Public Transportation: Multiple Factors Influence Extent of Transit-Oriented Development
Released: 2014-11-18T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: From 2004 to 2014, FTA allocated $18.9 billion to build new or expanded transit systems through the Capital Investment Grant program. One of the key goals for many local governments when planning major capital-transit projects is to encourage transit-oriented development as a way to focus future regional population growth along transit corridors. Transit-oriented development is generally described as a compact and “walkable” neighborhood near transit with a mix of residential and commercial uses.

GAO was asked to examine transit-oriented development. This report addresses (1) the extent to which transit-oriented development has occurred near select transit lines that received federal funds and the factors and local policies that affect transit-oriented development, and (2) the extent to which FTA considers factors related to the potential for transit-oriented development when assessing proposed projects and the extent to which FTA's assessment of these factors is consistent with the factors that local stakeholders told GAO affect a project's results. To address these issues, GAO reviewed relevant literature and visited six federally funded case study transit projects in Baltimore, MD; Washington, DC; Charlotte, NC; Santa Clara County, CA; San Francisco, CA; and Houston, TX, selected for diversity in local programs, markets, and geography. During these visits, GAO met with stakeholders, such as local officials and developers. GAO also interviewed FTA officials. In commenting on a draft of this report, DOT noted FTA's long-standing commitment to encourage transit-oriented development.

section_title: What GAO Found
paragraphs: GAO found a wide range in the extent of new transit-oriented development that has occurred since transit operations began for GAO's six federally funded case-study transit projects. There are many examples of new transit-oriented development in San Francisco, CA; Washington, DC; and Charlotte, NC, that local officials attribute—at least in part—to transit in the area. However, in other cities GAO visited, local officials said that there has been very little development around transit stations—or that development took as long as 10 years. Stakeholders in these cities attributed transit-oriented development, or lack thereof, near the projects selected to the influence of several factors, including:

conditions that support transit-oriented development, such as demand for nearby real estate, land available to develop, residents' support, and a transit system that provides a direct and efficient connection to jobs;

challenges that hinder transit-oriented development, such as high associated costs, difficulty in obtaining financing, a difficult local-government review and approval process, an unsupportive local population, and a physical configuration around transit stations unattractive for development; and

local government policies that support transit-oriented development, such as supportive zoning, planning, infrastructure investments, and tax incentives.

The Federal Transit Administration (FTA) assesses projects for potential New Starts funding by evaluating several of the factors and local government policies GAO identified as supporting transit-oriented development on a five-point scale ranging from low to high. FTA evaluates access to jobs, available land, and transit-supportive plans and polices—among other things—in assessing each project for economic development and land use, which are two evaluation criteria FTA uses to determine whether a project will be funded. Among four case study projects GAO visited that were assessed by FTA for New Starts, two scored medium-high or better, while two scored medium-low or lower. GAO found that many of the factors or local government policies that supported or hindered transit-oriented development are generally consistent with FTA's summary assessment for economic development and land use. Further, GAO found two projects where transit-oriented development resulted in increased ridership, while projects with less transit-oriented development have fewer riders than expected.

section_title: Letter
paragraphs: From 2004 to 2014, the Federal Transit Administration (FTA) allocated  $18.9 billion to build new or expanded “fixed-guideway” transit systems  through the Capital Investment Grant program, which categorizes the  largest projects as “New Starts”. One of the key goals for many local  governments when planning major capital transit projects is to encourage  transit-oriented development—generally described by research as a  compact, mixed-use, walkable neighborhood located near transit—as a  way to focus future growth along transit corridors. According to FTA,  transit-oriented development has a number of potential benefits, including  increased transit ridership, associated gains in revenue, and  encouragement of economic development. In addition, transit-oriented  development can provide advantages to the entire region through  environmental benefits, such as reduced carbon emissions through fewer  car trips.

You asked us to examine transit-oriented development around federally  funded transit facilities. In this report, we address (1) the extent to which  transit-oriented development has occurred near select transit lines that  received federal funds and which factors or local government policies  support transit-oriented development and which factors hinder transit- oriented development, and (2) the extent to which FTA considers factors  related to the potential for transit-oriented development when assessing  proposed projects, and the extent to which FTA’s assessment of these  factors is consistent with the factors that local stakeholders told us affect  a project’s results.

For both of these objectives, we selected six transit lines that received  federal funds to serve as case studies. We selected these lines based on  the existence of previously implemented and planned or in-construction  federally funded transit lines in the same region, diversity in the existence  of state and local programs that are supportive of transit-oriented  development; diversity in the current strength of the local real estate  market and; geographical breadth. The results of these six case studies  are not generalizable to all federally funded transit lines. While we  focused on a specific transit line in each city, in order to provide context  for our cases, we also discussed with local officials the city or county’s  broader experience with transit and transit-oriented development. The  case studies we selected were:

Central Corridor Light Rail in Baltimore, MD;

South Corridor Light Rail in Charlotte, NC;

North Corridor Light Rail in Houston, TX;

Third Street Light Rail, Phase 1 in San Francisco, CA;

Tasman West Light Rail Extension in Santa Clara County, CA; and

Green Line Metrorail Extensions in Washington, DC and Prince  George’s County, MD.

