The Pursuit of Affordable TODs
Communities are working to ensure affordable homeownership along transportation lines.
Emily Green enjoys being able to walk a few steps out of her condominium at Midtown Exchange in Minneapolis to hop on an express bus that gets her to downtown St. Paul in 35 minutes. When she gets home, she can pick up delicacies for dinner at one of the food stands in the Midtown Global Market, on the ground floor, and in the evening, Green can wheel out on a bicycle and pedal along the popular bike path across the street.
Midtown Exchange is a jewel of a project that includes the total revamp of a 16-story former Sears mail order center and store built in 1928 and listed on the National Register of Historic Places. It sits alongside a bus transit center and across from Midtown Greenway, an abandoned railroad track that was transformed into a bicycle and pedestrian path; residents are hoping a trolley eventually will take root there. Light rail is a mile or two away.
The building sat vacant for nearly a decade when business and community groups in the area convinced the city of Minneapolis to use the structure as a focal point for the ethnically diverse neighborhood. With developer Ryan Companies and cooperation from a wide coalition of supporters, Midtown Exchange opened in 2006 and includes about 300 residential units, corporate headquarters for Allina Hospitals and Clinics, a business incubator, Sheraton hotel, and a lively mixture of restaurants, produce vendors and informal entertainment.
Part of the complex, in a four-story building, is Condos on the Greenway; that’s where Green lives. It has 57 units and 10 of them are designated for affordable housing. Buyers have to meet income guidelines and abide by deed restrictions and the City of Lakes Community Land Trust is a co-owner. "The goal: to have affordable housing forever, Green says.
Who occupies the affordable units? “They are people who’ve chosen to pursue a career that just doesn’t pay as much,” says Green, treasurer of the Minneapolis Area Association of REALTORS® and whose firm, Sandy Green Realty, markets the condos. “And I love to have that energy in my building. I live next-door to an artist and somebody studying for a Ph.D. and a minister. To me, that is living in the city.”
Around the country, a growing number of communities are putting some thought into how to create and keep affordable housing. In many cases, transit-oriented developments are providing that opportunity. But as residents seek closer proximity to mass transit, property values may increase — ordinarily, a good thing but when it comes to affordable housing, a potential complication.
“The whole issue of how real estate is planned in conjunction with transportation is very much on the agenda, far more than it ever has been in the past, and affordable housing is part of that discussion,” says Andre Shashaty, president of Partnership for Sustainable Communities in San Rafael, Calif. But keeping it affordable presents a challenge. “It’s a major issue and it’s a major concern for policy makers. Because the value does tend to go up when transit is introduced to a neighborhood.”
More often than not, homes and apartments near public transit seem to rise in value more than those in their communities as a whole. An August 2011 Insights article by Keith Wardrip of the Center for Housing Policy concludes that while not unanimous, the general consensus is: “proximity to public transit does lead to higher home values and rents in many cases.” He cites several studies that show varying results, from a 0 percent to 45 percent premium in home prices near transit options. In Minneapolis, for example, a 2010 study by Goetz et al. showed that since the Hiawatha light rail line opened in 2004, single-family homes within one-half mile of a station sold for $5,229 more, or about 4 percent above the average sales price, than those farther away.
“First and foremost, you need to understand that trend is not uniform and you cannot average the results,” says Jeffrey Lubell, executive director of the Center for Housing Policy, in Washington, D.C. “The reality is that there are some communities where transit has very little impact. A lot of times, these are very high poverty areas … (but) there is significant potential that transit lines will increase values.”
The risk in urban areas is that rising property prices will create a situation like that in Paris, “where modest families are forced to the outskirts,” Lubell says. Gentrification is a serious concern, he says. “Wealthy people like to live in those areas but they don’t take the train all that much … They drive their BMWs into the parking garage,” Lubell says.
Shashasty, of the Partnership for Sustainable Communities, says there are two ways to address the issue of long-term affordability: zoning and land use regulations and/or direct financial support. Often, when there are such requirements, they call for 20 percent affordable units in new housing built within one-half mile of transit, he says. Financial support can range from a government subsidy to a developer to a land trust that works with the homeowner.
“It all stems from a proactive government planning approach where they look at issues, real estate and have a plan,” Shashasty says.
Atlanta has several efforts underway to bring affordable housing to transit station areas. In April 2011, after about eight months of planning, a group of nonprofits, professionals and others held a charrette about development around a new transit station. Southface, an Atlanta group that focuses on environmental education and sustainability, and the Atlanta Regional Commission led a group in four days of intense discussion over ideas for transit-oriented development at the planned Edgewood/ Candler Park MARTA (Metropolitan Atlanta Rapid Transit Authority) Station.
Robert Broome, government affairs director for the Atlanta Board of REALTORS® and the Atlanta Commercial Board of REALTORS®, took part in the charrette, which was funded partially by a grant provided to the Atlanta Board of REALTORS® from the National Association of REALTORS®. It was a collaborative effort to come up with a solution to a design problem.
“This gets all the stakeholders in the room as far as possible in advance,” Broome says. “It’s about creating a vision and then creating a plan for that vision and then getting instant feedback from those stakeholders.”
