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Brian Simel
Professor Becker
Economics 145—Literature Review
September 23, 2010
The Efficacy of Transit-Oriented Development
Transit-Oriented Development (TOD) is one of the most contentious topics in modern
urban planning. The basic concept of TOD is that local governments can and should encourage
decreased dependence on automobiles by creating convenient public transit nodes and supporting
high-density development in the immediate vicinity of these points. This often comes in the form
of new rail-transit investments and is lauded as an important tool in the fight against urban sprawl.
New Urbanists see in TOD an opportunity to encourage high-density, mixed-use development like
never before. More conservative purists, however, argue that these TOD neighborhoods represent
unwanted and inefficient market distortions that cater only to upper-class snobs too pretentious to
ride a bus. The outcome of this debate will have critical implications on the built landscape of our
urban environments for decades to come.
John Niles and Dick Nelson’s “Measuring the Success of Transit-Oriented Development:
Retail Market Dynamics and Other Key Determinants” presents some of the basic determinants of
success for TOD projects with a fairly pessimistic tone. The authors make sure to highlight the
distinction between local success and regional success in TOD development. No TOD will realize
its full potential unless it is part of a larger regional plan which incorporates numerous distinct
TODs. Indeed this is one of the main limiting factors to the expansion of this model, as there are
many communities that lack truly regional planning organizations and are therefore narrowly
focused on neighborhood impact. The authors proceed to present other potential determinants
which might enable success in TOD. Underlying many of these factors are a fundamental consumer
interest in residential access to public transit.
Much of the literature in support of TOD is based on the almost utopist vision of the
large—yet inevitably unquantifiable—externalities which may be derived from tightly knit walking
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communities, in which everyone waves at their neighbor on their nightly walk to the local grocery
store. However, this meta-analysis focuses solely on the extent to which any new TOD is able to
spark a shift away from automobile transit, which the authors consider to be one of the few truly
measurable benchmarks of success in this field. Although well intentioned, this dismissal of any
immeasurable externalities associated with TOD from consideration severely limits the conclusions
of the authors.
Despite their restricted presentation of the consequences of TOD, the authors do provide
an impressively comprehensive discussion of the factors which might lead to success in TOD.
Street patterns, for example, are noted as one determinant of TOD success. This is one area in
which New Urbanists have taken an immense interest. New Urbanists will often advocate for a
return to the gridded neighborhood street system typical of many older suburbs built in the 1950s, in
contrast to the more cul-de-sac, arterial design favored my many neighborhood developers and
homebuyers in today’s market. They view this proposed shift as important for a number of reasons,
not the least of which is that it would slow down automobile transit and encourage pedestrians to
“take back the streets”. This gridded street pattern is therefore considered by some to be an
essential part of TOD success, as it enables easier pedestrian access to transit nodes. The authors
cast doubt on this assumption, citing earlier research questioning the true transit benefit of this type
of design. However, it is difficult to believe that consistently gridded-streets, when combined with a
more transit focused style of development, would not lead to marginal reductions in automobile use.
Joyce Chen et. al.’s “Transit Oriented Development and Cluster Developments” presents a
much more positive spin on TOD, which the authors view as a wonderful tool available to modern
urban planners. Just as Niles and Nelson, Chen seeks to highlight the potential determinants of
TOD success, providing Metropolitan Place in Renton, Washington as an example of a successful
TOD. Chen, however, has a fundamentally different conception of what these factors are due to his
more interventionist view of urban planning. He believes that the objective of transportation
planners should be “surrounding a transit station with development appropriate to high-occupancy
transit use” (p. 2) in order to encourage more public transit use. Chen advocates for short-term tax
abatements, public incentives, and even zoning restrictions in pursuit of this goal.
Chen’s differing view of TOD is also informed by his conception of the barriers to this style
of development. In addition to highlighting the absence of regional planning authorities as a major
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obstacle, Chen writes that “The biggest problem with this tool is that given a choice, people often
choose socially and economically stratified neighborhoods.” (p. 4) The authors find little beyond
classism and poor management to blame for unsuccessful transit-based developments and take it as
a given that TOD is the intrinsically preferable homeowner lifestyle. Yet if market demand truly has
shifted towards TOD, it is difficult to imagine how this has not been echoed in increased private
sector exploration of this concept. In presenting the relatively new idea of TOD, the authors
provide a notably constricted argument in favor of this style.
Randal O’Toole’s “Defining Success: The Case against Rail Transit” argues that rail transit—
be it cable cars, light rail, or subways—is an inefficient allocation of public funds in almost all
scenarios. O’Toole details the massive rise in rail transit construction projects in the last few
decades, blaming frequent construction overruns and ambitious ridership projections for veiling the
true economic waste of these projects. The author also blames coercion by major real estate
developers and the perverse incentives coming from the federal government that encourage these
projects even in the face of net social welfare loss. The author provides detailed tables of operating
costs, ridership, and overall profitability drawn from the National Transit Database to support his
claims, and makes a fairly foolproof argument that buses are a more cost efficient alternative to
expensive rail projects. The article also provides convincing evidence to refute the oft-cited
environmental benefits of trains in comparison to other forms of public transit.
One argument often presented by rail-transit advocates is that the permanence of railway
stops has the potential to spur high-density development in surrounding areas. The author of this
piece suggests that this development is primarily due to localized government development
incentives, which, when coupled with government subsidy of the railways, serves to create a
government supported façade of positive economic growth. Yet it is difficult to imagine that these
emerging TOD communities are springing up without some form of conceptual buy-in from
developers and homebuyers. Although perhaps beyond the scope of this work, O’Toole fails to
present a true economic cost-benefit analysis of rail-transit construction when viewed within the
context of potential positive TOD externalities. Also, in sharply dismissing rail-transit and
accompanying TOD neighborhoods, O’Toole fails to consider the prospect of TOD communities
which employ a public bus stop as their transit node.
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The debate over TOD is so fascinating precisely because it remains so unresolved. It would
certainly be interesting as a point of further study to investigate how these communities are taking
shape as urban areas in America and abroad increasingly experiment with Transit-Oriented
Development policies.