GAO 

United States Government Accountability Office

Report to the Chairman, Subcommittee 

on Transportation, Housing and Urban 

Development, and Related Agencies, 

Committee on Appropriations, U.S. 

House of Representatives 

AFFORDABLE 

HOUSING IN 

TRANSIT-ORIENTED 

DEVELOPMENT 

Key Practices Could 

Enhance Recent 

Collaboration Efforts 

between DOT-FTA 

and HUD 

September 2009 

GAO-09-871 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2009

AFFORDABLE HOUSING IN TRANSITORIENTED DEVELOPMENT 

Key Practices Could Enhance Recent Collaboration 

Efforts between DOT-FTA and HUD Highlights of GAO-09-871, a report to the 

Chairman, Subcommittee on 

Transportation, Housing and Urban 

Development, and Related Agencies, 

Committee on Appropriations, U.S. House 

of Representatives. 

The federal government has 

increasingly focused on linking 

affordable housing to transitoriented developments—compact, 

walkable, mixed-use 

neighborhoods located near 

transit—through the Department of 

Housing and Urban Development’s 

(HUD) housing programs and the 

Department of Transportation’s 

(DOT) Federal Transit 

Administration’s (FTA) transit 

programs. GAO was asked to 

review (1) what is known about 

how transit-oriented developments 

affect the availability of affordable 

housing; (2) how local, state, and 

federal agencies have worked to 

ensure that affordable housing is 

available in transit-oriented 

developments; and (3) the extent to 

which HUD and FTA have worked 

together to ensure that 

transportation and affordable 

housing objectives are integrated in 

transit-oriented developments. To 

address these issues, GAO 

reviewed relevant literature, 

conducted site visits, and 

interviewed agency officials. 

What GAO Recommends

GAO is recommending that DOT 

and HUD develop a plan for 

implementing interagency efforts 

to promote affordable housing in 

transit-oriented developments, 

ensure they collect sufficient data 

to assess the results of these 

efforts, and formalize key 

collaboration practices. DOT and 

HUD agreed to consider the 

report’s recommendations. 

Characteristics of transit-oriented developments can increase nearby land and 

housing values, however determining transit-oriented development’s effects 

on the availability of affordable housing in these developments are 

complicated by a lack of direct research and data. Specifically, the presence of 

transit stations, retail, and other desirable amenities such as schools and 

parks generally increases land and housing values nearby. However, the 

extent to which land and housing values increase—or in the rare case, 

decrease—near a transit station depends on a number of characteristics, some 

of which are commonly found in transit-oriented developments. According to 

transit and housing stakeholders GAO spoke with, higher land and housing 

values have the potential to limit the availability of affordable housing near 

transit, but other factors—such as transit routing decisions and local 

commitment to affordable housing—can also affect availability. 

Few local, state, and federal programs are targeted to assisting local housing 

and transit providers develop affordable housing in transit-oriented 

developments. The few targeted programs that exist primarily focus on 

financial incentives that state and local agencies provide to developers if 

affordable housing is included in residential developments in transit-oriented 

developments. However, GAO found that housing developers who develop 

affordable housing in transit-oriented developments generally rely on local 

and state programs and policies that have incentives for developing affordable 

housing in any location. HUD and FTA programs allow local and state 

agencies to promote affordable housing near transit, but rarely provide direct 

incentives to target affordable housing in transit-oriented developments. 

Since 2005, HUD and FTA, and more recently DOT, have collaborated on three 

interagency efforts to promote affordable housing in transit-oriented 

developments including (1) an interagency agreement, (2) a HUD-FTA action 

plan, and (3) a new DOT-HUD partnership. While these interagency efforts 

have produced numerous strategies, local housing and transit officials told 

GAO that these strategies had little impact, in part, because they have yet to 

be implemented. However, the agencies have not yet developed a 

comprehensive, integrated plan to implement all efforts, and without such a 

plan, the agencies risk losing momentum. GAO has previously identified key 

practices that could enhance and sustain collaboration among federal 

agencies; when compared to these practices, GAO found that HUD, FTA, and 

DOT have taken some actions consistent with some of these practices—such 

as defining a common outcome. However, weaknesses in agency housing data 

and analytical transportation planning methods will limit these agencies’ 

ability to effectively monitor, evaluate, and report results—another key 

collaboration practice. GAO found that other collaboration practices, such as 

establishing compatible policies and procedures, could be taken to strengthen 

collaboration. Finally, without a more formalized approach to collaboration, 

including establishment of memorandum of agreements, these agencies may 

not effectively leverage their unique strengths. 

View GAO-09-871 or key components.

For more information, contact Dave Wise, 

(202) 512-2834 or wised@gao.gov, or 

Mathew J. Scirè at (202) 512-8678 or 

sciremj@gao.gov. 
Page i GAO-09-871 

Contents 

Letter 1

Background 5 

Transit-Oriented Developments Can Affect the Availability of 

Affordable Housing but Conclusions Are Complicated by 

Limited Research and Data 12 

Local, State, and Federal Affordable Housing Programs and 

Policies Support, but Generally Do Not Require, Affordable 

Housing in Transit-Oriented Developments 21 

DOT, HUD, and FTA Have Collaborated on Interagency Efforts to 

Promote Affordable Housing in Transit-Oriented Developments, 

However, Implementation Has Been Limited, and Additional 

Steps to Enhance Collaboration Could Be Taken 34 

Conclusions 47 

Recommendations for Executive Action 49 

Agency Comments and Our Evaluation 50 

Appendix I Scope and Methodology 53 

Appendix II Types of Locations that Could Have TransitOriented Developments 55 

Appendix III Examples of LIHTC Programs that Award Points 

for Proximity to Transit or Transit-Oriented 

Developments 56 

Appendix IV Comments from the Department of Housing and 

Urban Development 57 

Appendix V GAO Contacts and Staff Acknowledgments 60 

 Affordable Housing 
Tables 

Table 1: Examples of Federal Programs that Fund Transit Projects 10 

Table 2: Examples of State and Local Affordable Housing 

Incentives and Requirements that Have Been Used in 

Transit-Oriented Developments but Are Not Specifically 

Designed for Use in Transit-Oriented Developments 25 

Table 3: Summary of Strategies and Recommendations Made by the 

Three Interagency Efforts 37 

Table 4: Eight Key Practices Federal Agencies Can Undertake to 

Enhance and Sustain Collaborative Efforts and the Extent 

to which DOT’s, HUD’s, and FTA’s Collaboration Efforts 

Are Consistent with These Key Practices 43 

Figures 

Figure 1: Representation of a Transit-Oriented Development and 

Key Components 6 

Figure 2: Infill Development, Including Some Affordable Housing 

Units, Has Replaced Vacant or Underutilized Land near 

the Columbia Heights Station in Washington, D.C. 17 

Figure 3: Examples of Inconsistencies in Number of HUDSubsidized Housing Unit Records, 2000–2008 20 

Page ii GAO-09-871 Affordable Housing
Abbreviations 

AMI area median income 

CDBG Community Development Block Grant 

CTOD Center for Transit-Oriented Development 

DOT Department of Transportation 

EPA Environmental Protection Agency 

FTA Federal Transit Administration 

GPRA Government Performance and Results Act 

HUD Department of Housing and Urban Development 

LIHTC Low Income Housing Tax Credit 

PHA public housing authority 

QAP Qualified Allocation Plan 

SAFETEA-LU Safe, Accountable, Flexible, Efficient, 

 Transportation Equity Act: A Legacy for Users 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 

Page iii GAO-09-871 Affordable Housing
Page 1 GAO-09-871 

 

United States Government Accountability Office

Washington, DC 20548 

 

September 9, 2009 

The Honorable John Olver 

Chairman 

Subcommittee on Transportation, Housing 

 and Urban Development, and Related Agencies 

Committee on Appropriations 

House of Representatives 

Dear Mr. Chairman: 

Households seeking relief from high housing costs may move to areas with 

less costly housing but then find themselves further away from their place 

of employment and public transportation. Consequently, they can face 

significant increases in transportation costs and commute times. Such 

costs can particularly affect lower-income households, since these 

households are more transit dependent and have fewer transportation 

choices available. In addition, state and local governments, which build, 

operate, and maintain each region’s transportation system, may need to 

accommodate more people driving longer distances to work, and with an 

increase in traffic congestion, will likely need to spend more money on 

roads. 

To combat increasing costs for both individual households and local 

governments, numerous local communities believe there is a need to 

expand housing opportunities and other amenities located near transit by 

promoting transit-oriented developments. Transit-oriented developments 

are commonly seen as compact, mixed-use (commercial and residential),1

walkable neighborhoods located near transit facilities—such as fixedguideway stations.2

 The perceived benefits of transit-oriented 

developments include reducing individual households’ transportation 

costs by providing residents with walkable access to transit service and 

shopping, and reducing the investment needed for local governments to 

1

Mixed-use development mixes residential, commercial, cultural, or institutional uses on 

the same site which can allow for greater housing density; encourage more compact 

development; and promote pedestrian-friendly environments. 

2

Fixed-guideway systems are permanent transit facilities that may use and occupy a 

separate right-of-way for the exclusive use of public transportation services. These fixedguideway systems include rail (light, heavy, commuter, and streetcar) and may include 

busways (such as bus rapid transit). 

 Affordable Housing 
 

build and maintain roads. Officials in cities such as Denver and Seattle 

believe that promoting transit-oriented development will realize these 

benefits and can spur economic development. 

Some policy makers and housing experts, however, have raised concerns 

that lower-income households might not benefit from these developments. 

Specifically, they are concerned that the high demand for housing at 

transit-oriented developments will encourage developers, who typically 

seek to maximize the return on their housing investments, to primarily 

build market rate housing that may limit affordable housing opportunities 

for lower-income households.3

 Also, housing stakeholders have expressed 

concern that existing affordable housing—whether subsidized or not—

presently located near transit may no longer be financially feasible once a 

transit-oriented development is built, thereby increasing the demand for 

affordable housing.4

The federal government has acknowledged the link between housing and 

transportation.5

 For example, the Department of Housing and Urban 

Development (HUD) and the Federal Transit Administration (FTA) started 

collaborating in 2005 by funding research on expanding housing near 

transit. More recently, in separate testimonies presented in March 2009, 

the Secretaries of HUD and the Department of Transportation (DOT) 

 

3

For purposes of this report, affordable housing refers to housing, either for purchase or for 

rent, which is affordable to people with low to moderate incomes. HUD and others define 

affordability in terms of the proportion of a households income that goes toward housing. 

HUD defines low and moderate income as a certain percentage of the area’s median 

income. 

4

We are defining subsidized housing as housing in which financial assistance is provided to 

property owners or to tenants so as to make housing affordable for people with low to 

moderate incomes. The financial assistance may be provided by entities such as a federal 

or state agency. 

5

Other organizations have worked to establish the link between housing and transportation 

by developing new measures of affordability. For example, an affordability index was 

developed by the Center for Transit-Oriented Development (which is funded by FTA), the 

Center for Neighborhood Technology, and the Brookings Institution’s Urban Market 

Initiatives program. The affordability index calculates the true affordability of a home 

based on its market value and the transportation costs incurred by its location. 

Page 2 GAO-09-871 Affordable Housing
 

discussed the relationship between housing and transportation.6 In 

addition, there has been an increased focus on combining the cost of 

housing and transportation as the “true” cost of housing affordability. 

However, under the current structure, the federal government provides 

significant funding to state and local governments to support both local 

affordable housing and surface transportation programs through separate 

housing and transportation departments. For example, HUD provides 

rental housing assistance through three major programs—housing choice 

vouchers, public housing, and project-based rental assistance; in fiscal 

year 2008, these programs provided rental assistance to about 4.75 million 

households and, according to HUD officials, paid about $31.25 billion in 

rental subsidies. DOT, through a variety of FTA programs to include the 

New Starts program,7

 has provided more than $33 billion over the last 

decade to help design, construct, rehabilitate, and modernize fixedguideway transit projects throughout the country.8

 Congress, among 

others, has raised questions about how these departments could better 

work together. In 2008, the Appropriations Committees directed HUD and 

FTA to jointly address new and better ways for promoting affordable 

housing near transit service.9

 

6

Livable Communities, Transit-Oriented Development, and Incorporating Green 

Building Practices into Federal Housing and Transportation Policy: Hearing before the 

Subcomm. on Transportation, Housing and Urban Development, and Related Agencies, 

House of Representatives Comm. on Appropriations, 111th Congress (Mar. 18, 2009) 

(statements of Shaun Donovan, Secretary, Department of Housing and Urban Development 

and Ray LaHood, Secretary, Department of Transportation). 

7

For purposes of this report, we refer to New Starts as new fixed-guideway and fixedguideway extensions, fixed guideway modernization, and certain bus-related programs in 

accordance with 49 U.S.C. § 5309(b). 

8

FTA formula programs, such as the Transit Capital Assistance program, are also eligible to 

fund rehabilitation and modernization of fixed-guideway systems. 

9

Specifically, in an explanatory statement accompanying the 2008 Consolidated 

Appropriations Act published by the Chairman of the Committee on Appropriations of the 

House of Representatives, the Appropriations Committees directed FTA and HUD to 

develop a best practices manual to help communities establish mixed-income transitoriented developments. Further, the statement indicated that FTA and HUD should jointly 

report to the Committees on Appropriations of the House of Representatives and the 

Senate on new and better ways they could coordinate transportation and housing programs 

to promote affordable housing near transit. 153 Cong. Rec. H15741, H16497, and H16562 

(Dec. 17, 2007). 

Page 3 GAO-09-871 Affordable Housing
 

You asked us to provide information on several key questions related to 

the impact of transit-oriented development on affordable housing and how 

HUD and FTA might better work together. More specifically, this report 

addresses the following questions: 

1. What is known about how transit-oriented developments affect the 

availability of affordable housing? 

2. How have local, state, and federal agencies worked to ensure that 

affordable housing, including housing subsidized through HUD 

programs, is available in transit-oriented developments? 

3. To what extent do FTA and HUD work together to ensure that 

transportation and affordable housing objectives are integrated in 

transit-oriented developments, and what opportunities exist to 

enhance collaboration? 

