What's TOD Got To Do With It?

From a transportation perspective, "transit oriented development" (TOD) is the land use and economic development version of transportation demand management (TDM).  The purposes of TOD and TDM are similar, to reduce the use of single occupant vehicles (SOV) by increasing the number of trips by walking, bicycle, car/van pool, bus, street car, ferry or rail. To minimize external trips, TOD projects should be located in higher density, mixed use, urban pedestrian districts with high quality transit service. External SOV trips can be reduced as much or more by people walking within a mixed use urban district as they can by using transit within and between urban centers.

To be most effective, TOD should be "urban" even in a suburban setting.  Pedestrian scale design draws people to return again and again.  Urban development supports transit; suburban development does not.  This is a powerful idea once established.  The concept includes mixed use, higher density, buildings at the sidewalk, less private and more public open space, smaller blocks, narrow streets with wider sidewalks, street trees and lights, lower parking ratios, shared parking, parking behind buildings, and on-street parallel parking.

What happened in Portland, Oregon?

The 1992-1998 intergovernmental Westside MAX light rail station area design, planning and development program focused on removing public and private obstacles to and providing support for transit-oriented development (TOD) prior to opening the new light rail line between Portland and Hillsboro in 1998.  The effort was successful both in producing new development and in altering the land use regulatory structure in the western portion of the metropolitan area.  About 7,000 dwellings have been built and more than $505 million has been invested in projects within walking distance of the new light rail stations. For more information, please see:

• Community Building Sourcebook: Land Use & Transportation Initiatives In Portland, Oregon, Transit Oriented Development (TOD) [3.3 MB PDF], Tri-Met, December 2007
• At Work in the Field of Dreams: light rail and smart growth in Portland [2.8 MB PDF], G. B. Arrington, Jr., Tri-Met, September 1998.

The author of this paper, Henry S. Markus, AICP, led several dozen light rail station area planning and development tours in Portland, Oregon for elected, professional and citizen groups over a period of several years.  These groups were local, northwest, national and international.  It was surprising that many of the same questions came up repeatedly.  Much of the following material is based on answers to their questions.

Lessons Learned Index
Why should you care about TOD? Do you believe in magic? Plan or build? Baking a cake Market for TOD The light rail development advantage Travel to/from stations Business cycle Public/private partnerships Practice what you preach Politics Civic personalities Leadership Set targets Timing/coordination Budget/funding/resources Types of development sites	Flexibility & certainty Density & parking Buy land Program administration Joint products Property owners Station design/plan/develop Public/private partnerships Missed opportunities TOD sites Marketing/education Mixed use Infrastructure Public subsidies are effective TOD incentives Development regulations

Why Should You Care About TOD?

Transit oriented development (TOD) is good politics because the public likes it.  For a transit agency, TOD design will save time by reducing controversy and money by reducing the need for transit facility redesign.  It will help meet transit ridership targets.  TOD makes stations notable public places.  They will be a highly visible effort to "manage" growth.  Private sector TOD investments validate the public investment in transit.

Do You Believe In Magic?

Popular pedestrian districts are mixed use and active eighteen hours a day including weekends. People drive to them so that they can walk in them.  Their popularity with the public was not "planned" by government or "built" by developers although government now protects them and developers enhance them.  Creating a "magical" place on vacant land is difficult but can be done.

Plan or Build?

A planning program is completed when plans/codes are adopted.  A development program is successful when projects are built.  If you want TODs built before light rail begins operation, adopt plans and development regulations at least two years before opening day or be prepared to accept the consequences of dealing with TOD applications under existing plan/code.  Timing is crucial to address developers' anxiety about the public approval process.

Baking A Cake

If transit oriented development (TOD) is new to you, the following analogy may be helpful.  Many people love cake.  If you want to sell a new type of cake, you should offer people a free sample.  Baking a cake requires tools.  Don't ask someone who has never baked a cake to write a recipe.  Planning is only one ingredient.  A master chef bakes a better cake.  Making every cake unique is expensive.  A cake mix is cheaper and easier but can be bland.  Using the right ingredients makes a better cake.  Market analysts determine what type of cake people liked last year.  Investors may prefer to finance a cake mix factory rather than a bakery.  A wedding cake costs more.