To determine the extent to which transit-oriented development has  occurred near these transit projects, we analyzed local land use data;  physically observed development, if any, along these transit lines; and  interviewed local planning officials, developers, and other local  stakeholders. To identify factors that support or hinder transit-oriented  development and the policies that local governments can use to support  such development, we visited all of the transit projects identified above  and some nearby transit-oriented developments. We identified policies  that local governments can use to support transit-oriented development;  reviewed state and local planning regulations; and analyzed land-use and  transit-ridership data from 2005 to 2014. We deemed the data on land  use and transit ridership we collected reliable for the purposes of this  report. We reviewed relevant literature on transit-oriented development as  well as our past reports related to FTA’s Capital Investment Grant  Program and transit-oriented development. During our site visits, we met  with officials from transit agencies and local planning departments,  developers, and other stakeholders, such as representatives from various  transportation and planning organizations.

To determine the extent to which FTA considers factors related to  potential transit-oriented development when assessing proposed projects,  we analyzed relevant laws and documents, such as the Moving Ahead for  Progress in the 21st Century Act (MAP-21), FTA’s Annual Report on  Funding Recommendations, and New Starts policy guidance. For projects  that were assessed for New Starts funding, to determine the extent to  which FTA’s assessment is consistent with future land use changes, if  any, we reviewed FTA’s project assessments and materials used to  support project recommendations.assessments with information gathered from our site visits. We also  interviewed FTA officials. For further details on our scope and  methodology, see app. I.

We conducted this performance audit from February 2014 through  November 2014 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.
subsections: section_title: Background
paragraphs: As we have previously found, there is no single definition of transit- oriented development; however, research generally describes such a  development as a compact, mixed-use, and “walkable” neighborhood  located near transit. Transit-oriented developments are typically located  up to a half-mile from a transit station (usually a fixed guideway rail  station), can encompass multiple city blocks, and have pedestrian-friendly  environments. Transit-oriented developments can range in both size and  scope, with some located in major urban centers while others are located  in suburban neighborhoods. Transportation experts believe that transit- oriented development can increase access to employment, educational,  cultural, and other opportunities by promoting transportation options to  households, resulting in increased transit ridership and reduced road  congestion. Figure 1 provides a graphic representation of common  features of a notional transit-oriented development.

A number of stakeholders play important roles in the planning and  implementation of a transit-oriented development. These roles are  summarized below.

Local transit agencies: These agencies, such as transit authorities  or transit operators, are generally responsible for building,  maintaining, and operating transit systems. These transit systems can  include fixed guideway transit systems—such as rail or bus rapid  transit—ferry systems, paratransit services, and local bus service.

State and local departments of transportation and metropolitan- planning organizations (MPO):organizations develop transportation plans and improvement  programs; they also build, maintain, and operate transportation  infrastructure and services.

Local governments and regional councils: City and county  governments have planning departments with control over land use  planning, which includes zoning policies and growth management  policies. These entities are also generally responsible for reviewing,  engaging local residents on, and granting entitlements for new  development projects. Regional councils develop land use plans  used by metropolitan-planning organizations for transportation  planning.

Private developers: Private developers decide on and create  developments and build and manage housing units and commercial  developments.

Lenders: Banks and other financial institutions finance developers to  design and construct transit-oriented development projects.

Business improvement districts: These districts—and other entities  that coordinate local economic interests—have input on community  infrastructure upgrades.

Although FTA provides funds for transit projects that may spur transit- oriented development, it does not have a discrete program for transit- oriented development. However, the agency has been expanding its role  in transit-oriented development in recent years by:

Funding transit-oriented development research.

Coordinating with the Department of Housing and Urban Development  and the Environmental Protection Agency on the Sustainable  Communities Partnership. This partnership was formed in 2009 with  the goal of coordinating federal housing, transportation, water, and  other infrastructure investments to support communities’ development  in more environmentally and economically sustainable ways, including  transit-oriented development.

Implementing a transit-oriented development planning pilot program  that is to provide grants to state or local governments for advance  planning efforts that support transit-oriented development. FTA  plans to distribute $19.98 million in grant funding to state and local  agencies in 2015.

Since the early 1970s, the federal government has provided a large share  of the nation’s transit capital investment through the Capital Investment  Grant program. Projects eligible for the program include new fixed- guideway transit lines, extensions to fixed-guideways, and projects that  improve core capacity on an existing fixed-guideway system. As we  recently reported,Grant projects, local transit agencies typically serve as project sponsors,   although FTA provides funding for Capital Investment  and design and implement these projects. The project sponsors often  coordinate with local MPOs in designing and implementing these projects,  and FTA awards funding to project sponsors upon completion of the pre- construction development process. This process includes a range of local  policy-development and decision-making activities, including identifying  the specific transit corridor and project, refining the project design, and  obtaining the necessary funding commitments from state and local  partners.

Once a project sponsor decides to seek Capital Investment Grant  funding, FTA is required by law to rate a project considering a number of  evaluation criteria, before it can recommend the project to Congress for  funding. While these criteria have changed over time, there are currently  six individual criteria: mobility improvements, environmental benefits,  congestion relief, cost-effectiveness, economic development, and land  use. In addition, FTA considers the availability of federal funds;  consideration of project readiness, including sufficient engineering and  design to produce a reliable scope, cost figure, and schedule; and  sufficient technical capacity of the project sponsor to undertake a major  construction project. FTA is also required to evaluate and rate the local  financial commitment and the transit agency’s ability to operate the  project and continue to operate the existing transit system.

