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"Is Transit-Oriented Development Offering Access to Opportunity?,"

by Miriam Zuk May/June 2015 issue of Poverty & Race

In August of 2013, the Federal Transportation Authority issued new evaluation criteria for its New Starts Program, a program that funds nearly every major fixed-guideway transit project built in the United States. The new guidelines reward projects that are close to existing and future affordable housing in an effort to encourage more affordable transit-oriented developments (TOD). This comes after years of TOD research, advocacy and action and more recent efforts to ensure that these developments are accessible to all.

Many local, regional and state governments have already developed innovative funding and incentive programs to encourage equitable TODs. Yet little information exists on the progress that has already been made, therefore limiting our ability to assess how far we need to go to achieve more equitable TODs.

In a recent study, Ian Carlton and I studied the spatial proximity of all Low Income Housing Tax Credit (LIHTC) developments to fixed-guideway transit stations in the United States. We looked at several neighborhood opportunity indicators to determine not only if transit and affordable housing were being co-located, but also the quality of the neighborhoods in which this was occurring. We also investigated the many barriers to developing affordable housing in high-opportunity, transit-rich neighborhoods through three in-depth case studies.

What we found is that little progress has been made over the past two decades in delivering new affordable housing options near fixed-guideway transit stations in high-opportunity neighborhoods. Although it appears that transit stations are more likely to be located in neighborhoods with existing affordable units than vice versa, few units are being added to transit neighborhoods after they open. In addition, we found that when LIHTC-funded developments are located near transit stations, they are more likely to be in lower-opportunity neighborhoods. Furthermore, we found evidence that affordable TODs are experiencing more rapid gentrification than other neighborhoods with LIHTC developments. Therefore, although recent Federal policy and local and regional programs are promising, it remains to be seen if they can overcome the significant cost and other obstacles to delivering equitable TODs at scale.

Background

TODs have a diversity of economic, environmental and health benefits (Zhou & Zolnik 2013; Sallis et al. 2012). Increasingly, researchers and advocates alike argue that ensuring that TODs are equitable and accessible to all income groups will not only benefit low-income residents, but also transit ridership and ultimately the environment as well (Transform and CHPC 2014).

A number of innovative funding streams and programs have emerged at the local (e.g., Denver’s Transit Oriented Development Fund), regional (e.g., Atlanta’s BeltLine Affordable Housing Trust Fund), and state (e.g., California’s Affordable Housing and Sustainable Communities program) levels to fund and incentivize the development and preservation of affordable housing in TODs (Reconnecting America 2011).

At the Federal level, the FTA’s New Starts Guidelines and many state allocation plans for the Low Income Housing Tax Credit program also incentivize affordable TOD developments. Today’s New Starts funding evaluation process is the result of decades of refinement. It was not until the passage of the Moving Ahead for Progress in the 21st Century Act (known as MAP-21) in 2012 that FTA explicitly considered affordable housing as part of their transit funding process. In its 2013 guidance, the FTA incorporated evaluation metrics that consider tools to increase and preserve the amount of affordable housing in project corridors that include everything from inclusionary zoning to targeted property acquisition. Yet these land use measures only represent 1/12th of a transit proposal’s overall score. The impact of New Starts rules on project planning and outcomes may therefore be modest. In a recent analysis of 2016 New Starts applications, for instance, it was found that while the new affordable housing criteria affected the ratings for land use and economic development, they did not have an impact on the overall rating deciding federal funding (Zimmerman & Lukacs 2015).

The LIHTC program, on the other hand, accounts for the majority of affordable housing units created in the United States. As of 2014, over half of all states (n=27) provided additional points in their scoring criteria for projects located near transit. The distance to and types of transit, however, were variously defined, as were the amount of extra points allocated to projects. In addition to proximity to transit, approximately a third of states (n=15) provide points for projects located in areas of high opportunity, again defined differently by each state. Recent research on the impact of LIHTC scoring incentives for TODs found that states awarding extra points to developments near transit had more success at attracting affordable housing near rail transit in comparison to states that didn’t award extra points (Luckey 2012).

Our research did not examine the specific impacts of the LIHTC or New Starts evaluation criteria, but rather took a broader approach to assess the current state of progress towards developing equitable TODs, with a closer look at the obstacles to development and the strategies used to overcome them.

