Mixed-Income Transit-Oriented Development (MITOD)

What is mixed-income transit-oriented development?  It is generally accepted that it consists of transit neighborhoods that contain a mix of affordable and market rate housing.  MITOD’s provide many benefits, such as reduced income segregation, stabilization of transit system ridership, workforce stabilization, and strengthens the socioeconomic makeup of the neighborhood.  For these reasons, many jurisdictions are keenly interested in MITOD’s to achieve their goals of maximizing mass transit ridership, reducing traffic congestion, promoting economic development, growing their local tax bases, providing more housing options and lowering pollution and greenhouse gas emissions.

MITOD.org has created an action guide for local and regional planners to assess and implement mixed-income transit-oriented development in their jurisdictions.  The action guide has two components, 1) Analysis which is focused on Opportunities, Strategies & Existing Conditions and looks at an area’s population, community stability, real estate market, development capacity and existing housing inventory.  2) Tools which compile specific strategies planners and stakeholders can take to achieve each strategy and provides case studies for how these strategies have been used in other municipalities.

 

Here are the suggested steps in determining the appropriateness and feasibility of MITOD in your market:

Write your initial thoughts about the station area’s development potential, housing needs, challenges and opportunities.
  1. List all stake holders
  2. Identify existing partnerships between stakeholders
  3. Reach out to stakeholders
  4. Prepare hypothesis statement for station area which should include:
  • Current state of affordability
  • Level of household and community stability
  • Predicted impact of a MITOD
  • Number of existing affordable households to be preserved
  • Number and size of opportunity sites
  • Goals for the station area (senior housing, large families, student population, etc.)

 

Who is in the station area?
  1. Identify income and expenses of household’s in the transit zone and surrounding areas
  2. Identify household types
  3. Identify age distribution of the station area
  4. Characterize the neighborhood and the housing needs of the demographic represented in the station area.
Key Data to collect:
  • Median household income for transit zone & surrounding area (city, county, region)
  • Income distribution
  • Household spending for housing (> 30% of household budget is considered a burden; > 50% is a severe burden)
  • Household types such as large families, seniors, students, singles, couples without kids (various types require different housing and services)
  • Age distribution (this is an indicator of housing type needs and services)

Note: Department of Housing and Urban Development (HUD) definitions:

        High Income household (HH):  > 120% of average median income (AMI)

        Moderate Income HH:               80-120% of AMI

        Low Income HH:                         50-80% of AMI

        Very Low Income HH:                30-50% of AMI

        Extremely Low Income HH:      < 30% of AMI

For example:  A HH making $30,000 per year in an area with AMI of $45,000 would be considered a low income HH (30,000/45,000 = 67%).  Conversely, a HH making $55,000 in the same market would be considered a high income HH (55,000/45,000 = 122%).

 

What housing exists?
  1. Describe the quality and condition of the existing housing stock
  2. Determine the character of the existing housing
  3. Describe characteristics of any subsidized housing in the station area

 

Key data to collect:
  • Housing type: % share of single family vs. multi-family and determine area densities
  • Housing size: what is the mix in terms of number of bedrooms
  • Multi-family size: average size of buildings
  • Housing tenure: % share of renters vs. owner occupied
  • Housing age
  • Housing vacancy (indicator of market disconnect and declining neighborhood)
  • Housing quality
  • Subsidized housing (number of)
  • Subsidized housing stability (note whether existing units are likely to stay affordable and if there is market pressure or opportunity to revert to market rate.

 

Discussion points:
  • Diversity of housing options
  • Rental housing options (note that home ownership strengthens neighborhood stability and can act as a barrier to displacement)
  • Are there appropriate housing options for the household types represented?
  • Housing expenditures (if the majority of the neighborhood is experiencing a housing burden the development of additional subsidized housing may be needed)

 

 

What preservation opportunities exist?
  • Indicators of at-risk districts include rising rents or home prices, with a high number of renters (particularly low-income) and limited permanent affordable housing.

Note: At-risk subsidized housing includes Project-based Section 8 units.  This is public housing in which landlords enter into a 10 year contract with the Public Housing Authority (PHA) to provide units to low-income tenants with Section 8 vouchers.  The Public Housing Authority pays the landlord the difference between fair market rent and whatever the voucher holding renter can afford.  Affordability for the renter is determined as 30% of their household income.  For example: market rate is $900 per month for an apartment and the renter’s annual household income is $30,000 or $2,500 per month which makes the affordable rent $750 ($2,500 x 30% = $750).  The renter pays the landlord $750 and the PHA pays the remaining $150 per month.  After 10 years the landlord can opt out of the contract and bring all units to market rents  without subsidy. 

 

 Is there development site capacity?
  1. Look for under-utilized or vacant parcels
  2. Evaluate predominant land uses in the transit district
  3. Quantify and characterize vacant or under-utilized land uses
  4. Determine the likely location and characteristics of potential and new real estate development in the station area (location, size, potential assemblage, public vs. private ownership status (public lands and buildings are good opportunities to negotiate reduced acquisition prices or joint development)
  5. Major land uses that will influence the project
  6. Major activity and employment centers
  7. Priority sites that have strong political support    
  8. Under-utilized sites (Land value vs. Improvement value); look for:
  • Private surface parking lots
  • Aging commercial buildings
  • One story multi-family structures
  • Obsolete industrial buildings
  • Low priced motels
  • Private storage facilities

      

Do existing policies promote MITOD?
  1. Identify housing policies that may be affecting housing development, or lack thereof
  2. Identify lack of certain types of housing such of live work studios, existing policies may prevent
  3. Preservation policies may be a hindrance
  4. Discussion Points:
  • Renter protection
  • Redevelopment Zones
  • Zoning Alignment with housing needs
  • Inclusionary housing policy
  • Parking requirements
  • Efficient and transparent public approvals and permitting
  • Public Agency Collaboration
  • Funding and Financing

 

Strategy Analysis
  1. How stable is the station area population?
  2. What is the social trajectory of the station area?
  3. Analyze recent changes in the station area income, educational attainment and household structure
  4. Evaluate whether the station area is Stable vs. Changing or Vulnerable
  5. Key data to collect:
  • Employment in station area (ratio of workers to residents within ½ mile radius)
  • Household structure
  • Education – school quality
  • Median Income (look for changing trends in the median HH income of area)
  • Change in income distribution
  • Change in homebuyer income (look at income of homebuyers vs. overall income; see HMDA http://www.ffiec.gov/hmda/)
  • Tenure trends: Owner to renter indicates instability vs. Renter to owner which is indicative of a more stable market but can result in gentrification

 

 

 

What are the potential post transit housing market conditions?
 

Home Value Appreciation Relative to Region

Slow or Depreciation

Rapid

Housing Price Relative to Region

High

Warm, Cool, Stable?

Warm

Low

Cold

Warm

 

 

Is the market appreciating?
  • Compare station housing costs to region
  • Area rents
  • Rent Trend
  • Home prices
  • Home price trend
  • Foreclosures
  • Land prices & construction prices
  • Vacancy (station vs. surrounding area)
  • Foreclosure rate (station vs. surrounding area)
  • New development(s)
  • Local employment  vs. regional employment
  • Type of jobs in the area and being created

One of the keys to achieving successful transit-oriented development is providing diverse housing options where appropriate.  Historically affordable and low-income housing has been isolated from market rate units creating blight and a stigma towards low-income households.  By creating a mix of low, affordable and market rate units cities allow greater opportunity to lower-income households to attain a more prosperous life for their families.  By locating housing close to transit stations, lower income households can reduce their transportation costs, gain greater access to employment and education and help stabilize communities.

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