Transit-Oriented Development and Land Value Tax: Sharing Common Goals

Elizabeth F, of St. Louis, Missouri, is yearning for something different. “I don’t know what it is, but I just want to get out of my car for once,” she says. “I feel like I am in a cage all the time. I want my city to seem more like a neighborhood and less like a huge mesh of cul-de-sacs. I want to actually be able to walk places; to take public transit, without having to move to New York. I love St. Louis, but we have to start planning better. I just want to be able to walk to the park or the store instead of driving there. I want to see my neighbors more. I just want…more connection.”

 

Elizabeth is not alone. The development goals of many metro areas are changing with the times. Sprawl is out; compacted development is in. Public transit and pedestrian by-ways are taking the place of the public-private space of the personal car. Many communities are devoting more time and more planning to the process of Transit-Oriented Development (TOD). TOD focuses on building up rather than out in order to provide more walkable neighborhoods. These pedestrian-friendly neighborhoods both include a healthy mix of retail, residential, and industrial areas centered around public transit and encourage the interpersonal connection that has been lost.

 

I-70 via photopin (license)
I-70 via photopin (license)

 

City planners across the country are taking residents such as Elizabeth and others seriously and are making strides in TOD planning. Because TOD planning is unique to each region, cities and towns are learning from the implementation successes and mistakes of others, and they are creating individualized plans for future development.

This radical change in developmental demeanor has its costs–mainly the destruction of affordable housing and a lack of sustainable funding for capital improvements on public lands. The Land Value Tax can curb the potential negative consequences of TOD and ensure its success in the future.

How Do Transit Costs Affect Disposable Income in Lower-Income Households?

Residents of auto-dependent exurbs, the wealthier areas of cities that sprawl past the suburbs, spend up to 25% of their incomes on transportation costs. However, communities that have more public transit options spend considerably less on transit–only 9% in “location efficient environments.”  

Lower-income households in compacted development areas retain 59% versus 43% of their disposable income. This difference goes to pay for any expense that is not transportation or housing related. As incomes decrease, available disposable income also decreases. Decreasing disposable income by even a few percentage points can be the difference between financially making it, or not, for lower-income families.

 

ART - Arlington Transit Bus via photopin (license)
ART – Arlington Transit Bus via photopin (license)

 

Arlington County, VA: A TOD Success Story

Arlington County, Virginia, is often cited as a successful metro area that has addressed their transit and lower-income housing issues. It has not only created an environment where affordable housing is preserved, but it has taken steps to cluster affordable units around public transit hubs.  

 

How Does Arlington Pay for TOD?

 

Some of the tactics used by Arlington County include:

 

  • Federal tax credits that rely on transportation as a stipulation: HUD’s Low-Income Housing Tax Credits, which are distributed to each state, allow individual states to determine the criteria for which projects are funded. Some states use transportation as a factor in the allocation of these funds.
  • The Special Affordable Housing Protection District: The Arlington Special Affordable Housing Protection District mandates that affordable housing units near transportation hubs are to be replaced on a one-for-one basis in new developments.

 

Together, these tactics create an environment in which transportation and housing are able to develop in tandem.  

Elizabeth’s hometown of St. Louis plans to mimic Arlington’s success.

 

South Saint Louis Sunset via photopin (license)
South Saint Louis Sunset via photopin (license)

 

Case Study: Transit and Housing Development in the St. Louis, MO, Metro Region

How can Transit-Oriented Development Planning be used to protect low-income housing units while maximizing transit options and new development?

Released in January of 2011, the (TOD): Best Practices Guide outlined the first regional attempt to marry long-term transit planning with sustainable development.

How Does St. Louis Plan to Pay for Transit-Oriented Development?

Funding is the primary killer of TOD. TOD is a good idea that, unfortunately, will remain a good idea without the money to back it. Land Value Tax could be the answer to the financing dilemma TOD-planning creates. LVT naturally incentivizing high-density development goals and provides more housing options that for lower-income families.

However, the St. Louis Metro Area plans to rely heavily on federal block grants to fund regional improvements. St. Louis also focuses on sales and property taxes as a way to fund TOD.

Avoiding Increased State Income Tax: Sales and Property Taxes

The St. Louis Metro Area has historically used sales tax to fund capital improvement projects while avoiding raising income tax. As it stands today, there are areas of St. Louis County and St. Louis City, which are burdened by sales-tax rates in upwards of 10%. Sales-tax is highly regressive and downgrades the spending power of every citizen. Sales tax is especially harmful to those who do not generate enough income to offset the tax. High property taxes come with another set of problems.

High taxes on the development of the land creates disincentives to develop the high-density, pedestrian-friendly neighborhoods that the region craves. By taxing capital improvements on the land near transportation hubs, the St. Louis stakeholders encourage blight and reduce economic competitiveness.

Conclusions:

The primary goals of TOD are similar to the Land Value Tax. The emphasis is on creating pedestrian friendly, higher-density urban and suburban areas. TOD and LVT also protect low-income residents by reducing the amount of time and money spent on transportation. Finally, property values increase as a result of intrinsic capital-improvement incentives.

Elizabeth is optimistic about TOD planning in St. Louis. “It’s going to take a long time; it’s a huge shift in the way we all think about our neighborhoods. I’m willing to stick with the process, though,” she says. “This is my home, and I think if we do it right, we can make it whatever we want it to be.”

 

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