Market For TOD

There is a market for TOD.  If there are few/no TODs in your area, local real estate market analysts, who are paid to be conservative, will conclude that someone besides their client should build the first one.  The real estate industry has a supply problem.  Demand for more varied products exists.  Hire a forward looking market strategist to evaluate the market for TOD in your area.  Keep an up-to-date list of local TOD projects.

Developers, bankers and others are more comfortable building product that they are familiar with.  If the issue is comfort rather than risk, go find developers comfortable building a TOD. A TOD success will effectively convince other developers to build TODs.  If an experienced TOD developer says that something will not work, listen.

Until recently, national retailers loved big box and were skeptical of TOD.  "Lifestyle retail" is now the next big thing.  "Authentic" mixed use main streets and urban villages are not just acceptable but good investments for real estate investment trusts (REITS), insurance companies and pension funds.

The Light Rail Development Advantage

Like freeway interchanges, light rail station areas offer greater certainty and therefore less risk to the development community.  Once built and operational, a station is unlikely to move or operation to cease.  Bus routes are perceived to be more flexible and less certain over long periods of time like 30+ years.  Trains are more likely to be on schedule and travel faster during AM/PM commute periods than buses (or cars) because light rail operates on a separate right of way and cannot get stuck in traffic.

Local governments that revise their comprehensive plans and development codes to allow pedestrian and transit supportive development and restrict other land uses are providing "protection" to the first developer to build a TOD project by increasing the likelihood that future projects will increase rather than decrease the value of their project.  This is especially important to developers that "hold" rather than "resell" their projects.

Travel To/From Stations

Going to a light rail station, people can walk, ride a bus or bike, ride in a van pool, or drive a car.  After getting off a train, people can walk, ride a bike or bus, or take a shuttle (if available); they do not have the option of driving a car.  This has several important ramifications.  TOD with office, retail or entertainment uses give more people the option of walking to their final destinations.  Higher density residential TOD gives more people the option of walking to or from a station.  Mixed use TOD increases the number of people with both of these options.  As the number of station areas with higher density mixed use TOD increase, light rail ridership (peak and off-peak passengers) and mode split (percent of non-auto trips) will increase.  This in turn results in less traffic congestion, fewer vehicle miles traveled (VMT), and less air pollution.

Business Cycle

Buy low, sell high.  Land prices are lowest at the bottom of the real estate business cycle but this is the hardest time to get funding/financing and the longest wait before development is likely to occur.  Do not buy land or expect TOD to be built at the end of the cycle unless you are ready to tolerate red ink.  The initial upswing after the bottom of the market is the best time to do TOD planning but complete it fast to take advantage of market momentum.  By luck, the Westside station area planning program (WSAP) in Oregon hit the cycle perfectly -- $14 billion of regional high tech investment, large vacant land parcels at relatively low prices near five stations, and low apartment, office and flex space vacancy rates.

Public/Public Partnerships

State of Oregon funding conditions, Metro 2040 regional growth plan requirements, and the Federal Transit Administration (FTA) Hillsboro Extension funding conditions, created a framework for local government transit oriented planning and development in Portland. As a result of much discussion and effort that led to an understanding of the need for coordination of station area planning efforts, ODOT, Metro, Tri-Met, Washington County and the cities of Beaverton, Hillsboro and Portland cooperated in the planning process, including setting common goals and objectives, establishing a common work plan, agreeing on lead and shared planning responsibilities, and allocating limited funding.  The regular meetings of staff representatives throughout the process helped to identify and address shared planning issues, as well as providing moral support.  Based on discussions with staff in other metropolitan areas, this degree of cooperation is unusual.

