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Suggested Citation:"II. LITERATURE SUMMARY." National Academies of Sciences, Engineering, and Medicine. 2011. Transit-Oriented and Joint Development: Case Studies and Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/14588.
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Suggested Citation:"II. LITERATURE SUMMARY." National Academies of Sciences, Engineering, and Medicine. 2011. Transit-Oriented and Joint Development: Case Studies and Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/14588.
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Page 4
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Suggested Citation:"II. LITERATURE SUMMARY." National Academies of Sciences, Engineering, and Medicine. 2011. Transit-Oriented and Joint Development: Case Studies and Legal Issues. Washington, DC: The National Academies Press. doi: 10.17226/14588.
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3 TRANSIT-ORIENTED AND JOINT DEVELOPMENT: CASE STUDIES AND LEGAL ISSUES By John L. Renne, Ph.D., AICP; Keith Bartholomew, J.D.; and Patrick Wontor I. INTRODUCTION The purpose of this digest is provide an update to The Zoning and Real Estate Implications of Transit- Oriented Development (TCRP LRD 12). When TCRP LRD 12 was published in early 1999, only a handful of transit-oriented development (TOD) and transit-based joint development statutory and regulatory programs existed in the United States; those that did exist were, at that juncture, new and relatively untested. Since then, the field has filled with a number of new TOD and joint development programs, policies, and built projects, along with a robust academic and professional litera- ture. Cumulatively, these sources demonstrate a wide range of legal devices geared, directly and indirectly, toward promoting and building TOD and joint develop- ment projects. This digest attempts to trace these developments, beginning with an overview of the significant literature since the late 1990s. The literature summary is followed by a comprehensive survey of recently adopted federal, state, and regional statutory and regulatory programs promoting or facilitating TOD and joint development and a review of related case law. The digest’s third sec- tion provides detailed case studies from Portland, Ore- gon; Oakland, California; Chicago, Illinois; Plano, Texas; and Morristown, New Jersey. These case stud- ies, while illustrating important legal issues, demon- strate that TOD success extends beyond laws, financial mechanisms, and public–private contracts. The report concludes that these constructs, while instrumental to the success of TOD and joint development, are indica- tive of a more basic foundation at the root of every suc- cessful project—leadership from the public, nonprofit, and private sectors. We expect significant changes over the next decade for TOD in America. Recent studies indicate that over the next couple of decades the country will need to build several thousand new TODs to keep up with demand,1 which is a stark contrast to the several hundred present at the beginning of the 21st century. II. LITERATURE SUMMARY In the late 1990s and early 2000s, several books made a link between TOD and sustainability and smart 1 See, e.g., REID EWING, JERRY WALTERS, KEITH BARTHOLOMEW, DONA CHEN & STEVE WINKETMAN, URBAN LAND INSTITUTE, GROWING COOLER: THE EVIDENCE ON URBAN DEVELOPMENT AND CLIMATE CHANGE 23–27 (2008). growth principles.2 Peter Newman and Jeffrey Kenworthy’s Sustainability and Cities: Overcoming Automobile Dependence and Robert Cervero’s Transit Metropolis each provide an international focus of the importance of integrated land-use planning with high- quality mass transit systems. In the United States, however, some remained skeptical that TOD would yield significant results in such an automobile-oriented society.3 However, in recent years, TOD literature has demonstrated benefits, particularly in the areas of travel behavior and property value, along with studies that have reported on policies and implementation.4 This section summarizes TOD literature, beginning with a section on definitions followed by sections on trends favoring TODs, benefits and outcomes of TOD, and building TODs. A. Defining TOD, TAD, and TJD Similar to Dena Belzer and Gerald Autler,5 Transit Oriented Development and Joint Development in the United States: A Literature Review (2002) distinguished between TOD and transit-adjacent development (TAD). A TAD