See fig. 2.

section_title: A Variety of Factors and Local Government Policies Can Influence Transit- Oriented Development
paragraphs: We found a wide range in the amount of new transit-oriented  development since transit operations began for our six case study transit  lines. Stakeholders in these cities attributed the amount of transit-oriented  development to the influence of a variety of factors including conditions  that support of transit-oriented development such as a demand for real  estate, challenges that hinder transit-oriented development such as high  associated construction costs, and local government policies that  encourage transit-oriented development, such as transit supportive  zoning.
subsections: section_title: Overview of Case Study Findings
paragraphs: During our case study visits, we found a wide range in the amount of  transit-oriented development that occurred since the implementation of a  federally funded transit project. For each project, we found at least a  minimal amount of transit-oriented development near at least one station;  however, for each project we also found examples of stations that have  had little or no transit-oriented development. For example, in Baltimore,  MD, local officials told us that there has been very little development  around light rail stations—except near downtown Baltimore’s Penn  Station, which also services commuter rail and Amtrak—despite more  than 20 years of operations and a significant upgrade in service in 2006.  In contrast, local stakeholders in Charlotte, NC, told us that the South End  portion of the light rail line has been largely successful in attracting  transit-oriented development—although one of these stakeholders  acknowledge that stations further down the transit line in Charlotte are  more auto-oriented and have generated little transit-oriented  development. A more detailed description of examples of our findings  from each case study can be found in figures 3 to 8.

section_title: Conditions that Can Support Transit-Oriented Development near Selected Projects
paragraphs: Stakeholders from across our case studies identified key conditions that  can support transit-oriented development, including: demand for real  estate, available land for development, supportive local residents, and a  transit line that efficiently connects to established job and activity centers.  Specifically, we found that the following conditions support transit- oriented development:

Market demand for real estate: Market demand for real estate is  needed to support transit-oriented development. According to the  literature we reviewed and stakeholders we spoke to, demand for real  estate is driven in part by the strength of the local economy so cities  with strong local economies are more likely to support transit-oriented  development. One study has also shown that market demand is the  primary factor developers consider when determining whether to build  a transit-oriented development. For example, a developer that has  built mixed-use development projects in both Washington, DC, and  Baltimore told us that developers consider anticipated price growth  and existing housing supply when determining locations for new  development. This developer told us that consideration of these  factors has led to a pipeline of about 30,000 units in Washington,  while Baltimore only has a few thousand. Further, we observed many  new developments along the light rail in San Francisco, which had the  fastest real economic growth of the 10 largest metropolitan areas in  2012, according to the Bureau of Economic Analysis. While a strong  economy and demand for real estate are necessary to support transit- oriented development, they may not always be sufficient to lead to  transit-oriented development. For example, Houston had a 23 percent  job growth rate from 2003 through 2013, according to the Bureau of  Labor Statistics. While the United States had a 5 percent job growth  rate during the same period, we observed very little transit-oriented  development in Houston due to factors such as land speculation and  deed restrictions placed on land around transit.

Large parcels of land available for development: The availability of  large amounts of land such as surface parking lots near transit  stations or underutilized industrial land can also support transit- oriented development. We have previously found that many transit  agencies view converting surface parking lots at transit stations into a  transit-oriented development as an opportunity to accomplish multiple  goals, including promoting transit-supportive land use near stations  and increasing ridership. In addition, as we have previously found,  research has shownincrease with proximity to a transit station. Underutilized industrial  land also presents an opportunity for transit-oriented development due  to the large size of industrial land parcels and the lack of neighbors to  oppose new development. For example, we visited sites in both  Charlotte and San Francisco where developers took advantage of  large parcels of previously industrial land to build transit-oriented  development.  that land and housing values generally tend to

Resident support for transit and transit-oriented development:  Among our case study cities, San Francisco and Washington, DC,  have the highest transit ridership—among the top five in the nation  according to the 2009 American Community Survey—and both cities  also have historically dense development patterns. As noted above,  we observed many new developments near transit in both cities. In  addition, according to stakeholders, cities with a high concentration of  people 18 to 34 years old tend to be more supportive of transit- oriented development than other age cohorts. For example,  stakeholders from Houston; Washington, DC; San Francisco; and  Charlotte told us younger residents’ desire for neighborhoods close to  amenities and their support for transit are signs that this age cohort is  supportive of transit-oriented development. These comments conform  to a national survey by the Urban Land Institute that found that the  majority of this age cohort prefers a shorter commute over a larger  home; is attracted to living in neighborhoods close to public transit,  with a mix of shops, restaurants, and offices; and shows a preference  for living in a neighborhood with a mix of housing types and a mix of  incomes.

Efficient access to jobs and centers of activity: Transit that  efficiently connects people to established job and activity centers  provides potential for transit-oriented development. According to  planning and transit officials in Santa Clara County, to attract people  to transit, transit routes need to move from residential areas to job  centers as directly as possible. Specifically, the extent to which transit  connects people to anchor institutions,and existing mixed-use neighborhoods supports transit-oriented  development. Stakeholders cited Washington, DC’s Metrorail system  as an efficient system that has been successful in supporting transit- oriented development because riders can reach a number of job and  activity centers (such as downtown Washington, DC; Rosslyn, VA;  and the Courthouse district in Arlington, VA). In San Francisco, the  first segment of the T-Third Light Rail is close to Caltrain Commuter  rail, which provides access to nearby areas with a high concentration  of technology-industry jobs.

section_title: Challenges That Can Hinder Transit-Oriented Development near Selected Projects
paragraphs: Stakeholders from our case studies identified several factors that can  hinder transit-oriented development including: (1) the higher construction  cost of transit-oriented developments; (2) lenders’ reluctance to finance  transit-oriented developments in some cities; (3) lengthy or discretionary  local-development approval processes; (4) an unsupportive local  population; and (5) land around transit stations that is unattractive for  development. Specifically, we found that the following challenges can  hinder transit-oriented development:

