Transit Oriented Development and Affordable Housing

In a recent entry at HawaiiBusiness.com, two sides fired off on whether Honolulu's transit project will impact the availability of housing for working families.

Transit per se will not affect the availability or unavailability of affordable housing. In order to provide more affordable housing, transit must be paired with transit oriented development (“TOD”). According to the Transit Cooperative Research Program, sponsored by the Federal Transportation Association, TOD has three primary traits (1) Mixed-use development; (2) Development that is close to and well-served by transit; and (3) Development that is conducive to transit riding.

According to a 2002 study, Factors for Success in California’s Transit-Oriented Development, commissioned by the California Department of Transportation,

TOD can contribute to more affordable housing. TOD can add to the supply of affordable housing [1] by providing lower-cost and accessible housing, and [2] by reducing household transportation expenditures. Housing costs for land and structures can be significantly reduced through more compact growth patterns.

First, providing lower-cost and accessible housing is achieved through various developer incentives that promote development near transit stations in exchange for affordable units, including:

• Reducing the minimum parking requirements or setting maximum parking requirements around major transit stops,
• Density bonuses, and
• Property tax abatements to developers of higher-density, mixed-use, residential developments.

In addition to developer incentives, potential homeowners may be eligible for a Location Efficient Mortgage (“LEM”). An LEM, sponsored by Fannie Mae, is a mortgage that helps people become homeowners in location efficient communities such as TOD projects.

Second, reducing household transportation expenditures can also promote housing affordability. The average annual expenditure per capita in Honolulu for transportation between 2004 and 2005 was about $10,000. TOD can help to reduce the cost of transportation by reducing a homeowner's dependence on vehicles. According to the Center for Neighborhood Technology,

A growing body of research has shown a strong relationship between increased density, transit access and pedestrian friendliness on the one hand, and reduced vehicle miles traveled and automobile ownership on the other.

The bottom line: Transit paired with TOD creates an opportunity for increased housing affordability.

For more on affordable housing policies in Hawaii see this blawg’s Affordable Housing archive.