Transit-Oriented Development and Waking up from the American Dream

By Matt Baker

Six-way intersections. Highway-adjacent playgrounds. Railway grade crossings. Urban planning is one of those practices one might not notice until encountering a poor example of it. While the frustration of a long commute may annoy the lay person, urban planning wonks know that the ways we arrange and interact with our built environment can have powerful impacts.

One emerging part of the urban planner’s toolbox is transit-oriented development (TOD). As our culture shifts, with more and more people opting to live in dense, urban neighborhoods and renouncing automobiles, the urban landscape must respond.

Read_SC15Q4As the name suggests, the kernel around which transit-oriented developments germinate is public transportation. The idea is this: the areas surrounding transit stations should be comprised of dense, mixed-use structures with a lower parking footprint. That’s it. It’s a simple concept with a number of benefits.

More people living in one area with fewer cars leads to an increase in biking, walking and transit ridership. Higher transit use decreases air pollution and greenhouse gas emissions. That’s the primary benefit; just by how we organize our communities and by rethinking how we build and where, we can greatly affect a major contributor to climate change.

There are many other benefits as well. Walkable communities correlate with healthier residents, for example. They are also perceived as safer, leading to higher demand among renters and homeowners. Access to a robust transit system creates economic opportunity for low-income families. Expanding bus and rail service is one way to go about this, but another is built into TOD—adding residential density near transit hubs. Increased transit ridership leads to higher fare revenue, and thus lower government subsidies.

Finally, parking spaces are expensive and that expense can end up in the rent, whether a tenant owns a car or not. The minimized parking requirements of TOD allow for lower rents and condo fees because unnecessary parking spaces aren’t eating into fertile space.

Chicago has hemorrhaged residents since the new millennium. Between 2000 and 2010, the city shrank by over 200,000 people while, conversely, the collar counties (DuPage, Kane, Lake, McHenry and Will) gained population. Populations are shifting to the furthest suburbs, but transit isn’t keeping pace as 80% of the region’s CTA and Metra stops are in Cook County.

Designed by Wheeler Kearns Architects, the poster child for TOD in Chicago is 1611 W. Division. It features 99 units and zero tenant parking. On-site bike parking, access to a Divvy station, car sharing and a nearby CTA stop all combine to make this type of building feasible in such a vibrant neighborhood.

Designed by Wheeler Kearns Architects, the poster child for TOD in Chicago is 1611 W. Division. It
features 99 units and zero tenant parking. On-site bike parking, access to a Divvy station, car sharing and a nearby CTA stop all combine to make this type of building feasible in such a vibrant neighborhood.

Another problem is population per household. In that same ten-year period, according to a report by the Center for Neighborhood Technology (CNT), the average household size in the region decreased by 2%, but that attrition was over 5% near transit. This indicates that households near transit are increasingly single occupants, childless couples, empty-nesters or other small household types.

Despite the loss in population and the shrinking average household size, the number of households in the Chicago region increased by nearly 6%. Near transit, however, household growth was only 2%. Compare that with the Philadelphia and San Francisco metropolitan areas. They too added near 6% households overall, but their increase in households near transit were over 9% and 19%, respectively.

There are a number of contributors to this tendency toward sprawl. One is the Chicago Housing Authority’s multi-year plan to relocate residents from public housing. As the infamous projects have been dismantled, one consequence is the elimination of over 18,000 housing units near transit stations. Only half of that housing stock was added back to these transit areas between 2000 and 2010. Also, the continued economic distress on the south and west sides of the city, despite market rebounds, has throttled new development.

One surprise from the CNT report was that household growth was stagnant—or even in decline—in transit areas that received millions in investment. In hotter neighborhoods, existing buildings are often retrofitted to reduce density; what had been a building full of studios are now bigger loft space or two-flats are converted into single-family homes. “When there’s tremendous demand to live near transit in neighborhoods like Lakeview and North Center and those neighborhoods are seeing real estate investment pour in, and they’re losing, that’s a sign that something’s broken in the system,” said Kyle Smith, Manager of Transit-Oriented Development at CNT.