Construction costs can be higher: Construction of transit-oriented  developments can be more costly than for traditional, single-use  developments because of the cost of mixed-use buildings and parking  garages. According to literature we reviewed and stakeholders we  spoke with, aspects of transit-oriented developments such as multiple  stories or a mix of uses can make transit-oriented developments more  costly to build than traditional developments. For example, one study  found that “different functions, appearance, access, and security  levels of entrances and exits for different uses can become costly  features in mixed-use projects.” A national stakeholder group also  told us that the higher construction costs associated with mixed-use  buildings can inhibit small construction firms from pursuing mixed-use  projects. Some developers, transit, and planning officials noted that  transit-oriented joint development on surface parking lots at transit  stations could be hindered by the high cost of constructing  replacement parking garages. Typically, when transit agencies enter  into agreements with developers to use existing surface parking lots  for transit-oriented joint development projects, they ask developers to  pay for all or for part of a parking garage to replace the surface  parking spaces used for the development. In some cases, the cost of  constructing a replacement parking garage may hinder the  implementation of projects. For example, according to a 2012 study of  parking-garage costs in the San Francisco Bay Area, a replacement  parking garage may cost about $28,000 per space, or more than $14  million for a 500-space garage. In addition, a developer told us that  transit agencies could have design specifications for parking garages  that double the cost per parking spot compared to what he would  normally construct, cost that exacerbates the challenge of providing  replacement parking.

Lenders may be reluctant to finance transit-oriented  development: According to the transit-oriented development  literature we reviewed and developers and others we spoke with,  some lenders are reluctant to finance transit-oriented developments  because of a perception that transit-oriented developments are riskier  than more traditional developments due to higher market risk  associated with mixed-use buildings. This reluctance may be  heightened in areas with few or no successful transit-oriented  development projects. Mixed-use developments can face market  challenges because each use must have sufficient market demand to  make the project as a whole profitable. For example, a national  interest group told us that mixing retail use with residential use adds  risk to a project because the market for retail real estate tends to be  more volatile than the market for residential use. In areas with no  successful examples of transit-oriented development, lenders may  view these projects as additionally risky, because lenders do not know  if there is local consumer demand for transit-oriented development.

Local approval processes may add requirements or delays:  Another challenge that can hinder transit-oriented development is a  lengthy or discretionary local approval process. For example, two  national stakeholders said that developers face higher risk and more  uncertainty in developing projects when transit-oriented developments  are not in line with the zoning code for the area. In these cases, a  zoning variance is typically required from local officials, a requirement  that can make the entitlement process lengthier and more  discretionary. These stakeholders also said that when entitlement  processes are dependent on the discretion of the local officials,  developers might be unable to predict when projects will get approved  or what requirements local officials will attach to projects as conditions  of approval. Three developers in San Francisco and Charlotte told us  that if they are uncertain of the length or outcome of the entitlement  process, they might choose not to pursue projects.

Local residents may not support transit or dense development:  Stakeholders in every city we visited told us that transit-oriented  development could face challenges when the local population is not in  favor of transit or dense residential development. Transit officials in  Baltimore and Houston reported that negative perceptions of transit  affect transit ridership and consumer demand for transit-oriented  development. Stakeholders in Baltimore told us that a social stigma  associated with public transit results in low ridership on the light rail  system. The Houston transit agency and a local developer told us that  Houston’s “car culture”—wherein residents generally prefer to  independently travel in their own car rather than on transit—is a factor  that can inhibit the appeal of transit and demand for dense living near  transit stations. Stakeholders in the San Francisco Bay Area reported  that local residents may oppose new development out of concern  about issues such as the height of buildings for dense development or  perceived decreases in quality of life due to increases in population,  traffic, and demand for parking.

Physical features surrounding a transit station may be  undesirable for development: Stakeholders in all of our case study  areas reported that physical features such as highways, vast areas of  vacant land, blank walls, driveway entrances, or a lack of pedestrian  crossings at streets could hinder transit-oriented development. For  example, local officials in Houston told us that many stations along the  light rail system have challenges with the last 100 feet. Specifically,  there are many areas where sidewalk and ramp improvements are  needed to help better access the station. These improvements could  increase walkability and make transit-oriented development more  attractive.

Unsupportive land uses: Land uses around transit stations that are  not supportive of high-density, mixed-use development can also  hinder transit-oriented development. For example, as discussed  previously, vacant industrial parcels of land can support transit- oriented development. However, developers, planning officials, and  other stakeholders told us that aspects of this type of land can hinder  transit-oriented development if: there is still operating “legacy” industry nearby that would be  noxious to residential use;  the land requires environmental clean-up;  the land requires significant physical-infrastructure investment  such as adding sidewalks or upgrading sewer capacity; or  the area lacks community infrastructure such as schools and  parks.

section_title: Local Government Policies Support for Transit- Oriented Development
paragraphs: Local governments can use a variety of policies to encourage transit- oriented development including zoning regulations, station area planning,  targeted infrastructure investments, and tax incentives. Stakeholders told  us that these tools most successfully support transit-oriented  development when they align with the local residents’ preferences and  market demand for development. The following are examples of local  government actions to support transit-oriented development near the  projects we selected:

