances non-profits or other quasi-public entities can also own facilities
such as day care centers, and both public and private landowners can lease space
to private and non-profit tenants.
All investors, whether public or private, expect some type of return. While the
public agencies, including transit agencies and local and federal government, may
not require a full or even a direct monetary return on their investment, no private
sector project will get built unless it yields an appropriate return on investment
or receives a public subsidy to compensate for underperformance. Thus, planning
for TOD projects requires understanding what type of return each of the public and
private participants expects and ensuring that certain return thresholds can be
met. But, while this means that TOD projects must be responsive to the discipline
of market and financial realities, it does not mean that all development at transit-oriented
locations should always strive to achieve the "highest and best" use for
the site. This approach often tilts a development program away from a diverse land-use
mix and towards more office and commercial product. Assuming that each use within
the program yields an acceptable rate of return, a mixed-use strategy can be more
advantageous for the developer than a single-use project because it allows for greater
flexibility in responding to various market cycles, protects against market volatility,
and holds value over time. In addition, it may be easier to finance smaller increments
of different development products than one large single use because the project
risk is spread among a wider variety of lenders and equity investors.
While TOD projects may require more complex financing strategies, the potential
exists for increased return, particularly if projects are designed to take advantage
of the benefits provided by location efficiency. Evidence abounds that under the
right circumstances (i.e., in a strong real estate market) light rail can lead to
rent premiums in surrounding commercial properties (e.g., Weinberger 2000). Higher
potential return can be used as an incentive for developers and it can also be captured
for public benefit in various ways, either by requiring that developers spend a
portion on place-making amenities or through taxes.
The public sector governments and transit agencies can also reap financial
rewards from TOD, although they may have different criteria than private investors.
The public sector can and should have a more patient attitude and be willing to
wait longer for investments to yield a return. Moreover, these actors should not
necessarily define return in the narrow financial sense. Although all public investments
should be justifiable, that justification can be based as much on notions of social
return (greater equity, better affordable housing, better quality of life) as on
Even businesses that choose to locate at TOD sites may receive a return in some
cases. They may be willing to pay somewhat more to locate at transit stops, or they
may subsidize their employees' transit passes, but the benefits may outweigh the
costs through reduced costs of providing parking or less employee time lost to traffic
and long commutes (not to mention better employee morale). BellSouth's decision
to consolidate its facilities at transit stops in Atlanta reflected this rationale.
All TOD projects should be evaluated in terms of the total return to public as well
as private investors so as to assist in making decisions about the trade-offs involved
in potential public subsidies for various uses. Financial outcomes should include:
* For local governments: higher tax revenues from increased retail sales and property
* For the transit agency: increased fare box revenues and potential ground lease
and other joint development revenues. It is possible that in some cases increases
in land value could cover a significant portion of the cost of transit investments.
* For the developer: higher return on investment.
* For employers: shorter and more predictable commute times, easier employee access.
* A balance between financial return and other goals of TOD so that projects are
not judgedpurely on their monetary return.
One of the problems with standard suburban development is the lack of choice. Residents
have few options in terms of housing types, places to shop, and modes of transportation.
Meanwhile, people in a broad range of different contexts have emphasized the desire
to have more transportation options in many of the livability indexes cited above.
In other words, many people's idea of a good place includes the notion of choice.
Those who don't understand TOD sometimes describe it as an attempt to "force"
people to live in high-density apartments and take transit. This is simply not the
case. TOD involves function far more than form, meaning that no particular housing
type needs to dominate TOD projects. In fact, most projects will work better if
they include a range of types, from apartments to townhouses to single-family detached
houses (albeit on relatively small lots). Although a certain minimum overall density
is certainly a prerequisite for making TOD work, it is not true that TOD will necessarily
require everyone to live at higher densities than they already do. In many parts
of the country, notably in California, there has been a proliferation of medium-density
condominiums, townhouses) that is not connected to transit and that incorporates
none of the mixed- use or internal mobility of TOD. These projects function as high-density
auto-oriented suburbs, with all of the disadvantages of density and none of the
advantages of choices that TOD can offer. Yet they are fully viable in the marketplace.
TOD does not necessarily require higher densities than many projects already being
built; it requires instead that projects be built differently.
What leaves few options for residents in terms of housing type or mode of transportation
are current patterns of suburban development, not TOD. TOD is intended to supplement,
not replace, the current choices. Transit-oriented development projects can provide
a much broader range of options by offering internal diversity and by simply adding
a new type of development into the metropolitan area. Rather than leaving residents
with no choice but to live in a single-family house, shop at auto-oriented retail
centers, drive to work, and drive their children to activities, transit- oriented
development can a wide variety of options to local residents. TOD can make available
apartments, townhouses, and single-family homes to accommodate most family structures,
income levels, and life stages It can offer a choice of small, unique specialty
shops and larger retail outlets; the opportunity to get around on foot, by bicycle,
or on transit; and greatly enhanced mobility for children and seniors. Even studies
that cast doubt on the ability of traditional neighborhood design to significantly
reduce driving for shopping purposes (e.g., Handy and Clifton 2000) find that residents
of walkable neighborhoods with nearby retail value the option to walk and, in many
cases, have chosen their residence in part because they want that option.
TOD is about expanding rather than circumscribing options. Lower-income people with
less money to spend on transportation, first-time homebuyers, and others inadequately
TOD is about expanding rather than circumscribing options. Lower-income people with
less money to spend on transportation, first-time homebuyers, and others inadequately
served by most currently available housing options may particularly value the location
efficiency offered by TOD. For that reason, a commitment to providing high-quality
affordable housing in TOD projects seems particularly important. While this can
involve public subsidies of various kinds, housing affordability can also be enhanced
through other tools, such as density bonuses that allow developers to build at higher
densities in exchange for the subsidization of some of the units. Removing parking
from the cost of housing, as noted above, can also make market-rate projects more
affordable. Finally, the use of location-efficient mortgages can expand homeownership
opportunities. All of these tools in conjunction can increase housing choices.
Enhanced choice may entail:
* A diversity of housing types that reflects the regional mix of incomes and family
* A greater range of affordable housing options.
* A diversity of retail types. Diversity will necessarily be limited by the market
area and theparticular desires of the residents; however, this outcome could be
measured in terms of how well the retail mix meets the needs and desires of the
residents as they themselves define them.
* A balance of transportation choices.