is just that—development that is physically near transit; it fails to capitalize upon this proximity, however, to promote transit riding. A TAD lacks any functional connectivity to transit—whether in terms of land-use composition, means of station access, or site design. A number of U.S. TODs discussed in the literature more closely resemble TADs.6 The spectrum between TOD and TAD was revisited in a 2009 study, which compares urban design elements and travel behavior and vehicle ownership trends in the 2 PETER NEWMAN & JEFFREY KENWORTHY, SUSTAINABILITY AND CITIES: OVERCOMING AUTOMOBILE DEPENDENCE (1999); ROBERT CERVERO, THE TRANSIT METROPOLIS (1998); MICHAEL BERNICK & ROBERT CERVERO, TRANSIT VILLAGES IN THE 21ST CENTURY (1997). 3 MARLON BOARNET & RANDALL CRANE, TRAVEL BY DESIGN: THE INFLUENCE OF URBAN FORM ON TRAVEL (2001). 4 See, e.g., ROBERT CERVERO ET AL., TRANSIT ORIENTED DEVELOPMENT IN THE UNITED STATES: EXPERIENCES, CHALLENGES, AND PROSPECTS 102 (Transit Cooperative Research Report, Transportation Research Board, 2004). 5 DENA BELZER & GERALD AUTLER, TRANSIT ORIENTED DEVELOPMENT: MOVING FROM RHETORIC TO REALITY (2002). 6 ROBERT CERVERO, CHRISTOPHER FERRELL & STEVEN MURPHY, TRANSIT-ORIENTED DEVELOPMENT AND JOINT DEVELOPMENT IN THE UNITED STATES: A LITERATURE REVIEW 5 (Transit Cooperative Research Program, Research Results Digest No. 52, Transportation Research Board, 2002).

4 train station precincts of Berkeley, Hayward, and Fremont, California. TADs are more suburban-like, with lower densities, a dominance of surface parking and auto-centric design, limited pedestrian and bicycle access, more single-family homes, and industrial and segregated land uses. Among the three case studies, Fremont is most TAD- like and downtown Berkeley is the most transit- oriented. While each station serves different functions, the study found more sustainable travel patterns in Berkeley, followed by Hayward, and then Fremont. For example, the share of transit commute trips in 2000 was twice as high in Berkeley as compared to Fremont; however, from 1990 to 2000, the growth in the share of transit commuting was greatest in Fremont. Perhaps more astonishing than transit commuting is the share of walking and biking commute trips. Berkeley’s share in 2000 was nine times greater than Fremont but during the last decade of the century, Fremont outpaced Berkeley with a 69 percent growth in walking and bike commuting as compared to a 21 percent growth in Berkeley. This is perhaps correlated with vehicle ownership. From 1990 to 2000, the percentage of households in downtown Berkeley owning one or no vehicles decreased from 80 to 74 percent whereas Fremont saw an increase from 35 to 46 percent. An important finding from this analysis is that the TAD– TOD spectrum is not static, but can change over time corresponding to local development decisions.7 Dittmar and Ohland propose a performance-based definition of TOD in the New Transit Town. A TOD typology should meet five main goals: location effi- ciency, rich mix of residential and commercial choices, value capture, place making, and the resolution of the tension between node and place. Location efficiency comprises density, transit accessibility, and pedestrian friendliness. A rich mix of choices refers to people’s abil- ity to not only have transport alternatives but also have choice in housing, retail, and employment. Value cap- ture relates to household and community cost savings associated with transit use, which is less expensive compared to automobile use. They defined place making as the ability for TOD to create attractive, pedestrian- friendly neighborhoods replete with high-quality civic spaces, similar to European cities.8 Last, the tension between node and place stems from the work of Luca Bertolini and Tejo Spit, who evaluated the redevelop- ment of rail station precincts across Europe.9 7 John Renne, From Transit-Adjacent to Transit-Oriented Development, 1-15 LOCAL ENVIRONMENT 14, 1 (2009), available at http://www.informaworld.com/smpp/content~db=all?content=1 0.1080/13549830802522376. 8 HANK DITTMAR & GLORIA OHLAND, THE NEW TRANSIT TOWN: BEST PRACTICES IN TRANSIT-ORIENTED DEVELOPMENT (2004). 