A version of this Policy Perspective was originally published in the October 2001 issue of Brainstorm magazine.

Policy Perspective No. 1019
October 2001

The mythical world of Transit Oriented Development

By John A. Charles

Portland planners hate the automobile. They long for a car-free city, where people shop at neighborhood stores and commute by foot, bicycle or light rail.

James Dunn, a political science professor at Rutgers University, sees this as part of a national movement that he calls the "anti-auto vanguard" in his book, Driving Forces: The Automobile, Its Enemies and the Politics of Mobility. These crusaders, mostly urban intellectuals, view the automobile "not as a proud achievement of American industry but as a relentless oppressor and a menace to civilization."

The critics are not just interested in making cars less polluting or more energy-efficient; according to Dunn, "It is the whole gestalt of the auto as the central sociocultural icon of our society that they want to eliminate." However, the American public has largely rejected this vision, as evidenced by the huge increase in vehicle ownership and the decline in transit use during the past 30 years.

Frustrated by this rejection, government planners in Portland have mounted a multi-pronged campaign to simply make driving as difficult as possible, hoping to force people onto transit. Their strategies include siphoning tax dollars away from road improvements to subsidize transit projects; shrinking the road system by converting existing roadway capacity to bikeways, sidewalks and light-rail lines; and densifying neighborhoods to increase traffic congestion.

One of the more benign-sounding programs is called Transit-Oriented Development (TOD). According to Tri-Met, TODs are "compact, relatively dense, mixed-use, mixed-income developments [that] concentrate retail, housing and jobs in pedestrian-scaled urban centers, increase non-auto use (transit, bikes, walking) and decrease regional congestion and air pollution."

Though TODs sound appealing, most do not pencil out. Financiers, aware that polls consistently show that about 75 percent of Americans prefer a single-family home with a backyard, do not trust TODs to sell in the marketplace. Thus, Portland-area politicians have devised an array of subsidy programs to help create TODs, including (but not limited to):

Portland's TOD strategy promises to increase transit use, reduce congestion, and make the city more livable. The question is, how do TODs actually work? Do the social benefits exceed the social costs of the subsidies? An examination of several new TODs reveals some interesting answers.

The perfect project

Driving east on I-84 from Portland, the building complex becomes instantly recognizable as motorists leave the Hollywood district. Hard against the freeway on the south side, the Center Commons housing development rises above its neighbors like Godzilla in a television movie. Big and boxy, the project seems strangely out of proportion to the surrounding neighborhoods, which are dominated by single family homes and small businesses.

The Center Commons project, located on a 4.8 acre parcel that was formerly a state Division of Motor Vehicles site at the corner of NE 60th and Glisan, is one of the flagship projects in the TOD campaign. Sponsored by PDC, Center Commons illustrates both the hype and the reality of TODs.

In 1998, PDC promoted the Center Commons as an ideal use for a vacant parcel adjacent to the eastside light rail line. PDC claimed that their proposal met all of Portland's growth management objectives:

The project cost $31.5 million, of which approximately $13 million was paid for through public subsidies. The Commons was completed in the fall of 2000.

Has the dream of transit-oriented living been realized? Surprisingly, none of the local TOD advocates knows the answer. Neither PDC nor Tri-Met has done any monitoring to see how people who live there actually travel, and there have been no specific light-rail counts at the 60th street station to see if the Commons project has increased MAX ridership.

Nonetheless, Connie Lively, the project director at PDC who shepherded the Commons through the process, considers the project a success. When asked to give some criteria by which to judge the project, she replied, "When the construction was completed, the project became a success."

In other words, it's not just a matter of "build it and they will come;" in her view, simply building it is enough. What happens afterwards is irrelevant.

She has no idea how many residents use transit, but noted that "since we've received no complaints about parking from the neighborhood, and there are such low parking ratios, that's a sign that most people there use transit and relatively few use cars."