6. Efficient Regional Land-use Patterns
Most metropolitan areas in the United States have been urbanizing new land at a
faster rate than they have added new residents. Some areas have continued to consume
land even as their populations have shrunk.6 The causes of this trend are complex,
but the results are quite clear: less open space, more area given over to roads,
longer commutes, significantly unequal provision of services such as education across
the metropolitan area, more air pollution, and so forth. Not all of these ills can
be blamed exclusively on sprawl, but sprawl is a factor in all of them.
Transit-oriented development can foster much more efficient patterns and cut down
on traffic generation. For example, near the Pleasant Hill BART station in suburban
San Francisco, residential development generates 52 percent fewer peak period auto
trips than ITE Trip Generation Manual projections of typical residential development.
Equally importantly, those trips are shorter since services are immediately at hand
and the station is located immediately adjacent to a regional freeway. Office development
at the station generates 25 percent fewer trips than typical office development.7
These trips are also shorter. The fact that this development is concentrated around
a transit station means that it consumes less land, generates less traffic, contributes
much less to congestion and air pollution than more typical suburban development.
Yet the efficacy of such projects is limited by the fact that they remain relatively
isolated examples that are not necessarily tied into a cohesive regional system.
When a significant number of origins and destinations in the region are well-linked
to a station, transit becomes a much more viable option. At the same time, transit-oriented
development is one of the most important tools for creating more efficient regional
land-use patterns. The more growth that can be accommodated in station areas, the
less sprawl will be the automatic result of growth.
Smart growth measures such as the ones that have proliferated in recent years must
do more than simply curtail growth if they are to be truly effective. They must
channel growth to the places that are best suited for it. As frustration with sprawl
and its consequences grows, more and more regions will look to a coordinated set
of land-use policies and transportation investments to alleviate some of the problems.
Transit-oriented development embodies these goals. Neither transit nor transit-oriented
development promise a panacea for the problems associated with accommodating future
growth, but both are important components of creating healthier, more livable cities,
towns, and regions.
Outcomes of this efficient regional patterns include:
* Less loss of farmland and open space.
* More suitable regional and subregional balance between jobs and housing.
* Shorter commutes.
* Less traffic and air pollution.
* Station areas as that can serve as destinations as well as origins.
III. CHALLENGES FOR TRANSIT-ORIENTED DEVELOPMENT
The factors that keep TOD projects from succeeding, meanwhile, are rarely examined.
This is because, as noted earlier, TOD is normally declared successful or unsuccessful
without comparing the actual outcomes or functional aspects of a project to a fixed
performance standard. If the project is built, it is deemed successful, and if it
is not built, that is generally attributed to any one of a variety of problems.
In this fashion, the literature focusing on the difficulties of building TOD projects
tends to focus on a limited number of barriers to success. These barriers include:
local neighbors' fears new TOD will harm the character of their neighborhood or
depress property values; developers' and lenders' perceptions that TOD entails higher
risks and costs; the failure of existing land-use patterns to support TOD; a lack
of a market for it; difficulties of financing; poor transit design; and an unsupportive
These barriers suggest the range of factors that can stop a project from being built.
They are less useful for explaining why many of the projects billed as transit-oriented
development fall short of their potential. Moreover, although all of these barriers
represent significant issues, few are specific to transit-oriented development.
Most apply to any form of urban infill and as such they do not necessarily reflect
the special challenges and opportunities of transit-oriented development. Finally,
they reflect a focus on built form (e.g., dense mixed-use projects adjacent to transit)
rather than outcomes, such as the level of internal trip capture, increased mode
splits, and so on. Thus, the barriers people associate with TOD tend to parallel
the barriers associated with building all types of high-density infill projects,
regardless of proximity to transit.
This approach ultimately does not explain why many of the projects billed as transit-oriented
development fall short of their potential. Even if all of the above barriers were
removed, it is highly likely that future TOD projects would still fail to capture
the full range of benefits offered by a transit- oriented location. A project that
achieves high densities does not necessarily achieve the outcomes of TOD described
above. To discover why, we must look beyond the barriers to building high density.
Consider the following example from Miami. A developer bills his project as transit-oriented
development. The development is next to a Miami-Dade Transportation Authority (MDTA)
rail station, buses come right into the property, and the developer has taken advantage
of the location to build at a higher density than would be possible elsewhere, given
zoning laws. In other words, the project has some of the attributes of transit-oriented
development, and certainly is different than standard suburban development.
When asked about the barriers his project had faced, the developer was hard-pressed
to name any: His overall sense was that the project had gone smoothly. This may
be true, but upon closer inspection it turns out that the project resembles transit-related
development more than the comprehensive transit-oriented development as described
in Section 2. Parking standards have been reduced slightly, but there are still
3.3 spaces per 1,000 square feet of development a fairly typical level for
suburban development that reflects what the developer felt the market would
demand for any office development. The development contains a supermarket with 200
surface parking spaces, clearly intended to accommodate heavy automobile traffic.
Moreover, the project puts a lower priority on housing than on office or retail
and therefore does not constitute a truly location-efficient neighborhood. In other
words, using even moderately ambitious performance standards, we can see the project's
shortcomings, but the developer cited an absence of barriers to building TOD because
his definition was based more on a physical definition (density next to transit)
than a functional one. The barriers were minimal and the project was built, but
ultimately the project must be viewed as only a modest improvement over standard
development. We must look deeper to find the reasons why.
By shifting the emphasis from the physical characteristics of a project to its functional
outcomes, a somewhat different list of major "challenges" to implementing
this development emerges. Barriers to TOD constrain projects subtly by making it
difficult for them to live up to their full potential: A project may still get built,
but may be less effective as a result of the challenges faced. This is important
to keep in mind when thinking about the challenges discussed below. Their impact
has been not simply on the existence of projects, but also (perhaps more so) on
their quality. If all the barriers to TOD were overcome, there would still be no
guarantee of high-quality projects. However, if these challenges can be dealt with
and overcome, it is likely that both the overall number and quality of such projects
would be greatly increased.
A. No universal working definition of transit-oriented development exists. Often,
the actors engaged in TOD projects bring different goals to the table, pursue strategies
that work at cross-purposes to each other, and lack unifying policy objectives.
It should come as no surprise that any project that brings together the range of
actors typically involved in transit-oriented development will engender disagreement.