Creating zoning and regulations supportive of elements of  transit-oriented development: Local governments can support  transit-oriented development by designing zoning or other regulations  to facilitate more certainty for developers proposing projects near  transit stations. According to two stakeholder organizations we spoke  with, local governments can help improve developer certainty by  developing zoning codes that specifically allow aspects of new  developments that are consistent with transit-oriented development.  According to a report we reviewed, transit-oriented development  zoning districts that allow buildings of greater unit density or fewer  parking spaces can facilitate developer certainty because the  entitlement process will likely be shorter and projects will not be  subject to a discretionary entitlement process. A developer in  Charlotte told us that the transit-oriented development district zone  made him confident that he would get his project entitled and that  absent the zone, he would not have proceeded with the project. In  some cases, policies supportive of transit-oriented development can  make projects more economically feasible. For example, cities can  allow greater height or density and require fewer parking spaces to  allow developers to increase revenue or to help offset the property  value premium that transit can generate. The City of Houston does  not have zoning, which results in a unique regulatory environment in  which the City cannot regulate land use or other building features like  most cities can. The City allows a reduction in required parking and  has implemented an optional transit-corridor ordinance that reduces  the legal setback from the street, but few developers have used either  option to date.

Developing area plans that provide guidance and resolve  contentious issues: Local governments can also support transit- oriented development through neighborhood-scale land-use planning  activities. Among our case studies, most local governments use some  form of these plans to provide detailed direction on land use,  transportation, housing, parks and economic growth for the  development of city blocks, corridors, or neighborhoods around transit  stations. These plans typically identify gaps in city services and  resources deployed at the neighborhood level and shape capital  investment priorities, among other things. In San Francisco, planning  officials told us they not only use neighborhood plans to guide  neighborhood growth but also to create a blanket Environmental  Impact Review (EIR) that is applicable for the entire neighborhood.  According to these officials, this can reduce the cost of EIRs for each  development and also manages public participation in the EIR  process, which traditionally accounted for much of the entitlement  process delay. They noted that the Area Plan also resolves a number  of topics that can be contentious (such as density, height, parking,  and traffic congestion issues), before developers come in with specific  project plans. Developers told us that, as a result, development has  concentrated in neighborhoods with Area Plans and entitlement  processes for projects in these areas are shorter.

According to planning and transit officials in Baltimore, Washington, DC  and Charlotte, policies designed to encourage transit-oriented  development are most successful when they are tailored to local  circumstances such as local residents’ preferences and market demand.  The following are examples of such policies in our case studies:

Responsiveness to local residents’ preferences: Planning and  transit officials in Baltimore, Washington, DC, and Charlotte told us  that aligning local policies such as transit-oriented development  districts and Area Plans with the scale of the existing community may  ensure a higher level of local residents’ support for transit-oriented  development. In addition, incorporating input from local residents on  issues like land use, parking, density and building height may also  help ensure their support. For example, a Baltimore planning official  told us that the City of Baltimore held numerous public meetings while  drafting their new zoning code. Due to public input, the City changed  its plans to have two transit-oriented development districts of different  densities and similar uses and instead developed four different transit- oriented development districts with varying density and use.

Responsiveness to market demand: Planning and transit officials in  Charlotte also told us that it was important for transit-oriented  development districts and local government policies to conform to  market demand. For example, some local governments would like to  cap parking in transit-oriented zones in order to encourage transit- ridership, but city-mandated parking requirements do not always align  with consumer demand for parking and therefore the requirements  can hinder transit-oriented development. Some local governments  would like to encourage mixed-use developments near transit by  requiring retail, but two developers told us that setting aside a  minimum amount of retail space in residential buildings may not align  with demand for retail in that area because encouraging new retail  areas is very difficult. For example, a developer in San Francisco built  a mixed-use residential and retail development and the retail space  remained empty for fifteen years, until it was converted into a  live/work loft space.

Beyond planning and zoning, local governments can also play a role in  improving connections to transit and helping mitigate environmental  challenges to transit-oriented development. Actions in these areas may  include the following, among others:

Targeted investments in infrastructure: Local governments’ efforts  to support transit-oriented development through zoning and planning  are enhanced when local governments make targeted investments in  infrastructure around transit stations. To increase the attractiveness of  transit and transit-oriented development, local governments can  support the integration of multi-modal transportation choices to take  riders to and from the transit stations. Stakeholders in San Francisco  reported that shuttle service, car-sharing, bicycle-sharing programs,  bicycle lanes, and pedestrian amenities can help move people in and  around the transit station area, thus supporting ridership and making  transit more attractive (see fig. 9).

Tax credits for developers: In order to mitigate some of the  challenges associated with transit-oriented development on vacant  industrial land, some state governments have created programs that  provide tax credits to help developers ameliorate clean-up costs and  reduce legal liability. Stakeholders in both Baltimore and Charlotte  reported that programs in which developers receive tax credits and  reduced legal liability in exchange for providing a certain amount of  environmental clean-up on their parcels has made development on  vacant industrial land more feasible.

section_title: FTA’s New Starts Assessment of Certain Factors Is Generally Consistent with Future Transit- Oriented Development
subsections: section_title: FTA Assesses Factors That Support Transit- Oriented Development
paragraphs: FTA assesses several factors that can support transit-oriented  development when reviewing transit projects for potential New Starts  funding; however, these factors make up only a small percentage of all  the factors considered. As mentioned earlier, proposed New Starts  projects are evaluated and rated according to criteria set forth in law. In  addition to rating the local government’s financial commitment, FTA  evaluates and rates a proposed project according to six statutory project  justification criteria including mobility improvements, environmental  benefits, congestion relief, economic development effects, land use, and  cost-effectiveness. Two of the six project-justification criteria—economic  development effects and land use—require documentation from project  sponsors related to whether current and future land use is supportive of  transit. To assign ratings for these criteria, FTA evaluates many of the  same factors that we found help support transit-oriented development.

