Transit Oriented Development-The Transit Funding Source With The most Potential Is the one least discussed

What is Transit Oriented Development?

What if I told you there was a way to ensure new residents had the opportunity to live lower-car lifestyles, and to return money that may otherwise go to investors in another state right back to your local community, all while funding the construction of brand new high-capacity transit lines? Would you believe me?

Well, the good news is that you don’t have to believe me, because this miraculous method already exists, and there are examples of it right here in the Atlanta metro!

Transit Oriented Development (TOD), in its simplest form, is the idea of concentrating development around a transit system; usually around stations for high-capacity and rapid routes. This, in turn, allows more people to live, work, shop, and relax without needing a car to do so. Indeed, many people specifically want to live near transit, and many employers want to locate jobs near transit for the increased access and mobility that it provides. All of this, in turn, increases ridership of the transit route.

This may all sound like a no-brainer, and indeed it was once common practice, but it’s taken a few decades of urban growth to relearn this very simple idea. Despite Atlanta’s history as literally being a city founded because of the convergence of rail lines, and the histories of many neighborhoods having been originally anchored by streetcar, or commuter rail lines, much of the metro’s current rail transit system was built with cars in mind. Twenty one of MARTA’s thirty eight rail stations were built with cars as a major focal point, with only one of those having walking as a true consideration at its time of building. (Metropolitain Atlanta Rapid Transit Authority, 2007)

That is starting to change. Better yet, it’s changing in a way that directly funds MARTA for its efforts.

While there are multiple methods of leveraging TOD for funding transit expansion, and indeed there are multiple methods being used in Atlanta today, the most directly successful to date has been MARTA’s ground leasing system. Here’s how it works:

Transit agencies have the authority to purchase property. Usually this is for rights of way, station profiles, maintenance facilities, operations centers, or administrative offices. Often times, and indeed in MARTA’s case, though, the agency is not restricted to only buying property it needs. It can, should it choose, buy additional property. The important thing is that ALL of this property can be made available to private developers, who then pay a ‘ground lease’ right back to the transit agency.

This system allows private developers to directly pay the public transit agency back for constructing and operating its transit. Rather than some land-holdings company, it’s the local transit agency who gets all the benefits of land-lease profits from developments. All those profits, which may have well left the local community for stockholders’ pockets, is actually circulated right back into the public transit system, without actually raising the relative cost of developing on the land.

Does it work?

In the past, a significant amount of MARTA stations’ property was purchased for parking, surrounding (at the time) suburban rail stations with large swaths of asphalt, where a commuter could park their vehicle. As the metro grew, and with it the demand for not only new development, but also transit-connection, though, it became clear that there were better uses for that land. So, MARTA began asking developers to submit proposals. Today, there are a slew of TOD projects in various stages of completion, with yet more closing land-use deals, and even more requesting proposals. All are promising direct revenue, and new riders where once there was only parking.

Even though the wider-scale implementation of TOD is relatively new, with its main start in a series of leases established in 2015 along the eastern part of the Blue & Green Lines (Courbanize, 2019), MARTA is actually no stranger to the concept. As far back as 1998, before the last stations of the Red Line were completed, the agency partnered with private firms to redevelop a large amount of agency-owned land around Lindbergh Center station, where its headquarters were already located. MARTA is now working to expand on that initial redevelopment, which is expected to bring up to $2 Mil. total in new annual revenue. (Metropolitan Atlanta Rapid Transit Authority, 2015)

What can it do for Atlanta?

TOD has an incredible potential for augmenting other funding sources, and even potentially fund new high-capacity transit services outright. Each station along the route supporting development can generate significant amounts of new revenue, which adds up over the years. To give a practical example, we can look at commuter rail in Cobb County.