9 LUCA BERTOLINI & TEJO SPIT, CITIES ON RAILS: THE REDEVELOPMENT OF RAILWAY STATION AREAS (1998). The concept of transit-joint development (TJD) implies a quid pro quo between the public sector (usually a transit agency) and a developer. An important article from the early 1990s by John Landis and Robert Cervero notes that joint development, in the context of TOD, is the process in which a public entity and a private developer work together under a common vision in order to create a successful development. They identify nine categories that joint development projects can be classified into based on two broad categories, revenue-sharing and cost-sharing arrangements. The nine categories are 1) station leases and development, 2) nonstation leases and development, 3) station interface or station connections, 4) benefit assessment district, 5) incentive agreements, 6) cost-sharing agreements, 7) joint use of facilities, 8) capital or service provision, and 9) development-concession leases. More importantly, they note that four conditions are necessary for TJD: a healthy local real estate market, an entrepreneurial public agency, coordination across agencies, and the recognition that the benefits of TOD extend beyond generating revenues.10 Moreover, the study further defines joint development as: Any formal agreement or arrangement between a public transit agency and a private individual or organization that involves either private-sector payments to the public entity, or private-sector sharing of capital costs in mutual recognition of the enhanced real estate development po- tential or market potential created by the siting of a pub- lic transit facility.11 B. Trends Favoring TOD Belzer and Autler identified three trends in Ameri- can cities that related to an increasing importance for TOD. These trends include a resurgence of downtowns, continued growth of the suburbs, and a renewed inter- est and investment in transit. They note: At the convergence of these three trends is the realization that a substantial market exists for a new form of walk- able, mixed-use urban development around these new rail or rapid bus stations and transit stops…. These [TODs] have the potential to provide residents with improved quality of life and reduced household transportation ex- penses while providing the region with stable mixed in- come neighborhoods that reduce environmental impacts and provide real alternatives to traffic congestion.12 In the mid 2000s, Reconnecting America’s Center for Transit-Oriented Development (CTOD) became active in publishing TOD-related research. Hidden in Plain Sight: Capturing the Demand for Housing Near Transit illustrated how demographic changes in America are supportive of TOD. In analyzing all 3,341 of the Na- 10 JOHN LANDIS & ROBERT CERVERO, Transit Joint Development in the USA: An Inventory and Policy Assessment, vol. 9, issue 4, ENVIRONMENT AND PLANNING 431–52 (1991). 11 Id. 12 BELZER & AUTLER, supra note 5, forward, http://www.brookings.edu/es/urban/publications/belzertod.pdf.

5 tion’s fixed transit stations and an additional 630 sta- tions that would likely be built before 2025, the study found that with market demand for TOD at 25 percent of all new households, an additional 14.6 million house- holds in these transit zones would more than double the existing stock of 6 million households.13 Jonathan Le- vine and Aseem Inam also found similar demand at the national level of a quarter to a third of all households; however, Levine also argues that local government zon- ing regulations across the country restrict mixed-use development, thus creating an artificial cap on supply below what markets are demanding. 14 Perhaps high demand with limited prospects of supply is the basis for why Emerging Trends in Real Estate has rated TOD as a top investment prospect in each of its annual reports since 2004.15 C. Market for TOD TODs are a niche market in America. However, if future trends yield more demand, the only way to increase supply is to address policy at various levels of government. The federal government’s main responsibility for facilitating TOD is related to funding, whereas states such as California, New Jersey, Oregon, and Florida have taken on policies to encourage metropolitan planning organizations (MPOs) and local governments to promote TOD. TOD is most influenced by local government because of land-use regulatory powers; however, the transit agencies and local governments can enter into cooperative agreements to combine powers important in joint developments, such as site assemblage, zoning, financing, infrastructure provision, and expedited approvals.16 Jan Schuerer et al. examined TOD, TJD, and value capture in a report that outlines a value capture strat- egy using an Integrated, Risk-Sensitive Infrastructure Investment (IIRSII) Strategy model.17 The method, 13 RECONNECTING AMERICA’S CENTER FOR TRANSIT- ORIENTED DEVELOPMENT, HIDDEN IN PLAIN SIGHT: CAPTURING THE DEMAND FOR HOUSING NEAR TRANSIT (2004, revised 2005), available at http://www.reconnectingamerica.org/public/show/ ipsi. 14 Jonathan Levine & Aseem Inam, The Market for Transportation-Land Use Integration: Do Developers Want Smarter Growth Than Regulations Allow?, 31 TAUBAN COLLEGE OF ARCHITECTURE AND URBAN PLANNING, JOURNAL OF TRANSPORTATION, 409–27 (2004); JONATHAN LEVINE, RESOURCES FOR THE FUTURE, ZONED OUT: REGULATION, MARKETS, AND CHOICES IN TRANSPORTATION AND METROPOLITAN LAND USE (2006). 