Transit Oriented Development Potential for the San Juan Metro Area

In Uncategorized on December 15, 2011 at 8:50 pm

What is Transit-Oriented Development?

Transit Oriented Development (TOD) refers to any type of development which is located within a half-mile radius, or walking distance, from a transit station or stop. This type of development can include a mix of uses within high densities to provide easy access between housing, jobs, retail, etc. This effort typically involves the collaboration of transportation and planning departments within cities to create TOD districts with special zoning to achieve the desired mix of uses and create better pedestrian mobility to and from transit stops.

There are many benefits of developing affordable housing in a TOD zone. It provides residents with immediate access to transit which helps to stabilize ridership along rail lines and increase mobility. It also reduces the transportation cost burden in relation to income. An average family can spend up to 25% of their income towards transportation. The combined costs of housing and transportation consume up to 60% of low and moderate-income families’ gross household income1. Therefore housing affordability increases in TODs since residents will have more income to dedicate to housing costs and less transportation costs.

TOD creates zoning that minimizes parking requirements for affordable housing. In some cases (i.e. senior housing) the ratio could be reduced down to one parking spot per every four units of housing, compare to parking for market-rate housing; typically one-and-a-half parking spots per unit. These reduced requirements minimize the overall construction costs while maximizing residential densities around transit. Sites that are available for TOD typically have infrastructure which also reduces construction costs.

TOD Policies and Projects

There are various cities in the U.S. that have ongoing efforts to implement TOD. The city of Portland, Oregon is one of the best examples of proactive land-use planning in achieving TOD. The city offers property tax exemptions for multi-family housing that is within designated TOD districts. As part of their TOD Property Tax Abatementa developers are exempt for ten years on property taxes if they meet the affordability requirements set by the city. The city requires that twenty percent of rental units be affordable to household earning less than 60% area median income (AMI) and 10% to those earning less than 30% AMI. These units have to remain affordable for 15 years.

Other cities are looking at TOD as a way to boost densities. This gives the opportunity for developers to get a density bonus. In Washington, the city of Woodinville gives a ten percent density boost for TODs. The city is also creating TOD housing overlay districts within the CBD of the city. If developers provide onsite affordable housing they can get additional densities.

Transit Agency Joint Development

Public/Private partnerships have proven to be an effective way for creating affordable housing around TOD sites. Some public transit agencies around the US have set joint development policies recognizing that affordable housing can play a big role in stabilizing their ridership. Finding available land for developing housing at TOD sites can be difficult and costly for developers. The land owned by transit can be provided to affordable housing developer in exchange of meeting ridership goals for the agency.

Both Portland and Boston public transit agencies have provided design grants for developers who come up with competitive TOD affordable housing proposals while the agency is the owner of the land. This way the most competitive proposals guarantee successful affordable housing at their TOD sites.

The Fruitvale BART Station, south of Oakland, is a great example of a mixed-income affordable housing TOD. The transit agency (BART) entered in a joint development using FTA funding among other sources to develop affordable housing units, retail spaces, public plazas, a parking garage and community serving spaces. Now the area, once poor and neglected, is thriving because of a joint development partnership between the public transit agency and a private non-profit agency’s vision.

Financing for Affordable Housing TOD

Inclusionary Zoning Ordinance (IZO) –Some cities require that a percentage of their affordable housing happens within a TOD district. (e.g. San Francisco and Baltimore)

This guarantees affordable housing happens at available TOD sites.

Tax Increment Financing (TIF) – Some cities (e.g. Austin, San Francisco) have used Tax Increment Financing (TIF) to pay for additional improvements to infrastructure at TODs. In the case of California the state demands that 20 percent of TIF funds are used as a set-a-side fund towards affordable housing. These funds are typically administered by the Housing Department or a Housing Trust.

Low-Income Housing Tax Credits (LIHTC) - State Housing Finance Agencies, such as California’s, incorporate additional scoring in their Qualified Allocation Plans (QAP) to further TOD goals, thus providing an incentive for developers to go for TOD projects.

Massachusetts drafted a law, ‘Chapter 40B’, which rewards municipalities that plan TOD districts with bonus payments for each TOD unit built once a comprehensive TOD plan for a city is approved. Boston is leading these efforts with the creation of transit village overlay zoning along its planned transit lines.

The City of Portland has leveraged around 3.5 billion dollars invested into mixed-income development along its transit system in the Tri-Met Area using combined funding including FTA funds.