In 2013, Chicago passed a new TOD ordinance to loosen parking and density restrictions in transit zones. Most residential buildings in the city have a 1:1 parking space to unit ratio, but this ordinance cut that mandate in half within 600 feet of a rail station, or 1,200 feet if the property is on a (strictly defined) pedestrian-friendly street. A larger cut in parking could be arranged, if the developer wished to jump through some hoops for the zoning department and the local alderman.

These were encouraging, if conservative, changes to the city’s zoning ordinance. Biking and transit advocates pushed for more and this summer they got it. The TOD radius was effectively doubled as incentives are now available to properties within a quarter mile—half a mile on a pedestrian street—of a transit station. All residential parking requirements can be nixed if alternative transportation options are available, such as on-site car sharing or Divvy stations.

The cost to install on-site parking is an expense that developers have come to accept, but for a site like a TOD where that parking is likely to be integrated with a building, it can be particularly pricey. “On average, the cost of developing an underground structured space within the city of Chicago can run $37,000 or higher,” Smith said. “So it can be more expensive to house the car than to purchase it in many cases.” Those costs aren’t only a burden for the developer. One parking spot can inflate the cost of rent, creating upward pressure on the housing market.

Detractors of the TOD ordinance make two claims. First, that it will put a larger strain on street parking. But in order for Chicago to stop losing population to the suburbs, it needs to diversify its housing stock and neighborhood types. This complaint misses the point, as a community within a TOD will hopefully attract residents seeking a neighborhood that is friendlier to bike and foot traffic.

The other complaint is that TOD might help gentrify neighborhoods. A shield against that is built into the ordinance. In most commercial and mixed-use areas of the city, a structure’s total square footage is limited to three times the parcel footprint. Developments in a TOD ordinance are incentivized to provide affordable housing with a boost in allowable square footage. This is a sliding scale, so a developer can work in a little or a lot, with a maximum bonus of 33% more square footage for a 10% apportionment in affordable housing.

The TOD ordinance should unlock more private investment and hopefully, through the affordable requirements ordinance, have a percentage of that private investment oriented toward low income households. “But that won’t nearly close the gap between the housing we’re losing for low income families and what’s been there historically,” Smith said. “If our city-wide strategy stops at the ordinance, I do think we run the risk of housing near transit and TOD being defined as housing for more affluent households.”

The revised TOD ordinance also will likely do little to stabilize the market in neighborhoods on the south and west sides that are less attractive to real estate investors. “We have a very strong community development corporation infrastructure in Chicago, and there’s a great need to mobilize that infrastructure to … develop more housing for families and lower income households in distressed neighborhoods near the transit system,” Smith said.

According to a preliminary analysis by the Metropolitan Planning Council (MPC), the reforms to the TOD ordinance have the potential to generate more than $400 million in economic activity and $100 million in tax revenue for the city each year. It also could help to add housing for 100,000 people near mass transit over the next 20 years.

The MPC, in cooperation with the Institute for Transportation & Development Policy (ITDP), has created an online tool, Grow Chicago, for developers and residents to better understand TOD and how it can benefit the city. They include specific recommendations to strengthen zoning and financial incentives to increase TOD in different types of markets. It includes an interactive map showing properties that are primed for TOD development and the incentives available for parking reduction or density increase. This TOD calculator allows users to input the location, type and size of a specific development proposal and calculate the benefits to a local community in terms of additional retail stores, tax revenues, nearby jobs, residents, annual transit rides and affordable housing units.

“Grow Chicago’s tools and recommendations are not only great for the city of Chicago, but can and should be applied globally,” said Aimee Gauthier, chief program officer at ITDP. “As cities around the world continue to grow, increasing development near transit is an effective growth strategy—and one that provides more choices for residents of all incomes.”

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