In fact, independent observations of the project and interviews with people who live nearby confirm that the reverse is true: transit use is minimal, there is a severe shortage of parking, and local neighborhood streets are being inundated with out-of-district MAX riders and Commons residents parking on their streets.

To get some real-world data, I monitored all the transportation activity at the project one morning from 6:45 to 9:00 a.m. There were 68 car trips (combined in and out) and 23 pedestrian trips (most of which terminated at the 60th Street MAX station). The auto trips were diverse: 29 leaving, 24 arriving, at least 8 dropping off kids at the day-care center, and seven commercial vehicles.

The Commons has a severe shortage of parking. After visiting the site multiple times, it became clear that residents have responded to the parking shortage by taking matters into their own hands. There are approximately 30 unplanned or illegal parking spaces that have been created by the residents, with the apparent approval of the Commons management. The most egregious example is the sidewalk just outside the leasing office, where 7 new parking spaces have been created by residents who simply park on the walkway, making it completely impassible for pedestrians. This sidewalk is always blocked by cars, regardless of the hour.

The parking problems would be bad enough under ordinary circumstances due to the deliberate use of low parking ratios (.65 spaces per unit), but the situation is compounded by the fact that at least 100 MAX commuters had been using the abandoned DMV site as an "informal" parking lot at the time construction of the Commons began. This was noted by PDC in planning documents, and they even surveyed those commuters to learn how far they drove to get there, but they have done no follow-up to find out where they went after the Commons was built.

According to the Commons manager, Jessica Bushman, many continue to use the site as a park-and-ride for MAX. Others simply park in front of nearby houses. The problem got so bad at the Commons that management recently issued parking permits to all residents, that must be displayed from 8:00 a.m. to 6:00 p.m. While there is some logic to this approach, it's not clear why a project that only planned for .65 parking spaces per unit has issued 2.0 parking permits per unit. It suggests an obvious disconnect between the pragmatic concerns of on-site managers and the utopian dreams of PDC planners who refuse to acknowledge the preference most tenants have for cars.

PDC badly miscalculated the role of automobiles in the decision to mandate retail space on the southwest corner of the lot fronting NE Glisan. The space has been vacant since November 2000, and according to leasing agent Nancy Tamarin, the lack of parking is a fatal drawback. She says that "There is no foot traffic, there is no place to stop on Glisan and park, it's right at the entrance to the freeway, and there is no space for signage. Retail just doesn't work there; the location is terrible."

The 1,270 square foot retail site has only one assigned parking space to it, so any retailer is going to have parking problems not only for customers, but for employees as well. As Ms. Tamarin put it, "that location might work for a store that doesn't expect to ever have customers show up-but that's not the usual way retailing works.

The site does have a monster sidewalk on Glisan, at least 15 feet wide, but that is just wasted space. There is so little foot traffic there that a simple six-foot sidewalk would have been sufficient.

In a report to the Portland Planning Commission in April of 1998, Planning Bureau staff told the Commission, "Enough parking has been provided to satisfy the parking standards for the combined uses of the site. A sales-oriented/restaurant use which locates within this space will be doing so to take advantage of the site's unique location with respect to the number of families residing within the development complex, as well as because the site's location near existing businesses, and because of the site's location relative to transit service. For these reasons, the sales-oriented/restaurant use will not require parking in excess of the two parking spaces required by the zoning codeČÍ"

Apparently the people who wrote that statement have never had to actually go out and lease commercial retail space.

While some transit use at the Commons is occurring, much of it can probably be accounted for by a natural selection process: most of the apartments are subsidized, low-income units. By definition, poor people are likely to own fewer cars than rich people, and therefore tend to live near transit. Thus, if they were not living in The Commons, they would be living near transit anyway; but as soon as they become wealthy enough to own a car, most will buy one and cut back on their transit use.

