Program Issues and Opportunities

To maximize the effectiveness of the TOD Program, Metro needs to address a range of issues associated with where, how, and whether different types of investment make sense in partnership with other regional stakeholders in transit-oriented development implementation. The Program also needs to leverage key TOD investment opportunities that exist with other initiatives within Metro and other public agencies. These issues and opportunities are described below.

Program Issues

While Metro’s TOD Program has demonstrated success at leveraging more intensive development near transit, its funding levels have not kept pace with the rapid expansion of the region’s rail and frequent bus system. Whereas the square miles of TOD funding eligible areas have increased more than sevenfold since the program’s creation in 1998, program funding has not yet doubled. In order to be more strategic with these limited funds, the following issues need to be recognized and addressed:

  1. Limited funding sources keep the scale of the TOD Program relatively small.
  2. The TOD market readiness of station communities varies significantly across the region.
  3. Many suburban stations have limited near term market rate development potential, but have substantial land opportunity.
  4. Station design and existing transit alignments are not always conducive to TOD, making some stations harder to develop than others.
  5. A range of housing options is needed in station areas, including affordable housing, workforce housing, and market-rate housing.
  6. Other programs, agencies and policies are needed to complement the TOD program in promoting transit-oriented development – the TOD Program cannot “go it alone,” especially in weak market areas.

These issues are discussed in greater detail below:

1. Limited Funding Sources Keep the Scale of the TOD Program Relatively Small

With a biannual operating budget of approximately five million dollars, the TOD Program cannot operate on a scale large enough to be widely impactful throughout the region. Given the scale of the program there is no doubt that Metro has leveraged its dollars efficiently, but this does limit the ability of Metro to invest in areas that may require higher levels of subsidy, or to invest in a wide range of communities throughout the region each year. Therefore it will be important to enhance the impact of the TOD Program by seeking complimentary or matching sources of funding.

The TOD Program can be further maximized by leveraging programs and investments from other programs within Metro and at the state and local levels. For example, by setting up basic requirements for regulatory, political, and local support (e.g. financial incentives, public/private letters of support, design approval) in order to qualify for TOD Program funding, the time, expense and uncertainty of taking projects through the entitlements and community outreach process could be significantly limited. Chapter 3 of this report describes how the TOD Program can set these priorities.

2. TOD Market Readiness Varies Significantly Across the Region

As a Metro initiative, the TOD Program has a responsibility to promote TOD on a region-wide scale rather than just focusing in on a handful of areas. However, not all parts of the region are equally prepared to support TOD. The significant hard and soft costs associated with TOD require strong market demand and high achievable rents/sales prices. Near-term TOD potential tends to be focused in close-in neighborhoods and historic suburban downtowns and main streets, where higher density development is more feasible from a market- and financial perspective. Moreover, bringing TOD to scale will require changes to occur in a range of geographic and economic contexts, rather than just in core, urbanized areas.

3. Many Suburban Stations have Limited Near Term Market Rate Development Potential, but have Substantial Land Opportunity

In addition to the designated centers and corridors in the 2040 Growth Concept, the region’s rail station areas have been identified as key targets for future regional growth. Indeed many of the region’s more suburban station areas have significant developable lands, and the region could accommodate a large share of its needed growth through infill development in these areas. However, there are many challenges hindering the development of these areas, including high suburban land supply with limited market demand, a lack of road, bicycle, and pedestrian infrastructure, superblocks that need to be retrofitted and a lack of retail and service amenities to promote district living. This raises many questions for the pursuit of a more compact development program in areas outside of Central Portland.