15 JONATHAN D. MILLER, URBAN LAND INSTITUTE & PRICEWATERHOUSECOOPERS, EMERGING TRENDS IN REAL ESTATE (2004–2009). 16 CERVERO, FERRELL & MURPHY, supra note 6, at 5, http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rrd_52.pdf. 17 JAN SCHEURER, PETER NEWMAN, JEFF KENWORTHY & THOMAS GALLAGHER, LIGHT RAIL TRANSIT AND URBAN REDEVELOPMENT WITH VALUE CAPTURE FUNDING AND JOINT DEVELOPMENT MECHANISMS, INSTITUTE FOR SUSTAINABILITY AND TECHNOLOGY POLICY (2000), available at “though it sounds complicated, is simply a strategy for funding the provision of infrastructure (including rail, roads, parks, communications, etc.) that more equitably distributes the investment risk (such as construction cost) among the eventual beneficiaries.”18 John Renne and Peter Newman also describe how TOD projects could be facilitated through joint development and value capture. They note that the public sector can reduce risk for developers. The article identifies the roles of the public and private sectors during the planning stage and development stages. During the planning stage, the public sector should establish goals, develop the community vision in coordination with the public, seek out a suitable development partner, create a legal agreement between all parties, analyze feasibilities, develop exit strategies, and develop procedures for future stages of the deal. The role of the private sector is to establish goals, create a pro forma and analyze market feasibility, create a partnership with the government, and develop exit strategies consistent with the public sector’s goals. During the development stage, the public sector can help to expedite the approval process, provide oversight of the development, and begin transit service, and lease or sell building space (which depends on the agreement). The private sector should build the project and sell or lease buildings. A value capture mechanism can be linked to density bonuses, rate increases, tax increment financing, and a rail trust fund from parking revenue.19 Cervero et al. discuss issues related to TOD and TJD implementation. The first point in the report is that TODs can only be created when the market allows for such development. “A body of research and empirical evidence has shown that TOD and TJD cannot overcome a flat or anemic local real-estate market.”20 The creation of a TOD needs the assistance of government support, even when local markets are healthy. Incentives such as grants, sliding-scale impact fees, tax abatements, financial participation, tax increment financing, benefit assessment districts, empowerment zones, and enterprise communities and loans are all useful in TODs. Land-based initiatives, which can facilitate the construction of TOD, include assembly, swaps, land banking, and the sale or lease of development rights. With respect to zoning, incentives such as density bonuses, performance zoning, inclusionary zoning, interim zoning, floating zones, planned unit development, specific plans, and transfer of development rights are all noted as important tools for TODs. http://www.istp.murdoch.edu.au/ISTP/publications/rail_pay/ rail_pay.html. 18 Id., Appendix. 19 John Renne & Peter Newman, Facilitating the Financing and Development of “Smart Growth,” 56 TRANSP. Q., 2, 23–32 (2002). 20 CERVERO, FERRELL & MURPHY, supra note 6, at 44.

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TRB’s Transit Cooperative Research Program (TCRP) Legal Research Digest 36: Transit-Oriented and Joint Development: Case Studies and Legal Issues examines a combination of large, medium, and small Transit-Oriented Development (TOD) and joint development projects since 1999 and provides comprehensive case studies, with an emphasis on what made the project succeed and how legal issues relate to TODs in general.

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