Practice What You Preach

Locate and design stations, park & ride lots and other transit facilities to support TOD.  If the transit agency does not advocate for TOD, who else will?  Build structured parking, support shared parking, set up transportation demand management programs, sell air rights, locate retail mixed use between parking and station platform, assign fee credits to adjacent property owners for TOD, pursue joint development of remnant property, share cost of public/private master planning, provide technical and financial assistance to local jurisdictions, be an advocate for TOD in local permit public hearings.  For example, transit agencies, like retailers, want their parking at the front door; placing mixed use development between a station and a park & ride provides customers for the private project.  To make this work best, land should be set aside during the preliminary engineering and draft environmental impact statement processes.  The longer you wait, the harder it is to accomplish.

Politics

Identify potential fatal flaws and deal with them.  People think that they dislike density.  Based on visual preference surveys, what they actually don't like is insensitive design, traffic impacts, lack of public open space, and so on.  The solution is public outreach, citizen participation, adoption of good design standards, and site specific project impact mitigation.  Station area development regulations should include detailed design standards, and design review should be considered if not already required. 

If you need to cut down a forest to build TOD, seek support from environmental groups.  If a neighborhood fears congestion from new development, add traffic calming projects to your capital improvement program.  Always provide opportunities to participate in decision making.  Some issues are best dealt with by meeting separately with developers, property owners, citizens, experts, and public officials, then bringing a package back for joint/public review.  Participants need to have direct access to decision makers.

Civic Personalities

One local government is ready to do the work.  Others need time to get started.  One style is to get it done fast.  Others prefer to take several years.  Some are stable.  Others change mayors, directors and senior staff several times during the process.  One wants to wait until regional, state and federal policies are finalized.  Others prefer to lead rather than follow.  Some innovate through applications for development.  Others want development to stop until they revise their plans and codes.  Some want visibility, others prefer the stealth approach.  None of this is right or wrong, just different.  Take this into account when preparing work programs, schedules and budgets.  Provide expert technical assistance and hold work sessions early on to aid program set up.

Leadership

Promote enlightened self-interest.  Question traditional assumptions.  Set a new agenda.  Build coalitions of strange bedfellows.  Identify public, private, and non-profit leaders who support TOD.  Make it easy for neighborhood, city, county, regional, state and federal leaders to cooperate, coordinate, and collaborate.  Provide powerful facts.  Make sure that leaders get credit for success.

Set Targets

Clear intergovernmental objectives are needed to establish and evaluate the success of a station area planning and development program.  Take care to determine what is most important and to set real targets.  The target areas should include land within one-half mile of light rail stations or one-quarter mile of feeder bus routes.  Set targets for TOD based ridership; share of trips (mode split) from pedestrians, bicycles, and internal trips; ridership from feeder bus routes; people per acre for residents, employees, visitors and customers; transit ridership for AM/PM weekday peaks, mid-day, evening and weekend. 

For TOD ridership assume, for example, 10,000 new dwellings within walking distance of light rail stations, two adults per unit, two commute trips per day, and a 10% transit share, this equals 4,000 trips per day by transit.  Assuming mixed-use transit-oriented development, the total contribution of transit, walk/bike and internalized trips can reduce external automobile trips by up to one-third.

Translate targets into land uses and densities; include interim targets to support longer-term objectives.  For example, define build out for a station area and interim steps (project phasing) to reach the target.  Create catalyst projects to reach critical mass.  Identify areas where little is likely to happen. 

Timing/Coordination

Be aware that there can be irreconcilable timing dilemmas.  Light rail PE/DEIS processes end about five years before service begins.  Developers usually have about a two-year time frame.  Long-range land use planners can take several years to prepare a twenty- year plan.  Identify and take advantage of "windows of opportunity".  To the extent possible, coordinate work programs and schedules for the light rail project and station area planning.  Managers of major projects want to be on time and on budget.

