Transit-oriented development (TOD), when executed effectively, creates a symbiotic relationship between a community and its transportation infrastructure. Population growth can be accommodated through transit’s efficient use of urban space, and transit capital expenses are justified by population growth. The federal government can support this dynamic by guiding discretionary transit capital grants to places committed to building more housing near new or expanded transit infrastructure.
The Biden administration updated discretionary grant guidance in January 2023 to prioritize new rail and bus rapid transit grant applications with pro-growth, transit-supportive land use regulations that can support healthy ridership. Still, a future administration could change or dilute this policy, which would disadvantage the most viable transit projects for discretionary grant dollars.
Last year, we evaluated Sen. Brian Schatz’s Build More Housing Near Transit Act. While strong on principle, the bill would have allowed preferential scoring under the current competitive grant program for transit capital grants to flow to too many projects. This diluted the benefit of actually building more housing as the list of qualifying policies could have included identifying a small fund to support TOD projects without making underlying land use reforms that would be more effective. The bill also excluded ordinary bus transit projects entirely.
In November this year, Sen. Schatz, Rep. Scott Peters, and others introduced an updated bill under the same name but with revised language that addresses many of our earlier concerns. Most promisingly, the bill’s new text replaces overly inclusive preferential scoring language with a section that tightly defines results-oriented pro-housing policies and procedural reforms that are proven to grow and speed up housing production.
Benefits
Improved interagency coordination
Like the earlier bill, the current version deftly breaks down silos between housing and transportation priorities, up to and including forcing the secretaries of HUD and DOT to collaborate on grading housing policies for effectively yielding supply. Ever since establishing the Federal Transit Administration within the DOT in 1968, the link between transit projects and the areas around them has been disjointed. By requiring HUD and DOT to collaborate on grading standards, the bill makes a directional improvement toward breaking down silos between the two agencies.
Specific and actionable land use reforms
The bill lists reducing parking minimums, minimum lot sizes, and by-right zoning approvals among policies that can earn preferential scoring. These policies are proven to boost housing production and reduce costs over time. This is an improvement over the previous bill version that allowed local governments to sidestep by-right housing production in exchange for locally subsidizing TOD or other actions identified by the DOT Secretary.
Coverage of both state and local reforms
The bill counts pro-housing policies at both the state and local level, a helpful addition that should further encourage states to take action on housing supply reforms where one or more local governments within a project area refuse.
Drawbacks
The bill still only applies to the fixed guideway grant program (49 USC 5309)
Covering new rail and bus rapid transit projects that provide “fixed guideway” transit is a good start. However, the bill still excludes incremental improvements to ordinary bus service that millions of Americans and a plurality of all transit riders use every year.
Improvements
Expand the new grant criteria incentives to other competitive transit grants
The competitive portions of other grants, like the Buses and Bus Facilities Grant (49 USC 5339), could be included in these reforms. Doing this would have a similar impact to boost incremental TOD in small and midsize cities. Most ambitiously–after integrating learnings from HUD-DOT collaboration in this bill–formula funding itself could be modified to reflect transit operational performance and land use reforms that center rider utility.
Add building code reform to the preferred action list of reforms
Like the earlier version of the bill, building code reforms could be included as a preferred action in this legislation. A community that allows more single-stair apartments is committed to reducing housing costs near transit and facilitating more diverse and family-oriented housing options. As we have discussed before, the shortage of family-size units specifically is a barrier to families in urban areas and is shown to delay family formation more widely.
Conclusion
Neither party benefits from federally-funded mass transit projects where tight growth controls guarantee disappointing ridership. Supporting transit projects surrounded by complimentary land use policies should be a win for all sides of this equation.