Findings

Less than 1 out of every 6 LIHTC developments are built near a fixed-guideway transit station
From our national scan of LIHTC developments, we found that less than 15% of LIHTC-funded affordable housing developments are located within ½ mile of a fixed-guideway transit station and less than 4% are located within ¼ of a mile of transit stations. These rates have improved only modestly over time (Table 1).


Table 1. LIHTC Developments within ¼ and ½ miles of Fixed-Guideway Transit Stations
Within 1/2 mile of transit stationWithin 1/4 mile of transit stationMore than 1/2 mile of transit station
All LIHTC developments14.6%3.9%85.4%
LIHTC developments placed in service before 200013.2%3.5%86.8%
LIHTC developments placed in service after 200016.0%4.3%84.0%

Source: Zuk & Carlton (2015) based on calculations using the national LIHTC (HUD 2014) and TOD (CTOD 2012) databases

New fixed-guideway transit stations are more likely to be located near existing LIHTC developments, but few new LIHTC projects follow the opening of new transit
Over half of new fixed-guideway transit stations opened between 2000 and 2011 have been built within half a mile of existing LIHTC developments. New transit neighborhoods have not been as successful at attracting new affordable developments, however; only 1 in 5 new transit neighborhoods saw new LIHTC developments added. Furthermore, neighborhoods with both LIHTC developments and transit stations were more likely to experience gentrification pressures between 2000 and 2010 when compared to neighborhoods with only LIHTC developments but no transit. These results confirm previous findings that relate TODs to neighborhood gentrification (Pollack, Bluestone & Billingham 2010; Kahn 2007).

Table 2. Gentrification Indicators in LIHTC Neighborhoods Near and Far from Transit Stations
Gentrification IndicatorsLIHTC Neighborhoods < 1/2 mile of transit stationLIHTC Neighborhoods > 1/2 mile of transit station
Change in % poverty- 1.3%+ 3.4%
Change in % non-white- 1.5%+ 5.2%
Change in % of adults over 25 with a bachelors degre+7.6%+ 2.3%
Change in median household income+ 8.3%- 7.3%
Change in median rent+ 21.1%+ 7.3%
Change in median home value+ 84.2%+ 31.6%

Source: Zuk & Carlton (2015) based on calculations using the LIHTC and national TOD databases as well as Census data derived from the 2000 Census and 2006-2010 American Community Survey from the Neighborhood Change Database


Affordable TODs are located in lower opportunity neighborhoods than LIHTC developments without transit and transit neighborhoods without LIHTC developments
There is also tremendous room for improvement as it relates to locating transit stations and LIHTC developments in high-opportunity neighborhoods. By analyzing neighborhood poverty and school district proficiency rates, we find that transit neighborhoods with LIHTC developments had significantly lower opportunity levels than both transit neighborhoods without LIHTC developments and neighborhoods with LIHTC developments that did not have transit stations. When comparing opportunity levels for units placed in service before and after 2000, no significant difference was found.

The lower levels of school quality and higher poverty rates of neighborhoods where subsidized housing is located has been found in previous research for various types of subsidized housing (Ellen & Horn 2012; Dawkins 2013). Yet what our research indicates is that those residents living in LIHTC units near fixed-guideway transit live in even lower performing school districts and higher poverty neighborhoods than low-income residents living in subsidized units in non-transit neighborhoods (Table 3). These results point to significant barriers in developing affordable housing in high-opportunity, transit-rich neighborhoods.

Table 3. Opportunity Measures (2010) in LIHTC and Transit Neighborhoods
LIHTC developments < 1/2 mile of stationLIHTC developments > 1/2 mile of station (urban areas only)Transit Areas WithoutEntire U.S.
% Poverty (median)29%20%10%12%
School District Proficiency (median)57%69%69%74%
% Nonwhite (median)87%44%37%26%

Source: Zuk & Carlton (2015) based on calculations using the LIHTC and national TOD databases. Poverty and race data were derived from the 2006-10 American Community Survey. School district proficiency data were obtained from the New America Foundation, averaged between grade 4, grade 8 and high school math and reading test scores.

