Transit-Oriented Development

While not a new concept in the public policy lexicon, transit-oriented development is receiving renewed attention as some states and communities ponder a future that may include high-speed rail. States have a vested interest in ensuring that huge investments in rail and transit systems pay off not only in improving transportation but also in creating economic development and helping to bring about healthier, more environmentally friendly and sustainable communities around transit stations. Fortunately, a number of states already have years of experience in using public policy to shape how this development takes place.


Executive Summary

  • Transit-oriented development is defined by such factors as not only proximity to transit, but also mixed land uses, zoning codes that create memorable and versatile areas, traffic calming measures that make areas suitable for pedestrians and cyclists, limited car parking, abundant bike parking, sidewalks, affordability and open space. 
  • Although it is not a new concept, transit-oriented development is receiving renewed attention as some regions of the country prepare for high-speed rail. 
  • With a San Francisco-to-Los Angeles rail line planned in California, planners and researchers there hope to avoid some of the mistakes made during the development of San Francisco’s Bay Area Rapid Transit system in the 1960s. Lacking a good land-use plan, some transit stations became islands surrounded by parking and little else. That limited the connectivity of the system and squandered many of the potential benefits of public transportation and transit-oriented development, including getting emission-producing cars off the road. A California assemblywoman is introducing legislation in 2011 to allow local governments to use tax-increment financing to create transit-oriented development. That’s a mechanism that uses future gains in tax revenue that are expected to accrue from infrastructure improvements to finance those improvements now. 
  • The benefits of transit-oriented development are significant and widespread. Among them are: reduced travel costs, increased travel choice, reduced driving and resulting greenhouse gas emissions, reduced parking requirements, improved public health, improved access to jobs and local businesses, and creation of a sense of community and place. 
  • State governments play an important role in ensuring development around transit stations serves an overall vision and taps all the potential benefits of transit investment.
  • State governments have sought to encourage transit-oriented development through both indirect and direct means. They provide grant funding and technical planning assistance and work with interagency coordinating committees. A few states have adopted policies that call for steering future statewide growth to transit corridors. Oregon mandates statewide land-use planning, while Florida has regional impact requirements.
  • The possible roles for state governments in transit-oriented development include: promoting regional coordination; forming collaborative relationships between state agencies; developing goals to promote tax savings and environmental well-being; providing financial incentives or grants for planning, property acquisition and construction; removing regulatory barriers to land use; promoting public-private partnerships; providing planning and technical assistance to local governments; and establishing pilot programs to test new ideas.
  • California’s department of transportation, Caltrans, has identified a series of strategies to change state policies and practices in order to encourage broader implementation of transit-oriented development. They include: encouraging improved coordination at the local and regional levels; facilitating the use and sale of state-owned land; examining state environmental review requirements; contributing to improved data on travel and economic impacts; and providing information and technical assistance on transit-oriented development implementation.
  • Caltrans also identified strategies for the best use of state funding for planning and implementation of transit-oriented development, including: providing funding for planning to local jurisdictions; providing financial incentives to enable local agencies and private organizations to implement it; providing funding for specific demonstration projects; changing laws to allow local agencies to provide tax-increment financing; allowing greater flexibility in the use of state transportation funds  for transit-oriented development; and helping to make private transit-oriented development mortgage instruments more widely available. A lack of funding for implementation has been the biggest problem California has faced in its transit-oriented development efforts.
  • The San Francisco Planning and Urban Research Association offers these recommendations for state policy actions: draft statewide station area planning and development guidelines to inform local plans; provide local governments with financial support to develop plans that meet guidelines; establish oversight and certification of local station area plans to ensure they meet planning and development criteria; and recapture value from future growth to help pay for station area improvements. 
  • State programs around the country are designed to encourage more transit-oriented development. New Jersey’s Transit Village Initiative and Pennsylvania’s Transit Revitalization Investment District Act both allow the state to partner with municipalities and transit agencies in establishing or revitalizing areas around transit stations. Oregon used tax abatement to incentivize denser developments by creating “vertical housing zones.” Connecticut issued bonds for transit-oriented development capital expenses. Maryland changed state law to allow transit-oriented development to be eligible for funding from the state’s Transportation Trust Fund. Massachusetts used a 2004 bond issue to provide grants for transit station area projects, while an as yet unfunded loan program in Minnesota looks to do the same. 
  • Future transit-oriented development policies will need to focus to some degree on strategies to make affordable housing part of these developments and to achieve greater equity and access for those at all income levels. 
  • State programs that provide grants, loans, tax credits or financial incentives may require some rethinking in the years ahead, as well as tailoring to make them fit local conditions and varying kinds of transit corridors.
  • Federal funding for high-speed rail is already bringing new development. But development around rail stations may also ensure more high-speed rail projects get funded and that a high-speed rail system is ultimately successful. State government policies will play a key role in reaping the full benefits of transit-oriented development for transportation, the environment, the economy, and the health and sustainability of communities.

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