As construction projects progress, they are less flexible; change orders create headaches and cost money.  This is a key reason to undertake station area design, planning and development as soon as possible. Be prepared to do any or all of the following concurrently -- Public/private master planning; finalizing transit facility locations and design; updating local government plans, regulations and capital improvement programs; development review; and TOD marketing/incentives.  Use a charrette process (intensive multi-day meeting) to compress the time required to reach agreement on light rail final design, TOD, plan/code, and other issues without missing opportunities or creating fatal flaws by dealing with one issue at a time.

Budget/Funding/Resources

Make walk-on ridership a budget priority.  To the extent possible, make TOD an eligible light rail project expense.  To capture potential TOD ridership, adequate resources are needed for staff, geographic information system (GIS) system/data/operator, consultants, marketing, training, land purchase, and so on.  Obtain funds for TOD from as many sources as possible with as few strings as possible to provide technical and financial assistance as well as to buy land and make site improvements.

For TOD public/private master planning, negotiate a 50/50 cost split.  Under intergovernmental agreements, pay for work that is completed, not for work in-progress.  Use multi-year contracts; delegate authority so that every amendment does not have to go back to the governing bodies; provide for public budget end-of-the-year funding roll over.  Make sure that each public sector player has at least one senior level person assigned full time to TOD plan/code work and implementation.  Once you succeed in obtaining TOD funds, use them or lose them.

Types of Development Sites

The type of development sites in light rail station areas is important for setting targets and because developers often specialize in one or two types; development costs may vary by type of site; and neighborhood support and/or opposition may vary by type of project site.  National developers with institutional funds want to build large projects, for residential, this often means a minimum of three hundred units.

• "Greenfield" sites are vacant parcels that are ten acres or larger;
• "Infill" sites are smaller vacant parcels in developed areas;
• "Brownfield" sites require environmental clean-up;
• "Redevelopment" sites have improvements whose value is lower than the land value;
• "Rehab" sites have buildings that can be updated or converted to a new use; and
• "Joint development" sites are owned by a public agency and offered for development on a competitive basis.

TOD Sites

Identify, preserve, enhance or create TOD opportunity sites around stations and feeder bus routes.  Consider interim development regulations to prohibit inappropriate land uses while permanent plans and regulations are being prepared.  Purchase the land or prepare public/private master plans for large vacant sites.  Proactively solve problems of difficult sites (hazmat, wetland).  Consolidate fragmented parcels or at least require coordination of development.  Support infill and redevelopment design sensitive to neighbors.  In existing residential areas with alleys or large lots, allow a rental unit to be added on single family lots to increase density over time without major upheaval.

Marketing/Education

This is much more than "citizen participation" in planning.  "Stakeholders" include transit project staff, residents, property owners, developers, institutional investors, business, special interest groups, government agencies, and others.  Prepare a marketing strategy, document TOD opportunity sites (profiles/maps), market analysis, case studies (nothing sells like success), focus groups, charrettes, seminars, conferences, newsletter, presentations, handbook, tours, TV shows, newspaper articles, lecture series, sketch walks, computer simulations, field trips, surveys, web sites, monitor development projects, and so on.

Mixed Use

Mixed use TODs are the most effective type of development for reducing external automobile trips but are difficult to do.  Public incentives may be necessary.  Mixed-use projects can be vertical (in a building) or horizontal (adjacent to one another).  For vertical, it is more difficult to find developers and consultants who understand mixed use relationships and marketing, to obtain financing, and to get permit approvals.  Most banks do not make loans for mixed use.  A modest mix of uses can be hidden inside a larger project like first floor commercial in one building of a multi-building residential complex.  Nationally, there is growing experience with mixed-use urban villages (neo-traditional development).  Combined with transit, this is a powerful and workable marketing concept.

Infrastructure

Station area planning should include traffic impact analysis for the types and density of development desired.  Make public improvements or offer tax/fee credits to developers to support necessary TOD infrastructure.  Higher density pedestrian districts require more streets; this costs more than sprawl development and is harder to finance.  Even assuming a 20% mode-split, higher density TODs will create local congestion because 80% of trips will still be by automobile.  The benefits are creation of active pedestrian districts and reductions in regional traffic congestion, air pollution, and vehicle miles traveled.  Land locked stations surrounded by vacant land can be wonderful development opportunity sites; however, be sure to acquire public access to the station before finalizing the station location and design.