To address these questions, we conducted a review of relevant literature, 

reports, studies, and our prior research. We also conducted 11 site visits in 

Mesa, Phoenix, and Tempe, Arizona; Sacramento, California; Chicago, 

Illinois; Cleveland, Ohio; Jersey City and Hoboken, New Jersey; Portland, 

Oregon; Washington, D.C.; and Arlington, Virginia. During these site visits, 

we interviewed federal, state, and local housing and transportation 

officials; nonprofit housing organizations; and housing developers, and 

toured transit-oriented developments. We selected this nongeneralizable 

sample of metropolitan areas based on whether the metropolitan areas 

reported having transit-oriented developments, if the area had received 

New Starts federal funding for construction of a local fixed-guideway 

transit system, and geographical diversity. We also interviewed 

transportation, housing, and community development officials; housing 

developers; and representatives from various transportation and housing 

associations with experience in developing, implementing, or analyzing 

these issues. In addition, we reviewed studies and documentation on how 

government agencies and other housing and transportation stakeholder 

groups in these and other metropolitan areas and states have promoted 

transit-oriented developments. We conducted this performance audit from 

August 2008 to September 2009 in accordance with generally accepted 

government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives. See 

appendix I for more information about our scope and methodology. 

Page 4 GAO-09-871 Affordable Housing
 

There is no single definition of transit-oriented development; however, 

research generally describes such a development as a compact, mixed-use, 

walkable neighborhood located near transit facilities. Research has 

highlighted that most transit-oriented developments are typically near a 

fixed-guideway rail station, generally encompass multiple city blocks up to 

a half-mile from a transit station, have pedestrian-friendly environments 

and streetscapes, and include high-density and mixed-use developments. 

In addition, these developments may have fewer parking spaces compared 

to more traditional developments because residents have easy access to 

transit, and thus less need for an automobile. Transit-oriented 

developments can range in both size and scope, with some being in 

suburban neighborhoods with streetcars or bus rapid transit systems and 

community-related services while others are located in major urban 

locations with light, heavy, or commuter rail.10 Transportation experts 

believe that transit-oriented developments can increase accessibility to 

employment, educational, cultural, and other opportunities by promoting 

transportation options to households, thereby increasing transit ridership 

and reducing road congestion. Figure 1 provides a graphic representation 

of a transit-oriented development, and appendix II provides a description 

of various types of such developments. 

Background 

 

10Light rail transit is defined as a metropolitan-electric railway system characterized by its 

ability to operate in a variety of environments such as streets, subways, or elevated 

structures. Light rail systems typically use an overhead source for electrical power, can 

operate on streets with other traffic, and boarding takes place from the street or platforms. 

Heavy rail transit systems operate on a totally separated right-of-way, use a third rail on the 

ground to power the trains, require platform boarding, and typically have longer distances 

between stations and have greater capacity than light rail systems. 

Page 5 GAO-09-871 Affordable Housing
 

Figure 1: Representation of a Transit-Oriented Development and Key Components 

Transit station, such as

a light rail station, that is

part of a transportation 

network allows residents

to access the region’s

neighborhoods, 

destinations, and centers, 

thereby promoting

transit use

Open spaces to 

include transit-plazas, 

small parks or regional 

open spaces

High-quality walking

environments and

streetscape that allow 

people to take care of 

some of their daily 

needs by walking

or biking

Includes moderate- to 

high- density mix of 

residential, commercial, 

employment, and civic/ 

cultural developments

Includes residential 

buildings that can 

vary from small-lot 

single family/ 

duplex/ townhome 

units to high-rise 

multifamily units

Offers mixed use and 

employment 

developments that 

can vary from mid- to 

high-rise residential 

over commercial to 

low-to-high-rise 

office/commercial

Features (generally encompasses multiple city blocks up to a half-mile from a transit station)

Source: GAO.

Planning and development of a transit-oriented development and 

affordable housing are driven largely by state and local governments, 

transit agencies, and private developers. For example, state and local 

Page 6 GAO-09-871 Affordable Housing
 

government agencies provide many of the necessary infrastructures of 

transit-oriented developments, including transit stations, connections to 

other transportation modes, sidewalks, utilities, and other public 

amenities. Local governments also create the zoning environment, which 

may, for example, allow developers to build a mix of uses at higher 

densities. Some of the key agencies involved and their principal roles are 

summarized below. 

• State and local departments of transportation and metropolitan 

planning organizations11 develop transportation plans and improvement 

programs; and build, maintain, and operate transportation infrastructure 

and services.12

• Local transit agencies, such as transit authorities or transit operators, 

are responsible for building, maintaining, and operating transit systems. 

These transit systems can include fixed-guideway transit systems—such as 

light or heavy rail, and bus rapid transit—ferry systems, paratransit 

services, and local bus service. 

• Local county and city governments, and regional councils, through 

agencies such as county or city planning departments, have control over 

land use planning, which includes zoning policies and growth management 

policies. Regional councils develop land use plans used by metropolitan 

planning organizations for transportation planning. 

 

11Metropolitan planning organizations are federally mandated regional organizations 

responsible for comprehensive transportation planning and programming in urbanized 

areas with a population of 50,000 or more and are required by federal law to develop 

regional transportation plans. 

12The current framework for federal participation in surface transportation is set forth in 

authorizing legislation, most recently amended by the Safe, Accountable, Flexible, 

Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU). These pieces of 

legislation have established an overall approach for surface transportation planning and 

decision making that generally gives local and state governments significant 

responsibilities for these activities in their own regions. For example, 23 U.S.C. § 134 

establishes specific planning task requirements that metropolitan planning organizations, 

in conjunction with states, public transportation operators, and other stakeholders, must 

perform, which include (1) developing long- and short-range transportation plans and 

transportation improvement programs, (2) specifying financing for the transportation plan, 

and (3) involving a wide range of stakeholders in the process that emphasizes consultation 

and coordination. 

Page 7 GAO-09-871 Affordable Housing
 

In addition, state housing agencies, local governments, and private and 

nonprofit housing developers are the main stakeholders in building 

affordable housing. Some of the key agencies involved include: 

• State housing development and financing agencies provide funding 

for affordable housing through the Low Income Housing Tax Credit 

(LIHTC) program—an indirect federal subsidy used to finance the 

development of affordable rental housing for low-income households—

and other state programs for affordable housing.13

• City and county housing departments are responsible for planning, 

developing, and funding affordable housing. In addition, local housing 

departments or agencies are required by federal law to develop local area 

housing plans.14

• Local public housing authorities (PHA), normally created by state law, 

typically manage a local region’s public housing units and federally 

sponsored housing voucher programs. 

• Private for-profit housing developers and nonprofit housing 

developers, such as community development corporations, build and 

manage housing units. 

FTA provides financial and technical assistance to local and state public 

transit agencies to build, maintain, and operate public transit systems. 

FTA’s New Starts program, its major capital investment program for new 

and extensions to existing fixed-guideway transit systems—a key element 

of transit-oriented developments—awards funds to individual projects 

 

13LIHTC is administered by the Internal Revenue Service based on section 42 of the Internal 

Revenue Code, which was enacted by Congress in 1986 to provide the private market with 

an incentive to invest in affordable rental housing. 

14HUD generally requires states, cities, and counties to prepare a 5-year Consolidated Plan 

and a 1-year Action Plan that together identify long-range housing needs, as well as shortterm funding priorities for HUD’s formula grant programs. 24 C.F.R. pt. 91 

Page 8 GAO-09-871 Affordable Housing
 

through a competitive selection process.15 Only a few systems are 

recommended by FTA for funding in each fiscal year. FTA also provides 

transit funding to state and local governments through formula grants, 

which are funded entirely from the Highway Trust Fund’s Mass Transit 

Account.16 These grants provide capital and operating assistance to local 

transit agencies and states through a combination of five relatively large 

and five relatively smaller grant programs, which FTA distributes via 

formula grants. In addition, two programs administered by the Federal 

Highway Administration, the Surface Transportation Program and the 

Congestion Mitigation and Air Quality Improvement Program—also 

referred to here as flexible funding programs—routinely provide state and 

local transportation agencies flexibility in using funding for transit 

projects by permitting a portion of the program funding to be transferred 

for these purposes. A portion of flexible funding is allocated to localities 

and metropolitan planning organizations rather than states, allowing local 

authorities, acting through the metropolitan planning organization, to 

select projects reflecting their jurisdictions’ priorities. Table 1 provides 

additional information on these programs. 

 

15Under the New Starts program, the Secretary has the authority to provide funding for new 

and extensions to existing fixed guideway systems—done through a competitive process—

as well as fixed guideway modernization and bus-related projects. In addition to New 

Starts, SAFETEA-LU established the Small Starts program for lower-cost fixed-guideway 

capital projects, which may include a corridor-based bus capital project. Small Starts 

projects are defined as those projects that request less than $75 million in New Starts 

funding and have a total estimated net capital cost of less than $250 million. FTA also 

subsequently introduced a subset of the Small Starts program called the Very Small Starts 

program for projects that have a total capital cost of less than $50 million. 

16The Highway Trust Fund is divided into two major accounts: the Highway Account and 

the Mass Transit Account. A portion of federal fuel taxes (2.86 cents of the 18.4 cents 

federal gas tax) is deposited into the Mass Transit Account. 

Page 9 GAO-09-871 Affordable Housing
 

Table 1: Examples of Federal Programs that Fund Transit Projects 

New Starts and Small Starts (FTA) Selects new fixed-guideway and fixed-guideway extensions, fixed guideway modernization, 

and certain bus-related projects for funding in accordance with 49 U.S.C. § 5309. Projects 

can include heavy, light, and commuter rail, and certain bus rapid transit projects. To be 

eligible for funding under New Starts, projects must, among other things, be justified based 

on a comprehensive review of mobility improvements, environmental benefits, economic 

development effects land use, cost effectiveness, and operating efficiencies, and 

supported by an acceptable degree of local financial commitment. Small Starts are 

evaluated against a subset of these measures including cost effectiveness, land use, other 

factors (including economic development impacts), and local financial commitment. 

Transit Capital Assistance (FTA) Provides grants to local transit agencies through a formula for projects that can include 

capital projects and associated capital maintenance items, planning, transit enhancements, 

and operating costs of equipment and facilities. Funding is apportioned to urbanized and 

nonurbanized areas on the basis of legislative formulas, which include such items as 

population and population density, bus revenue vehicle miles, bus passenger miles, fixed 

guideway revenue vehicle miles, and fixed guideway route miles. 

Congestion Mitigation and Air Quality 

Improvement Program (joint Federal 

Highway Administration and FTA) 

Partially funds transportation projects and programs in order to reduce transportationrelated emissions in areas with poor air quality. To be eligible for funding, projects must be 

transportation related, in nonattainment or maintenance areas,a

 and reduce transportationrelated emissions. 

Surface Transportation Program (joint 

Federal Highway Administration and 

FTA) 

Provides funding to states and localities for projects on any federal-aid highway—including 

transit capital projects and local and intercity bus terminals and facilities. 

Source: GAO analysis of DOT information. 

a

Federal air quality standards, established by the Environmental Protection Agency, exist for certain 

air pollutants (knows as criteria pollutants). Geographic areas that have levels of a criteria pollutant 

above those allowed by the standards are called nonattainment areas. Areas that were previously 

nonattainment areas but now meet the standards (i.e., have reached attainment) are known as 

maintenance areas. 

HUD generally provides rental housing assistance through three major 

affordable housing programs—housing choice vouchers, public housing, 

and project-based rental assistance. These three programs generally serve 

low-income households—that is, households with incomes less than or 

equal to 80 percent of area median income (AMI).17 Some of these 

programs include targets for households with extremely low incomes—30 

percent or less of AMI. HUD-assisted households generally pay 30 percent 

 

17Area median income—sometimes also referred to as median family income—limits are 

published annually by HUD and are used to determine eligibility of applicants in federal 

and local affordable housing programs. 

Page 10 GAO-09-871 Affordable Housing
 

of their monthly income, after certain adjustments, toward their unit’s 

rent.18

• The Housing Choice Voucher program, which supports over 2 million 

housing units and is administered by local PHAs, provides vouchers that 

eligible families can use to rent houses or apartments in the private 

housing market. Voucher holders are responsible for finding suitable 

housing that meets HUD’s housing quality standards. The subsidies in the 

voucher program are provided to the household (that is, tenant-based), so 

tenants can use the vouchers in new residences if they move. The housing 

subsidy is paid to the property owner directly on behalf of the 

participating households. The household then pays the difference between 

the actual rent charged by the owner and the amount subsidized by the 

program. PHAs have some flexibility to determine the maximum amount 

of rental subsidy they can pay for assisted households within limits set by 

HUD. For example, HUD establishes “fair market rents” for each 

metropolitan area, based on actual market rents for standard-quality rental 

units, but PHAs may choose a “payment standard” that is up to 10 percent 

lower or higher than the fair market rent. 

• The public housing program, also managed by PHAs through operating 

and capital grants, subsidizes the development, operation, and 

modernization of government-owned properties and provides units for 

eligible tenants in these properties. In contrast to the voucher program, 

the subsidies in the public housing program are connected to specific 

rental units, so tenants receive assistance only when they live in these 

units. HUD pays an operating subsidy, which helps to cover the difference 

between the PHA’s operating costs and the rents the PHA collects from 

tenants. 

• Through a variety of project-based programs including project-based 

Section 8, HUD provides rent subsidies in the form of multiyear housing 

assistance payments to private property owners and managers on behalf of 

eligible tenants. Tenants may apply for admission to these properties with 

project-based rental assistance contracts. HUD pays the difference 

between the household’s contribution and the unit’s rent. 

HUD also administers formula grant programs, such as the Community 

Development Block Grant (CDBG) program and the HOME program, 

 

18A tenant’s rent is based on a household’s anticipated gross annual income—that is, 

income from all sources received by the family head, spouse, and each additional family 

member who is 18 years of age or older, less applicable exclusions and deductions. 

Page 11 GAO-09-871 Affordable Housing
 

which help low-income households obtain access to affordable housing. 

These programs divide billions of dollars across local jurisdictions and 

numerous activities on an annual basis using funding formulas pursuant to 

statutory guidance. Activities funded by the CDBG program can include 

housing, economic development, neighborhood revitalization, and 

community development. The HOME program provides federal assistance 

to participating jurisdictions for housing rehabilitation, rental assistance, 

homebuyer assistance, and new housing construction. Recipients of CDBG 

and HOME funding have a great deal of flexibility in how they use these 

grants, and must fulfill HUD’s planning requirements to receive funding. 