What are the main barriers to developing affordable TODs and the strategies used to overcome them?
We identified several recent successful cases where LIHTC-funded affordable housing has been developed in high-opportunity, transit-rich neighborhoods, which we then examined to uncover the obstacles and opportunities to developing equitable TODs. Out of 2,306 developments placed in service since 2010, 369 (16%) were located within a half mile of a fixed-guideway transit station, 271 of which (12%) were family-friendly with larger units, 149 (6%) were in tracts with poverty rates below 30% in 2010, and 29 of which (1%) were in school districts with an average proficiency score above 70% in 2010. Of these, we further narrowed the list by looking for cases where the transit station opened relatively recently and received New Starts funding. We arrived at a list of fewer than 10 LIHTC developments, of which we chose three to examine more closely: 1) M Station apartments in Austin, Texas, 2) South Oak Crossing in Charlotte, North Carolina, and 3) Patton Park in Portland, Oregon.

We found, perhaps unsurprisingly, the cost of land to be one of the greatest barriers to developing affordable TODs. Researcher s have long associated proximity to transit with housing price premiums (Cervero & Duncan 2002), which was not uncommon in the cases we studied. For each case, stakeholders talked about the difficulty in finding affordable parcels near transit stations, which only got more difficult with time. In addition, finding a suitable parcel at these infill sites proved challenging, often leading to the acquisition of sub-optimal land that required significant development costs.

The cost of developing affordable housing is a well-known constraint, and although all the cases we investigated did receive LIHTC, they also were supported with significant local and state support through housing trust funds, tax abatements, gap financing and other funding programs, often precisely because their proximity to transit aligned with the local and state priorities of developing equitable TODs. We found that in addition to providing gap financing, cities also lowered the costs of development through streamlined permitting, lowering parking ratios, and subsidizing public land for joint developments, among other programs and strategies.

Beyond funding, we also found other ways that local governments played both supportive and impeding roles in the developments of affordable TODs. In Portland, the highly coordinated transportation and land use planning agencies were fundamental in all stages of development, including land acquisition, when the transit agency used surplus FTA funds to acquire and later subsidize land development for affordable housing. In Charlotte, the local transit agency contributed to circulation improvements, whereas the housing agency limited the density and scale of development due to their housing locational policy that aimed to limit the concentration of poverty.

Two of our three cases—Patton Park and M Station—were located in neighborhoods that were experiencing rapid gentrification, and the development of affordable units near transit was seen as measures that could be used to stabilize the neighborhoods. For South Oak Crossing, although the demographics of the neighborhood did not indicate active gentrification, the rapid appreciation of the land that tripled in value after the station opened could contribute to future demographic changes.

Finally, two of our three cases noted considerably lower transit ridership of residents than expected. These were also developments that included 1:1 or higher parking ratios, in part because the transit systems in these areas—the Lynx Blue Line in Charlotte and the MetroRail Red line in Austin—were limited transit systems that connect few places and mostly served commuters. “So it works for residents that just need to get downtown for work, or perhaps out to the suburbs, but otherwise is limited,” explained Walter Moreau, the executive director of Foundation Communities that developed M Station. In contrast, Patton Park was located next to an extensive transit network and included lower parking ratios, which the housing developers cited as a necessary element to bringing costs down in the strong Portland market.

Implications and Conclusions

Despite growing interest, policymaking, and funding for the inclusion of affordable housing in TODs, this study finds that limited progress has been made over the past two decades in delivering new affordable housing options near transit stations in high-opportunity neighborhoods. Perhaps because of the need for dense neighborhoods to support ridership, combined with the nature of urban poverty and housing policy in the United States, transit seems more likely to be sited in neighborhoods where affordable housing is already located. New transit neighborhoods have not been as successful at attracting new affordable developments, however. Combined with our findings that transit-rich neighborhoods were more likely to experience demographic shifts signaling gentrification pressures, these findings create cause for concern of the future for equitable TODs.