The land use criterion includes evaluation of factors such as the  development, character (including amenities such as short building  setbacks and active facades), pedestrian facilities, parking supply, and  the percentage of affordable housing in the existing corridor and station  areas compared to the percentage in the surrounding counties. Many of  the elements that support high ratings for this criterion are similar to the  elements that stakeholders we spoke with identified as supportive of  transit-oriented development. Specifically, to receive a higher rating,  project sponsors need to show, among other things, that the existing  project corridor serves a significant number of employees and densely  populated areas; has development with infrastructure such as sidewalks,  trees, crosswalks, and other pedestrian amenities; a mix of residential,  retail and professional uses; and minimal parking and thereby costly  parking (more expensive parking tends to support ridership).

The economic development criterion includes evaluation of several  factors relating to local government policies. FTA evaluates three sub- factors within the criterion: transit-supportive plans and policies,  performance and impacts of policies, and tools to maintain or increase the  share of affordable housing in the project corridor. To assign ratings, FTA  considers many of the same plans and policies that stakeholders told us  can help support transit-oriented development. For example, FTA  considers plans and policies to enhance the transit-friendly character of  station areas, plans to improve pedestrian facilities, parking policies,  zoning ordinances that increase development density and allow for  reduced parking, and outreach and efforts to engage the development  community in station area planning. FTA also considers whether  proposed station areas have land available for development and  demonstrated cases of development affected by transit-supportive  policies and plans, policies, or incentives the local governments have in  place to maintain or increase the share of affordable housing.

These two criteria account for one-third of the summary-project  justification rating and one-sixth of the project’s overall rating. The  remaining two-thirds of the summary project-justification rating are based  on four other criteria. While these four criteria could be affected by future  transit-oriented development, they do not directly relate to the potential for  a project to support transit-oriented development:

Mobility Improvements—The total number of “linked trips” using the  proposed project, with a weight of two given to trips that transit- dependent persons would make with the project.

Environmental Benefits—Based upon the dollar value of the  anticipated direct and indirect benefits to human health, safety,  energy, and the air-quality environment scaled by the annualized  capital and operating cost of the project. FTA computes these benefits  based on the change in vehicle miles travelled that would result from  implementation of the proposed project.

Cost-Effectiveness—For New Starts projects cost-effectiveness is  measured by the annual capital and operating and maintenance cost  per trip on the project. The number of trips on the project is not an  incremental measure but simply total estimated trips on the project.

Congestion Relief—A new criterion introduced in MAP-21. Until FTA  undertakes a rulemaking process, FTA plans to assign a medium  rating to this criterion for all projects seeking New Starts funds.

FTA uses either estimated ridership or the change in vehicle miles  traveled resulting from a transit project as part of the calculation for  mobility improvements, environmental benefits, and cost-effectiveness.  As discussed above, the calculation for the congestion relief criterion is  not yet defined. Transit ridership can be generated in a number of ways.  Riders can approach a transit station by car and park at the station, a  feeder bus system, or by walking from transit-oriented development or  other location near transit. These ridership forecasts may take into  account growth in population and employment in the region. While  transit-oriented development may be part of the reason for this growth,  growth could also come from broader development in the region. Benefits  and high ratings for these criteria could be driven by transit-oriented  development, but could also be driven by more auto-oriented uses.

While FTA evaluates many of the factors or local policies that we  identified that support or hinder transit-oriented development, there are  inherent limitations in the extent to which some factors can be fully  evaluated. For example, local officials and a developer told us that the  strength of the real estate market is critical for transit-oriented  development. FTA evaluates real estate market conditions as part of the  economic development criterion; however, real estate markets for  residential, retail, and office space are cyclical and the life cycle of a  transit project planning spans many years into the future. Market  conditions could change significantly between FTA’s assessment and the  beginning of transit operations. According to a transit official, FTA  evaluations are based on a snapshot of a specific moment in time that  may not necessarily be predictive of future economic or political cycles.  Similarly, development patterns and acceptance for dense, urban living  may be influenced by cultural factors that influence local resident support  for transit-oriented development. Factors such as Houston’s “car culture”  and housing preferences of millennials can be challenging to quantify and  evaluate.

section_title: FTA’s Assessment of Factors Related to Land Use and Economic Development Is Consistent with Future Transit-Oriented Development
paragraphs: Among our case studies that were assessed for New Starts funding, we  found that the amount of transit-oriented development realized—and the  factors that local stakeholders told us supported or hindered transit- oriented development—are generally consistent with FTA’s pre- construction evaluation and rating of factors related to transit-oriented  development. For example, we included two light-rail projects as case  studies that FTA assessed as high or medium-high for land use and  economic development. Both the Charlotte South Corridor light rail and  the Third Street light rail in San Francisco were rated highly for transit- supportive land use.projects are now surrounded by several new transit-oriented  developments (see figs. 4 and 6). For the Charlotte South Corridor light  rail project, in support of the medium-high rating, FTA cited local policies  such as the regional centers and corridors’ growth strategy, the transit  overlay district, and the 2025 Integrated Land Use/Transit plan. In  addition, FTA noted that changes to policies and zoning in the South End  neighborhood had led to new buildings’ being built. We observed other  transit-oriented development activity, such as new residential and retail  establishments oriented towards the light rail (see fig. 10).