Transit-Oriented 

Developments Can 

Affect the Availability 

of Affordable Housing 

but Conclusions Are 

Complicated by 

Limited Research and 

Data 

Characteristics of TransitOriented Developments 

Can Increase Nearby Land 

and Housing Values 

According to most of the literature we reviewed, plans for the existence of 

transit stations and amenities commonly found in transit-oriented 

developments generally increase nearby land and housing values, but the 

magnitude of the increase varies greatly depending upon several other 

characteristics.19 The studies generally conclude that increases occur 

because residents place a premium on land and housing the closer each is 

 

19Our literature review included eight studies, four of which included extensive reviews of 

previously published literature. These eight studies are representative of the general 

research findings that the value of property is positively correlated with the presence of a 

transit station. These studies, conducted between 1978 and 2008, examined primarily 

residential property using sales data on single-family homes, condominiums, or apartment 

rents in varying areas and, as a result, estimates of land or housing values with respect to 

transit development vary. A 2008 report from the Center for Transit-Oriented Development 

said that increased asking prices for property along planned light rail corridors have been 

observed in several areas, including the Twin Cities, Houston, Denver, and Charlotte. See 

Reconnecting America’s Center for Transit-Oriented Development, Capturing the Value of 

Transit, November 2008. 

Page 12 GAO-09-871 Affordable Housing
 

to a transit station. Although the presence of transit generally affects land 

and housing values, increases in some cases are modest, and results can 

vary throughout an entire transit system depending on several 

characteristics which are summarized below. 

• Retail development is common to the type of mixed-use development 

found in transit-oriented developments because it allows residents to 

avoid car trips for everyday shopping. A few studies we looked at found 

that retail presence near transit stations affected land and housing values 

near transit positively. One particular study found that the stations with 

the highest increases in nearby housing values had a retail presence. 

• Neighborhood characteristics surrounding a transit station is another 

factor the studies we reviewed have shown to be valued by transit users 

and nontransit users resulting in increased land and housing values. The 

studies we reviewed showed a number of neighborhood characteristics 

such as higher relative incomes, and proximity to parks, schools, or other 

neighborhood amenities. One of the goals often cited in research of 

transit-oriented development is to create quality, desirable neighborhoods 

that include many of these amenities. 

• Other factors that have been found to increase land and housing values 

include proximity to job centers, pedestrian amenities, and quality or 

frequency of transit service. For example, a study of California transit 

systems found that increases in property values are more likely along 

reliable, frequent, and fast transit systems in the San Francisco-Oakland 

Area and San Diego than near more limited light rail service in Sacramento 

and San Jose.20

Conversely, some characteristics of areas near transit can limit increases, 

or even cause a transit station to be a negative influence on land or 

housing values. These characteristic include: 

• Non-transit-oriented land uses and prevalence of crime: In the San 

Francisco-Oakland Area, studies found that a transit station generally has 

a positive influence on land and housing values, except near certain 

 

20Landis, John, Robert Cervero, Subhrajit Guhathukurta, David Loutzenheiser, and Ming 

Zhang. Rail Transit Investments, Real Estate Values, and Land Use Change: A 

Comparative Analysis of Five California Rail Transit Systems. Monograph 48, Institute 

of Urban and Regional Studies, University of California at Berkeley (1995). 

Page 13 GAO-09-871 Affordable Housing
 

stations in a largely industrial area in Oakland.21 In addition, the study of 

the Atlanta rail system found that the presence of crime limited increases 

and sometimes even decreased land and housing values, particularly near 

rail stations with an adjacent surface parking lot.22

• Poor economic environments: A study of Buffalo transit stations found 

a premium value for real estate near stations in high-income areas, but a 

negative effect on land and housing values near stations in low-income 

areas.23 The authors conclude that these negative effects may be the result 

of a lengthy economic decline and population loss in Buffalo, delayed 

development, and a lack of job centers on the transit system rather than 

the presence of the transit station. 

Availability of Affordable 

Housing in TransitOriented Developments 

Varies Depending on Land 

and Housing Values, Local 

Decision Making, and 

Other Factors 

Higher land and housing values generally tend to limit housing units 

affordable for lower-income households but many other factors can also 

affect the availability of affordable housing near transit and in transitoriented developments.24 According to local officials and transit and 

housing stakeholders we spoke with, higher land and housing values have 

the potential to limit the affordable housing units that are market rate, 

government subsidized, or incentivized. Increased land and housing values 

can raise the market price of sale and rental housing beyond an affordable 

percentage for households at or below an area’s median household 

income, thus reducing the availability of market rate affordable housing. 

Subsidized or incentivized affordable housing units can also be affected by 

higher land and housing values. For example, if rents for units near transit 

stations increase above fair market rents, tenant-based rental vouchers—

provided through HUD’s housing choice voucher program—may be 

insufficient to cover the increased rents. 

 

21Pollution can also potentially negatively affect land and housing values. See for example, 

Kenneth Chay and Michael Greenstone. “Does Air Quality Matter? Evidence from the 

Housing Market,” Journal of Political Economy, vol. 113, no. 2 (2005). 

22Bowes, D. R. and K.R. Ihlanfeldt. “Identifying the Impacts of Rail Transit Stations on 

Residential Property Values,” Journal of Urban Economics, vol. 50 (2001): pp. 1-25. 

23Daniel Baldwin Hess and Tangerine Maria Almeida. “Impact of Proximity to Light Rail 

Rapid Transit on Station-area Property Values in Buffalo, New York,” Urban Studies, vol. 

44 (2007): p. 1041. 

24Affordability is often defined as housing cost as a percentage of household income, 

therefore higher land values can affect affordability if income remains constant. 

Page 14 GAO-09-871 Affordable Housing
 

Moreover, a recent study conducted by Reconnecting America and the 

National Housing Trust highlighted that HUD project-based Section 8 

contracts for many properties near transit stations will expire in coming 

years.25 Nearly two-thirds of those buildings near transit in the eight cities 

the study examined have contracts expiring by 2012. As the study 

indicates, if contract holders believe that the increasing land values could 

allow them to charge higher rents than the subsidy they receive from HUD 

for participating in the Section 8 contract, the property owners may decide 

not to renew the Section 8 contracts.26

Increased values and land speculation can also potentially stifle 

development of affordable or mixed-income housing projects. In several 

places we visited, local officials and developers told us that higher land 

costs can make it difficult for projects to meet profit expectations, 

resulting in a preference for developers to market projects in transitoriented developments to higher income households. 

In addition to land and housing values, local officials told us that several 

other conditions and local decisions can affect the availability of 

affordable housing near transit. For example: 

• Local economic conditions can suppress land and housing values 

proportionately more than the local median household income, resulting 

in an increased supply of affordable housing units at market rate. For 

example, officials in Cleveland told us that the weak local economic 

conditions have led to an abundant supply of market rate units that are 

affordable to people with low incomes. Therefore they are less focused on 

increasing the stock of affordable housing units near the recently 

completed Euclid Corridor Bus Rapid Transit, and more focused on 

stimulating economic development and revitalizing the general housing 

market. 

• Local transit station location decisions can also affect the availability 

of affordable housing near transit. For instance, although housing 

advocates and local officials raised concerns that as land values increase, 

 

25Reconnecting America and the National Housing Trust, Preserving Opportunities: 

Saving Affordable Homes Near Transit, 2007. 

26HUD’s project-based Section 8 program subsidizes the rent of low-income individuals 

through contracts between HUD and multifamily property owners. The subsidies keep 

rents in Section 8 properties affordable to households earning at or below 80 percent of 

AMI. 

Page 15 GAO-09-871 Affordable Housing
 

low-income households may be displaced, several local officials we spoke 

with told us that new transit station locations were planned in corridors 

with limited housing prior to the construction of the transit line. These 

station locations were specifically placed in blighted or industrial areas or 

railyards with relatively inexpensive land and plentiful space available for 

infill developments.27 For localities committed to providing affordable 

housing, new development near these transit stations provides 

opportunities for new affordable housing near transit. For example, 

officials in Washington, D.C., told us that some stations of the rail transit 

system were aligned to support housing and economic development on 

vacant or underutilized properties (see fig. 2). 

 

27Infill refers to redevelopment of vacant or underutilized property in urbanized areas. 

Page 16 GAO-09-871 Affordable Housing
 

Figure 2: Infill Development, Including Some Affordable Housing Units, Has 

Replaced Vacant or Underutilized Land near the Columbia Heights Station in 

Washington, D.C. 

Other transit lines can be aligned to serve populated, low-income 

neighborhoods. Local officials told us that one of the goals of the HudsonBergen Light Rail was to provide better transit access to low-income 

residents of Jersey City and Hoboken, New Jersey. The introduction of 

light rail in the past decade, paired with longer-term, focused investment 

of HUD affordable housing and revitalization dollars, has helped improve 

the availability of quality, affordable housing near transit. While transit 

lines can provide better transit access to low-income residents in the short 

term—a key role of transit—housing advocates have raised concerns that 

1/2-mile radius from transit station 

Transit station

Market rate residential or non-residential development

Mixed-income housing

100% affordable housing 

Source: GAO analysis of District of Columbia planning data.

Infill development on previously vacant or underutilized property since 2000

Page 17 GAO-09-871 Affordable Housing
 

rents will increase in the long term, placing pressure on existing lowincome residents. 

• State and local commitment to preserving or developing affordable 

housing near transit can help ensure the availability of affordable housing 

despite potential increases in land value. Local officials told us that some 

tools—which we will discuss in greater detail in the next section—are 

available to subsidize affordable units or to encourage developers to 

provide affordable units to help counter higher rents and property values 

near transit. In addition, coordinated state and regional planning also can 

influence local governments’ support of affordable housing in transitoriented developments, according to recommendations from recent 

reports. For example, to overcome issues associated with increasing land 

values and speculation, nonprofit organizations and regional and local 

governments can invest in land along transit alignments with the intent to 

develop the land in the future with an affordable housing component. 

Limited Research and Data 

Complicate Conclusions 

about the Effect of TransitOriented Developments on 

the Availability of 

Affordable Housing 

A lack of direct research, incomplete data, and factors unique to each 

transit station limit the conclusions that can be made about how transitoriented developments affect the availability of affordable housing. To 

date, there has been little research that specifically links transit-oriented 

developments to affordable housing, hindering the ability of policy makers 

and private investors to make informed decisions or evaluate results. For 

example, most of the studies we reviewed focused on land or housing 

values near transit but did not distinguish between stand-alone transit 

stations and transit stations in transit-oriented developments. In addition, 

most studies did not directly measure the number of affordable housing 

units, or otherwise quantify the availability of affordable housing, whether 

it was market rate or subsidized. Moreover, the research that does exist on 

land and housing values is typically focused on specific geographic areas 

and does not distinguish among the effects of state and local commitment 

to affordable housing and other factors that affect the availability of 

affordable housing. Finally, many communities with relatively new fixedguideway transit systems have limited experience with transit-oriented 

developments, and often development—and any potential long-term 

effects on the availability of affordable housing—has yet to fully take 

hold.28

 

28According to some research, transit-oriented developments often take years, if not 

decades, to fully develop. The effect land and housing values might have on affordable 

housing may not be fully realized until years after the transit station opens. 

Page 18 GAO-09-871 Affordable Housing
 

The scarcity of reliable housing data and limitations in analytical 

transportation planning methods also limit thorough study and evaluation 

of the direct effect that transit-oriented developments have on the 

availability of affordable housing.29 For example, HUD-subsidized housing 

data—the only nationwide data available for subsidized housing—do not 

provide a full and accurate picture of the availability of subsidized housing 

for research purposes. According to HUD, funding recipients self-report 

data for the locations of subsidized housing programs to local PHAs, 

limiting HUD’s ability to ensure completeness and accuracy. In addition, 

the data that are collected are primarily intended for administrative 

purposes and HUD officials told us they think the data are sufficiently 

reliable for administrative purposes. However, our analysis of the data 

revealed that several quality concerns—including inconsistencies in data 

over time—limit using the data for research purposes which involve 

reliable long-term data analysis. HUD officials told us that a variety of 

potential explanations existed for these inconsistencies including 

transitions between reporting requirements having potentially caused 

missing records as well as some records with missing geographic data.30

For example, 32 PHAs were not required to submit data for Housing 

Choice vouchers or public housing units from 2000 to 2006 due to 

participation in the Moving to Work program.31 Figure 3 shows examples 

of three geographic areas in which the number of HUD-subsidized housing 

unit records changes significantly over time and in some cases from one 

year to the next. While HUD’s Performance and Accountability reports 

indicate there has been some variation in the overall number of HUDsubsidized units over time, the extent of change in figure 3 is not explained 

by this variation. The lack of reliable and complete data would limit 

analysis on the impacts of HUD investments for affordable housing near 

transit. Furthermore, state and local governments—which provide 

significant amounts of housing subsides—vary in the extent to which data 

 

29Local travel models are used to forecast travel demand for transit projects, which is then 

used in calculating transportation system user benefits for New Starts projects. 

30HUD officials told us that this is in part because changes were made to the reporting form 

for the Moving to Work program and there was initial confusion among PHAs about the 

requirement. In addition, HUD officials told us that missing geographic data were not 

random throughout the database, and that the reasons for the differences varied. Moreover, 

HUD told us that the accuracy of the geographic data is of significantly less quality prior to 

2000. 

31Moving to Work is a HUD demonstration program that allows PHAs to design and test 

ways to promote self-sufficiency among assisted families, achieve programmatic efficiency 

and reduce costs, and increase housing choice for low-income households. 

Page 19 GAO-09-871 Affordable Housing
 

are collected, available, and reliable. The affordability of market rate 

housing can also be affected by increases in land value in transit-oriented 

developments; however the market rate housing datasets that do exist, 

such as the American Housing Survey, do not record housing costs with 

the detail, scale, or frequency needed to capture trends that may result 

from transit-oriented developments. Our past work has also cited the 

difficulties of accurately predicting changes in traveler behavior and land 

use resulting from a transit project, as well as concerns about the quality 

of data inputs into local travel models.32

Figure 3: Examples of Inconsistencies in Number of HUD-Subsidized Housing Unit 

Records, 2000–2008 

Cleveland Metropolitan Area - Public Housing

Washington D.C. Metropolitan Area - Section 8 Housing Choice Vouchersa,b

State of New Jersey - Multifamilyc

0

10,000

20,000

30,000

40,000

50,000

60,000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Number of units

Source: GAO analysis of HUD Data.

Fiscal year

Note: The graphic demonstrates several examples of significant and unexpected changes in the 

number of subsidies in each of these designated areas over time. 

 

32GAO, Highway and Transit Investments: Options for Improving Information on 

Projects’ Benefits and Costs and Increasing Accountability for Results, GAO-05-172

(Washington, D.C.: July 25, 2008). 

Page 20 GAO-09-871 Affordable Housing
 

a

Washington, D.C., includes subsidies within the Metropolitan Washington Area. New Jersey includes 

subsidies located in the State of New Jersey. Cleveland includes subsidies located in Metropolitan 

Statistical Area 1680. 

b

The District of Columbia Housing Authority is a participant in the HUD Moving to Work Program. 

c

Multifamily programs include Section 8 Project Based / Section 202 - Project rental assistance 

contracts / Section 811 - Project rental assistance contracts / Section 236 / Section 221(d3) / Rental 

Assistance Program / Rent Supplement. 

