Transit-Oriented Development

Transit-Oriented Development or “TOD” is a growing trend in mixed-use developments that combines residential housing with retail, hotels and other businesses, all located adjacent to or near a public transport station.    Generally, transit-oriented development has the following characteristics:

  1.  Located around rail stations, not bus stops;
  2. A mixed-use project, combining residential, office, retail and occasionally, hotel uses;
  3. The residential aspect is usually a mixture of condominiums (either high-rise or mid-rise multifamily), townhouses and some single-family dwellings;
  4. The development is sometimes located on land owned by the transit agency;
  5. It is one of the few categories of development that is doing well in the current recession, becoming the housing choice of the “new urbanist” or “creative class”;  and
  6. Transit agencies and local governments usually provide incentives, promote, or even subsidize the project.[1]


Developers say this type of project is now one of the fastest growing sectors in the housing market, fueled by high gasoline prices and the low prices for traditional suburban sprawl homes.    While it is no surprise that these types of developments are springing up along both the East and West Corridors, there are also TOD developments going up in Denver, Phoenix and Charlotte, NC.    Federal and state governments have encouraged these projects with tax breaks and incentives to reduce sprawl and pollution.

A recent Wall Street Journal article discussed the decision by Tom and Pat Kelly of New Jersey to trade their suburban four-bedroom home with a pool and big yard for a condominium within walking distance of a local train station.  The move allows Mr. Kelly to take the high-speed Patco train from his local station and arrive at his Philadelphia law office in just 30 minutes, as opposed to his previous two or more hour commute by car.[2]  The desire to save time and fuel costs, along with the increasingly questionable value of the suburban housing market is causing not only Gen Xers, but also Baby Boomers to rethink their life style and choose a TOD lifestyle.  The use of public transportation is growing in this country, and according to data from the American Public Transportation Association, there were about 36 million boardings daily in the 2011 fourth quarter, up 1.2 million from the prior year.

While currently the number of rail systems in the United States is small compared to those of Europe, the numbers are increasing, particularly in the Sunbelt and Western states, as cities invest in rail mass transit.  Most of the newer systems are light rail, which is popular because of its lower construction cost as well as the fact that it has a lower passenger capacity, reflecting the wider suburban sprawl found in auto-dominant markets.  Part of the American problem, as we all know, is the fact that the auto-centric population growth of the last century was not conducive to development near rail lines; in fact, during the last 50 years, rail lines were considered blight, and lowered property values of any residential developments near the tracks.  But new developments in train technology, resulting in quieter engines and less-noisy wheel and track systems, are reducing the negative impacts of housing developments along rail lines.  Housing developers are also using double and triple paned windows and better sound insulation to reduce the noise and vibrations of passing trains, making rail lines less intrusive to neighboring residents.

According to Steven Teiltelbaum, “In America, transit agencies rarely own significant amount of land around their stations, and often don’t have the power to influence the nature of adjacent development.  The transit agency exists to provide transit . . .” and are not really involved in the development process.[3]    Public-private partnerships can be difficult for potential developers to navigate, due to the multiple layers of local, state and federal government agencies, as well as community and business groups.  The up-front costs for TOD can also be higher than for traditional suburban development.  But where the land is available, the municipality and transit agencies willing, and the developer can design an attractive and practical plan for the development, more and more people will be willing to give up the big yards and long commutes for the advantages of living near a train station.

 


[1] Teitelbaum, Steven, “Transit-Oriented Development: A View from Inside a Transit Agency”, The ACREL Papers, Spring 2012, Las Vegas, Nevada.

[2] Wotapka, “Suburban Swap:  Trading a Backyard for a Train Station”, Wall Street Journal, Wednesday, May 2, 2012.

[3] Teitelbaum, id., at 118.

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