Public Subsidies Are Effective

Urban sprawl is supported by past and present public policy on freeways, the GI Bill, the Lakewood Plan (southern California), and tax subsidies for single-family homes and parking lots.  For anyone who says they hate subsidies, ask them if they own a home and deduct mortgage interest and property taxes on their income taxes.  To provide a "level playing field" for TOD, either subsidy for auto-oriented development should be reduced and/or subsidies for TOD should be provided.

TOD Incentives

Public support can take many forms.  Consider all possible ways to encourage and support TOD. Sponsor demonstration, pilot and catalyst projects.  Sell land owned by public agencies not needed for a public purpose.  Take action to minimize development soft costs, time delays and uncertainties by dealing with issues like wetlands, strange or missing code provisions for TOD.  Amend zoning codes to allow high-density development.

Other opportunities include offering a TOD property tax exemption, systems development charge or transportation impact fee credits, permit expediting, and modifying any/all existing/related programs to support TOD.  HUD has a multiple-family housing mortgage guarantee program that allows first floor commercial.  Public benefits, both tangible and intangible, should equal public costs.  The marketing value of incentives should not be underestimated.  Beware, if higher developer transaction costs to take advantage of public incentives approach the value of the incentives, program effectiveness is dead on arrival.

Development Regulations

Make what you want easy and prohibit what you don't want.  Many codes do the opposite.  Do a regulatory audit.  Adopt interim development regulations.  If you don't want "suburban" low-density auto-oriented development in station areas, don't allow it.  If you set your standards too high, no transit-oriented development will occur without subsidy. If too low, what's the point.  Finding the balance that is currently viable, which is a moving target, is the hard part.

To the extent possible, make standards clear and objective.  Use "shall" not "may"; adopt "standards" not "guidelines".  Have an intergovernmental team prepare model regulations with intent and commentary to help local government staff expedite code update.  Get sign off from police/fire officials for skinny street design.  Prepare proactive solutions to fire code concerns for vertical mixed-use projects and wood frame platform parking.  Some government agencies want single story buildings and lots of parking for their facilities.  Require public agencies to practice what they preach.  New people-intensive civic facilities should be located in station areas; locate new land-intensive public or private facilities like maintenance or storage elsewhere.

Negotiate an overall strategy with all agencies responsible for issuing light rail project development permits and fees.  Obtain intergovernmental agreement on consistent design standards and a consolidated process.  If you want high quality TOD design requirements, apply the same criteria to the light rail project.  Obtain approval to assign any unused fee credits to TODs on adjacent properties.

Flexibility & Certainty

This is the boon and bane of developers and city officials.  If you want retail but market risk does not justify requiring it, require retail "design" instead and zone for commercial land use which allows but does not require retail.  This way a developer has a fall back position if retail does not work for a time.  Consider adopting two approaches in the development code for TOD: A traditional one with prescriptive standards and a second with flexible performance standards for master planning with public review.

Density & Parking

High parking ratios combined with surface parking make high-density development impossible.  In suburban areas, set the minimum density near the top end of what the market can provide without public subsidy for structured parking (25-30 du/ac subject to topography); this should increase over time.  Set maximum allowed parking near the low end of what the market will accept (1.7 space/unit); this should decrease over time.  Promote shared/joint parking and structured parking; provide public incentives to encourage this such as shared use of park & ride lots.  Set up transportation demand management programs to reduce parking demand.  Pedestrian oriented blocks are 200-300 feet long with a perimeter of 800-1200 feet.  Small blocks may prohibit some types of development.  Having more streets provides more on street parking which creates a better pedestrian environment.