Local, State, and 

Federal Affordable 

Housing Programs 

and Policies Support, 

but Generally Do Not 

Require, Affordable 

Housing in TransitOriented 

Developments 

Few Local and State 

Programs Are Specifically 

Targeted to Affordable 

Housing in TransitOriented Developments, 

and Most Are Incentive 

Based 

Few local and state programs are targeted to assist local housing and 

transit providers develop affordable housing in transit-oriented 

developments; the few targeted programs that do exist mainly provide 

financial incentives to developers if they include affordable housing in 

new residential developments in transit-oriented developments. In our site 

visits, we found examples in which local housing providers used these 

targeted programs to either build new or preserve existing affordable 

housing in transit-oriented developments. For example, California 

allocated $285 million over a period of 3 years to the Transit-Oriented 

Development Housing Program, which uses loans and grants to encourage 

the development of housing development projects within one-quarter mile 

of transit stations.33 The loans and grants are made available on a 

competitive basis to affordable housing developers and local government 

 

33In 2006, voters in the State of California passed the Housing and Emergency Shelter Trust 

Fund Act of 2006 which allocated $2.85 billion for housing and development programs, 

including affordable housing in transit-oriented developments. Cal. Health & Safety Code 

§§ 53560 et seq. (2009). 

Page 21 GAO-09-871 Affordable Housing
 

housing agencies that commit to build at least 15 percent of the units they 

develop as affordable housing units.34 According to California officials, in 

2008, $145 million was committed or awarded to 16 applicants, and over 

1,800 affordable housing units will be created as a result of these awards. 

In Portland, Oregon, the Transit-Oriented Development Property Tax 

Abatement supports affordable housing on vacant or underutilized sites in 

transit-oriented developments by reducing operating costs for affordable 

housing property owners and developers through a 10-year maximum 

property tax exemption.35 For 2007-2008, Portland reported that the tax 

abatement program assisted 971 housing units resulting in over $1.3 

million in foregone tax revenues for the city and county. Of these units, 

279 have rents restricted for residents with incomes between 30 percent to 

80 percent median family income. Finally, in Denver, Colorado, the city is 

developing a transit-oriented development fund that will provide funding 

to local affordable housing developers to preserve and create at least 1,200 

affordable units for sale and rental along Denver mass transit corridors 

over a 10-year period. 

Many states use federal tax credits as a financial incentive to encourage 

development of affordable housing near transit as well as specifically in 

transit-oriented developments. States administer federal LIHTCs and 

provide them to developers in accordance with state Qualified Allocation 

Plans (QAP)—plans that states are required to develop which outline the 

competitive process used to award these funds. In QAPs, most states use a 

competitive points system to award LIHTCs. There is no statutory 

requirement that a state incorporate proximity to transit into its QAP. 

States that have either required or provided incentive points for proximity 

to transit have done so independent of federal requirements. In these 

states, incentive points can be earned if developments are within a certain 

radius of public transit or in transit-oriented developments as designated 

by a state or local authority.36 For example, New Jersey’s QAP awards an 

additional point for proposed developments that are one-half mile from 

 

34Affordable housing units must be affordable to persons of very low and low income for a 

period of at least 55 years. 

35See Or. Rev. Stat. § 307.600 (2009). 

36The total points which applicants can earn vary across QAPs. For example, applicants can 

earn up to 63 points in New Jersey and up to 146 points in California. We did not examine 

the extent to which applicants or state housing finance agencies believed a certain number 

of points for proximity to transit would make a difference in applicants’ prospects for 

success in receiving LIHTCs. 

Page 22 GAO-09-871 Affordable Housing
 

public transportation, as well as up to 10 points for proposed 

developments in Transit Villages, a designation given by New Jersey’s 

Department of Transportation to transit-oriented developments.37 New 

Jersey officials commented that since tax credits are awarded only to a 

fraction of those that apply for them, developers consider these points a 

strong incentive to propose projects that will earn the additional points for 

proximity to transit. Appendix III provides examples of LIHTC programs 

that contain proximity to transit incentives. Additionally, states can award 

additional tax credits in HUD-designated high-cost areas.38 While HUD 

designates high-cost areas, which could include transit-oriented 

developments, states have the authority to designate buildings as being 

located in areas which they determine as high cost, independent of the 

areas designated by HUD. Oregon has used this authority to designate 

affordable housing buildings in transit-oriented developments as high-cost 

areas which require additional funding to be financially feasible. 

Therefore, Oregon provides additional tax credits to projects located in 

transit-oriented developments. 

State and local governments we visited generally did not use incentives in 

their local land use regulations or building codes to promote affordable 

housing in transit-oriented developments. Rather, incentives and 

requirements provide broad support for state and local governments to 

promote affordable housing without regard to location. These can help 

support the economic feasibility of affordable housing development by 

using nonfinancial incentives—such as land use regulations and building 

codes—and financial incentives—such as direct funding or financing 

options. In addition to incentives, we found that a few state and local 

governments have implemented certain requirements to include affordable 

 

37The New Jersey Transit Village Initiative is a coordinated effort by the state’s various 

agencies including housing and transit to establish transit-oriented developments 

throughout the state. 

38If the development is located in a HUD-designated high cost area (HCA), the state 

allocating agency may award up to 30 percent additional LIHTCs. These areas include both 

Qualified Census Tracts (QCT) and Difficult Development Areas (DDA). In a QCT, 50 

percent or more of the households have incomes of less than 60 percent of AMI. DDAs are 

designated according to a HUD comparison of housing costs with incomes for each area. 

Section 3003(a) of the Housing and Economic Recovery Act of 2008 amended section 

42(d)(5) of the Internal Revenue Code and allowed certain state-designated buildings to be 

treated as being located in a DDA and qualify for additional LIHTCs. 26 U.S.C. § 

42(d)(5)(B)(v). To quality for this special treatment, the building must be designated by the 

state as requiring the enhanced credit in order to be financially feasible as part of the lowincome housing project. 

Page 23 GAO-09-871 Affordable Housing
 

housing in new developments, but like most state and local incentives, 

these requirements are not specifically targeted at affordable housing in 

transit-oriented developments. Determining if these nontargeted 

incentives and requirements have ensured the availability of affordable 

housing in and near transit-oriented developments is difficult due to a 

number of reasons described earlier. 

Selected examples of state and local affordable housing incentives and 

requirements that have been used in transit-oriented developments but are 

not specifically designed for use in transit-oriented developments include 

the following: 

• Density bonus permits allow developers to build more than the 

maximum number of allowable units permitted by local code if they agree 

to designate a certain number of units as affordable housing. 

Incentives 

• Parking reductions allow local governments to reduce minimum parking 

requirements set forth in local building codes for developers that build 

near transit. This incentive allows developers to build fewer parking 

spaces and use the money saved from the reduced parking construction 

costs to support additional affordable units. 

• Tax increment financing is used by local governments to encourage 

economic development by issuing municipal bonds to subsidize 

development, which are repaid using the incremental future tax revenues. 

Some localities dedicate a portion of tax increment financing for 

affordable housing. 

• Affordable housing trust funds are distinct funds set aside by cities, 

counties, and states that dedicate sources of revenue to support affordable 

housing development. 

• Inclusionary zoning: Some states or localities may require that all new 

housing developments, regardless of location, include a portion of units as 

affordable housing. Some inclusionary zoning ordinances allow developers 

to pay the local government for each affordable unit they choose not to 

build. 

Requirements 

• Affordability requirements on publicly financed residential 

development: Some state and local governments include affordable 

housing requirements when they sell land to housing developers or when 

any government financing is involved in the project. 

Page 24 GAO-09-871 Affordable Housing
 

We found examples from our site visits and other research where each 

type of nontargeted incentive and requirement discussed above was being 

used to support affordable housing in transit-oriented developments (see 

table 2). Because developers (both for profit and nonprofit) are not 

required to do so, developers may or may not take advantage of the 

various state and local government incentives to build or preserve 

affordable housing in transit-oriented developments. 

Table 2: Examples of State and Local Affordable Housing Incentives and Requirements that Have Been Used in TransitOriented Developments but Are Not Specifically Designed for Use in Transit-Oriented Developments 

Category Type Location Example Result 

Nonfinancial 

incentives 

Density bonus Arlington County, 

Virginia 

Arlington County permits a 25%

density bonus to developers who 

provide affordable units. The density 

bonus allows both market rate and 

affordable units, with the income from 

the market-rate units designed to offset 

the cost of the affordable units. 

Quincy Plaza, a residential 

development in the transitoriented development around 

the Ballston Metro station, used 

the full 25% bonus to add 25 

affordable units. 

Financial incentives Tax increment 

financing 

Sacramento, 

California 

All local redevelopment agencies in 

California are required to set aside 

20% of tax increment financing 

resources for a separate affordable 

housing fund. 

Sacramento’s redevelopment 

agency supported 114 lowincome senior apartments in a 

transit-oriented development 

through $6 million in tax 

increment financing. 

Financial incentives Affordable 

housing trust 

funds 

Los Angeles, 

California 

The City of Los Angeles’s Affordable 

Housing Trust Fund provides funding 

to create affordable housing, as well as 

revitalize neighborhoods and remove 

blight. 

In 2008, 225 affordable housing 

units in three developments 

located in transit-oriented 

developments in Los Angeles 

received over $21 million from 

the Affordable Housing Trust 

Fund. 

Requirements Inclusionary 

zoning 

Montgomery 

County, 

Maryland 

Montgomery County’s Moderately 

Priced Dwelling Unit program requires 

that at least 12.5 percent of the units in 

new subdivisions of 20 or more units 

be set aside as affordable units. 

King Farm, a mixed-use transitoriented development adjacent 

to the Shady Grove Metro 

Station in Rockville, 

Montgomery County, includes 

3,200 units, of which 353 units 

are affordable as part of the 

County’s inclusionary policy. 

Requirements Affordability 

requirements on 

publicly financed 

residential 

development 

New Jersey Statutory requirement that any new 

housing development for which the 

land was purchased from a state or 

local government agency, or which 

received any kind of state funding, 

must set aside at least 20% of the 

residential units for low- and moderateincome individuals. 

Legislation enacted in July 

2008 and results are not yet 

available. 

Source: GAO. 

Page 25 GAO-09-871 Affordable Housing
 

Local housing providers have used HUD programs in a number of cases to 

support affordable housing in transit-oriented developments, however, 

these programs support affordable housing in any location. HUD 

programs, such as the CDBG and HOME programs, generally provide local 

and state agencies with flexibility to tailor their housing spending 

decisions to meet local needs. According to HUD officials, CDBG and 

HOME grant recipients have flexibility in applying funds to local 

initiatives, and in some locations we visited, local officials told us they 

used these funds, among others, to increase affordable housing near 

transit as part of a transit-oriented development plan. 

HUD and FTA Programs 

Allow Local and State 

Agencies to Promote 

Affordable Housing near 

Transit, but Rarely Provide 

Direct Incentives to Target 

Affordable Housing in 

Transit-Oriented 

Developments 

• A community development corporation in Washington, D.C., used 

approximately $7 million in CDBG funds to rehabilitate or develop 

approximately 800 units of affordable housing and generate economic 

development as part of its efforts to revitalize the neighborhood around a 

transit station. 

• In Hoboken, New Jersey, a local housing agency official highlighted the 

flexibility in the CDBG program as an opportunity for the city to target 

funding to best meet the city’s need to revitalize the existing housing stock 

around new transit stations. 

• In Seattle, Washington, local housing agency officials allocated over $4 

million in HOME program funds to subsidize 200 new affordable units in 

four rental housing developments located in transit-oriented 

developments. 

Similarly, numerous other HUD programs, including project-based Section 

8 and the Housing Choice Voucher program, can be used to support 

affordable housing in transit-oriented developments, but according to 

HUD officials, these programs have not been targeted specifically for 

developing or preserving affordable housing in transit-oriented 

developments.39 While project-based Section 8 assists more than 1.3 

million low- and very-low-income families, during our site visits, local and 

federal housing agency officials told us they had not prioritized the 

renewal of project-based Section 8 contract housing in transit-oriented 

developments. As highlighted earlier, a study found that some projectbased Section 8 housing is located near rail stations—defined as within 

 

39Other programs include mortgage insurance programs that provide federal loan 

guarantees to support the construction of new apartment projects and the refinancing of 

the rehabilitation of older ones. 

Page 26 GAO-09-871 Affordable Housing
 

one-half mile of existing or proposed rail stations—and that many of the 

contracts for the properties near rail stations are set to expire before the 

end of 2012. Housing experts have identified this as a potential problem 

since Section 8 contract holders may not renew these contracts if they 

believe the rents they could earn without the contract would be higher 

than the rental subsidy they receive from HUD, thereby, reducing the 

number of affordable units in these areas. The Housing Choice Voucher 

program is also a significant source of HUD-subsidized affordable housing 

that individuals can use for housing in transit-oriented developments. 

However, this requires that individuals find units where the owner accepts 

the voucher, which is set at the region’s fair market rent.40 HUD allows for 

exceptions to be made to the fair market rent valuations in high-cost areas, 

but HUD officials did not know of any exceptions that had been made 

specifically based on rents in transit-oriented developments exceeding 

HUD’s fair market rent valuations. 

It is unclear the extent to which increases in market rate rents that may 

occur in transit-oriented developments have affected subsidized housing, 

such as project-based Section 8 properties and rental vouchers. In transitoriented developments, consideration of ways to ensure that project-based 

Section 8 contract units remain affordable and rental vouchers remain 

viable may be integral to ensuring the ongoing availability of affordable 

housing in transit-oriented developments. However, as described earlier, 

HUD’s data for its subsidized housing programs have limitations. These 

limitations do not permit a comprehensive analysis of the HUD-subsidized 

housing units located in transit-oriented developments. In addition, HUD 

has not assessed the effects of its policies and programs in supporting the 

availability of affordable housing in transit-oriented developments. 

Without such analysis grounded in reliable data, it will be difficult for HUD 

to assess how its programs might help to ensure the availability of 

affordable housing in transit-oriented developments. 

While most HUD programs do not consider a connection between housing 

and transit in the program criteria, some HUD programs do provide 

incentives for building affordable housing near transit, but not specifically 

in transit-oriented developments. For example, the Neighborhood 

Stabilization Program, funded by the American Recovery and 

Reinvestment Act of 2009, provides competitive grants to states, local 

governments, and nonprofits to address the damaging economic effects of 

 

40Fair market rents are determined annually by HUD. 