4. Station Design and Alignment of Transit is not always Conducive to TOD

Not all of the region’s transit corridors are conducive to catalyzing compact urban development. As demonstrated in communities including Beaverton and Gresham, a transit station alone cannot create a sufficient draw to result in large-scale expansion of a nearby existing downtown. Highway-aligned corridors such as the Green line and the Banfield stations have been more “cost-effective”, because of lower right-of-way costs, and until very recently have been favored in the Federal Transit Administration’s New Starts allocation process. However, this type of design and alignment limits the ability of the TOD Program to help create a pedestrian oriented environment. For example, TOD opportunities at the highway-aligned Hollywood Station are constrained due to pedestrian access challenges, and most development in the neighborhood has happened several blocks from the transit center. Other regions around the country struggle with these same alignment challenges, and several have developed innovative funding approaches to help make stronger pedestrian connections to stations.

5. A Range of Housing Options is Needed Near Transit, Including Mixed-Income, Workforce, and Market-Rate Housing

In the region’s lower income station communities much of the new development has been in the form of subsidized affordable housing. These areas generally do not have the market strength to support new, market rate development and are often underserved by neighborhood serving retail and services. There is a lasting concern that concentrating more affordable housing in existing low-income areas, however, is neither equitable, nor economically beneficial to existing local residents.

In middle to higher income station communities, the region has been relatively successful at attracting new compact development. The market rate units in these new development projects, however, remain out of the reach of many working families. Much of this new market rate development has been occurring in the region’s most amenity and transit-rich areas, which can accept significantly higher levels of density without a proportional increase in congestion or vehicle miles traveled. Providing additional density in these areas—as well as mixed-income and workforce housing opportunities—should be a key priority to help achieve regional goals.

6. Other programs and policies are needed to complement the TOD program in promoting transit-oriented development – the TOD Program cannot “go it alone,” especially in weak market locations

The scope of activities within the TOD Program, and the program’s budget, is limited to promoting new development but cannot address many of the other critical investments needed in the region’s station areas in order to truly maximize TOD potential. Many stations require significant local incentives and infrastructure improvements in order to promote urban style development, biking, walking, and transit use. Additionally, station area planning and implementation efforts are needed particularly in outlying station areas. TOD investments are intended to stimulate a market response, but many other critical investments and/or incentives are needed leading up to development or concurrent with it.

The comprehensive set of investments needed to promote TOD suggests that significant further coordination is needed between the TOD program and other Metro programs and public agencies throughout the region. While there is some coordination and regular communication across Metro programs, further coordination of investments within key station areas could result in a substantial growth in TOD opportunities throughout the region.

Program Opportunities

Though there are many challenging issues that TOD Program must address, now is an excellent time to take advantage of emerging national and regional opportunities to maximize the program’s future success and forge new partnerships that bring TOD to scale:

  1. A growing market preference and demand for TOD
  2. Federal support for integrated urban development, housing and transportation planning is at an all-time high
  3. The TOD Program is operating with a successful track record
  4. There is potential for greater coordination and partnerships with local jurisdictions and other Metro programs
  5. TOD, economic development, and pedestrian/bicycle connections are likely to be weighed more heavily when evaluating future transit corridor investments

These opportunities are discussed in greater detail below.

1. A Growing Market Preference and Demand for TOD

CTOD has forecasted that between 2005 and 2030, 184,000 new households in the Portland region will want to live near transit, beyond those households who already live near transit. About 72,000 of these households will fall within the smaller, non-family household types likely to prefer living in more compact apartment and condominium units. The Metro TOD Program can help capture this demand, by continuing to provide investments that accelerate the market for compact living throughout the region.

2. Federal support for integrated urban development, housing and transportation planning is at an all-time high

Federal level policy is becoming more aligned with the goals associated with transit-oriented development. The HUD-DOT-EPA Interagency Partnership for Sustainable Communities is guided by six principles that closely mirror the fundamental values of the 2040 Growth Concept. The federal partnership principles are:

  1. Provide More Transportation Choices
  2. Promote Equitable, Affordable Housing
  3. Enhance Economic Competitiveness
  4. Support Existing Communities
  5. Coordinate Policies and Leverage Investment
  6. Value Communities and Neighborhoods

The Interagency Partnership is aggressively seeking new ways to ensure that federal policy and funding sources support local and regional efforts to achieve these principles. The TOD Program and other Metro activities are a natural connection for initiatives and funding streams already stemming from the Partnership.