Buy Land

Public purchase of land and resale for TOD is a key implementation tool.  Obtaining funds to purchase land is difficult.  To the extent possible, use light rail project funds.  Buy as many of the "best" TOD sites as possible, prepare master plans, make site improvements, package incentives, then resell on a competitive basis for private development with conditions.  Reinvest land sale proceeds to reduce development soft costs, provide infrastructure in the project area or on-site public amenities, or put into a revolving fund to use at other TOD sites.  Obtain interagency agreement on the permit approval process and requirements before offering joint development sites and incentive packages to developers.  The location and size of light rail construction staging areas should take into account the potential for TOD; minimum size should be one acre; bigger is better.  National multiple family residential developers like projects of 300 units or larger.  This strategy works for infill sites as well as greenfield sites.

Program Administration

For intergovernmental projects, have management experts (not planners) set up and monitor contracts and legal agreements (IGA, MOU), objectives, milestones, budget, accounting, scheduling, products, and evaluation.  Key decisions include who does what and joint products.  Prescreen consulting firms in a variety of disciplines using an RFQ process to allow hiring on the fast track from a pre-approved short list on an as needed basis.

Joint Products

For example, model development regulations with intent and commentary should be prepared by a consultant team with an intergovernmental advisory committee.  Local government staff can then prepare custom versions for adoption in their jurisdictions based on the model.  This will expedite adoption of new local TOD plans and codes.  Themes should be consistent but include variations for different situations.  Seek review and critique of the model from special interest groups.  Using common names and requirements for station areas where two or more local governments have jurisdiction reduces potential confusion of residents, business, property owners and developers.  Use MOUs or letters of intent to establish a working basis for an inter-agency project.  If conditions change, amend the agreements.

Property Owners

Individuals, families and public or private organizations that own vacant or underutilized land in light rail station areas may have little or no expertise with development.  They may know even less about transit oriented development.  Their perception of risk for TOD may be even higher than that of conservative developers.  The public sector should provide technical assistance to property owners as well as practice patience.

Station Design/Plan/Develop

The right interagency/interdisciplinary team with the right assignment at the right time can save significant funds and time while reducing conflict. The team should include land use, transportation, market analysis, environmental, urban design, engineering, legal, marketing, public relations, and other specialties.  To identify, preserve, enhance and create TOD sites, include urban designers and market analysts on teams before finalizing transit facility location and design, updating city/county plan/code and preparing public/private master development plans.  For interagency teams, seek people with expertise and signature authority; document team conclusions and decisions at the end of each work session; members should obtain sign off from their agencies before the next meeting so work can proceed to the next stage.  When explaining the purpose of TOD to engineers or economists, tell them that TOD will "increase the utilization capacity" of light rail.  Translated into English, this means that you get more riders at little or no additional cost.  That is a very good thing.

Public/Private Partnerships

In Portland, the best TOD projects were developed using the Oregon version of California's "specific plans".  Seek partnerships with local government, major property owners and developers.  Offer to split the cost of master planning but require a 50% private match.  Be willing to modify transit facility location and design to take maximum advantage of major development projects.  Define roles and responsibilities, and set clear joint objectives at the beginning for land uses, density, parking, block size, incentives, street connectivity, public involvement and so on.  Either jointly hire a consulting team or create two teams, one for the private participants and another for the public.  Use a charrette process with the decision makers and consultants in face to face discussion.

Missed Opportunities

In Oregon, the two most significant missed opportunities were not preparing model plan/code provisions and not purchasing land for TOD.  Model interim city/county station area development regulations prepared by an intergovernmental team with consulting assistance saved time, effort and money; the effort should have continued to prepare permanent model plan and code.

Public purchase of some of the large tracts of vacant land around stations from willing sellers in the early 1990s for mixed use development would have created better catalyst projects demonstrating the full potential of TOD.  Even if funds had been available, it would have been hard to convince a public agency (city, county or transit) to buy land for TOD that had never done this type of economic development project before. In 1997, Metro established a new program to buy land for TOD.