Page 27 GAO-09-871 Affordable Housing
 

properties that have been foreclosed and abandoned.41 Of the funds to be 

awarded to successful applicants of this program, 25 percent must be used 

for the purchase and redevelopment of abandoned and foreclosed-upon 

homes and residential properties to house individuals and families whose 

incomes do not exceed 50 percent of AMI. Under the program’s 

competitive scoring criteria, applications for projects that are transit 

accessible will be awarded additional points.42 Also, Sections 202 and 

811—multifamily programs for the elderly and people with disabilities, 

respectively—consider proximity to transit in their selection criteria. HUD 

officials from one region noted that the location of multifamily projects is 

determined by many other factors, such as land prices, which have a 

greater impact in the rating process than access to transit. HUD’s HOPE VI 

program, which funds the redevelopment of obsolete public housing, also 

has a formal link between public housing and transit. If public housing 

locations that are selected as HOPE VI redevelopment sites lack sufficient 

transportation to services and employment, then project plans for 

revitalization must include increased access to transportation. 

Since FTA’s core mission is to support locally planned and operated public 

transportation systems, we found that FTA policies that allow local transit 

agencies to support affordable housing in transit-oriented developments 

are limited and still have a statutory requirement to support transit use. 

Under FTA’s Joint Development Guidance, local transit agencies can use 

land that was purchased with FTA funds to support transit-oriented 

developments through joint development partnerships.43 With FTA 

approval, local transit agencies can improve this property through 

incorporation of private investment, including commercial or residential 

development (to include affordable housing), as long as the transit agency 

can demonstrate that the development supports transit. To receive FTA 

approval, the local transit agency must demonstrate that the joint 

development project provides an economic link, public transportation 

benefits, revenue for public transportation, and reasonable share of costs 

 

41Notice of Funding Availability for fiscal year 2009 for the Neighborhood Stabilization 

Program 2 under the American Recovery and Reinvestment Act, 2009, No. FR 5321-C-01, 28 

(May 4, 2009) (the Notice); Pub. L. No. 111-5, 123 Stat. 115. 

42According to the Notice, transit accessible is defined as being in a census tract with 

convenient bus service (local bus service every 20 minutes during rush hour or an express 

commuter bus) or being or bordering a census tract with a passenger rail stop or station 

(including, for example, commuter rail, subway, light rail, and streetcars). 

43Local transit agencies can use all types of federal transit funds for the Joint Development 

Program including New Starts funding, formula grants, and flexible funding programs. 

Page 28 GAO-09-871 Affordable Housing
 

(if applicable). The current Joint Development Guidance seeks to allow 

the maximum flexibility to transit agencies under the law when 

undertaking joint development purposes.44 Of four FTA regions we 

contacted regarding their approved joint development projects, FTA 

officials identified a total of 11 approved projects, of which four were used 

by a local transit agency to support the development of affordable housing 

as part of a transit-oriented development.45 Portland, Oregon’s transit 

agency had three of the approved projects, including a recent project 

which included the development of 54 affordable housing units. In 

Portland, the transit agency used land it had purchased for construction 

staging areas as part of a New Starts-funded transit development for a joint 

development project. When construction of the transit stop was 

completed, the agency sold the land to a developer with the condition that 

affordable housing be part of the development. In two of our site visit 

locations, we heard from local transit agency officials that the guidelines 

for the Joint Development Program policy are unclear and that further 

clarification would assist them in supporting transit-oriented development 

through joint development partnerships with the private sector. According 

to FTA officials, an FTA task force is clarifying the eligible activities that 

can be supported through the provisions and applications of this policy. 

While FTA’s New Starts Program considers mobility improvements for 

riders—which includes consideration of the lowest socioeconomic group 

of transit dependent residents—and economic development benefits of 

proposed New Starts projects, FTA currently does not weigh these criteria 

 

44In addition, according to FTA officials, transportation and transit planning studies that 

include transit-oriented development and joint development are eligible for funding under 

FTA formula programs. FTA’s Metropolitan Planning Program (49 U.S.C. § 5305(d)) and the 

State Planning and Research Program (49 U.S.C. § 5305(e)). 

45According to FTA officials, FTA does not maintain a national database of approved joint 

development projects. 

Page 29 GAO-09-871 Affordable Housing
 

in its overall project rating.46 In a number of our site visit locations, local 

transit agencies planned to implement components of transit-oriented 

development around one or more of the transit stations that were part of 

the transit project funded by New Starts. Some local government transit 

officials we interviewed and literature we reviewed described the benefits 

of transit-oriented development—which includes components such as 

higher-density and mixed-use projects of commercial and residential 

activity—as potentially including economic development. 

However, many of the local transit agencies we met with commented that 

although they viewed the transit stations as anchors for economic 

development, they did not believe the New Starts project evaluation 

criteria fully assessed the project’s impact from economic development 

activities. In a previous report, we also found transit stakeholders who 

expressed concern about how economic development is considered in the 

New Starts project evaluations.47 When we discussed this with FTA 

officials as part of our current review, they discussed the challenges of 

capturing economic development benefits and separating those benefits 

from the measures included under the transit supportive land use 

criterion. FTA officials acknowledged the limitations of its current 

approach, but noted that FTA has been working with the transit industry 

to develop a more robust methodology for measuring economic 

development effects. FTA officials explained that the transit industry has 

not yet reached consensus on the best way to measure economic 

development effects that would be useful in meaningfully distinguishing 

between projects and would not require extensive new data collection and 

 

46FTA has previously stated that the mobility improvements criterion is used as a 

tiebreaker. Additionally FTA has taken steps to address the consideration of economic 

development and the weight to be accorded to it and other statutory New Starts criteria. In 

a Federal Register notice published on January 26, 2009, FTA issued and sought comments 

on a discussion paper on new ways of evaluating economic development effects. See 74 

Fed. Reg. 4502 (Jan. 26, 2009). FTA is now reviewing those comments. Also, in May 2009, 

FTA took steps to address concerns about the exclusion of some project justification 

criteria from the evaluation process. In a Notice of Availability for New Starts and Small 

Starts Policies and Procedures and Requests for Comments in the Federal Register, FTA 

proposed changing the weights assigned for the project justification criteria for New Starts 

projects. See 74 Fed. Reg. 23776 (May 20, 2009). According to FTA, these changes reflect 

statutory direction that project justification criteria should be given “comparable, but not 

necessarily equal, numerical weight” in calculating the overall project rating. See 

SAFETEA-LU Technical Corrections Act of 2008, Pub. L. No. 110-244, § 201(d), 122 Stat. 

1610. FTA is currently soliciting public comments on these proposed changes. 

47GAO, Public Transportation: Improvements Are Needed to More Fully Assess Predicted 

Impacts of New Starts Projects, GAO-08-844 (Washington, D.C.: July 25, 2008). 

Page 30 GAO-09-871 Affordable Housing
 

reporting by project sponsors. The FTA officials also said a quantitative 

approach could require significant additional time and contractor 

resources for both project sponsors and FTA. 

Some HUD and FTA regional officials noted they support having 

affordable housing in close proximity to transit but they emphasized that 

local governments have jurisdiction over land use planning and determine 

priorities for the development of affordable housing and transit. 

Recipients of either certain HUD or DOT program funding must fulfill 

planning requirements calling for them to focus on either community 

development and affordable housing issues for HUD funding or 

transportation issues for DOT funding.48 The requirement for local and 

state agencies to integrate housing and transportation issues in these 

planning activities, however, is minimal. Guidelines for the Consolidated 

Plan required by HUD urge jurisdictions to coordinate with other local 

plans, which may include metropolitan-wide plans that address issues 

such as transportation. Some officials from HUD and local agencies 

receiving HUD funding noted that guidance on the Consolidated Plan was 

not significant in integrating affordable housing and access to transit. DOT 

requires states and metropolitan areas, through their metropolitan 

planning organizations, to develop long-range and short-term 

transportation plans, which includes planning for transit. These 

transportation plans are also limited in integrating housing into 

transportation planning. In some regions, HUD officials told us they attend 

local or regional planning meetings, but their role is limited to observing or 

providing guidance on HUD programs. Similarly, DOT officials said that 

FTA officials provide guidance to states, metropolitan planning 

organizations, and transit agencies regarding FTA program and planning 

requirements, but do not influence decision making related to 

transportation plans and programs. HUD and DOT have recently 

considered ways to strengthen integrated housing and transit planning, as 

described in more detail later in this report. 

 

48DOT program funding includes funding for transit activities administered by FTA. 

Page 31 GAO-09-871 Affordable Housing
 

Local Governments and 

Developers Encounter 

Challenges in Supporting 

Affordable Housing in 

Transit-Oriented 

Developments 

According to transit and housing agency officials and stakeholders we 

interviewed, infrastructure and economic conditions can present 

challenges to supporting affordable housing in transit-oriented 

developments. Some local housing agency officials told us that in some 

areas where land values are higher (and irrespective of proximity to 

transit) the high cost of land acquisition made it economically unfeasible 

for a developer to build affordable housing units. As discussed earlier, 

several studies we reviewed show that the presence of a transit station, as 

well as factors associated with transit-oriented developments, generally 

increase the value of land near the transit station. Based on their 

experiences, some affordable housing providers we interviewed 

commented that the value of land near a transit station rose quickly with 

the announcement of the station’s opening. Therefore, affordable housing 

providers told us they may require additional financial support from 

government agencies to support affordable housing units in close 

proximity to transit stations and in transit-oriented developments. Local 

affordable housing providers often referred to land banking as another 

tool to address the challenge of land acquisition in high-cost areas. 

Affordable housing developers land bank when they purchase land at a 

low cost in anticipation of future increases in land values, thereby 

lowering land acquisition costs and using the additional funds on 

affordable housing. Many officials told us, however, they had limited 

opportunities to practice land banking for affordable housing development 

due to limited resources and available land near transit. 

According to local affordable housing providers and experts, the ongoing 

economic slowdown has contributed to a slowdown in the construction of 

new housing, including affordable housing. Specifically, they noted that 

the ongoing economic slowdown has caused LIHTCs to be less valuable, 

which may lead to less funding for affordable housing. Tax credits are 

allocated to affordable housing developers, who typically sell the credits 

to private investors, who then use the tax credits to offset taxes otherwise 

owed on their tax returns. Generally, the money private investors pay for 

the credits is paid into the projects as equity financing. This equity 

financing is used to fill the difference between the development costs for a 

project and the non-tax-credit financing sources available, such as 

mortgages that could be expected to be repaid from rental income. 

Financial institutions with limited resources have been buying fewer tax 

credits, and as a result prices for tax credits have dropped and funding 

available for affordable housing has declined. 

Local housing officials we spoke to also described aspects of federal 

policy and programs that may limit the programs’ use for supporting 

Page 32 GAO-09-871 Affordable Housing
 

affordable housing in transit-oriented developments. One source of 

financial support, the LIHTC program, has some specific provisions that 

limit its use in developing affordable housing in transit-oriented 

developments. Specifically, the amount of tax credits for which a 

development project is eligible is based in part on the amount of 

development costs for the project. But, the development costs used to 

calculate the amount of tax credits excludes the cost of acquiring land and 

higher land costs may be associated with transit-oriented development.49

This can potentially make LIHTCs less valuable for developers building 

affordable housing in transit-oriented developments. Developers may 

receive financial assistance through the CDBG and HOME programs to 

acquire land as part of LIHTC projects. Also, as described earlier, states 

may designate transit-oriented developments as high-cost areas, allowing 

them to allocate additional tax credits to affordable housing developments 

in such areas. Another aspect of the LIHTC program which may limit its 

use in transit-oriented developments is that the maximum tax credit 

allowed for each project is based on the development costs allocated to 

only those units that are designated for low-income residents. Since tax 

credits are applied only to those units in the housing development that 

qualify as affordable, there is an incentive for developers to plan for as 

many affordable units as possible, making mixed-income developments 

relatively less competitive in this regard. However, some transit-oriented 

development studies have cited the benefits of mixed-income housing in 

transit-oriented developments. Some states appear to be addressing this by 

prioritizing mixed-income housing for tax credits in their QAPs. 

In some cases local transit agencies we contacted described the challenge 

of selling surplus land—purchased using federal funds—for affordable 

housing development near transit. Transit officials said they had explored 

the possibility of selling the land at a low cost to affordable housing 

developers to increase the availability of affordable housing in transitoriented developments. However, they cited the requirement to sell this 

land at fair market value as a potential barrier to selling the land at a low 

cost in order to make it more feasible for the development of affordable 

housing in high cost areas. According to FTA officials, transit agencies 

may dispose of real property through sale, using competitive sale 

procedures to the extent practical, which yield the highest possible value 

 

49The development costs which are included in determining the amount of eligible tax 

credits include “hard” costs, such as construction costs, and most “soft” costs, such as 

architectural and engineering costs, soil tests, and utility connection fees. 

Page 33 GAO-09-871 Affordable Housing
 

return.50 In certain circumstances, transit agencies may transfer the 

property for purposes such as affordable housing joint development. 51

DOT, HUD, and FTA 

Have Collaborated on 

Interagency Efforts to 

Promote Affordable 

Housing in TransitOriented 

Developments, 

However, 

Implementation Has 

Been Limited, and 

Additional Steps to 

Enhance 

Collaboration Could 

Be Taken 

HUD and FTA, and More 

Recently DOT, Have 

Collaborated on 

Interagency Efforts to 

Promote Affordable 

Housing in TransitOriented Developments 

Starting in 2005, HUD and FTA, and more recently DOT, have collaborated 

to promote affordable housing in transit-oriented developments through 

three interagency efforts, which are summarized below. 

• Interagency agreement: In 2005, HUD and FTA entered into an 

interagency agreement to assist communities in understanding the 

potential demand for housing in transit-oriented developments by 

conducting a research study. The agreement identified five major research 

objectives, including (1) increasing the understanding of the potential for 

incorporating housing—including affordable or mixed-income housing—

and homeownership in transit-oriented developments; (2) enhancing data 

analyses and communities’ geographic information system capacity for 

 

50See 49 C.F.R. § 18.31. 