In today's typical TOD project the public sector builds the transit (often with
the involvement of multiple agencies), local governments try to control development,
and developers look for opportunities to make profits. Transit agencies also become
involved as property owners in joint development projects. All of these entities-not
to mention transit riders, neighbors, and the public at large-have different ideas
about what the project should accomplish.
This lack of clarity in the definition of TOD may exacerbate legitimate disagreements
about what constitutes "good" TOD Should TOD aim to maximize revenue to
the transit agency through lucrative ground leases or seek to minimize the use of
automobiles? Should TOD be designed to maximize ridership or to help revitalize
the station area? Should it try to maximize economic success or urban values? All
of these are legitimate but sometimes mutually incompatible goals that may result
in policies that work at cross-purposes to one another. And resolving them is made
harder by the lack of a settled framework for assessment.
For example, in the Miami case the MDTA placed a greater emphasis on maximizing
its revenue stream from ground leases than on creating a location-efficient place.
efficiency is not a universally recognized goal of TOD, not all actors involved
in a project consider the impact of their priorities on location efficiency.
Table 1 shows a number of possible goals associated with each of the actors involved
in TOD projects. Many of these goals-such as maintaining a high level of station
parking and maximizing pedestrian access to the station-conflict. Even a single
actor may have goals that are incompatible, or at the very least, that require careful
balancing if they are to be reconciled. Many of the incompatibilities reflect the
basic tension between place and node.
Table 1:TOD Actors and Goals
Actor Possible Goals
* Maximize monetary return on land.
* Maximize ridership.
* Capture value in the long term.
* Create/maintain high level of parking.
* Improve transit service and station access.
* Increase mobility choices.
* Develop convenient mix of uses near station.
* Maintain/increase property values.
* Minimize traffic impact.
* Increase mobility choices.
* Improve access to transit, services, jobs.
* Enhance neighborhood livability.
* Foster redevelopment.
* Maximize tax revenues.
* Foster economic vitality.
* Please constituents.
* Redevelop underutilized land.
* Protect "public interest" and set limits on how federally-funded investments
can be used. Developer/Lender * Maximize return on investment.
* Minimize risk, complexity.
* Ensure value in long term.
Properly addressed, these tensions do not necessarily have to engender conflict
or sub- optimal outcomes. A station's role as a node can be strengthened if it also
becomes a viable place. But interviews suggest that disparate goals, and divergent
definitions of TOD, are often not recognized explicitly, and the actors do not necessarily
think through the impact of a particular goal.
Too often, in sum, projects are implemented without a clear vision of the desired
outcomes, the different goals of the actors, and the ways in which those goals may
work at cross-purposes and lead to a project that, while perhaps superior to traditional
development, falls short of the potential of TOD.
B. Transit-oriented development must deal with the tension between node and place.
That is, it must achieve a functional integration of transit and the surrounding
The need for transit-oriented development to function as both node and place affects
virtually every aspect of the station area, from physical layout and design to the
appropriate development program. Yet as the discussion of the first challenge makes
clear, the multitude of actors and goals to be found in any TOD project makes integration
of node and place extremely difficult. Some actors see their interests as closely
connected to the role of a station area as a node while others are more concerned
about the quality of the place. All too often there are few or no advocates (and
little or no money) to keep the idea of place on the agenda.
Over and over, actors involved in TOD projects complain that the attitude of many
transit agencies is that "they run the trains" and no more. Most transit
agencies have little interest in stations as anything but nodes. As discussed above,
even when transit agencies participate as property owners, they are generally working
within a narrow agenda. Other actors may be more divided, but they too have trouble
balancing these different needs. Citizens who clamor for more parking at stations
(a node function) may be at odds with others who complain about increased traffic
in their neighborhood (a quality of place concern).
Parking is perhaps the clearest illustration of this. The way in which the seemingly
mundane issue of parking is handled turns out to be one of the most crucial issues
in transit-oriented development. Parking is tied to a station's role as a node in
a larger regional system, and there is tremendous pressure on transit agencies to
provide ample parking for riders. Parking can become a political, financial, and
design issue, and the goal of providing parking conflicts with place-related goals
in many ways.
In addition to the financial burden and its effects on the development program,
parking and the associated access roads present a design issue, since it is difficult
to accommodate large numbers of cars and create a pedestrian-friendly environment.
Higher densities around transit stations will be largely offset by high parking
ratios, since all the additional square footage will also require parking and roads
to accommodate additional cars. In this way, parking, whether it serves the transit
station itself or the surrounding uses, reduces the efficacy of transit-oriented
development as a place.
Because transit-oriented development provides an alternative to automobile travel
for commuters, shoppers, and residents alike, development should not be expected
to provide parking at the same level as elsewhere. Both the local government and
the transit agency have the ability to try to limit parking, but this is not always
a priority. For example, despite the fact that Dallas Area Rapid Transit (DART)
has been in operation for a number of years now, the Dallas parking code is only
now adding a credit for mass transit accessibility. Even if such a provision exists,
developers, financial institutions, or the public are sometimes reluctant to see
the level of parking reduced.
In the case of a system undergoing rapid increases in ridership, such as BART, the
public perception of the need for parking is even stronger given the difficulty
of finding a space at the station. Not only is any proposal to reduce the number
of spaces seen as unworkable, but strong pressure exists to increase the amount
of parking. In the planning process for transit-oriented development at the Pleasant
Hill BART station, many participants expressed their view that adequate parking
for BART riders was the top priority. The following, taken from a letter to the
editor, is typical of many comments: "The last plan I saw had, among other
things, a 12-story office building and a seven-story garage. Wrong. It should be
a seven-story office building and a 12-story garage. And all those apartments..."8
In effect, these comments assume that the station's role as a node is more important
than its role as a place and, moreover, that the node should favor riders who drive
to the station over riders (real and potential) who would arrive on foot, by bicycle,
or on feeder bus routes.
Many of the shortcomings of TOD projects can be better understood when those projects
are viewed through the lens of place and node. There is not necessarily a single
correct way to balance these two roles; however, achieving the best possible outcomes
in any given case requires an understanding of the way in which this tension shapes
projects and forces trade-offs.
C. Planners have few guidelines for translating the concept of location efficiency
into concrete prescriptions for TOD in different settings. What makes a place has
not been codified.
The previous challenge dealt with the tension between node and place. Making the
place work is another challenge. All too often there are few or no advocates (and
little or no money) to keep the idea of place on the agenda. Furthermore, little
information exists about how to make good places.
