Introduction
Transit-oriented development (TOD) – typically defined as compact, mixed-use development within walking distance of a transit station – has emerged in recent years as a key strategy for fostering quality neighborhoods and reducing auto dependence. Despite the emphasis on TOD in many policy discussions, however, only limited information is available to help communities understand the likely development impacts of new transit investments. This report builds on a 2010 study by the Center for Transit-Oriented Development (CTOD), Rails to Real Estate: Development Patterns along Three Recently Constructed Rail Lines, to examine the opportunities and challenges involved in promoting TOD in different types of neighborhoods, and the strategies that may be appropriate to catalyze TOD depending on the neighborhood context. By examining development patterns and public investment strategies through the lens of “development context” or “neighborhood type,” this report attempts to represent the actual, onthe-ground conditions within which TOD planning and implementation decisions are made.
Previous Research
Sponsored by the Federal Transit Administration, Rails to Real Estate documented real estate development within a half-mile of three new transit lines in the Denver, Charlotte, and Minneapolis-St. Paul regions. The report found that while there had been a significant amount of development along all three lines, development had occurred unevenly within the corridors. New development appeared most likely to locate near downtowns and other employment centers. City-led planning processes, infrastructure investments, and other public sector efforts were found to play an important role in influencing the location of development. One surprising finding, however, was that, at least in the 2-5 years following the introduction of transit, the location of “opportunity sites” for development was not a good indicator of the location of new development. The report concluded that there is a great deal of unmet development opportunity along transit lines. Finding ways to encourage future infill development in these locations will be important for maximizing the value of our transit investments, as well as for meeting greenhouse gas emissions and other goals.
The Importance of Development Context
This report builds on Rails to Real Estate by examining development patterns through a more qualitative framework of eight development contexts that are commonly found around transit stations:
- Downtowns/Urban Business Districts: City centers, including major regional employment and cultural hubs, as well as sub-regional central business districts located in smaller cities.
- Major Suburban Employment Areas: Job centers located outside of central business districts, including major office concentrations along highways, regional retail centers, and master-planned business parks.
- Legacy Industrial Areas: Industrial districts built in the late 19th and early 20th centuries, often near the historic urban core of cities.
- Mixed-Use Neighborhoods/Main Streets: Neighborhoods that feature a mix of retail and residential uses at a walkable, pedestrian scale.
- Auto-Oriented Commercial Corridors: Corridors designed to facilitate automobile access with wide streets, fast-moving traffic, and strip retail.
- Industrial/Distribution Areas: Districts characterized by low-density industrial uses and warehouses, usually located near highway interchanges or other major transportation nodes.
- Low-Density Residential Neighborhoods: Neighborhoods dominated by single-family residential uses.
- Major Greenfield/Infill Sites: Very large parcels of underdeveloped or underutilized land.
Actual neighborhoods, of course, rarely fit neatly within one of these categories, and may move between categories as they change over time. The eight development contexts used in this report are intended to provide a simplified framework for thinking about the typical types of conditions found near transit.
An improved understanding of the context for transit-oriented development is particularly important given two parallel trends that are underway in transit and planning circles. First is the increasing focus on “value capture” as a source to pay for, or in some cases maintain, transit investments. Value capture is a type of public financing where increases in property values generated by public investments are “captured” or recovered by the public sector. The most common forms of value capture include assessment districts, tax-increment financing, developer fees, and joint development.1 Because most of these mechanisms are dependent upon new development to generate revenue, understanding the likely extent, location and timing of future investment is critical for developing effective value capture strategies.
The second trend is the growing interest in forming innovative partnerships to support TOD. Both the public and private sectors are more interested than ever in partnering to create creative tools – such as infrastructure banks, corridor-wide tax-increment financing districts, and land acquisition funds for affordable housing – to unlock the potential for development near transit, especially given the current weak real estate market. Some efforts are focused on finding ways to fund needed infrastructure, catalyze private investment, and deliver affordable housing, parks, community centers, and food stores. Others are geared toward minimizing displacement of low-income households. Understanding where and when development is likely to occur is critical for developing effective tools and policies and determining how best to deploy limited resources to catalyze TOD. Unrealistic expectations about the development impacts of transit can result in poor planning and policy decisions, lead to the creation of ineffective financing tools, and fuel speculation in property markets.
Structure of the Report
Following this introduction, Chapter 2 revisits the three regions explored in Rails to Real Estate to take a closer look at where development did and did not occur in terms of the eight development contexts. Chapter 3 provides a more detailed look at the opportunities and Center for Transit-Oriented Development Downtowns, Greenfields, and Places In Between challenges involved in fostering TOD in each type of neighborhood, and discusses strategies that may be appropriate for catalyzing TOD depending on the development context.