5149 U.S.C. § 5334(h). 

Page 34 GAO-09-871 Affordable Housing
 

developing and building affordable housing adjacent to transit-oriented 

developments; (3) identifying federal, state, and local policies and future 

research that can influence linking affordable housing and transit-oriented 

developments; (4) quantifying the factors that facilitate the development of 

affordable housing in transit-oriented developments; and (5) identifying 

regulatory barriers to building affordable housing in transit-oriented 

developments. To address these research objectives, HUD and FTA funded 

the Center for Transit-Oriented Development (CTOD) to conduct this 

research study and publish a final report. The final report, which was 

published in April 2007, recommended broad approaches to addressing 

some key challenges in supporting affordable housing in transit-oriented 

developments, including high land prices around transit stations, complex 

financing structures of mixed-income and mixed-use developments, and 

limited funding for building new affordable housing.52

• HUD-FTA action plan: In December 2007, the Appropriations 

Committees indicated that HUD and FTA should jointly address new and 

better ways for promoting affordable housing near transit service and 

develop a best practice manual to assist communities that seek to 

establish mixed-income transit-oriented developments.53 In response to 

this request, HUD and FTA jointly developed an action plan to better 

coordinate their respective programs to promote affordable housing in 

transit-oriented developments, expand mixed-income and affordable 

housing choices in the immediate proximity of new and existing transit 

stations, develop a more comprehensive approach to address housing and 

transportation expenditures, and preserve existing affordable housing 

near transit. The HUD-FTA action plan outlines 11 strategies—including 

the development of the best practices manual for local governments to 

successfully promote mixed-income housing and transit-oriented 

developments—that HUD and FTA say they will implement from fiscal 

year 2008 through fiscal year 2010.54 Some strategies are focused on 

increasing education for housing and transit stakeholders and reviewing 

current housing and transit policies and regulations. 

 

52Reconnecting America’s Center for Transit-Oriented Development, Realizing the 

Potential: Expanding Housing Opportunities Near Transit, April 2007. 

53153 Cong. Rec. H15741, H16497 and H16562 (Dec. 17, 2007). 

54FTA has taken the lead in developing a best practices guidebook on mixed-income 

housing and transit-oriented development and FTA has partnered with Center for TransitOriented Development to develop the guidebook, FTA providing the $60,000 and the Center 

matching this funding amount. 

Page 35 GAO-09-871 Affordable Housing
 

• Partnership for Sustainable Communities: In March 2009, DOT and 

HUD announced the Partnership for Sustainable Communities, which 

seeks to help American families gain better access to affordable housing, 

more transportation options, and lower transportation costs by 

coordinating federal programs. Since the partnership’s original 

announcement, the Environmental Protection Agency (EPA) has joined 

the partnership.55 As part of this partnership, the agencies have highlighted 

six livability principles that will serve as the partnership’s foundation. 

While these six livability principles establish some broad goals, including 

increasing transportation options to address climate change and 

supporting existing communities, a major component of the partnership is 

promoting affordable housing.56 To support this partnership, the 

Secretaries of DOT and HUD and the EPA Administrator have created a 

high-level interagency task force, led by DOT’s Deputy Assistant Secretary 

for Transportation Policy, the Senior Advisor to the HUD Deputy 

Secretary, and the EPA Director for the Development, Community and 

Environment Division. For example, the high-level interagency task force 

is charged with collaborating in developing a federal funding program, 

called the Sustainable Communities Initiative, to encourage local 

governments to integrate their regional housing, transportation, and land 

use planning and investments by funding grants for local governments to 

reform their current zoning, building codes, and land use codes. This 

Sustainable Communities Initiative will be administered by HUD under the 

proposed Office of Sustainable Development and in consultation with DOT 

and EPA. The President’s fiscal year 2010 budget request for HUD includes 

$100 million in Regional Planning Grants, $40 million for Community 

Challenge Grants, and $10 million for joint DOT and HUD research efforts 

in its fiscal year 2010 budget. The partnership will also fund joint DOT, 

HUD, and EPA research and evaluation efforts and work to align the 

respective agency programs. In addition, a joint HUD-FTA working group, 

which was originally formed as part of the HUD-FTA action plan, will be 

one of several individual working groups that will support the 

DOT/HUD/EPA high-level interagency task force in implementing the 

partnership. According to HUD officials, the partnership is intended to 

supersede and incorporate the activities contemplated by the HUD-FTA 

action plan. 

 

55On June 16, 2009, it was announced that EPA joined DOT and HUD in the Partnership for 

Sustainable Communities. 

56Additional livability principles include valuing communities and neighborhoods, 

coordinating federal policies and leveraging federal investments, and enhancing economic 

competitiveness. 

Page 36 GAO-09-871 Affordable Housing
 

Based on our review, the three interagency efforts outlined a number of 

similar strategies and recommendations. For example, the CTOD report 

recommended that HUD explore regulatory and policy approaches that 

may increase the supply of affordable or mixed-income housing within 

transit corridors—a strategy outlined in the HUD-FTA action plan. In 

addition, all three interagency efforts have recommendations or strategies 

that encourage local jurisdictions to better integrate and coordinate their 

housing and transportation planning and to conduct research to better 

measure affordability. Table 3 provides a summary of recommendations 

and strategies made by the three interagency efforts. 

Table 3: Summary of Strategies and Recommendations Made by the Three Interagency Efforts 

Category 

Center for Transit-Oriented 

Development Report (specific 

federal recommendations) 

April 2007 

HUD-FTA action plan 

August 2008 

Partnership for Sustainable 

Communities 

June 2009 

Establishment of 

interagency working 

groups 

Coordinate federal housing and 

transportation programs by 

establishing a HUD and FTA 

interagency working group 

Implement Joint HUD-FTA 

Working Group 

Establish a high level DOT/ 

HUD/EPA task force 

Coordination of federal 

programs, policies, and 

requirements 

Use transportation and housing 

policies and funding to encourage 

mixed-income housing near transit

Improve coordination of housing 

and transportation planning 

through HUD’s Consolidated Plan, 

DOT’s Transportation Planning 

requirements, and other 

mechanisms 

Harmonize DOT, HUD, and EPA 

programs to identify opportunities 

to better coordinate their 

programs 

Identify regulatory barriers to 

affordable housing near transit 

Coordinate federally mandated 

housing and transportation 

planning requirements 

Opportunities for 

education and outreach 

Identify opportunities for joint 

outreach to housing and transit 

providers and stakeholders 

Conduct briefings and workshops 

for HUD and FTA staff 

Enhance capacity-building 

program(s) by providing technical 

assistance to transit providers, 

public officials, and other 

stakeholders 

Changes in statutory 

requirements 

Address affordable housing and 

mixed-income housing needs in 

new legislative initiatives 

Page 37 GAO-09-871 Affordable Housing
 

Category 

Center for Transit-Oriented 

Development Report (specific 

federal recommendations) 

April 2007 

HUD-FTA action plan 

August 2008 

Partnership for Sustainable 

Communities 

June 2009 

Funding and financial 

incentives 

Accelerate federal efforts to 

preserve existing affordable and 

market rate rental housing near 

transit 

Identify financial incentives for 

funding affordable housing near 

transit 

Establish a competitive grant 

program for metropolitan areas to 

enhance integrated regional 

housing, transportation, and land 

use planning and investment 

Target HUD funding sources to 

build housing near transit facilities 

Performance 

measurement 

Assess the effectiveness of the 

HUD-FTA action plan 

Establish standards and 

performance measures 

Research and 

development 

Continue to study the causal 

relationships between housing 

markets and transit investments 

Identify opportunities for joint 

research and development policy 

analysis 

Research, evaluate, and 

recommend measures that 

indicate the livability of 

communities, neighborhoods, and 

metropolitan areas 

Consider implementing a federal 

affordability measurement that 

reports on the combined costs of 

housing and transportation 

Develop a best practices manual 

for mixed-income housing near 

transit 

Develop a federal housing 

affordability measure that includes 

housing and transportation costs 

Source: GAO. 

HUD and FTA 

Collaboration Has Not Yet 

Affected Federal Support 

to Local Housing and 

Transit Agencies 

Although HUD and FTA’s collaboration has produced numerous 

recommendations and strategies to promote affordable housing in transitoriented developments, local officials told us these efforts have had little 

impact on local housing and transit agencies’ planning and decision 

making. As we mentioned above, because housing and transportation 

planning and decision making is done by state and local jurisdictions, 

many of these recommendations and strategies could affect how local 

housing and transit agencies use federal programs to support their 

activities. However, since many of these strategies are relatively new and 

have yet to be implemented, it may be too soon to evaluate their 

effectiveness. 

Furthermore, our review of the HUD-FTA action plan shows that while 

some of the strategies identify specific products or other deliverables—

such as publishing a best practices manual in fiscal year 2010 or 

developing an outreach plan—many other strategies require additional 

research and analysis before any actual change to current federal policy or 

programs could be made. For example, both the CTOD report and the 

HUD-FTA action plan recommend identifying regulatory barriers to 

promote affordable housing in transit-oriented developments and 

identifying a range of incentives that could be adopted to support efforts 

Page 38 GAO-09-871 Affordable Housing
 

to include affordable housing in such developments. And while HUD has 

recently issued two competitive task order requests to implement some of 

the strategies, including identifying regulatory barriers identified in the 

HUD-FTA action plan, it will still take some time before these strategies 

can potentially benefit housing and transit agencies.57 For example, under 

the terms of the first contract, three policy reports assessing—(1) state, 

federal, and local regulatory barriers to mixed-income housing in transitoriented developments; (2) financing techniques available for mixedincome housing in transit-oriented developments; and (3) incentives 

through HUD and FTA programs—are due to be completed and published 

by July 1, 2010, almost 3 years after this assessment was first 

recommended by the CTOD report.58 Once the agencies have identified the 

regulatory barriers, they need to take additional steps—some of which, 

such as public notice and comment periods, take time—to address those 

barriers. Furthermore, HUD and FTA must identify which areas may 

require congressional action to revise current statutory requirements. In 

addition, the second contract solicits the development of a model 

transportation and housing plan that can be utilized as a template by local 

jurisdictions; however, this plan is not expected to be completed until 

March 2011. 

Because several strategies in both the HUD-FTA action plan and the 

Partnership for Sustainable Communities have no detailed implementation 

information available, it is unknown when and how these strategies could 

impact local housing and transit agencies. In our prior work examining a 

variety of federal programs, we have highlighted the importance of having 

implementation plans to build momentum and show progress from the 

 

57Both competitive task orders were issued on June 1, 2009, and must be awarded by 

September 30, 2009. 

58The first policy report is due to be delivered 3 months after the contract is awarded, the 

second policy report is due to be delivered 6 months after the contract is awarded, and the 

third policy report is due to be delivered 9 months after the contract is awarded. 

Page 39 GAO-09-871 Affordable Housing
 

outset.59 For the Partnership for Sustainable Communities, the President’s 

fiscal year 2010 budget request for HUD includes $150 million for the 

Sustainable Communities Initiative. As part of this initiative, $100 million 

is allocated for the proposed Regional Integrated Planning Grants 

program, which will award grants to local metropolitan areas or states that 

integrate their regional transportation, housing, and land use planning and 

investment. However, this budget has not been approved and therefore, no 

detailed information is available regarding the components of this program 

or how this program will be implemented. An example of the steps that 

HUD, in consultation with DOT and EPA, may need to take to implement 

this type of grant program can be seen with DOT’s recent implementation 

of a similar type of grant program, the new Urban Partnership Agreement 

initiative. This initiative—a competitive grant program intended to 

demonstrate the feasibility and benefits of comprehensive, integrated, and 

innovative approaches to relieving congestion—illustrates the many steps 

required to implement a competitive grant program. DOT issued a Federal 

Register notice soliciting proposals for the Urban Partnership Agreement 

Initiative, set requirements for applications, created a multistep review 

process, and established terms and conditions of the agreement.60

However, because there is no detailed information available on the 

proposed Regional Integrated Planning Grants program, it is unclear how 

grants will be awarded or when the program will be finalized. In addition, 

HUD and FTA officials stated they are still working to determine whether 

there will be any link between these competitive grants under the 

Sustainable Communities Initiative and the HUD-FTA development of a 

transportation and housing planning model. 

Finally, local housing and transit agencies with whom we met were 

generally unaware of the collaboration between HUD and FTA. Many of 

 

59GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and 

Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003); Intercity 

Passenger Rail: Issues Associated with the Recent Settlement between Amtrak and the 

Consortium of Bombardier and Alstom, GAO-05-152 (Washington, D.C.: Dec. 1, 2004); 

United States Coast Guard: Improvements Needed in Management and Oversight of 

Rescue System Acquisition, GAO-06-623 (Washington, D.C.: May 31, 2006); 

Telecommunications: Full Adoption of Sound Transition Planning Practices by GSA and 

Selected Agencies Could Improve Planning Efforts, GAO-06-476 (Washington, D.C.: June 6, 

2006); 2010 Census: Costs and Risks Must be Closely Monitored and Evaluated with 

Mitigation Plans in Place, GAO-06-822T (Washington, D.C.: June 6, 2006); FAA Airspace 

Redesign: An Analysis of the New York/New Jersey/Philadelphia Project, GAO-08-786

(Washington, D.C.: July 31, 2008). 

6071 Fed. Reg. 71231 (Dec. 8, 2006). 

Page 40 GAO-09-871 Affordable Housing
 

the local housing and transit agencies officials we interviewed stated they 

were not aware of the HUD-FTA action plan or that HUD and FTA had 

been working on this project. In addition, as part of our site visits, we 

interviewed officials from HUD regional and field offices and FTA regional 

offices. During these visits, we found that most of these regional officials 

had not received official copies of the HUD-FTA action plan, were 

unaware that the action plan was posted on the agencies’ Web sites, and 

most were generally unaware of the plan’s strategies. In addition, HUD and 

FTA headquarters officials noted that only headquarters staff were 

involved in the development of the action plan and did not receive any 

formal input from regional officials or local housing and transit agencies.61

We have highlighted in prior GAO reports that other federal agencies reach 

out to key stakeholders to collect input from stakeholders and gain 

support for the program both during the development of the program and 

during its implementation.62

 

61On June 11, 2009, FTA Regional Administrators were briefed on the HUD-FTA action plan 

and notified that the HUD-FTA action plan was posted on FTA’s Web site. 

62GAO, Urban Partnership Agreements: Congestion Relief Initiative Holds Promise; Some 

Improvements Needed in Selection Process, GAO-09-154 (Washington D.C.: Mar. 25, 2009) 

and Privacy and Security: Food and Drug Administration Faces Challenges in 

Establishing Protections for Its Postmarket Risk Analysis System, GAO-09-355

(Washington, D.C.: June 1, 2009). 