Effective transit-oriented development cannot be defined by physical form alone.
For example, while residents of dense urban areas like San Francisco clearly drive
less than suburban residents, those of many relatively high-density areas do not
achieve particularly good outcomes in terms of reducing driving. The difference
lies in the way that many San Francisco neighborhoods combine density with appropriate
street patterns, access to transit, neighborhood amenities, and an adequate mix
of retail in close proximity, as well as in the demographic composition. This contrasts
housing developments in many other cities (parts of San Diego or Fremont, California
are prime examples) that, while achieving similar densities, sit behind walls with
only one entrance. Residents have no choice when they leave home but to travel on
major arterials and shop at auto-oriented retail centers. Density is clearly not
the only important factor.
Although a fairly rich literature probes the individual elements that determine
location efficiency, little work has been done to integrate these individual lines
of inquiry. The impact of density on transit use, retail viability, and auto use
has been studied, but it is not clear to what extent density must be accompanied
by other features in order to provide mobility choices, nor what role a neighborhood's
socioeconomic status plays. Likewise, even research that suggests that a grid street
pattern encourages walking more than a system of cul-de-sacs and major arterials
does not necessarily offer much insight into how that layout interacts with factors
such as street design, proximity to transit, and the mix of retail offerings. Thus,
although many planners and TOD advocates have a clear conceptual understanding of
the factors that contribute to the desired outcomes, little understanding-and even
fewer guidelinesexists about how to turn those concepts into plans.9
Retail elements clearly point up another problem. In contrast to other mixed-use
projects, which do not necessarily attempt to satisfy all needs, TOD projects aiming
to maximize location efficiency must, by definition, strive to serve as many of
the daily needs of the residents as possible. Designing a project to serve those
needs requires precise information on the services that shoppers (residents, employees,
visitors) need and want, the way people choose where to shop and how to get there,
and the conditions (e.g. demographics, retail mix) necessary for different retail
services to be viable.
While much of the work that has been done on retail services is excellent and sheds
light on particular questions, little research exists to guide planners making decisions
about the most desirable retail mix for transit-oriented development projects. What
types of retail services are least likely to generate car trips, and do these match
the services that are most important to making a neighborhood location efficient?
How do density, mix of uses, and demographics interact? Residents' propensity to
walk to retail varies not only with distance, density, and street design but also
with the age, number of children, and income of shoppers. Affluent older parents
are less likely to forgo driving than young, middle-income singles. Given a particular
location and feasible density, it needs to be asked what mix of retail uses is most
suitable, what density of population is needed to support that, and what demographics
are most compatible with transit-oriented development.
The picture grows even more complicated when planners begin to look beyond retail.
Different types of employers and occupations are likely to generate different levels
of transit use. What types of employers or real estate types are best suited to
being located near transit? Can the role of a station area as an employment center
be reconciled with its role as a neighborhood? What types of employment mesh best
This general problem of information shortfalls is made more acute by the fact that
most of the research in these areas does not focus on transit-oriented development
specifically. But mixed-use represents less a particular species of mixed-use development
than a special case entirely.
Finally, the appropriate density, mix of uses, amount of parking, level of bus service,
and other aspects of station area program and design will necessarily vary depending
on the scale and type of place in question, as well as the particular characteristics
of the place. Yet again, there are few guidelines for planners.
D. TOD requires synergy among many different uses and functions, but this synergy
is extremely difficult to achieve. As a result, TOD almost always involves more
complexity, greater uncertainty, and higher costs than other forms of infill development.
Because of their need to fulfill both place and node functions, TOD projects require
all their component parts the transit system, station access routes (buses,
taxis, cars, bicycles, and pedestrians infrastructure), and the surrounding development
to interface with each other. While it is the synergism among these functions
that allows TOD to achieve location efficiency and other desired outcomes, the process
necessary to link all these parts together into a single well- functioning place
remains extremely complex. Even if a successful strategy is devised to finance all
the basic components of the project a clearly identifiable funding source rarely
is available to pay for many of the extra "place making" features that
smooth the transition between place and node and encourage location.
As a relatively new real estate product that is still largely undefined and still
outside the mainstream, TOD lacks a standard approach. Most TOD projects are experiments
that try to negotiate unfamiliar regulatory, physical, political and financial terrain
simultaneously. This fact, combined with the inherent complexity of good TOD projects,
often means greater delays, conflicts, confusion, and costs. Even when developers
are not deterred by this prospect, they and the other actors may not succeed in
maximizing the potential synergies of the project.
The challenges are particularly acute given that, with few exceptions, no single
actor can completely set the agenda. Transit agencies run the trains and have some
control over development on their land, but they are still subject to constraints
from local governments, and they have no control over the larger station area. Local
governments often have to push transit agencies to make their station designs more
accommodating to surrounding development. Developers may be reluctant to build appropriate
buildings, or if willing, they may have problems getting financing or even getting
the necessary assistance from the local government.
Not all problems result from such an obvious lack of coordination. The cost and
complexity of good TOD projects is greater in part because of the very nature of
the projects. In order to achieve the goals laid out above, TOD projects must have
a complex mix of uses. This is even true within any given real estate type: Ideally
there should be a choice of housing types (single- and multi-family, rental and
ownership), retail choices, and so on. Yet different real estate types have different
levels of risk and require different financing strategies. Different lenders, investors,
and financing parameters may be necessary for each real estate type, which requires
"parsing" the different components of the project. Yet this can require
significant expertise and technical knowledge outside the realm of experience of
most developers and transit agencies.
The problems can be seen especially clearly in suburban locations where land is
relatively inexpensive. There, neither local governments nor transit agencies have
an incentive to build expensive parking garages even though structured parking might
make for better and more efficient places. Other features, such as attendant-operated
bike parking stations, small urban parks, community facilities, or even small-scale
retail might all contribute to location efficiency in a TOD. Equally importantly,
truly functional TOD depends on high-quality design and planning. However, place-making
amenities and high-quality design are too often viewed as secondary or irrelevant.
Even when this is not the case, there is usually no source of financing to pay for
these important components of the project. None of the actors necessarily see it
as their role, and although the local government is usually in the best position
to create the conditions for good planning and design, there is often a lack of
understanding or leadership on that front.
E. Transit-oriented development typically occurs in a very fragmented regulatory
and policy environment. There is often no comprehensive plan or vision, and many
local governments suffer from a significant leadership gap.
