Value Capture: How to Get a Return on Investment in Transit and TOD

The maxim is that when looking for a new home or business the three most important considerations are: location, location, location. As traffic makes it increasingly difficult to drive in downtowns, as downtowns become increasingly popular with both residents and businesses, and as new transit systems open up in downtowns across the U.S., an address near transit is proving to be a good one. Empirical evidence that transit and TOD create significant value is mounting. It has to do with economies of agglomeration and the efficiencies created: Some things work better when clustered together. And with “killer commutes” tying up 10 million drivers two hours a day in traffic, it works best when they’re clustered around transit.

The fact that condo sales have outpaced the sale of single family homes is proof the market is changing. Smaller, non-traditional households without children want to live in convenient neighborhoods. In cities, the road network has reached a level of connectivity best described as “saturated,” and returns on that investment are diminishing. But transit still offers net benefits, in part because it concentrates development -- and the tax base – allowing for more focused value capture strategies. And in this era of shrinking public funding and expansive demand, value capture strategies are needed to help pay for construction and operation of transit and expensive TOD components like structured parking.

Value Capture: How to Get a Return on Investment in Transit and TOD