While new policies and programs have been implemented to promote affordable housing near transit, it remains unclear how well they can counteract the enormous cost and other barriers to developing affordable housing near transit. Although the FTA’s inclusion of affordable housing in their New Starts evaluation guidelines is a necessary first step, it will be important to monitor its impact on new affordable developments near transit, which from our research appears to be a weak link. One approach could be for FTA to support the greater use of funds for affordable housing preservation or production through joint development, as was done in Portland. While the funding priorities for the LIHTC are decentralized, states could be further encouraged to give extra points for projects near rapid transit and incentives could be integrated into HUD affordable housing programs as well. At the local and regional level, certainly more funding will always be necessary. However, our research indicates that better coordination between transit, planning and housing agencies leads to greater success.

Despite the successful implementation of the three LIHTC developments we studied, there is limited evidence from these cases that suggests residents of affordable TODs may not be using transit as much as expected. The theoretical benefits of affordable developments near transit therefore may not be fully captured. It will be important for future research to assess the gap between the theoretical and actual benefits of TODs.
Affordable TOD appears to be a laudable goal that our study found is not yet fully understood and certainly has not been widely implemented. It will be important to replicate similar studies in the future to determine if recent policymaking, new funding programs and other efforts aimed at fostering equitable growth in transit-rich and opportunity-rich neighborhoods are successfully moving the needle.

References

Cervero, Robert & Michael Duncan. 2002. “Benefits of Proximity to Rail on Housing Markets: Experiences in Santa Clara County.” Journal of Public Transportation 5 (1). http://trid.trb.org/view.aspx?id=720184.

CTOD, Center for Transit-Oriented Development. 2012. “TOD Database.” http://toddata.cnt.org/.

Dawkins, Casey. 2013. “The Spatial Pattern of Low Income Housing Tax Credit Properties: Implications for Fair Housing and Poverty Deconcentration Policies.” Journal of the American Planning Association 79 (3): 222–34. doi:10.1080/01944363.2014.895635.

Ellen, Ingrid Gould & Keren Mertens Horn. 2012. Do Federally Assisted Households Have Access to High Performing Public Schools? Civil Rights Research. Poverty & Race Research Action Council.

HUD, Department of Housing and Urban Development. 2014. “LIHTC Database.” May 1. http://lihtc.huduser.org/.

Kahn, Matthew E. 2007. “Gentrification Trends in New Transit-Oriented Communities: Evidence from 14 Cities That Expanded and Built Rail Transit Systems.” Real Estate Economics 35 (2): 155–82.

Luckey, Kara S. 2012. “Assessing the Effectiveness of Approaches to the Allocation of Low-Income Housing Tax Credits in Proximity to Rail Transit.” http://trid.trb.org/view.aspx?id=1129506.

Pollack, Stephanie, Barry Bluestone & Chase Billingham. 2010. Maintaining Diversity In America’s Transit-Rich Neighborhoods: Tools for Equitable
Neighborhood Change
. Dukakis Center for Urban and Regional Policy.

Reconnecting America. 2011. 2010 Inventory of State, Regional and Local TOD Programs.

Sallis, James F., Myron F. Floyd, Daniel A. Rodríguez & Brian E. Saelens. 2012. “Role of Built Environments in Physical Activity, Obesity, and Cardiovascular Disease.” Circulation 125 (5): 729–37.

Transform, and California Housing Partnership Corporation CHPC. 2014. Why Creating and Preserving Affordable Homes Near Transit Is a Highly Effective Climate Protection Strategy.

Zhou, Xin & Edmund Zolnik. 2013. “Transit-Oriented Development and Household Transportation Costs.” Transportation Research Record: Journal of the Transportation Research Board 2357 (December): 86–94. doi:10.3141/2357-10.

Zimmerman, Mariia & Kyle Lukacs. 2015. Creating and Preserving Affordable Housing through the Federal Transit Capital Investment Program: An Analysis of the FY2016 Federal Funding Recommendations. MZ Strategies.

Zuk, Miriam & Ian Carlton. 2015. Equitable Transit Oriented Development: Examining the Progress and Continued Challenges of Developing Affordable Housing in Opportunity- and Transit-Rich Neighborhoods. PRRAC.

Miriam Zuk is project director and postdoctoral research fellow at the Center for Community Innovation. She also teaches research design and writing to graduate students in the Dept. of City & Regional Planning at UC Berkeley. Miriamzuk@gmail.edu
 
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