3. The TOD Program is operating with a successful track record

It is important to note that the TOD Program has been successful at working with developers to push the private market towards more intensive and sustainable development accessible to transit. Relationships with the region’s development community and local governments are solid foundations to build on the existing strengths of the program. The TOD Program can continue to build on this success while piloting new approaches to issues such as implementation planning and partnerships around infrastructure investments.

4. There are opportunities for coordination with other Metro programs, and with other public agencies

The 2040 Growth Concept, and the Making the Greatest Place effort clearly pave the way for establishing a more coordinated set of investment strategies across programs within Metro. Moreover this kind of coordination is critical to make sure every program can maximize its effectiveness. For example, staff from the TOD Program will need to play a larger role in evaluating future potential transit corridors, and can provide valuable insight about development opportunities and market strength. Moreover, the Pearl District has proven that parks and other public infrastructure are a critical piece of the success of good transit-oriented districts and complete neighborhoods, but this component is beyond the reach of the TOD Program specifically. More coordination with internal programs and other external public entities offers a clear opportunity for achieving regional compact development and greenhouse gas reduction goals.

5. TOD, economic development, and pedestrian/bicycle connections are likely to be weighed more heavily when evaluating future transit corridor investments

There has been a clear shift in the understanding of how station design and placement play a role in maximizing development opportunities and walkability. The Yellow line in North Portland, for example, is aligned more with revitalization opportunities and the pedestrian scale in mind. Metro should continue to seek new ways to engage and integrate the transit alignment process internally with land use and TOD programs, as future light rail, streetcar, and rapid bus alignments are planned. The recent High Capacity Transit study has considered the integrated roles of land use and transportation in particular, and offers a data-driven, local foundation of knowledge upon which to build this new integrated transit planning process. And perhaps most importantly, integrated planning efforts gained significant traction with the Federal Transit Administration’s spring 2010 announcement that the cost effectiveness criterion for building new lines will no longer be its number one priority for funding allocations in the New Starts program. FTA is currently revisiting the criteria for allocating funding, and the Center for Transit-Oriented Development anticipates that changes to these criteria will result in funding to lines that are more supportive of transit-oriented development. Metro’s TOD Program represents a significant and ongoing commitment to maximizing the benefits of transit investments in the region, and will serve the region well in pursuit of competitive transit funding for future expansion projects.

Plan Objectives

This plan strives to address the above issues and leverage opportunities by:

  • Strategically targeting TOD program investments: the typology approach developed for this plan will help both the TOD Program, and other public agencies and programs with an interest in TOD, to understand the types of investments that are appropriate given variable local physical and market contexts.
  • Ensuring investment activities respond to changing market cycles, and variable local market conditions: TOD Program activities on a year-to-year basis will vary depending on the strength of the regional real estate market. This plan describes how different activities can be employed in different market cycles. Likewise, not all transit communities can effectively support real estate investments, but the plan describes other types of investments that might be appropriate for transit communities with mild or moderate market strength.
  • Leveraging the resources of other agencies/programs: The typology and funding strategies describe activities that may not be core to the TOD Program specifically, but may be core to other Metro Programs or other public agencies. This plan therefore can be used as a reference for public agencies beyond the TOD Program in evaluating appropriate neighborhood and transit corridor level investments based on a range of local conditions.
  • Identifying overall needs related to TOD implementation region-wide, and determining where the TOD Program’s involvement is most appropriate: The typology and cost effectiveness model recommendations help evaluate not only where TOD Program investments should occur, but what types of investment make the most sense for the program in particular. Some “bricks and mortar” projects might make sense more than others in a particular transit community.
  • Identifying potential areas for program expansion, and funding options: Metropolitan Planning Organizations (MPOs) across the country are becoming more creative in their use of transportation funds for projects that support transit use and reduce vehicle miles traveled. This plan describes some of these various activities and the funding mechanisms used to support them, and evaluates whether the TOD Program is an appropriate entity to pursue these activities.