section_title: Performance of Transit- Oriented Development and Ridership along Selected Transit Lines
paragraphs: Among projects we visited, the actual ridership performance of the transit  lines when compared to ridership expectations or historical ridership  varies. Our case studies provide several examples where ridership has  grown over time. For example, when the Columbia Heights Metrorail  station in Washington, DC, opened in 1999, several vacant or  underutilized lots surrounded it. Ridership at the station in 2000—the first  full year it was open—averaged about 4,000 riders per day. Since 2000,  many new developments were constructed on the vacant or underutilized  lots near the Columbia Heights station. Over the past 10 years, ridership  has grown about 93% to more than 12,000 riders per day. The  percentage gain in ridership for Columbia Heights has exceeded  percentage gains for the other five Green Line stations that also opened  in 1999 or 2001. Of the four stations in this group located in Prince  George’s county—where local officials told us there has been little or no  development—three have lost ridership in the past 10 years (see fig. 11).

Similarly, in Charlotte, the projected opening-year average ridership for  the Charlotte Light Rail system was about 9,100 riders per day. In 2008,  the first full year of operations for the system, ridership averaged 11,678  per weekday, exceeding the opening-year ridership target by about 2,500  riders (28%). As development has occurred along the line, ridership has  grown 30% to more than 15,000 riders per average weekday.

Other projects, particularly those projects that have not been surrounded  by new development, are generally not on track to meet the ridership  forecasts specified in the New Stats project’s documentation, specifically:

Ridership on the Houston North Corridor light rail averaged about  4,500 passengers per weekday from February to July 2014,than one-third of the expected opening year ridership of 17,400. (see  fig. 12).

The Baltimore Central Corridor light-rail system attracted an average  of 26,647 riders per weekday in 2013. The ridership forecast for 2020  is 44,000 riders per average weekday (see fig. 12).

Average weekday ridership at stations built as part of the West  Tasman Light Rail Extension in Santa Clara County was 3,125 from  July 2012 through January 2013. The ridership forecast for this  segment was estimated to be 7,500 by 2005. (see fig. 12).

In San Francisco, ridership on the T-Third Light Rail is also below  expectations despite the new development project that has been built in  Mission Bay. For operating purposes, the T-Third is actually part of the K  Ingleside/T-Third Route that runs through downtown San Francisco and  into another part of the city. San Francisco Municipal Transportation  Agency does not break out ridership on the T-Third, but estimated that in  fiscal year 2013 the entire route had about 34,000 riders per average  weekday. This is short of the more than 80,000 daily boardings estimated  for 2015 during the preliminary engineering phase of the project.

However, the average weekday ridership at the nearby San Francisco  Caltrain rail station has increased by 58 percent from February 2007 to  February 2014.

section_title: Agency Comments
paragraphs: We provided DOT with a draft of this report for review and comment. In its  comments DOT stated that the report highlights the multiple challenges  faced by local governments in guiding development around transit. DOT  reiterated FTA’s long-standing commitment to encourage local land use  actions near major transit capital investment.  DOT also stated that  authorizing statutes have increased the prominence of land use and  economic development for the FTA’s Capital Investment Grant evaluation  process and that FTA has long believed transit supportive land use plans  and policies indicate good regional planning.

We are sending copies of this report to interested congressional  committees and the Secretary of the Department of Transportation. In  addition, this report will be available at no charge on GAO’s website at  http://www.gao.gov.

If you or your staff have any questions or would like to discuss this work,  please contact me at (202) 512-2834 or wised@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this report. Individuals making key contributions  to this report are listed in appendix II.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: In this we report we identify: (1) the extent to which transit-oriented  development has occurred near select transit lines that received federal  funds and which factors or local government policies support transit- oriented development and which factors hinder transit-oriented  development, and (2) the extent to which FTA considers factors related to  the potential for transit-oriented development when assessing proposed  projects, and the extent to which FTA’s assessment of these factors is  consistent with the factors that local stakeholders told us affect project’s  results.

To respond to both of our objectives, we selected six transit lines that  received federal funds to serve as illustrative case studies. We selected  these cases based on the existence of previously implemented and  planned or in-construction federally funded transit lines in the same city or  county; diversity in the existence of state and local programs and grants  supportive of transit-oriented development; diversity in the current  strength of the local real estate market; and geographical breadth. The  results of these six case studies are not generalizable to all federally  funded transit lines. While we focused on a specific transit line in each  city, we discussed the greater city’s experience with transit and transit- oriented development with local officials to provide context for our cases.  The case studies we selected were:

Central Corridor Light Rail in Baltimore, MD;

South Corridor Light Rail in Charlotte, NC;

North Corridor Light Rail in Houston; TX;

Third Street Light Rail, Phase 1 in San Francisco, CA;

Tasman West Light Rail Extension in Santa Clara County, CA; and

Green Line Metrorail Extensions in Washington, DC, and Prince  George’s County, MD.

To determine the extent to which transit-oriented development has  occurred near these transit projects, we analyzed local land-use data,  physically observed development, if any, along these transit lines, and  interviewed local planning officials, developers, and other local  stakeholders. To identify factors that support or hinder transit-oriented  development, we conducted site visits to all of the transit lines and some  nearby transit-oriented developments and interviewed a variety of  stakeholders. In total, we interviewed with 66 different stakeholders  including:  twenty-six planning officials from eight local and regional planning  entities,  sixteen transit officials from eight local and regional transit agencies,  fifteen representatives from both national and local-interest non-profit  and research organizations with knowledge of transit-oriented  development, and nine developers from seven different firms.