Economic revitalization: Another planning fantasy

TODs are usually promoted as an economic asset. However, there is no evidence that the development has done much for the neighborhood other than create more local traffic. A stroll down Glisan-the only nearby street with commercial activity-simply reveals boarded up storefronts and businesses that have been there for awhile, including a low-budget Mexican restaurant, a "meat provisioner," A&L sports pub, a tobacco store, a pizza joint, and a Union 76 gas station. Because the Commons project doesn't have enough on-site parking, cars can be found parked in front of nearby retailers with Commons parking permits hanging from their rear-view mirrors, indicating that project tenants are cannibalizing scarce parking space previously used for retail shopping. Thus, it's entirely possible that the project has had a negative effect on local businesses.

Interviews with long-time neighbors confirm the parking problems. Lloyd Rhoades, who lives at the corner of NE 61st and Oregon, says that traffic has been a problem since the project opened. At one point last year, so many cars were parking at his house that he couldn't even get his car out of his own driveway, and he had to get the city to paint the curbs yellow around it so people wouldn't park there. Several times he had to get cars towed.

His other major complaint is that the five-story project is out of scale with the neighborhood and blocks his view of the sunset. Rhoades and his wife have a small back porch, and a yard colorfully festooned with hundreds of flowers. They enjoy being outside in nice weather. The Commons project diminishes some of that enjoyment.

Are dense neighborhoods really more livable? Within the project itself, there are other problems caused by density. The 84 children living there have only a small public playground within the courtyard. If even 10 of them are playing at the same time, the noise levels can be painfully loud, and there are potential safety problems due to the proximity of so many vehicles.

The senior living wing is right up against I-84, where it is exposed to constant highway noise. Lisa Runkle, who visits her sister there, said, "The noise of the freeway is really loud in the outer senior wing. People living there have to turn their televisions on all day to drown out the noise." Her general reaction to the TOD concept is, "It's a nice idea but it needs more parking."

Her sister, Mica Gould, is a senior citizen who has been there since May. She expressed frustration that "there is no air conditioning in the senior wing and they won't let us install our own window units." She also noted that the porches are "too small to do anything but stand," and that parking is a problem. She summed up her impressions by saying that "the general [TOD] concept seems like a nice idea, but everything is too cramped."

Russellville: TOD welfare for yuppies

If the Center Commons seems like a Chicago-style housing project, Russellville comes across as the Club Med of TODs. Located in east Portland between 102nd and 105th, just south of Burnside Avenue, Russellville is an 11-acre site that was once a public school. Several large-lot homes next to the school were also purchased, demolished and the land consolidated.

In 1992, the property owner of the school site proposed a commercial use featuring a large discount store. Because such stores ("big-box retail" in planner-speak) are economic pariahs in Portland, planners from PDC, the City of Portland, Tri-Met and Metro pooled enough subsidies to entice a developer to build a 480-unit residential development instead. The complex has three and four-story buildings and features one, two, and three-bedroom townhouses and one and two-bedroom apartments. Rental prices range from $710 to $1,060. Unlike the neighborhood just to the east, which features homes on spacious quarter-acre and half-acre lots, Russellville is built out at 42 units per acre.

As this project is not designed for low-income tenants, it is much more upscale than The Commons, featuring a heated pool and spa, fitness room, business center with conference room, and a computer room with high speed Internet accessibility. Visiting the site on a hot July day and watching attractive twentysomethings stroll around the well-manicured grounds in swimsuits, it almost had the feel of a resort.

Because the project is just a block southeast of the 102nd Street MAX station, planners were convinced that a TOD would encourage transit use and reduce congestion. A visit to the project, however, clearly shows that transit and pedestrian use fall far short of auto use, which means the project has made local traffic worse.

Observations of light-rail use were made on two separate occasions during the peak commute period. The first count was done between 7:00 and 9:00 a.m. simply to see how people arrive at the 102nd Street Max station. Of the 93 total riders, 26 walked (from Russellville and other locations), 11 transferred off the No. 15 bus, three were dropped off by car, and 53 arrived by foot from other locations.

