Panel 3: Financing the Placemaking for TOD
Shanti Breznau, Strategic Economics (Moderator); Will Fleissig, Communitas Development, Inc; Cooper Martin, American Institute of Architects (AIA); Buzz Roberts, Local Initiatives Support Corporation (LISC); Danilo Pelletiere, National Low-Income Housing Coalition (NLIHC)
This panel will discuss issues that move beyond the T (the Transit) in TOD to parking, planning, agency coordination, multi-modal facilities, and the streetscape. One example that highlights the importance and magnitude of this funding challenge is from the proposed Central Corridor project in the Twin Cities, Minnesota. This is an example of an Equity Corridor as described by Dena Belzer. We did some work to compile the dozens of community redevelopment and station-area plans that have been developed along the corridor to get a comprehensive sense of scale. The total project cost including the transit, stations, redevelopment, utilities, placemaking and other elements is $7 billion, 81 percent of that is private. The transit portion is a little under $1 billion. Doing a very rough estimation of the cost to ensure a portion of new development is affordable to very low income households, an additional $500 million in subsidy may be needed.
First question for panelists: Given the scale of this challenge, what are the biggest financing challenges to make equitable TOD occur?
Will Fleissig: Patient Capital. It comes down to underwriting criteria. It used to be a strict cost benefit of total riders and cost per mile. We’re now having a larger local match, value capture, tax increment financing, and more from local real estate sources. Now in version 3.0, DOT and HUD are coming up with their criteria. A borrowing entity is going to want to understand its corridor. We should be looking out beyond the half-mile circle around the transit station to ensure access, long-term affordability, the CNT index, and GHG reduction as part of the underwriting criteria.
Cooper Martin: The actual acreage of most TOD districts is small, relative to the region and national need. We can use these projects to make unique places and give them the advantages that our policy choices have traditionally given to the exurban fringe. We should address the mortgage interest deduction. We should recalibrate some of our tax policies to include incentives for redeveloping and creating TOD districts.
Buzz Roberts: I’m thinking about already established neighborhoods. Some of these places already have transit but need to make better use of it. The definition of affordable housing is different depending who you ask, and each will have a different way to measure it. The places with the best potential tend already to have their acts together. We’re seeing this in Columbia and Congress Heights. The credit market is tough now, but it will come back. The federal government is backing 96 percent of the housing market. I don’t see the government being able to come up with gobs of new money. Hopefully collaborative and inclusive projects reduce NIMBYism.
Danilo Pelletiere: My organization is worried about the lowest income people. There’s not a lot of placemaking funding anywhere. TOD can complicate affordability. There aren’t big streams of federal dollars, the Community Development Block Grant (CDBG) program is $4 billion. We need to first preserve the affordable housing we have, and then we can create new units.
Second question for panelists: How do we pay for these things?
Will Fleissig: We can regulate and do district financing. Do broad types of developments with broad funding streams. Jamming developments into one area can create NIMBYism. We should allow variable density. Doing the planning around the half-mile radius is fine but for financing we should look a little further afield.
Buzz Roberts: Land is a fixed cost. Make the development denser and generally the costs per unit decrease. CDBG and low-income tax credits could be tailored to TOD.
Danilo Pelletiere: Infill stations in urban areas probably have affordable housing around them. We should identify projects that exist that can work for this. The federal government needs to ask, Why are we doing this? What are the goals? CDBG requires an anti-displacement plan for transportation projects.
Cooper Martin: We’re up against sprawl subsidies. There’s no GHG reduction, livability measure. It’s hard to design a tax credit to meet all the criteria. We could create a competitive district program. We need local coordination and support, we need them to say, “we want this developed”.