As part of GDOT’s Georgia Rail Passenger Program (Georgia Department of Transportation, 2006), it was estimated that a total of $301 Mil. would be needed to build commuter rail from the City of Atlanta to Canton, with $3.3 Mil. per year in operations. If we assume a 25-year operational lifetime (before the need for major overhaul and refurbishments), and we assume the 8-stations as the route was initially planned to have (with a temporary terminal station in Tilford Yard, rather than the MMPT), that means that, on average, each station would need to earn nearly $2.1 Mil. a year to pay for the entire service.

As we saw above, MARTA’s expecting to get roughly that amount in just new revenue from expanding the existing Lindbergh Center TOD, so it seems entirely possible to meet those revenue needs from new developments along the commuter rail corridor. After all, the metro is in dire need of more transit connected housing and commercial properties.

That’s not to say that the entire route must be paid for entirely by TOD. Even just covering half of the life-time costs of a high-capacity transit route would be an incredible victory, essentially doubling potential high-capacity miles that a transit-expansion tax can build.

Of course, TOD can be scaled as needed, both to meet expected costs of different routes, as well as the local needs for development.

Furthermore, TOD isn’t limited to only funding high-capacity transit, and could in fact be used to fund over-all mobility improvements around new transit routes. Sidewalks, bike lanes, local bus routes, and many other local amenities could be paid for in full or in part from TOD anchored by new routes, particularly if TOD is scaled up large enough to surpass the costs of the initial high-capacity transit line.

As a funding source, TOD could greatly expand the possible transit routes available to be built within the metro. By both fully funding, and extending the utility of more traditional funding sources for high-capacity transit, Atlanta could potentially fund huge amounts of Commuter Rail, Heavy Rail, Light Rail, Streetcar, Bus Rapid Transit, and much more.

Why isn’t it more used?

Despite its potential, TOD occupies an odd position of overlapping policies. The mating of private investment, and public services means that those who are, ostensibly, of the same political point of view, can have wildly different opinions on the merits of TOD. The development may be seen as a government agency manipulating a market that should otherwise be free, or as giving away public funds to wealthy developers when there are potential routes in poorer areas. The agency may be thought of as striving to reduce the environmental impact of development, or bringing the fuss of density to otherwise quiet neighborhoods.

It’s easy to build a nonpartisan coalition of opposition to new development already, without the added fuel of controversial public transit expansions, and sadly support is often much more quiet than opposition in this case.

More directly, though, the United States has simply lost its experience with large scale implementation of Transit Oriented Development. Despite the successes of MARTA’s and various other agencies’ programs, and even the unfolding efforts of Virgin-Train’s development-based passenger rail routes, truly huge real estate portfolios supporting transit service the likes of Tokyo’s and Hong Kong’s are still unheard of here.

Government agencies are cautious, often unwilling to take the risk of planning entire new routes on the prospect of developmental returns. Even if every indicator is that the project would go smoothly, the potential to be wrong, and be seen as bad stewards of already tight and limited public funding, is still there. Without some kind of catalyst, external or internal, it is unlikely that this posture will change, which means that those same limited public funds won’t be able to reach their full potential for service.

What can be done to expand it?

Talk to your local representatives about TOD. Tell them how it can greatly expand the ability of other transit funding to provide services. Tell them how projects should include TOD studies as part of the cost and revenue calculations. Tell them how transit should be allowed to seed development, and how that development should be used to everyone’s benefit.

Until we get our local political leaders to open up to TOD as a key component of transit expansion funding, the potential for expansion will always be much lower than it should be.

References

Courbanize. (2019, October 1). MARTA Transit Oriented Development. Retrieved from Courbanize: https://courbanize.com/collections/marta

Georgia Department of Transportation. (2006). Georgia Rail passenger Program 2006 Fact Sheet. Georgia Department of Transportation.

Metropolitain Atlanta Rapid Transit Authority. (2007). MARTA Infill Station Study. Atlanta: Insomina LLC.

Metropolitan Atlanta Rapid Transit Authority. (2015). Transit-Oriented Development: Lindbergh Center Station TOD Phase II. Atlanta: AECOM.

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