Given the inherent complexity of transit-oriented development and the need for synergy
among many disparate elements, the lack of an overall vision and a streamlined regulatory
structure is an enormous challenge. Projects must move forward in an environment
of complex and sometimes contradictory regulations, lack of coordination among different
actors, and the absence of a clear vision and the leadership necessary to implement
While TOD requires the coordination of many actors, local governments occupy the
best position of any of them to create and sustain the vision necessary for TOD
and to assist with critical aspects of the development process such as entitlements,
land assembly, investment in key infrastructure and place-making amenities, and
so on. Unfortunately, many local governments even some that view TOD as a
desirable goal do not well understand the benefits of planning or clearly
envision the role that they can play as facilitators. When these are lacking, projects
can fall short. Provision of infrastructure and amenities is another key role for
local government activism. Without a visible program of investment in basic infrastructure,
streetscaping, and so on, developers may lack confidence that the public sector
is making a commitment to the area. Unfortunately, the two most critical actors
in the TOD process transit agencies and local government often fail
to work together effectively to establish a unified and comprehensive vision for
Developers nearly unanimously stress the importance of a good plan for providing
a predictable environment for development. Without such a plan, no guarantee exists
that the community will accept a proposed development, or that there is any agreement
on the future evolution of the area. Delays and uncertainty can be higher and as
a result the cost of pre- development work may increase. If this is the case, the
developer will require a higher return-on- investment and the scope and creativity
of the project will be constrained.
In nearby Plano, Texas, in contrast, the city has played a much different role in
the redevelopment of its downtown, where a new station of the Dallas Area Rapid
Transit (DART) system is being built. The city aggressively courted the DART system,
assigned a full-time staff member to transit and TOD issues (in addition to other
knowledgeable and active staff members), produced a downtown parking management
plan, and developed a comprehensive plan to guide development downtown. This active
leadership on the part of the city government played a key role in assembling both
the transit and the development. The developer of two downtown housing projects
states that he would not have been interested in downtown Plano, even with DART,
had it not been for the city's downtown plan, its willingness to finance infrastructure
and public improvements, and its efforts to assemble land for development.
Finally, the local government can play a key role in land assembly by purchasing
land, facilitating deals, coordinating different entities, and so on. True transit-oriented
development cannot occur on a single parcel, but ownership of land is nearly always
fragmented and assembly of multiple parcels can be difficult. If the local government
does not play a leadership role then the development program surrounding the transit
station is unlikely to be of sufficient scope to be truly effective as TOD.
Market forces are not always strong enough to support good TOD by themselves. When
they may not, local government becomes an even more critical actor in the TOD process
and strong public policy provides and important tool for overcoming a neighborhood's
disadvantages and creating a place that is suitable for high-quality development.
A local government that plays an active role in developing an area plan, providing
infrastructure, and ensuring land supply can significantly alter the perceived market
conditions in an area. In the end, the most successful TOD projects will be those
which involve a partnership between the public and private sectors.
F. Transit alone does not drive real estate investment when other conditions
particularly market conditions are not supportive.
Much evidence confirms that transit can have a positive impact on land values, commercial
rents, and development trends. Still, transit agencies and policymakers sometimes
overestimate the impact of a transit line on development.
Part of the problem lies in the confusion between, on the one hand, increased land
values stemming from transit investments and, on the other hand, market demand for
particular real estate products close to transit. In economic terms, the impact
of transit on land values is follows from the fact that transit renders the land
effectively less "distant" from key locations (i.e. the "cost"
of transportation, whether in monetary or non-monetary terms, decreases). Given
that, all other things being equal, users will be willing to pay more to locate
there. From the developer's perspective, the value of what can be built on the land
increases, and therefore the market value of the land increases.
Even with transit, however, any given site must still compete with every other site
in the region for development. Since transit is only one of many factors driving
development, many other sites may prove more attractive to developers. To be sure,
the public sector most notably local government can elevate market demand
at a site by working to create more of the necessary conditions for development.
But without strong existing demand or coordinated policies to help create it, transit
alone will not drive appropriate development even if it leads to increases in land
This can make transit-oriented development a particular challenge in low-income
areas, where the real estate market is usually weak. Real or perceived problems
such as crime, social problems, and deteriorated physical conditions deter investment.
Either investment will simply not occur or the quality of the development will be
compromised. As a result, new development in transit-rich low-income neighborhoods
is very difficult to achieve and often lacks the full set of features, such as appropriate
site design and pedestrian connectivity that would maximize location efficiency.
Under these conditions well-planned transit investments can constitute a key piece
of an economic development or revitalization package, but a host of supporting policies,
incentives, and investments are also necessary.
In addition to the site's location within the region, local factors also shape market
conditions. Some places may be more amenable to high density than others. The demographic
composition surrounding a site may be more or less favorable to TOD. Even when real
estate investment occurs, it is not necessarily supportive of the goals of transit-oriented
development. For example, the construction of suburban style housing in neighborhoods
with good transit connections may undermine the location efficiency of those neighborhoods.
While in theory development parameters can be set with zoning and other tools, there
is no guarantee that the market will provide the desired development. Buyers may
want something different in that location, and lenders and developers may balk at
providing a product of which they are uncertain.
In short, real estate investment decisions are made on the basis of many criteria,
and although transit can help catalyze development, transit alone is not sufficient
when market conditions are not supportive. Node as defined by the connection
to the transportation system and place as viewed by the market and defined
by other qualities and policies must work together to generate investment.
IV. RECOMMENDED ACTIONS
The demand for more "urban style" development will likely increase over
the next several years. Whether in revitalizing cities like Washington, D.C., outer-ring
suburbs like Lenexa, Kansas, or the increasingly dense "boomburg" suburbs
of Orange County, California, places with proximity to fixed-guideway transit systems
will become increasingly valuable development sites in any region dealing with growth.
TOD can help address the urban growth problems of these places if it is recognized
as a mainstream development product. The challenge is to recognize the full extent
of the opportunity offered by such sites and push for real transit-oriented development,
rather than settling for sub-optimal projects that will provide considerably fewer
benefits over the long run.