The second observation, made a week later between 6:35 and 8:35 a.m., was used to determine how people travel in the northwest quadrant of Russellville-the corner most convenient to MAX. Motorists outnumbered pedestrians by more than 4-to-1; there were 19 pedestrians leaving Russellville, 83 drivers, and three non-resident MAX riders who parked on the street and walked to the train.

Perhaps because this project has a more affluent client base, the parking ratio is much higher than at The Commons: it has .95 spaces per unit, versus .65 at the Commons. But even with these ratios, planners badly underestimated the preference for auto use. All the streets within Russellville are lined with cars virtually every day of the week, and neighbors adjacent to the project report chronic problems of parking infiltration by Russellville tenants.

One long-time neighbor is John P. Schmidt, who is retired. Like most of his neighbors, his house is on a large lot and he stores several vehicles on his property. Because of the shortage of parking at Russellville, he regularly has parking conflicts over street parking. One tenant across the street deliberately parks in front of an "informal" driveway that Mr. Schmidt uses to get his recreational vehicle onto the street, and refuses to move it. He noted, "People who live in Russellville share apartments and each person has a car, so they park in our neighborhood."

The problem is only going to get worse because a developer is going around pressuring his neighbors to sell out so he can build another high-density project, which will undoubtedly receive property tax exemptions because of its proximity to light rail.

"We have no say in how the neighborhood gets developed," says Schmidt. "I pay my property taxes yet these people get exemptions. There used to be lots of open space with big yards and the old school ground; now everyone lives on top of each other."

Assessing the evidence

Transit advocates love to spend other people's money on these projects, but they have no idea whether TODs actually work. With the help of a research associate, I contacted bureaucrats at the PDC, Portland Office of Transportation, Metro and other local agencies promoting TODs. None of these agencies could provide a single study showing that TODs reduce congestion, improve air quality, protect open space, or make neighborhoods more livable.

However, finding evidence to the contrary is not difficult at all. For example, the Ballston transit station area in Northern Virginia, often cited as a national model of TOD, has a density five time higher than that of the spread out Fairfax City/Oakton area, yet Ballston creates more than four times as many daily vehicle trips per acre than its low-density neighbor (57.5 daily vehicle trips/acre vs. 13.9 for Fairfax City/Oakton).

In the trade journal Innovation Briefs, a suburban Maryland planner was quoted as saying, "Many people support Smart Growth [the policies of which favor TODs] in the mistaken belief that it will reduce traffic congestion and create a more livable environment. Quite the contrary, concentrating growth also concentrates citizen opposition, and over the same issues of traffic, crowded schools and inadequate services that gave birth to the Smart Growth law in the first place."

The Blue Line in Los Angeles (a new light rail line) has failed to stimulate any visible improvement or development near the rail stations, according to University of California researchers Anastasia Loukaitou-Sideris and T. Banerjee. In a paper entitled, "There's No There There, or Why Neighborhoods Don't Really Develop Near Light-Rail Transit Stations," they concluded that "After six years, areas around stations remain unchanged-disinvested, forsaken and decaying-denying planners' dreams of transit villagesČÍThe New Urbanists' romantic image of a transformed inner city stands in stark contrast with the decay, unemployment, poverty and crime that characterize these neighborhoods."

The problem is not just with light rail. A whole series of studies were done several years ago assessing the experience of the nation's first modern-era heavy rail transit program, the Bay Area Rapid Transit (BART) system in San Francisco. BART had essentially the same goals as Portland's TODs-to reduce suburbanization, increase transit use, and to link urban centers with a rapid rail transit system.

Researchers John Landis and Robert Cervero summarized the findings of the BART @ 20 project in the respected journal Access, published by the University of California Transportation Center, and their conclusions are devastating:

Researchers John Niles and Dick Nelson presented a paper to the American Planning Association in 1999 entitled "Measuring the Success of Transit-Oriented Development." After reviewing the empirical studies to date, the authors concluded that, "they provide insufficient evidence that TOD on a regional scale, even when supported by large transit investments, is likely to produce significant regional benefits."