Page 41 GAO-09-871 Affordable Housing
 

Key practices for enhancing and sustaining collaboration could be used to 

help the agencies implement the HUD-FTA action plan and the recently 

announced Partnership for Sustainable Communities.63 We have reported 

before that federal agencies often face a range of barriers when they 

attempt to collaborate with other agencies, including missions that are not 

mutually reinforcing, concerns about protecting jurisdictions over 

missions and controls over resources, and incompatible procedures, 

processes, data, and computer systems.64 In our October 2005 report, we 

identified eight key practices federal agencies can undertake to overcome 

these barriers and enhance and sustain their collaborative efforts.65 Table 

4 summarizes the key practices and extent to which DOT, HUD, and FTA 

are using these key practices.66 While these practices can facilitate grea

collaboration among federal agencies, we recognize that other practices 

may also help to foster greater collaboration. In addition, while the 

specific ways in which agencies implement these practices may differ in 

light of the specific collaboration challenges each agency faces, we have 

previously recommended that federal agencies adopt a formal approach—

to include practices such as a memorandum of agreement or formal 

incentives focused on collaboration signed by senior officials—to 

encourage further collaboration.

DOT, HUD, and FTA Have 

Started Using Some Key 

Practices for Enhancing 

and Sustaining 

Collaboration, but a More 

Formal Approach and 

Other Practices Could 

Encourage Further 

Collaboration 

ter 

 

67

63For the purpose of this report we use the term “collaboration” broadly to include 

interagency activities that others have variously defined as “cooperation,” “coordination,” 

“integration,” or “networking.” We have done so since there are no commonly accepted 

definitions for these terms and we are unable to make definitive distinctions between these 

different types of interagency activities. 

64GAO, Managing for Results: Barriers to Interagency Coordination, GAO/GGD-00-106

(Washington, D.C.: Mar. 29, 2000). 

65See GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005). 

66Even though FTA is one of the four DOT surface transportation operating 

administrations, we have decided to separate DOT and FTA in our discussions of agency 

collaboration since FTA and HUD have initiated collaboration efforts individually prior to 

the Partnership for Sustainable Communities. 

67GAO, Rural Economic Development: Collaboration between SBA and USDA Could Be 

Improved, GAO-08-1123 (Washington, D.C.: Sept. 18, 2009). 

Page 42 GAO-09-871 Affordable Housing
 

Table 4: Eight Key Practices Federal Agencies Can Undertake to Enhance and Sustain Collaborative Efforts and the Extent to 

which DOT’s, HUD’s, and FTA’s Collaboration Efforts Are Consistent with These Key Practices 

Key practice 

The agencies have not 

taken any action 

consistent with the key 

practice 

The agencies have 

identified and initiated 

one or more actions that 

are consistent with the 

key practice 

The agencies have 

implemented actions 

consistent with the key 

practice by adopting a 

formal approach such as 

a memorandum of 

agreement or formal 

incentives 

Define and articulate a common outcome: To 

overcome significant differences in agency 

cultures and established ways of doing business, 

collaborating agencies must have a clear and 

compelling rationale to work together. 

√

Establish mutually reinforcing or joint strategies:

To achieve a common outcome, collaborating 

agencies need to establish strategies that work 

in concert with those of their partners or are joint 

in nature. 

√

Identify and address needs by leveraging 

resources: Collaborating agencies should 

identify the human, information technology, 

physical, and financial resources needed to 

initiate or sustain their collaborative effort. By 

assessing their relative strengths and limitations, 

agencies can look for opportunities to address 

resources needs by leveraging each other’s 

resources. 

√

Agree on agency roles and responsibilities:

Collaborating agencies should work together to 

define and agree on their respective roles and 

responsibilities, including how the collaborative 

effort will be led. 

√

Establish compatible policies, procedures, and 

other means to operate across agency 

boundaries: To facilitate collaboration, agencies 

need to address the compatibility of standards, 

policies, procedures, and data systems that will 

be used in the collaborative efforts. 

√

Develop mechanisms to monitor, evaluate, and 

report on results: Agencies involved in 

collaborative efforts need to create the means to 

monitor and evaluate their efforts to enable them 

to identify areas for improvement. 

√

Page 43 GAO-09-871 Affordable Housing
 

Key practice 

The agencies have not 

taken any action 

consistent with the key 

practice 

The agencies have 

identified and initiated 

one or more actions that 

are consistent with the 

key practice 

The agencies have 

implemented actions 

consistent with the key 

practice by adopting a 

formal approach such as 

a memorandum of 

agreement or formal 

incentives 

Reinforce agency accountability for collaborative 

efforts through agency plans and reports:

Collaborating agencies should ensure that goals 

are consistent and, as appropriate, program 

efforts are mutually reinforced through tools such 

as strategic and annual performance plans. 

√

Reinforce individual accountability for 

collaborative efforts through performance 

management systems: Collaborating agencies 

should use their performance management 

systems to strengthen accountability for results, 

specifically by placing greater emphasis on 

fostering the necessary collaboration both within 

and across organizational boundaries to achieve 

results. 

√

Source: GAO analysis. 

In comparing the agencies’ collaboration—through the interagency 

agreement, the HUD-FTA action plan and the Partnership for Sustainable 

Communities—to these key practices, we found that the agencies have 

taken some initial actions that are consistent with some of the key 

practices; however, these actions have not been fully formalized. Even 

though some of the interagency efforts are still in the early stages—such 

as the HUD-FTA action plan and the Partnership for Sustainable 

Communities—and implementation has only recently started, 

collaboration between the agencies started back in 2005 with their 

interagency agreement. 

• The agencies have started defining and articulating a common outcome, 

through the three interagency efforts, to highlight a compelling rationale 

for why the agencies have to collaborate, by establishing some goals for 

their collaboration efforts. These goals include expanding mixed-income 

and affordable housing choices near transit, developing a more 

comprehensive approach on housing and transportation affordability, and 

preserving existing affordable housing. However, the development of a 

common outcome takes place over time and requires sustained resources 

and commitment by both agencies staff. The agencies have only recently 

begun allocating resources to implementing the strategies and 

Page 44 GAO-09-871 Affordable Housing
 

recommendations produced by the efforts and assigning staff to work on 

the various interagency working groups to implement these strategies and 

recommendations. 

• The agencies have identified and taken steps to establish mutually 

reinforcing or joint strategies that were developed in both the HUD-FTA 

action plan and the Partnership for Sustainable Communities. For 

example, the HUD-FTA action plan calls for identifying opportunities for 

joint research and development, improving coordination of local housing 

and transportation planning through federal housing and transportation 

programs, and identifying financial incentives to local communities 

through both HUD and FTA funding programs. By establishing these 

reinforcing strategies, the agencies can align core processes and resources 

to accomplish the common outcome. However, while the agencies have 

started implementing some of these reinforcing strategies, such as 

awarding the contract to prepare an outreach plan, and have recently 

adopted a shared set of principles, a number of these efforts require 

additional research and analysis, and therefore, it is too soon to determine 

how the agencies will integrate these reinforcing strategies into current 

agency processes and resources. 

• HUD and FTA have identified and started leveraging resources needed to 

initiate or sustain their collaboration efforts by allocating funding to start 

implementing a number of the HUD-FTA action plan strategies and 

proposing funds for the Partnership of Sustainable Communities, through 

the proposed Sustainable Communities Initiative in the fiscal year 2010 

HUD budget. In addition, the agencies have assigned staff to work on the 

interagency task force and have established four interagency working 

groups to work on a number of items, such as developing performance 

measures and identifying barriers to coordinated housing and 

transportation investments. However, the most significant resource 

investment, $150 million for the Sustainable Communities Initiative, has 

not yet been approved by Congress, and therefore, the initiative’s final 

budget is unclear. 

• The agencies have started to define and agree on their respective roles 

and responsibilities, and in doing so, are beginning to clarify who will do 

what, identify how to organize their joint and individual efforts, and 

facilitate their decision making. For example, under the Partnership for 

Sustainable Communities, DOT and HUD have formed an interagency task 

force to implement the specific programs and policies of the initiative and 

plans to have HUD administer the Regional Integrated Planning Grants 

program, in consultation with DOT, EPA, and other federal agencies. 

However, while the DOT-HUD high-level interagency task force has 

Page 45 GAO-09-871 Affordable Housing
 

conducted numerous meetings, and has scheduled future meetings, to 

discuss goals, objectives, implementation issues, and establish working 

groups, the agencies have yet to formally determine and document how 

specific roles and responsibilities will be divided. 

• There have been actions taken to reinforce agency accountability through 

strategic and annual performance plans. For example, our review of both 

agencies’ recent strategic and annual performance plans found that while 

only HUD had included the collaboration efforts with FTA in its 2008 

annual performance review, officials in both agencies noted they would be 

updating their strategic plans and annual performance plans to include 

their collaboration efforts. 

Based on interviews with HUD and FTA officials, there are several other 

key collaboration practices the agencies have not yet begun to implement. 

These key practices include establishing compatible policies, procedures, 

and other means to operate across agency boundaries; developing a 

mechanism to monitor, evaluate, and report results; and reinforcing 

individual accountability for collaborative efforts through performance 

management systems. Adopting each of these key practices could enhance 

the agencies’ collaboration, and the effectiveness of both the HUD-FTA 

action plan and the Partnership for Sustainable Communities. 

• For example, in each of the interagency efforts, strategies and 

recommendations call for increasing research and development between 

the agencies. In the HUD-FTA action plan, the agencies have identified 

eight specific topics for joint research to include development of tools, 

techniques, and methods for addressing housing and transportation 

expenditures, improving the use of geographical information systems, and 

monitoring and assessing the effectiveness of policies and tools that have 

been deployed to promote mixed-income housing in transit-oriented 

developments. To facilitate this collaboration, the agencies need to 

address the compatibility of standards, policies, procedures, and data 

systems that will be used. However, according to HUD and FTA officials, 

there has been no assessment on whether any compatibility exists or can 

be established. 

• The HUD-FTA action plan calls for the joint HUD-FTA working group to 

develop performance measures and an associated management 

information system which, in part, would require that HUD and FTA 

determine if there are reliable data available for assessing the 

effectiveness of the results of joint actions taken by the two agencies. This 

is in line with a key practice to develop a mechanism to monitor, 

evaluate, and report results. In addition, we have previously reported that 

Page 46 GAO-09-871 Affordable Housing
 

the annual performance planning processes under the Government 

Performance and Results Act (GPRA) allow agencies to foster greater 

collaboration by ensuring that collaborating agencies’ individual program 

goals are complementary and, as appropriate, common performance 

measures are used.68 However, agency officials reported that there has 

been no effort to establish a monitoring system or to determine whether 

current data systems would be able to provide reliable data that would be 

needed to identify areas for improvement. In addition, as we stated above, 

the current scarcity of reliable housing data and limitations on transit 

modeling would need to be addressed to make sure the agencies develop 

an effective performance measurement system. 

• Agencies can strengthen collaboration by reinforcing individual 

accountability through their performance management systems. HUD and 

DOT officials stated they have not implemented any changes to their 

performance management systems to reflect better coordination efforts 

between their respective agencies’ staffs. 

Inherent to each of these eight practices, factors such as leadership and 

trust are key to establishing collaborative working relationships. These 

factors can foster a collaborative culture and therefore help agencies 

overcome the barriers they face when they attempt to collaborate. In 

addition to these eight practices, there are other management tools 

available that can foster greater collaboration among federal agencies. For 

example, GPRA, with its focus on strategic planning, the development of 

long-term goals, and accountability for results, provides a framework that 

Congress, the Office of Management and Budget, and executive branch 

agencies can use to consider the appropriate mix of long-term strategic 

goals and strategies needed to identify and address federal goals that cut 

across agency boundaries. 

One way to assist lower-income households, which are generally more 

transit dependent and thus more vulnerable to increased housing and 

transportation costs, is to increase the availability of affordable housing in 

transit-oriented developments. Since state and local governments are the 

main providers of affordable housing and transit services, they are on the 

front line of this issue. From our site visits and review of relevant studies, 

we found that some communities have programs and policies that 

Conclusions 

 

68GAO, Results-Oriented Government: GPRA Has Established a Solid Foundation for 

Achieving Greater Results, GAO-04-38 (Washington, D.C.: Mar. 10, 2004). 

Page 47 GAO-09-871 Affordable Housing
 

specifically promote affordable housing in transit-oriented developments, 

but most do not. Therefore, many communities that choose to build or 

preserve affordable housing near transit-oriented developments rely on 

broader affordable housing programs and other incentives that can be 

used wherever the development is located. 

With HUD and FTA focusing on their individual core missions and, until 

recently, promoting affordable housing and transit separately, these 

agencies have not generally attempted to link federal housing and 

transportation programs. Furthermore, while there are federal 

requirements for both housing and transportation planning, traditionally 

these plans have not been integrated. In fact, some program requirements 

(such as the LIHTC) may limit the development of affordable housing in 

transit-oriented developments. Starting in 2005, HUD and FTA have 

collaborated to develop strategies for better coordination of their 

respective programs with the goal of helping to provide more affordable 

housing in transit-oriented developments. The strategies that HUD and 

FTA, and more recently DOT, have developed are in line with what 

housing and transit stakeholders have stated can assist local communities, 

and address some current weaknesses we found in the two agencies’ 

independent programs and policies. While these strategies have the 

potential to assist local communities better link housing and 

transportation programs, only a few strategies—such as the best practices 

manual—have the potential to provide assistance in the near term. Many 

strategies, such as identifying regulatory barriers and financial incentives, 

still require additional research and analysis and others have only just 

been announced. In particular, any areas that may require congressional 

action to revise current statutory requirements may require the agencies to 

take additional steps. Without an implementation plan for each strategy, 

however, DOT and HUD run the risk of losing momentum. Given the 

number of steps and time it may take to implement the various strategies, 

including the proposed new regional planning grants, it will be important 

to establish an implementation plan that encompasses the various 

strategies in order for HUD and DOT to be better positioned to implement 

each of their strategies as their interagency efforts progress. The scarcity 

of reliable housing data and the limitations on transit modeling also limit 

the ability of DOT, HUD, and FTA to determine whether current and future 

efforts are ensuring the availability of affordable housing in transitoriented developments. Therefore, without development of better data and 

data systems, which are key elements of any performance measurement 

system, the agencies will not have the information necessary to determine, 

among other things, whether they need to increase coordination or adjust 

existing strategies. 

Page 48 GAO-09-871 Affordable Housing
 

In addition, when comparing the agencies’ collaboration to the key 

practices we have previously identified, we found that the agencies have 

taken actions that are consistent with some of the practices. However, the 

agencies had not taken actions on a number of practices—such as 

reinforcing individual accountability for collaborative efforts or 

developing mechanisms to monitor, evaluate, and report on results. 

Furthermore, without a formal approach to collaboration for all of the key 

practices, DOT, HUD, and FTA may miss opportunities to effectively 

leverage each other’s unique strengths to promote affordable housing in 

transit-oriented developments. 