Transit-oriented development should be both place-based and market-oriented. It
needs to work for communities and for people, for employers and for employees, and
for all those who are keeping an eye on the future such as planners, civic and community
leaders, and politicians. Like all other place-based assets, no single agency or
interest can make it work by itself. In order to fulfill its potential, then, TOD
needs to have the benefit of conditions, resources and policies that are highly,
dependably, and accountably aligned around the task at hand. There must also be
a high degree of flexibility during the planning and development process to embrace
different approaches depending on the particular context, whether it be light rail
or commuter rail, low-density or high-density areas, strong or weak real estate
TOD offers an opportunity to put the place back into marketplace, but it cannot
happen if there's a sense of delusion about what works and what doesn't, or a lack
of realistic strategies for building on success. Seizing this opportunity therefore
requires that the many actors who influence the shape of transit-oriented development
projects change the way they have traditionally done business. All parties must
better understand what TOD projects can and should accomplish, how those goals can
dovetail with each actor's own interests, and the role of each actor within the
larger decision-making and development process. The "jointness" in joint
development has to be real and based on the recognition that in the case of TOD
doing things together is better than doing them separately.
In addition to the main actors transit agencies, local government, developers,
and lenders there is room for other actors to serve as TOD intermediaries.
Such groups could include both local activist organizations and national entities.
The former groups should focus on advancing specific TOD projects, while the latter
can play a key role by collecting and disseminating information on good projects
and strategies, providing or facilitating funding, and working to turn TOD into
a mainstream real estate product recognized by developers and lenders.
The following recommended actions include various ways in which each of these stakeholders
can work to reform the current process so as to achieve optimal transit-oriented
A. TOD-Related Development Intermediary
Broad-based education, information, and advocacy about the challenges and opportunities
of transit-oriented development needs to be undertaken. To be sure, this is beyond
the scope of most local governments and transit agencies. But certain state and
federal government agencies can be involved in meeting this need, and public interest
groups can and should also play a role. The Congress for the New Urbanism has also
pursued education and advocacy to introduce a new type of real estate development
onto the market, and the growth in the number of new urbanist development demonstrates
success in this regard: The annual number of projects built or in planning has quadrupled
since 1996.11 Transit-oriented development needs its own champions to move it into
TOD intermediaries can play a critical role in meeting this challenge by conducting
research and disseminating the results, helping to build community support, working
to shape public policy, educating actors in the TOD process, and developing toolkits
for TOD implementation.
The following are the most important actions to be taken.
1. Action 1(a): Establish a "TOD Fund" to financially support TOD projects
that cannot obtain conventional financing.
Although lenders and developers are undertaking more innovative urban infill projects,
including some types of TOD, many situations remain in which lenders in particular
are unwilling to assume the risk of certain elements of a particular project, or
to make loans in certain types of neighborhoods, especially inner-city communities
with lower income households. A TOD fund administered by a TOD intermediary could
provide a critically needed source of money for grants, loans, equity investments,
loan guarantees, and other types of financial support for such projects that have
strong market support but that for other reasons lack support from conventional
Such a fund might offer predevelopment assistance, revolving loans, funds for equity
investment, or linkage to existing sources of capital such as tax credits or other
equity funds. Such funds could be established independently on a national scale,
deployed regionally, or developed in cooperation with existing community development
2. Action 1(b): Provide technical assistance to local governments, transit agencies,
and developers implementing TOD projects.
As a non-standard product, TOD is unfamiliar to most local actors. Education and
technical assistance can help them avoid pitfalls and achieve optimal outcomes.
The following are the most important agendas:
* Assist the planning process, especially with technical information on appropriate
densities, mix of uses, design, and so on.
* Develop a typology of places and successful strategies that can give local actors
models and examples on which to base TOD efforts in different places. See Action
* Help devise standard real estate products that can be used in TOD projects and
that are recognized by developers and lenders as tested and viable.
* Identify the full range of financing tools that can be used for TOD and help develop
others that take into account the specific needs of TOD. This includes training
in structuring financing packages from multiple sources and separate financing targeted
to different pieces of the development in order to mix different types of financing.
* Advocate creative solutions to dealing with parking. See Action 1(e) and Action
3. Action 1(c): Create a typology of TOD projects appropriate for different types
of stations in different contexts, as well as performance criteria for each project
. TOD must respond to the characteristics of the site in question rather
than adhering to a rigid formula. However, it may be possible to develop a general
typology of places to account for a variety of different scales (large city, small
city, town), locations in the metropolitan area (central city, peripheral city,
commuter town), transit type (commuter rail, frequent light rail), and other key
attributes. Specific topics that should be addressed include:
* What mixtures of uses will optimize effective mixed-use development and support
location efficiency under specific conditions (for example, in areas with different
levels of income and density)?
* How can theoretical location efficiency be translated into real improvements in
mode split, VMT, and other measures of location efficiency in different contexts?
What densities and level of transit service are necessary?
4. Action 1(d): Develop and disseminate materials to showcase examples of the
benefits of these TOD goals and the ways in which they can be realized.
Develop educational materials for the public, financial institutions, transit agencies,
developers, and local governments covering the following:
* Illustrate effective examples of projects or processes that have overcome conflicts
between different TOD goals to create great projects with lasting value as both
nodes and places.
* Provide a framework to help develop an optimal program for a TOD.
* Investigate and document the impacts of physical layout on the success of TOD
* Explore and promote creative financing strategies and approaches to realizing
* Prepare educational materials on ground leases for TOD.
* Use conferences, specialized press, and large developers to promote TOD.
5. Action 1(e) Help develop and promote appropriate parking standards and educate
actors about parking reduction strategies.
Parking is one of the biggest stumbling blocks for TOD, and many developers, lenders,
and local governments do not consider the option of reducing parking or other strategies
to achieve that goal. Lenders may not finance a project if it doesn't contain a
standard parking ratio, but standard ratios may not accurately reflect the local
conditions. The most important areas of action for the TOD intermediary are:
* As part of the typology of places, develop parking and trip generation standards
for TOD at different scales and in different types of places based on empirical
research. * Examine strategies for unbundling parking from other land uses.
* Actively promote these standards and strategies to standards agencies, lenders,
and local governments.
5. Action 1(f) Work with lenders and secondary markets to understand ways to
standardize lending strategies for TOD.
There is a need for standard lending strategies that recognize the viability
as well as the potential greater return of TOD projects. In the same way that
Fannie Mae has agreed to serve as a secondary market for location-efficient mortgages,
it or another organization could support a form of lending tailored to TOD projects.
B. Transit Agencies
Transit agencies often take the lead in stimulating transit-oriented development
because they own land adjacent to their own stations and view joint development
as a tool for meeting goals ranging from increasing ridership to generating ground
lease revenues. Transit agencies can play an important facilitating role, and coordination
between the transit agency and entities doing station area planning is always crucial
to successful TOD.
