Transit-Oriented Development and Affordable Housing

Transit-Oriented Development and Affordable Housing

On November 20, 2024, panelists at PD&R's most recent Quarterly Update discussed synergies between transit-oriented development and affordable housing and presented strategies for leveraging resources toward that end.

Transit-oriented development (TOD) aims to create dense, walkable, mixed-use areas around public transit stops. TOD planning typically includes a mix of commercial, residential, office, and entertainment uses to create neighborhoods that are vibrant, sustainable, and equitable. On November 20, 2024, HUD's Office of Policy Development and Research (PD&R) hosted a Quarterly Update event featuring two panels discussing how TOD and affordable housing can complement each other and explored ways to leverage resources that support affordable housing development near transit.

The Synergy of Affordable Housing and TOD

The first panel explored the importance of including affordable housing in any TOD neighborhood. Moderator Solomon Greene, principal deputy assistant secretary at PD&R, asked the panelists to share some of the successes and challenges they have encountered in their efforts to integrate affordable housing into TOD neighborhoods.

Several panelists described the mutual benefits of pairing transit systems and affordable housing. Kristy Chambers, chief executive officer of the Columbus Community Center, a large-scale disability service provider based in Salt Lake City, described how her organization, along with development partner Housing Connect, worked with the Utah Transit Authority (UTA) to advocate for building affordable housing on a site adjacent to a transit station. The partnership, said Chambers, made sense for both organizations' core missions, because transportation ranks as one of the most significant barriers to full community inclusion for individuals living with disability, and a disproportionate share of UTA ridership consists of people living with a disability. The resulting $46 million project consists of 157 one- to three-bedroom units, of which 140 are affordable to households earning up to 60 percent of the area median income. Eleven units are reserved for adults with autism who participate in programs supporting independent living skill development and 5 units are reserved for formerly unhoused members of the community. Eryn Deeming Kehe, urban policy and development manager for planning, research and development at Metro, the metropolitan area government for Portland, Oregon, discussed how her organization awards grants to developments that demonstrably increase transit ridership and grants that assist ground-floor uses in buildings near transit that help enliven TOD neighborhoods. Metro also operates a land acquisition and disposition program that promotes development around transit stations. 

Often, TOD's full benefits are realized only after sustained support allows neighborhoods to mature. Since efforts in the Portland area began 3 decades ago, Metro has supported nearly 100 projects with a combined total of approximately 7,000 housing units, half of which are affordable, said Kehe. These developments generate approximately 2 million annual rides for the area's transit system. Crucial to Metro's increased focus on affordable housing is the organization's strategy of securing development sites in anticipation of future transit expansion, helping ensure that affordable housing developers are included in developing transit-oriented neighborhoods before land values increase prohibitively. Chris Iglesias, chief executive officer of The Unity Council, shared how efforts that began 20 years ago to create a TOD neighborhood in Oakland, California have fostered a robust community that now includes a health center, local merchants, a Head Start center, a high school, a senior center, and a library. This success, Iglesias noted, was not preordained; planners at Bay Area Rapid Transit (BART) in the 1980s and 1990s originally intended to use the site around the Fruitvale BART station as parking for suburban commuters rather than the mixed-use TOD that eventually took root there. Community pushback led BART to abandon the parking plan and conceive the Fruitvale "transit village."

How Transportation Resources Support Affordable Housing Development

In the second panel, moderated by Harriet Tregoning, senior advisor on land use in the Office of the Secretary for the U.S. Department of Transportation, participants discussed how transportation departments and transit funds can be leveraged to promote affordable housing development and TOD. 

Clay Kerchof, section chief for climate and transportation policy in policy and program support at the California Department of Housing and Community Development, discussed the importance of TOD in helping California meet its housing and environmental challenges. California residents, Kerchof noted, wrestle with the high costs of transportation, housing, and energy, all of which can be reduced by building dense, affordable housing near transit. In this, Kerchof echoed Iglesias' example of the dense housing development replacing a planned parking facility around the Fruitvale station. To promote TODs, California policymakers adopted environmental impact criteria for new development that assess how many vehicle miles traveled a development will produce, giving an advantage to projects near transit. Those criteria went into effect in 2020. Despite being only a few years old, the policy shift, in combination with other efforts, already is having an effect. In 2016, approximately 57 percent of housing units in California were located within a half-mile of high-quality transit; for units currently planned during the next 8 years, however, that rate is nearly 75 percent.

Because transit agencies often own surplus land near stations, they can play a direct role in providing sites for affordable housing development, which can benefit the transit agency financially beyond increasing ridership. Stan Wall, managing partner in the Washington, D.C. office of HR&A Advisors, discussed how transit agencies in the D.C. area are increasingly promoting housing development around transit stations and on agency-owned land to bolster ridership in response to pandemic-era shifts in work and commuting patterns. The additional housing, he says, is needed in a region that currently is falling behind in its housing production goals. These efforts have already produced results; Metro, the area's transit agency, already has delivered 7,500 units of housing on Metro-owned property. Wall stated that, without any changes to policy or outside support, an additional 6,500 units could be created on Metro-owned sites; however, with land use reforms and the support of state and local governments, the potential exists to add up to 17,000 housing units on Metro-owned land throughout the Washington, D.C. region. To make this goal a reality, Wall emphasized that partnerships among agencies and governments at all levels will be critically important.

To encourage private-sector development in service of TOD, policymakers also can offer incentives; these can work in tandem with the direct support from transit agencies that Wall highlighted. Jake Day, secretary at the Maryland Department of Housing and Community Development (DHCD) pointed to the urgent need to address housing costs in the state and cited public support for government-funded affordable housing development near transit. To encourage TOD, Maryland created a 30 percent by-right density bonus for developments within three-quarters of a mile of an existing or planned transit stop on top of local density bonuses; limited the ability of local governments to unreasonably restrict development near transit through permitting approval, parking requirements, or other measures; and set a maximum number of public hearings allowed for TOD developments. In addition, a recent memorandum of understanding between the state Department of Transportation and DHCD commits both agencies to prioritizing TOD housing projects in the state's affordable housing tax credit, rental finance, bond finance, and grant programs, including those for design and construction costs.

Cory Fellows, vice president of real estate development at Preservation of Affordable Housing, Inc., discussed one of his organization's projects in Boston's Mattapan neighborhood to provide mixed-income affordable housing at the terminal stop of the Mattapan trolley, which also connects to several bus routes. The 135-unit project, which rents to households earning between 30 and 80 percent of the area median income and includes 10,000 square feet of retail space, benefited from a mix of financing sources, including affordable housing tax credits and state and city gap funding. As in the Oakland example, the project replaced a surface parking lot, which, Fellows said, reflected the notion that peripheral transit stations should serve suburban commuters starting their journey by car and heading to the city center by rail. In contrast, he says, the TOD project serves the needs of the community rather than commuters. In addition to affordable housing, the development features a grocery store in its ground-floor commercial space that operates in what had been a food desert as well as a daycare center that addresses childcare needs.

As participants on both panels showed, TOD paired with incentives and subsidies for affordable housing can promote dense, inclusive neighborhoods around transit stops, thereby reducing automobile dependence while increasing transit ridership and helping lower-income residents live in amenity-rich neighborhoods with transportation access to nearby employment opportunities and other services.