To identify policies that local governments can use to support transit- oriented development, we reviewed state and local planning regulations,  and analyzed relevant land use and transit ridership data from 2005 to  2014. Finally, we reviewed literature on transit-oriented development  published within the past 5 years as well as our past reports related to  FTA’s Capital Investment Grant Program and transit-oriented  development. We assessed the reliability of the land use and by  reviewing relevant documentation and either discussing reliability with  agency officials or comparing data to corroborating information. We  assessed the reliability of transit ridership data by reviewing  documentation on the methods used to collect and maintain the data. We  deemed the data on land use and transit ridership we collected reliable  for the purposes of this report.

To determine the extent to which FTA considers factors related to  potential transit-oriented development when assessing proposed projects,  we reviewed and analyzed relevant laws including Moving Ahead for  Progress in the 21st Century Act (MAP-21) and the preceding funding  authorization laws. We also reviewed FTA’s Annual Report on Funding  Recommendations and New Starts policy guidance. For projects that  were assessed for New Starts funding, to determine the extent to which  FTA’s assessment is consistent with future land use changes, if any, we  reviewed FTA’s project assessments and materials used to support  project recommendations. We then compared these assessments with  information gathered from our site visits. To determine the extent to which  these projects have met ridership projections included in the information  provided for New Starts funding assessment, we gathered ridership data  from transit agencies and compared this data to the original ridership  forecasts. We also interviewed FTA officials.

We conducted this performance audit from February 2014 through  November 2014 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.

section_title: Appendix II: GAO Contact and Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, John W. Shumann (Assistant  Director); Melissa J. Bodeau; Mark Braza; Leia Dickerson; Kathleen  Donovan; Terence Lam; Matthew LaTour; Hannah Laufe; Cheryl  Peterson; and Kelly Rubin contributed to this report.


Question-summary annotations: questions: question: What type of federally funded transit-oriented development has GAO observed?
answer: GAO found a wide range in the extent of new transit-oriented development that has occurred since transit operations began for GAO's six federally funded case-study transit projects.
child_questions: question: What examples of this development were located by the GAO?
answer: There are many examples of new transit-oriented development in San Francisco, CA; Washington, DC; and Charlotte, NC, that local officials attribute—at least in part—to transit in the area.

question: What counter-examples of transit development did the GAO find?
answer: However, in other cities GAO visited, local officials said that there has been very little development around transit stations—or that development took as long as 10 years.

questions: question: Why are GAO-identified transit-oriented developments important to the Federal Transit Administration?
answer: The Federal Transit Administration (FTA) assesses projects for potential New Starts funding by evaluating several of the factors and local government policies GAO identified as supporting transit-oriented development on a five-point scale ranging from low to high.
child_questions: question: How does the FTA choose New Starts funding recipients?
answer: FTA evaluates access to jobs, available land, and transit-supportive plans and polices—among other things—in assessing each project for economic development and land use, which are two evaluation criteria FTA uses to determine whether a project will be funded.

question: How were the four case study projects the GAO visited judged by the FTA?
answer: Among four case study projects GAO visited that were assessed by FTA for New Starts, two scored medium-high or better, while two scored medium-low or lower.

question: What did GAO find regarding the connection between local government policies and FTA’s summary assessment?
answer: GAO found that many of the factors or local government policies that supported or hindered transit-oriented development are generally consistent with FTA's summary assessment for economic development and land use.

question: Why might transit-oriented development be important for public transportation ridership?
answer: Further, GAO found two projects where transit-oriented development resulted in increased ridership, while projects with less transit-oriented development have fewer riders than expected.

questions: question: How many resources has the FTA dedicated to transit systems?
answer: From 2004 to 2014, FTA allocated $18.9 billion to build new or expanded transit systems through the Capital Investment Grant program.

question: What is most important to local governments when planning transit projects?
answer: One of the key goals for many local governments when planning major capital-transit projects is to encourage transit-oriented development as a way to focus future regional population growth along transit corridors.
child_questions: question: What does transit-oriented development look like for these governments?
answer: Transit-oriented development is generally described as a compact and “walkable” neighborhood near transit with a mix of residential and commercial uses.

questions: question: What key points about transit-oriented development does the GAO report cover?
answer: GAO was asked to examine transit-oriented development. This report addresses (1) the extent to which transit-oriented development has occurred near select transit lines that received federal funds and the factors and local policies that affect transit-oriented development, and (2) the extent to which FTA considers factors related to the potential for transit-oriented development when assessing proposed projects and the extent to which FTA's assessment of these factors is consistent with the factors that local stakeholders told GAO affect a project's results.

question: How did the GAO respond to what local stakeholders affected transit-oriented development results?
answer: To address these issues, GAO reviewed relevant literature and visited six federally funded case study transit projects in Baltimore, MD; Washington, DC; Charlotte, NC; Santa Clara County, CA; San Francisco, CA; and Houston, TX, selected for diversity in local programs, markets, and geography. During these visits, GAO met with stakeholders, such as local officials and developers. GAO also interviewed FTA officials.
child_questions: question: What consistent message did the FTA have about transit-oriented development?
answer: In commenting on a draft of this report, DOT noted FTA's long-standing commitment to encourage transit-oriented development.