TODs increase housing costs

Self-styled "affordable housing advocates" in Portland have been some of the strongest boosters of the TOD strategy-primarily because of their personal distaste for the suburbs-but a recent study by Tufts University economics professor Matthew Kahn suggests that suburban development is better for low income residents. Professor Kahn concludes in his paper, "Does Sprawl Reduce the Black/White Housing Consumption Gap?" that "Black households living in sprawled metropolitan areas live in larger housing units and are more likely to own a home than observationally identical black households in less sprawled areas.

In addition, as the metropolitan area's sprawl level increases, the black/white housing gap closes for these measures of housing. Sprawl is likely to increase affordability in both the suburbs and the center cities."

His primary explanation for these conclusions is that "increased fringe urbanization leads to a greater supply of land for development, which increases affordability." Oregon's state-mandated Urban Growth Boundaries, of course, do just the opposite; they intentionally create a cartel of urban property owners who can demand above-market prices because of the contrived scarcity of buildable land.

None of this should be a surprise to local housing advocates. In Metro's 1994 report, Metro Measured, the agency concluded, "The data suggest a public welfare tradeoff for increased density, reduced vehicle miles traveled and higher nonauto travel. The downside of pursuing such objectives appears to be higher housing prices and reduced housing output."

Ignorance is bliss

Despite their failure to produce any empirical evidence to support their assertions, Portland planners are cheerfully planning to develop more TODs, some on a massive scale. For example, the Lloyd District development plan, drafted over an 18 month period by PDC, calls for 1,500 to 2,000 high-rise housing units by 2015; expanding the Portland Streetcar over the Broadway Bridge into the Lloyd District; building a large hotel; and converting existing parking lots to more intense uses.

The PDC project manager, Sara King, confidently predicts, "It doesn't threaten the neighborhoods to have density in the Lloyd District."

The people actually living there, and in other neighborhoods targeted for densification, might disagree. In North Portland, Tri-Met is planning to wreck 56 single family homes through eminent domain and replace them with high-density TODs, in order to help generate ridership for the North Interstate light-rail extension, now under construction. The residents of those homes do not think of TODs as a means of improving neighborhood livability.

Changing the subsidy equation

Because Portland planners seem uninterested in assessing whether TODs actually meet their objectives, perhaps a change in the subsidy formula would be a better way to protect taxpayers. Currently, subsidies come from a variety of sources, including property tax exemptions, Congressional grants, and gas taxes diverted from roads through "flexible funding" provisions of federal law.

However, there is one other major source that has yet to be tapped: the Public Employee Retirement System (PERS) Fund, which has over $35 billion. This fund is managed for the benefit of retired public employees, under the direction of the Oregon Investment Council. Because the Council is always looking for good investments, and TODs purport to have high benefits, local planners could demonstrate their true commitment to TOD by agreeing that no public funds be approved for an individual project until the Oregon Investment Council approves the investment of a matching amount of PERS money into that project. Because members of the Investment Council are bound by the "prudent person" rule in as trustees for the PERS Fund, this would be an excellent way for the public to find out if TODs make financial sense.

The willingness of government planners to adopt this funding formula would go a long way towards establishing intellectual credibility for the concept of transit-oriented development.

John A. Charles is environmental policy director at Cascade Policy Institute. Graham Storey and Susan Reiter assisted with research for this analysis.

Founded in 1991, Cascade Policy Institute is Oregon's premier policy research center. Cascade's mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. To that end the Institute publishes policy studies, provides public speakers, organizes community forums and sponsors educational programs. Focusing on state and local issues, Cascade offers practical, innovative solutions for policy makers, the media and concerned citizens.

Cascade Policy Institute is a tax-exempt educational organization as defined under IRS code 501(c)(3). Cascade neither solicits nor accepts government funding, and is supported by individual, foundation, and corporate contributions. Nothing appearing in this document is to be construed as necessarily representing the views of Cascade, or as an attempt to aid or hinder the passage of any bill before any legislative body.

Copyright 2001, Cascade Policy Institute