TOD in the San Juan Metropolitan Area

The San Juan Metropolitan Area (SJMA) accounted for 532,259 jobs in 2002, which were 53% of all jobs in PR at the time2. San Juan has had a great need for public transportation given that 9 out of 10 people ride their car to get to their jobs3. The Center for Neighborhood Technology’s Housing and Transportation index map (see fig. 1) shows us that transportation costs average of SJMA is at 46.5% of the household income. This shows the great need to provide workers with better access to their jobs from their housing to be connected by an efficient transportation system. Creating TODs around the Tren Urbano begins to address this need.

H+T Affordability Index: San Juan–Bayamon, PR: Comparing Housing Costs – % Income to Housing and Transportation Costs – % Income

The Housing + Transportation Affordability Index is an innovative tool that measures the true affordability of housing based on its location.

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Fig. 1 Transportation Costs – CNT – H&T

The existing heavy-rail line, the Tren Urbano, with its 16 transit stops and the 14 planned new light-rail stations, for the SATOUR4, provide the state, the city and affordable housing developers with many opportunities for TODs to include housing that supports transit and to be fully integrated with the cities inter-modal public transportation system; feeder buses, water-taxis, bicycle routes, etc.

The existing eight-year old train system currently has a much lower ridership than was expected. There is approximately 40,000 riders per day which is way below the projected 100,000 rider5. The transit agency needs to stabilize its ridership in order to maintain its funding and operation. Most of the ridership demographic is low to moderate-income which comprise the same incomes of residents in affordable housing. Therefore, establishing joint developments between the transit agency (DTOP) and affordable housing developers can help meet the agencies ridership goals while creating opportunities for TOD mixed-income housing.

Puerto Rico’s Low Income Housing Tax Credit (LIHTC) program can also help provide incentives to create affordable housing TOD projects. Other states, like California, are giving additional points in their QAP for doing housing within designated TOD zones, proximity of a transit stop and frequency of trips. An effort like this can help meet transit policy objectives as well as housing needs within the SJMA.

“Ciudad Red”- Transit Districts & Joint Development efforts

Under the Ciudad Red’s master plan there has been an effort to promote TOD around a 500 meter perimeter from the existing stations. Law #207, drafted in 2000, allows the municipalities to create special zoning districts around Tren Urbano stations (see zoning map on Fig 2). This law has allowed parcels around the train stations of Martínez Nadal, Domenech, Roosevelt, Hato Rey, and Sagrado Corazón to build TOD projects through Public/Private joint developments. So far, only about 7 projects, on 17 acres of land, have been developed this way around the five stations. These developments represent about 400 million Public/Private investments6.

Although there has been TOD planning efforts such as the Ciudad Red plan to create a pipeline for TOD projects in the SJMA its efforts have focused mostly on market-rate condo TODs or retail TODs and not on affordable housing TODs.

Fig. 2 – Proposed Zoning at Hato Rey and Roosevelt Stations

One of the critiques has been that the program has made the private sector assume the risks and infrastructure costs while the public sector hasn’t established a fair process to insure project viability7. The public sector must assume some financial risk to guarantee the success of a project.

The planned light-rail train, the SATOUR, which will connect to the Tren Urbano with the Old San Juan provides the city with an opportunity to set TOD planning objectives. The alignment of the SATOUR is to be set around traditionally residential area which will boost ridership and create possibilities to preserve and develop affordable housing TODs.

Fig. 3 Proposed SATOUR Light Rail map

Conclusion

All across the nation cities are investing in their transit networks. The city of San Juan is no exception as it is the case with the planned SATOUR and the existing Tren Urbano. But, the city has not been creating transit-oriented developments that include affordable housing as component to support its networks. There are many precedents, mentioned in this research, set by other cities, in many cases smaller than San Juan, which provide clear solutions and strategies to create opportunities for affordable housing TOD in the city.

The city of San Juan and the state transit agency are well poised to increase the economic feasibility of transit-oriented projects and encourage developers to build housing that is affordable while supporting its existing and future transit investments.

Bibliography

Mixed-income Housing near Transit: Increasing Affordability with Location Efficiency

The Center for Transit-Oriented Development

http://www.reconnectingamerica.org/assets/Uploads/091030ra201mixedhousefinal.pdf

Guías de implantación para el Programa de Desarrollo Conjunto de Ciudad Red; Yoana L. López de Jesús, 2008

http://uprati.uprm.edu/Docs.%20Inf.%20Finales%20Group4/Yoana/InformeFinalYoanaLopez.pdf

The Walkable City Plan for San Juan; Antonio Di Mambro & Assoc. (2010)

http://issuu.com/sanjuannews/docs/finalreportsummary_walkablecity_july3-final

DTOP: Ciudad Red brings new development on track with Tren Urbano, Caribbean Business (2007)

Reshaping the San Juan Metro Area, Caribbean Business (2005)

Research

The Case for Mixed-Income Transit-Oriented Development in the Denver Region