To strengthen formal collaboration efforts, we recommend that the 

Secretary of Transportation should direct the Administrator of the Federal 

Transit Administration, and the Secretary of Housing and Urban 

Development should direct the appropriate program offices, to take the 

following three actions: 

Recommendations for 

Executive Action 

• Develop and publish an implementation plan for interagency efforts to 

promote affordable housing in transit-oriented developments, to include 

the HUD-FTA action plan and the Partnership for Sustainable 

Communities. This plan should include, but not be limited to, a project 

schedule, resource allocation, outreach measures, and a performance 

measurement strategy. 

• Develop a plan to ensure that data collected on the various programs of 

the agencies related to affordable housing and transit are sufficient to 

measure the agencies’ performance toward goals and outcomes 

established in the HUD-FTA action plan and the Partnership for 

Sustainable Communities. 

• Adopt a formal approach to encourage further collaboration in promoting 

affordable housing in transit-oriented developments. Such an approach 

could include establishing and implementing a written agreement to 

include defining and articulating a common outcome; establishing 

mutually reinforcing or joint strategies; identifying and addressing needs 

by leveraging resources; agreeing on agency roles and responsibilities; 

establishing compatible policies, procedures, and other means to operate 

across agency boundaries; reinforcing agency accountability for 

collaborative efforts through agency plans and reports; and reinforcing 

individual accountability for collaborative efforts through performance 

management systems. 

Page 49 GAO-09-871 Affordable Housing
 

We provided draft copies of this report to the Secretary of Transportation 

and the Secretary of Housing and Urban Development for their review and 

comment. DOT generally agreed to consider the recommendations in this 

report, and provided technical comments, which we incorporated, as 

appropriate. We also received technical comments from HUD that we have 

incorporated as appropriate. In written comments, HUD’s Director of the 

Office of Departmental Operations and Coordination stated that HUD 

would consider the findings and recommendations of the report carefully 

as the agency continues its efforts to combine housing and transportation 

funds and resources near transit. The Director’s letter is reprinted in 

appendix IV. Discussed below are the additional comments HUD had with 

certain aspects of the report and our response. 

Agency Comments 

and Our Evaluation 

First, HUD stated that the definition of affordable housing used in the 

report is overly narrow in that we focused on subsidized housing and that 

affordable housing goes beyond subsidized housing for low- and moderateincome families. However, the definition of affordable housing used in the 

draft report is not limited to subsidized housing. Nor does the report 

suggest that subsidized housing is the only source of affordable housing; 

however, as we state in the report, national data on all affordable housing 

in transit-oriented developments are limited and there has been little 

research that specifically links transit-oriented developments to affordable 

housing. HUD also noted that we did not sufficiently look at the combined 

cost of housing and transportation, as a measure of affordability. We agree 

that the combined costs of housing and transportation are an important 

indicator of housing affordability and noted in our draft report that some 

organizations have worked to establish a link between housing and 

transportation costs by developing new measures of affordability. 

However, determining transit-oriented developments’ effects on 

affordability—as defined by combined housing and transportation costs—

is complicated due to a lack of national data including reliable data on 

subsidized housing. 

Second, HUD commented that it has made significant progress on 

coordinating housing and transportation under the Partnership on 

Sustainable Communities. HUD cited some specific actions it has taken, 

including developing the six livability principles announced in June and 

creating four working groups to implement the partnership. While our 

draft report did mention these efforts and recognized other actions the 

agencies have taken consistent with some of the key practices for 

collaboration, we have added some additional discussion of the six 

livability principles and the four working groups. However, we believe that 

we correctly assessed the level of progress made by the agencies and 

Page 50 GAO-09-871 Affordable Housing
 

maintain that to sustain their initial efforts, it will be important for the 

agencies to meet the principles of interagency collaboration, which we 

discuss in the report. 

Lastly, HUD noted that we overstated the issues associated with accuracy 

of HUD data on subsidized households. HUD stated in its comments that 

the data collected on subsidized housing are primarily intended for 

administrative purposes and may be sufficiently reliable for administrative 

purposes. We acknowledge in our report that HUD officials told us that the 

data are collected primarily for administrative purposes but we did not 

evaluate the reliability for those purposes. Rather, we discuss the data’s 

limitations for monitoring, evaluating, and reporting results related to 

understanding the impact of transit-oriented development on the 

availability of certain affordable housing. In the report, we provide 

multiple reasons why we believe the data have gaps and inconsistencies 

beyond those associated with the Moving to Work program that make their 

use for geographic analysis limited. Reliable geographic information will 

be important for the department to measure the impact of its programs 

and make adjustments to those programs to ensure the availability of 

certain affordable housing in transit-oriented developments. 

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 15 days after the 

date of this letter. At that time, we will send copies of this report to 

congressional committees with responsibilities for surface transportation 

and housing programs; DOT officials, including the Secretary of 

Transportation and the Administrator of FTA; and HUD officials, including 

the Secretary of Housing and Urban Development. This report will also be 

available on our home page at no charge at http://www.gao.gov. 

Page 51 GAO-09-871 Affordable Housing
 

If you have any question about this report, please contact us by e-mail at 

wised@gao.gov or by telephone at (202) 512-2834 or by e-mail at 

sciremj@gao.gov or by telephone at (202) 512-8678. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this report. GAO staff who made key contributions to this 

report are listed in appendix IV. 

Sincerely yours, 

Mathew J. Scirè

Director, Financial Markets and 

David Wise 

Director, Physical Infrastructure Issues 

 Community Investment Issues 

Page 52 GAO-09-871 Affordable Housing
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To identify how transit-oriented developments affect the availability of 

affordable housing, we reviewed reports and studies issued by federal, 

state, and local agencies; transportation research organizations; and 

academia, as well as our past work in surface transportation and 

affordable housing. A GAO economist reviewed relevant reports and 

studies, which were identified by searching economics, housing, and 

transportation literature, and found their methodology and economic 

reasoning to be sound and sufficiently reliable for our purposes. 

To identify how local, state, and federal agencies have worked to ensure 

that affordable housing, including housing subsidized through Department 

of Housing and Urban Development (HUD) programs, is available in and 

near transit-oriented developments, we interviewed Department of 

Transportation (DOT), Federal Transit Administration (FTA) officials, and 

HUD officials. We also conducted 11 site visits or interviews with state and 

local transportation and housing officials in Mesa, Phoenix, and Tempe, 

Arizona; Sacramento, California; Chicago, Illinois; Cleveland, Ohio; Jersey 

City and Hoboken, New Jersey; Portland, Oregon; Washington, D.C.; and 

Arlington, Virginia. We selected this nongeneralizable sample of 

metropolitan areas based on experience with transit-oriented development 

and if the area had received New Starts federal funding for construction of 

a local fixed-guideway transit system, and geographical diversity. During 

these site visits, we interviewed federal, state, and local housing and 

transportation officials and toured transit-oriented developments. In 

addition, we reviewed studies and documentation on how these and other 

metropolitan areas and states have promoted transit-oriented 

developments. 

To identify to what extent do HUD, DOT, and FTA work together to ensure 

that transportation and affordable housing objectives are integrated in 

transit-oriented development projects, we reviewed documentation 

describing the collaborative efforts. We examined the mechanisms (e.g. 

interagency agreements, task force agendas, etc.) the agencies used to 

collaborate. Additionally, we interviewed agency officials on their 

knowledge of any past or future collaborative effort. 

To determine what opportunities exist to enhance collaboration between 

HUD, DOT, and FTA, we reviewed our prior work on key practices that 

can help enhance and sustain collaboration and address barriers to more 

effective collaboration. We also obtained the views of agency officials, 

local housing and transit providers, transportation organizations, and 

nonprofit housing organizations with experience in developing, 

implementing, or analyzing these issues. Finally, we compared the 

Page 53 GAO-09-871 Affordable Housing 
Appendix I: Scope and Methodology 

agencies’ collaboration efforts with key practices that can help federal 

agencies enhance and sustain their collaborative efforts. 

We conducted this performance audit from August 2008 to September 

2009, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

Page 54 GAO-09-871 Affordable Housing
Appendix II: Types of Locations that Could Appendix II: Types of Locations that Could Have Transit-Oriented Developments 

Have Transit-Oriented Developments 

Type Definition 

Regional center Regional centers are the primary centers of economic and cultural activity in any region. These are the 

regional downtowns, and are characterized by a dense mix of housing and employment types, retail, and 

entertainment that cater to the regional market. They are served by a rich mix of transit modes that support 

all this activity, including high-capacity regional rail and bus, and local-serving bus. 

Urban center Urban centers contain a mix of residential, employment, retail, and entertainment uses, usually at slightly 

lower densities and intensities than in regional centers. Destinations draw residents from surrounding 

neighborhoods. These centers serve as commuter hubs for the larger region and are served by multiple 

transit options, often including rail and high-frequency regional bus or bus rapid transit, as well as localserving bus. 

Suburban center Suburban centers contain a mix of residential, employment, retail, and entertainment uses, usually at 

intensities similar to that found in urban centers but lower than that in regional centers. Suburban centers 

can serve as both origins and destinations for commuters. They are typically connected to the regional 

transit network and include a mix of transit types—regional rail and bus, bus rapid transit, and local bus—

with high-frequency service. 

Transit town center Transit town centers function more as local-serving centers of economic and community activity than either 

urban or suburban centers, and they attract fewer residents from the rest of the region. A variety of transit 

modes serve transit town centers, and there is a mix of origin and destination trips—primarily commuter 

service to jobs in the region. There is less secondary transit service when compared to regional centers, 

urban centers, or suburban centers. Secondary transit lines feed primary lines, often at intervals timed to 

facilitate transfers at the primary transit stations. 

Urban neighborhood Urban neighborhoods are primarily residential areas that are well-connected to regional centers and urban 

centers. Densities are moderate to high, and housing is usually mixed with local-serving retail. Commercial 

uses are limited to small businesses or some industry. Development is usually oriented along a wellconnected street grid that is served by a secondary transit network. Transit is often less a focal point for 

activity than in the “center” types of locations, and stations may be located at the edge of two distinct 

neighborhoods. 

Transit neighborhood Transit neighborhoods are primarily residential areas that are served by rail service or high frequency bus 

lines that connect at one location. Densities are low to moderate and economic activity is not concentrated 

around stations, which may be located at the edge of two distinct neighborhoods. Secondary transit service 

is less frequent and less well connected. There is often not enough residential density to support much 

local-serving retail, but there are often retail nodes. 

Special use or 

employment district 

Special-use or employment districts are often single use—either they are low to moderate density 

employment centers, or are focused around a major institution such as a university, or an entertainment 

venue such as a stadium. Transit stations are not a focus of economic activity. Secondary transit service is 

infrequent and focused on stations; development tends to be more recent and the street grid may be less 

connected than in older neighborhoods. 

Mixed-use corridor Mixed-used corridors are a focus of economic and community activity but have no distinct center. These 

corridors are typically characterized by a mix of moderate-density buildings that house services, retail, 

employment, and civic or cultural uses. Many were developed along streetcar lines or other transit service. 

Mixed-use corridors are especially suitable for streetcars, bus rapid transit or other high-quality bus service 

with closely spaced stops. 

Source: GAO summary of information from Reconnecting America and the Center for Transit-Oriented Development report on transitoriented development. 

Page 55 GAO-09-871 Affordable Housing 
Appendix III: Examples of LIHTC Programs 

that Award Points for Proximity to Transit or Appendix III: Examples of LIHTC Programs Transit-Oriented Developments 

that Award Points for Proximity to Transit or 

Transit-Oriented Developments 

Arizona Awards 10 points for projects located within the Phoenix or Tucson Metropolitan Statistical Areas that demonstrate 

indicators of sustainable development or transit-oriented development, including locating the project within 1 mile or 

less from a mass transit route or light rail line. 

California Awards 7 points for projects part of a transit-oriented development strategy where there is a transit station, rail 

station, commuter rail station, or bus station, or bus stop within one-fourth mile from the site with service at least 

every 30 minutes during the hours of 7 to 9 a.m. and 4 to 6 p.m., and the project’s density will exceed 25 units per 

acre. 

Georgia Awards 3 points for projects designated as a transit-oriented development by a rapid transit authority or projects 

located within one-fourth mile walking distance of a rapid rail transit station along paved roads, sidewalks, 

established pedestrian walkways, or bike trails. 

Illinois Awards 1 point for projects that are part of a transit-oriented development strategy (located within four blocks) of a

regular bus route, or to a rapid transit system stop, etc. 

Maryland Awards 5 points for projects that are part of a transit-oriented development—which is defined as having a density 

that exceeds 25 units per acre, involves mixed-use or is part of a larger mixed-use undertaking, and involves good 

nonmotorized transport design (walkability)—and are located within one-half mile of a mass or public transit or rail 

station, or are located within one-fourth mile of a bus depot or bus stop with scheduled service at intervals at most 

30 minutes between the hours of 6:30 a.m. and 7:00 p.m. 

Awards 6 points for projects in which the buildings and the project site, including the nearby surroundings, provide 

opportunities for recreation, education, convenient access to mass transit or rail systems, and community activities. 

New Jersey Awards 10 points for projects that are located within a transit village. “Transit village” refers to a designation given 

by the New Jersey Department of Transportation to communities with a bus, train, light rail, or ferry station that has 

developed a plan to achieve its goals of transit-oriented development. The transit village program is designed to 

spur economic development, urban revitalization, and private-sector investment around passenger rail stations. 

Awards 1 point for projects located within one-half mile of public transportation. 

Nevada Awards 1 point for projects within one-fourth mile of local transit route. 

Texas Awards 4 points to projects located within one-fourth mile of public transportation that is accessible to all residents 

including persons with disabilities and/or located within a community that has “on demand” transportation, special 

transit service, or specialized elderly transportation for qualified elderly developments. 

Source: GAO analysis of selected state Qualified Allocation Plans. 

Page 56 GAO-09-871 Affordable Housing
Appendix IV: Comments from the Department Appendix IV: Comments from the of Housing and Urban Development 

Department of Housing and Urban 

Development 

Page 57 GAO-09-871 Affordable Housing
Appendix IV: Comments from the Department 

of Housing and Urban Development 

Page 58 GAO-09-871 Affordable Housing
Appendix IV: Comments from the Department 

of Housing and Urban Development 

Page 59 GAO-09-871 Affordable Housing
A

A

ppendix V: GAO Contacts and Staff 

cknowledgments 

Page 60 GAO-09-871 

Appendix V: GAO Contacts and Staff 

Acknowledgments 

David Wise (202) 512-2834 or wised@gao.gov

Mathew Scirè (202) 512-8678 or sciremj@gao.gov

In addition to the individuals named above, Raymond Sendejas, Assistant 

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