The plan is expected to include affordable housing, and Broome says the charrette identifies three ways to accomplish that: through higher-density zoning; through anticipated transportation cost reductions that come from living near transit; and by adding the convenience of stores and services near the MARTA station. There are also incentives the city of Atlanta can offer, such as lower-cost permit fees and expedited site inspection. MARTA’s own policy calls for at least 20 percent of units in transit- oriented developments to be affordable to workforce households, seniors with low or fixed incomes, or people with disabilities.
Atlanta is in the thick of a much bigger project that ensures affordable housing will be built. The Atlanta BeltLine, a $2.8 billion redevelopment, will involve a series of public parks, trails and transit along a 22-mile rail corridor that circles the downtown. A Tax Allocation District, approved in 2005, will funnel 15 percent of its net proceeds to the BeltLine Affordable Housing Trust Fund, helping to create more than 5,000 new units of affordable workforce housing — both owner-occupied and rental units — over 25 years.
Denver also is taking steps to bring more affordable housing, creating the Denver Transit-Oriented Development Fund in 2009. Its goal is to support construction and retention of more than 1,000 affordable housing units by buying properties in current transit corridors and in anticipation of Denver’s FasTracks light rail system. Sites will be bought and held for up to five years through the $25 million revolving fund which is expected to leverage $100 million in economic development.
The cities of Denver and Lakewood, the Denver Housing Authority and Metro West Housing Solutions have been working jointly on a plan for the West Corridor, where rail lines will be extended. Their recommendations call for including affordable housing.
But Jacqueline Jenkins, broker associate with HOME real estate in Denver, has some questions. After touring the West Corridor with project officials, she wants to ensure that affordable homeownership will be included in the mix, not just rental apartments. “I saw rental when I took the tour. I didn’t see a lot of ‘for sale’ projects,” says Jenkins, former chair of the Denver Board of REALTORS’® affordable housing committee.
Citing reports that show homeownership helps sustain communities, Jenkins says, “If all of the project is rental, how would we meet that goal? We need to make sure it will include affordable housing for ownership as well.”
There are some organizations having success at building affordable housing of different types in TODs and maintaining its affordability.
One of the current transit-oriented developments of the Low Income Investment Fund, or Liif, which was established in 1984 to promote affordable housing as a primary way to help families escape poverty, is the Eddy & Taylor project in San Francisco. The project will have 143 affordable apartments and retail space, two blocks from a major BART (Bay Area Rapid Transit) hub and close to bus stops. Foundations, organizations and banks help finance Liif’s programs, and tax credits keep the housing affordable for decades, says Brian Prater, western region managing director of Liif.
Prater says the economy is dictating the focus on rental apartments rather than on homeownership, in terms of affordable housing. “Right now, at least, we’re not seeing a lot of demand for acquisition for homeownership. But we have seen an increase in applications for rental housing,” Prater says.
Liif, A&R Development and Urban Atlantic have been involved in Rhode Island Row, a Washington, D.C., project along the Metro subway line that boasts upscale apartments with granite countertops, stainless steel appliances and “luxury plank flooring.” Twenty percent of the units are affordable housing, for households earning less than $53,000 a year, and are so designated for 20 years.
“We designed a program where the affordable housing is directly cross-subsidized by both market-rate housing and retail development. The units are identical in mix and size to market rate units with some minor difference in finish level,” says Urban Atlantic president Vicki Davis.
BRIDGE (Bay Area Residential Investment Development Group), founded in 1983 in San Francisco, has 350 employees and has developed more than 13,000 affordable housing units. More than 20 of its projects are in transit-oriented developments, including North Beach Place, described as one of the largest mixed-income, mixed-use complexes in California. Completed in 2004 next to a lively cable car turnaround near Fisherman’s Wharf, the $108 million project turned a former public housing project into a development with 341 mixed-income, affordable apartments; a Trader Joe’s grocery; a business incubator; and a child care/community center.
Another BRIDGE project is Trestle Glen, a former recreational vehicle/trailer park turned into a five-story building with 119 apartments next to the Colma, Calif. BART station. "e units are for households earning 30 to 50 percent of the area’s median income.
In the works is MacArthur Transit Village, a public-private partnership with BART, the city of Oakland Redevelopment Agency and MacArthur Transit Community Partners, which includes BRIDGE. The $340 million, multi-use project, adjacent to a BART station, will include 624 housing units, with about 20 percent of them pegged as affordable apartments.
BRIDGE uses a variety of funding sources, including low-income housing tax credit equity, tax-exempt bonds, redevelopment tax increment funds, federal programs, loans and grants and private debt, says president and chief executive Cynthia Parker. The programs often dictate income levels of residents and a lengthy commitment period, keeping the units affordable. “Most of our affordable properties have restricted use covenants in place for 55 years (sometimes longer) which ensures affordability for the populations and incomes we are serving,” Parker says.
The Center for Housing Policy’s Lubell says with high energy prices, the growing population of older adults and more young adults without children, the demand for housing near transit stations is likely to keep increasing. Communities should take steps such as streamlining approval procedures for mixed-use developments; reducing parking requirements; increasing housing density; and partnering with public agencies, creating public acquisition funds to hold onto properties for future use, he says.
Lubell says the more communities create plans for a wide range of development, including long-term affordable housing, “the more likely we are to really be able to achieve some of the broader goals: less energy use, less traffic congestion and improved ridership for public transit.”
Judy Newman is a newspaper reporter in Madison, Wis.