Transit- Oriented Development (TOD)

Transit- Oriented Development (TOD)

Transit-oriented development, or TOD, is an approach to development that focuses land uses around a transit station or within a transit corridor. Typically, it is characterized by:

  • A mix of uses
  • Moderate to high density
  • Pedestrian orientation/connectivity
  • Transportation choices
  • Reduced parking
  • High quality design

The rule of thumb is that TOD occurs within one-quarter mile, or a five to seven minute walk, of a transit station.

Rationale

Transit-oriented development is a response to current conditions:

  • Rising energy prices
  • Road congestion
  • Climate change
  • Shrinking household sizes
  • Increasing demand for urban living
  • Interest in green building and walkable neighborhoods

Homebuyers, renters and employers are increasingly drawn to areas with convenient access to transit and other urban amenities such as neighborhood shopping and services.A recent study found that at least a quarter of all housing demand in the next 20 years - some 14.6 million households - will be for homes and apartments within half a mile of rail transit stations ("Hidden in Plain Sight: Capturing the Demand for Housing Near Transit, Reconnecting America's Center for Transit-Oriented Development," 2005). This high level of demand is reflected in the prevalence of higher rents and land values near transit across the country.

Effort Required

Buy-in will be required on both the governmental and community levels. With the increased desire for these types of developments pushback from the community should be minimal; however, if public transit infrastructure is not currently in place, the upfront costs may be high.

Benefits

By developing more "urban-scale" buildings with reduced parking ratios and ready access to transit, TOD improves air quality and reduces auto traffic congestion. Studies indicate that TOD can reduce traffic congestion and air pollution by up to 25 to 50 percent compared to typical suburban development.

Risks

  • Financial Risk to Developer: Although TOD is gradually gaining more acceptance in the development community, it is still often hard to convince developers and financiers that TOD can be profitable. Many developers and investors believe that TOD involves higher risks and costs than other types of development. Some conservative lending institutions require the facilities they invest in to have automobile-oriented design features because they believe it will ensure a higher financial return.
  • High Initial Public Investment Costs: It is widely viewed that TOD can lower infrastructure costs in the long run but the initial TOD infrastructure needs can be considerable and can require extensive public investment. There is no single source of funds for TOD; instead, a number of funding sources are needed. Other municipal infrastructure development often competes with TOD for the same funding sources.
  • Unsupportive Regulatory Framework: One of the biggest challenges is that the regulatory framework of most municipalities is not supportive of TOD. It is common for cities to have zoning ordinances and land development codes designed for automobile-oriented, single-purpose, suburban-scale development. The physical requirements of zoning ordinances often prohibit the development density necessary for TOD, through such provisions as maximums on floor area ratio (building floor area divided by lot area), height limitations, minimum front setback of buildings, landscaping requirements, lot coverage maximums, and minimum parking requirements.
  • Community Resistance: Resistance from the local neighborhood can pose a challenge to the implementation of TOD. Such resistance comes from residents of existing neighborhoods that may be targeted for transit improvements. Residents often have concerns that TOD will take away from the character of the neighborhood, create localized traffic congestion or lower property values. The resistance also comes from new residents, as expressed by choices made to buy homes in the suburbs rather than in TOD.

Action Agent(s)

  • Department of Transportation and Public Works
  • Department of Housing and Community Development

Cost

TODs are relatively inexpensive considering the alternative, sprawl. Sprawl drives up costs of development because it requires the expansion of public infrastructure such as roads, water lines, electrical services and sewer lines. Public service costs also rise from increased service requirements (e.g., fire and police, road maintenance, school busing, snow plowing) that result from additional miles of roadway. Conversely, TODs use existing infrastructure, and can often be served by existing municipal services, requiring little additional investment. For new, denser development at transit stations, communities may be able to realize economies of scale in new infrastructure investments. Further, by reducing dependence on the automobile, TOD reduces traffic congestion and its associated costs to municipalities.TODs have also been reported to have a positive impact on property values. Research consistently shows that both residential and commercial property values rise with proximity to transit stations. This helps to foster growth of the municipal property tax base and allows revenues to be spent in the very neighborhoods where public infrastructure and service delivery costs are reduced due to increased densities. Many states offer financial incentives to encourage transit-oriented development. The state of Massachusetts program is called the "Transit Oriented Development Infrastructure and Housing Support Program - TOD Bond Program". Eligible projects include pedestrian improvements, bicycle facilities, preliminary design for bike and pedestrian projects, housing projects (must be 25% affordable at 80% of median income) and parking facilities. Grants range from $50,000 for design to $500,000 for bike and pedestrian improvements to $2.0 million for housing and parking projects.

Resources