1. Action 2(a): Participate in planning for both transit agency property and
the wider station area with the aim of fostering long-term rather than short-term
value. Use transit agency resources to support this long-term value
As public entities and landowners, transit agencies should be able and willing to
support a long-term vision for a site in a way that most other actors cannot sustain.
This involves addressing
current financial realities, evaluating impacts on existing conditions, and creating
a useful public participation process.
2. Action 2(b): Create station-access plans that recognize the critical link
between the station and its adjacent land uses, as well as the need for the station
to be an integral part of a larger area.
Plans should be developed with a focus on all of the desired outcomes for transit-oriented
development, including great accessibility and interconnection, the creation of
a vital place, high levels of ridership, the maximization of land around the station
and strong financial performance.
3. Action 2(c) Plan for TOD at the system-wide scale, assessing opportunities
at each station site and thinking regionally about the interplay between land uses
around each station and the way they can affect system-wide ridership
Although each individual station must balance node and place functions to some extent,
the value of the system as a whole can be enhanced if there is some degree of specialization.
In addition, from a market perspective it does not make sense to try to force a
mix of uses that is radically different from what is in demand. Goals of TOD can
sometimes be enhanced more at the regional level than at the local level.
Thus, many of the stations along the extension will be fairly specialized, but the
line as a whole will provide a reasonable mix of jobs, housing, retail, and commuter
parking. While the details of the development along the line can be criticized,
the overall concept of specialization works well. Even when specialization is not
carried to the same extent as in this example, any TOD project will be made more
effective if it is planned with other station areas in mind.
C. Local Government
Local government has the broadest mandate of any of the actors: promoting the public
good. While the public good can be defined in many different ways, the local government
will almost always be the actor best positioned to advocate the broadest and most
long-term vision for development sites and as such is the actor best able to take
a leadership role in creating great places.
1. Action 3(a): Establish transit-oriented development area plans around all
TOD area plans should be informed by whatever research and guidelines are available
to help planners and should do the following:
* Present a conceptual land-use diagram and program.
* Identify key opportunity sites.
* Present design guidelines and a streetscape plan.
* Designate investment priorities for infrastructure and place-making amenities.
* Present an action plan and financing strategy. The latter should discuss how value
will be captured and how it will be spent.
* Set high design standards, ensure careful design review at all stages of process,
and enforce standards strictly. Create strict guidelines around parking design and
vehicular circulation so that cars do not interfere with pedestrian and bicyclist
access to the station or make the station unpleasant for non-drivers.
* Take a comprehensive view of mobility.
* Formulate an anti-gentrification strategy where appropriate.
* Incorporate essential services such as day care facilities into transit-oriented
* Tie federal/state/local funds for provision of key infrastructure (transit facilities,
bridges, etc.) to requirements for transit-supportive design (plan implementation).
2.Action 3(b): Develop a process for interagency coordination with the transit
operator(s) who will be involved in transit-oriented development projects to ensure
that such projects will both achieve the goals of transit-oriented development and
move forward expeditiously
. As described above, municipalities and transit agencies
need to work together to identify the goals of every transit-oriented development
project before physical planning begins or developers are involved. These goals
should include outcomes such as a high level of accessibility and interconnection,
an attractive and well-used place, high levels of ridership, the reduction of congestion
and commute times, the intensification of land-use around the station, and strong
financial performance. Local government, in cooperation with the transit agency
or agencies, should identify a timeframe and process for initial goal setting, the
involvement of the public, and the selection of a developer. Strong support from
local government and an ongoing facilitating role in the development process is
essential for proper land assembly and other aspects of creating effective TOD.
3.Action 3(c): Create comprehensive parking strategies for TOD projects that
include comprehensive management and that "unbundle" parking from other
land-uses. In coordination with the other actors, local governments should create
comprehensive parking strategies for TOD projects that accomplish the following:
* Create area parking management plans for TOD projects.
* Link parking requirements to actual parking utilization and vehicle ownership
* Set parking ratios that reflect the area's transit service that enable people
to live or work here without owning a car, or by owning fewer cars per household
than would be feasible in a more suburban location.
* Encourage and facilitate car-sharing, local shuttle service to employment centers
as well as to neighborhood shopping centers (or beyond), and other strategies as
part of a comprehensive strategy.
* "Unbundle" parking from other land uses like housing, financially and
perhaps physically, and create a separate market for parking so that people pay
for parking separately from other uses.
4. Action 3(d): Provide financial and land assembly assistance to transit agencies
and/or developers as an incentive for creating optimal TOD projects, including identifying
new revenues streams to support bond financing.
Local governments may need to invest their own resources to ensure that TOD projects
get implemented properly. Land assembly is one of the most important roles that
local governments can play, since high land costs and fragmented ownership patterns
are often an impediment to any type of infill development. Also, by paying for market
studies and/or predevelopment activities, public investment can help to encourage
developers by proving project feasibility.
5. Action 3(e): Establish explicit policies for incorporating mixed-income housing
in TOD projects
. The creation of mixed-income housing should be an explicit
goal from the beginning of the project, and specific policies to create affordable
units should be incorporated into the planning process from an early date. Local
governments should set explicit standards, such as TOD-specific inclusionary housing
ordinances, for accommodating a range of income groups within TOD projects instead
of allowing projects to build housing targeted at only a narrow band of incomes.
In addition to whatever subsidies may be provided, local governments can use a range
of techniques to capture the additional value in TOD projects and direct a portion
of it to internally subsidize below market rate housing. In the same way that local
governments can use density bonuses that allow developers to build more intensively
(and therefore more profitably) on the condition they use some of the additional
profits to subsidize affordable units, parking reductions made possible by the nature
of the project can yield cost savings that can then be invested in affordable units.
D. Developers ~Lending Institutions
Developers and lenders provide the private capital and resources required to build
transit- oriented development projects. While developers share the local government's
primary focus on place, they do not have a mandate to promote the public good. Their
mandate is to meet the financial requirements of their investors and lenders. The
outcomes they focus on are phasing, costs, revenues, income, marketability, property
values, and overall return numbers.
