Rising Land Prices. Because of the growing demand for housing near transit, land prices now increase as soon as a plan for a new station, or even increased service, is formalized. Anti-displacement measures are most effective and nonprofit developers can compete better when land prices are still low.
“Highest and Best Transit Use.” Transit agencies are required by the Federal Transportation Administration (FTA) to put land purchased using federal funds to the “highest and best transit use.” Traditionally, “highest and best use” has been interpreted to mean the use that generates the most revenue—limiting the ability to plan for mixed-income TODs. Since 1997, however, the FTA has defined highest and best transit use more broadly as a project that benefits the transit agency through a combination of program revenues and increased ridership. Since low-income residents use transit more than higher-income residents, the development of affordable homes near transit stations can generate ridership. Regional and community benefits can and should be considered elements of highest and best transit use.
Developer and Lender Assumptions. Despite growing awareness of TOD, many developers and lenders remain unfamiliar with these types of projects. Lenders can be especially nervous about commercial developments with low parking ratios, even when local zoning officials have waived standard minimum parking requirements. This skepticism can make TOD financing a challenge.
Commuters. Transit stops, especially train stations, often serve a wider area than their immediate neighborhood and a cross-section of users with potentially different priorities for the site. Commuters who drive to the station from a neighboring suburb, for example, may view a transit stop as more of a “node” than a place”; they may be less invested in the aesthetic and community atmosphere of the station area and instead favor retaining a large amount of convenient parking. Commuters are also essential riders, and good TOD design can encourage them to support the station area economy by directing them through pleasant, bustling commercial areas between the station and parking facilities.
Market Forces. The success of TOD ultimately hinges on market forces. Effective TODs will leverage land use policies, building codes, parking ratios, and design standards to maximize transit ridership, commercial success, and economic opportunity.
TOD is not possible everywhere. Sprawling localities may lack the transit infrastructure necessary for dense, mixed-use development, and ridership projections must be high enough to justify transit agency investment in a new or upgraded station. Additionally, while walkability and reduced auto dependence are key goals of TOD, it can be difficult to attract business or institutional interest to a development with too few parking spaces provided. The challenge of successful TOD is balancing equity and quality-of-life goals with economic vitality and market realities.
Existing Zoning. Zoning ordinances often prohibit the mixing of land uses (commercial, residential, etc.), require large amounts of parking, or restrict building density. Most TODs require variances that recognize the surrounding area as a special transit zone. Examples of successful TOD-related waivers can help persuade skeptical zoning boards to consider creative solutions to bureaucratic obstacles.
Design and Form. By itself, proximity of a transit station and a commercial area will not meet the objectives of TOD. Effective TOD requires careful consideration of street patterns, storefront designs, pedestrian walkways, bicycle paths, crosswalks, station entrances and exits, and a host of other design factors. Pathways should link the station and surrounding neighborhood visibly and physically—and enhance access by a variety of transportation modes, including pedestrian, bicycle, and bus.