Lending institutions, while critical to the process of developing a TOD, are less
directly involved than the other actors. Their focus is not on the TOD itself, but
on how a loan fits into their loan portfolio and its marketability on the secondary
market. As a result, they are less interested in the unique benefits of the project
as either a place or a node. Instead, they are concerned primarily with the performance
of the loan and how well it matches standard underwriting criteria. They rely on
underwriting criteria such as the debt coverage ratio, the loan to value, the track
record of the developer, and parking ratios. These criteria direct the lender to
hone in on outcomes such as the net operating income, the value of the project,
and invested equity as well as physical details such as square footage and parking
1. Action 4(a): Become educated about the financial structure and performance
of existing TOD and appropriate mixed-use projects.
With the help of TOD intermediaries and other advocates, developers and lenders
can learn about some of the many strategies that lead to successful TOD projects.
For instance, there are many built examples of both vertical and horizontal mixed-use
projects all over the country. One strategy for vertical mixed use is to limit retail
to less than 15 percent of the overall building square footage, thus enabling compliance
with existing single-use loan types. Or, for horizontal mixed use, each part of
the project can be "parsed" and treated independently for financing, phasing,
ownership and disposition purposes. By learning from such examples, the developer
is likely to save time and money in the development process as well as achieve a
2. Action 4(b): Use phasing and design flexibility into projects in order to
demonstrate market viability, examine assumptions, and allow for the evolution of
TOD over time.
Phasing can work as a critical tool to examine assumptions and demonstrate market
viability as well as respond to market change and limit risk. For instance, as the
viability of reduced parking is proven and as the project matures to the point where
transit gains a greater share of mode split, parking in subsequent phases can be
reduced. Use phasing to test unknown markets, such as higher density housing in
otherwise low-density areas. Build other portions of the project for which there
is known demand, and that may spark demand for less tested products like higher
Designing for future flexibility enables the TOD to react to market demands created
by both the evolution of the TOD itself as well as more macroeconomic changes in
the community and region. For example, as the TOD becomes more of a recognized place
and destination, lively with people and activity, the demand for retail should grow.
Building design should be able to accommodate more retail by changing the use of
some of the existing spaces when tenants leave, through conversion of ground floor
commercial offices to storefronts.
3. Action 4(c): Revise underwriting practices that require standard parking ratios
for TOD projects.
Lenders need to revise parking ratios to account for the reduced need for parking
spaces at TOD projects due to their location efficiency. Applying the same parking
ratios to a project that is only accessible by car to one that is accessible via
many forms of transportation makes little sense. For example, if the lender parking
ratios for suburban office development were applied to office buildings in downtown
San Francisco or Manhattan, there would have been no loans made in these very profitable
markets. The same case can be made for TOD. Those lenders who do not revise their
parking ratios to account for location efficiency will fail to capitalize on this
potentially very profitable and growing market segment.
4. Action 4(d): Create loan guarantee pools to help transit-oriented retail projects
get financing, especially those in revitalizing or inner city areas.
Retail projects in lower income areas may have great difficulty in securing the
tenancy of a chain anchor tenant, due to strict demographics requirements around
minimum area median income. Without the security of revenue and credit that a chain
tenant provides, lenders are often reluctant to finance new retail development.
Loan guarantees should fill in the gap in the event of tenant turnover, slow lease
out, or missing rent and can eliminate the need for a major-credit tenant.
E. Community Organizations
1. Action 5(a) Become active in planning activities sponsored by local governments
and transit agencies around transit stations
Community organizations are important sources of local knowledge and important allies
in any development project. By being active in planning activities, community groups
can push for better projects, help keep the political focus and momentum on TOD
projects and potential projects, and ensure that the needs of residents are well
2. Action 5(b) Advocate for mixed-income housing and recognize the benefits of
mixed use and location efficiency as part of an affordable housing strategy.
Community organizations in all neighborhoods should be involved in advocating for
mixed- income housing. This may include participating in housing action coalitions
or otherwise building relationships with affordable housing advocates or other public
interest groups who may not yet have realized the potential benefits of TOD for
their particular constituency. Groups that focus on affordable housing issues may
not realize the ways in which transit-oriented development can further their agendas.
This paper has argued that transit-oriented development can help alleviate a wide
range of urban and metropolitan problems, from traffic congestion and air pollution
to sprawl, long commutes, and shortages of affordable housing. TOD can enhance quality
of life and at the same time provide benefits for individuals, communities, and
The paper also argues that it is important to focus not only on whether or not ostensibly
transit-oriented projects are built, but on the quality of those projects as measured
by the functional outcomes of projects. The three main goals of TOD projects
location efficiency; mobility, housing and shopping choices; and value-recapture
and value-return can be measured and quantified. The definition presented
herein avoids a purely physical view of TOD and acknowledges a continuum of success.
This allows a more nuanced evaluation of projects, in contrast to the common practice
of labeling any project with certain features a success, regardless of how well
or poorly it actually achieves the three main goals of TOD.
A focus on functional outcomes leads to a different view of why TOD projects are
not living up to their potential than has been presented elsewhere in the literature.
Instead of focusing on the barriers to getting projects built, this paper examines
why the projects that get built so often do not live up to the full potential of
TOD. It finds that that:
* No working definition of TOD exists
* Projects fail to resolve the tension between "node" and "place"
* Planners lack guidelines about what makes a place work
* Unleashing synergy is complicated
* The regulatory and policy environment is fragmented
* The market may not be supportive
Such challenges do not necessarily derail projects entirely, but they do keep them
from taking advantage of the full range of synergies made possible by TOD.
With this analysis, it is possible to evaluate TOD projects in a new light, and
to take a different approach to improving them. The paper has laid out a series
of recommendations for doing so, focusing on the roles that can be played by five
main actors. Given the lack of consistent information and the disparate goals that
often cause actors to work at cross-purposes, a national- level TOD-related intermediary
can play a key role in bringing TOD up to scale. An understanding of the reasons
that many projects labeled TOD fail to live up to their potential combined with
a willingness to grapple with the tension between node and place and a realistic
assessment of what we do and don't know about planning for location efficiency can
help in the planning process. Enhanced ability of the actors to work together, with
the information and facilitation provided by an experienced intermediary, can ensure
that well-planned projects are properly implemented.
Such a mix of understanding, information, cooperation, and intermediation can both
improve individual TOD projects and help move TOD into the mainstream of real estate
products. TOD, to be sure, offers only one part of the solution to our urban problems.
However, if brought up to scale, TOD can play a central role in creating more livable,
sustainable, and socially just cities and regions.