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Transit-Oriented Development in Philadelphia: Using a proven strategy to create more vibrant, livable neighborhoods

Neighborhoods become more vibrant and livable to the extent that new development is oriented to transit access and to the value of the mobility it affords

Executive Summary

Transit-oriented development (TOD) may seem like a new-fangled notion, and in fact has particularly gained momentum and cachet in the past decade; but it is in fact a strategy as old as some of Philadelphia’s oldest neighborhoods. Then, as now, neighborhoods became more vibrant and livable to the extent that new development could be oriented to transit access and to the value of the mobility it afforded. Conversely, neighborhoods have suffered in vibrancy and livability when reinvestment has been hindered or when there has been little or no coordination with transportation infrastructure.

So it is appropriate that transit-oriented development is a major focus of NeighborhoodsNow. It is also an appropriate moment for the release of this publication, “Transit-Oriented Development in Philadelphia: Using a Proven Strategy to Create More Vibrant, Livable Neighborhoods.”

Philadelphia has enjoyed a resurgence in development activity in the past decade; and in parallel, the City and other key stakeholders are bringing to the fore important discussions on related topics such as transportation funding, city planning, and neighborhood development. The time is right to return to a concept authentic to urban Philadelphia and to its most storied neighborhoods, that of transit-oriented development.

TOD refers to a mixed-use development in close proximity to a public transit station, which provides a community with a variety of transportation options, multiple uses in a compact setting, and pedestrian-friendly design. If done well, TOD can confer a variety of benefits to residents and to a region:

 

  • A sense of place
  • Economic development
  • Economic equity
  • Environmental stewardship
  • Greater mobility
  • Healthier citizens
  • Increased transit
  • Public cost ridership savings
  • Public/private
  • Public safety partnerships
  • Quality of life
  • Reduced congestion

This list of potential benefits is of great relevance to neighborhoods. Neigh•borhoods all across Philadelphia, after all, seek to be aesthetically pleasing and authentically designed; they want robust commercial growth but also multiple price points for housing; and they desire most of all an enhanced economic and social quality of life. TODs, at their best, can confer these sorts of positives to neighborhoods in which they are located:

 

  • Affordability. Higher densities can enable a mixing of house price levels. Also and importantly, proximity to transit stops can lead to a reduction in transportation costs for working families, by reducing or even eliminating the need for a car and related expenses. Thus, connecting with TOD can produce a twofold effect on cost of living for working families.
  • Access. For the segment of the local population that does not wish to or cannot afford to own a car, being near public transit greatly increases the pool of potential jobs that can be pursued and obtained, as well as the universe of retail outlets that can be reached and utilized. To the extent that TOD brings retail and other employment to neighborhoods, these also represent additional shopping options and job opportunities.
  • Aesthetics. TOD can bring good urban design to previously disinvested communities. Its value for pedestrian-friendliness can also bring the necessary lighting and access to make safer previously avoided intersections.

These potential benefits represent the upside for neighborhoods of having TOD. The downside for neighborhoods of not having TOD, of course, is that disinvestment imposes higher costs on families, stifles access to employment and retail centers, and creates physical eyesores in once-prominent locations.

Infrastructurally, TOD requires extensive rail transit service and a dense central core, two conditions that regions around the nation are spending billions of dollars to create or recreate. Meanwhile, Philadelphia has both attributes in abundance. However, good TOD in Philadelphia’s neighborhoods has proven elusive. In fact, where development has occurred near transit stops, it has not tapped into the benefits of transit-oriented development and can generally be best described as merely transit-adjacent development. Even worse, there are a significant number of promising sites in which no meaningful development has occurred at all.

The hindrances to TOD in Philadelphia appear to be more systemic:

 

  • The hollowing out of urban Philadelphia diminished the value of access to destinations served by transit. From a development perspective, the value of transit access has been further lessened by cheap auto travel,
  • No development, let alone that oriented to transit, will take place if there is no profit to be made in developing. In fact, the City experienced a significant 50-year pattern of population and employment loss after World War II.
  • Although Philadelphia does not lack for viable TOD sites, its antiquated zoning code does not go far enough to encourage TOD.

These barriers, however discouraging, also represent opportunities to act now to stem the existence of transit-adjacent develop•ment and transit-anemic development and to stimulate the movement towards transit-oriented development. In many ways, the time is right for transit-oriented development in Philadelphia:

 

  • There is a distinct increase in the quality and quantity of conversations at the highest levels over the important subject of dedicated funding for public transportation, coupled with the recent multiyear funding commitment by the Commonwealth of Pennsylvania for SEPTA.
  • The City is no longer bleeding residents and jobs, and in fact, thanks in part to a citywide ten-year tax abatement on new construction and significant renovation, there has been a notable increase in residential and commercial development.
  • There has been much discussion recently over the updating and reforming of the City’s zoning code, and many groups are particularly urging the City Planning Commission to spearhead a more aggressive and coordinated agenda to zone key transit-proximate sites to encourage TOD.

Transit Service and Its Impact on Development

As much as public transit in Philadelphia is disdained in the media and on the street, it is unmistakably a core asset for the City. It could become a key advantage in an increasingly competitive regional, national, and global economy. The continuing suburbanization of jobs, houses, and retail only underscores this reality: Philadelphia’s edge lies in its urbanness. From this perspective, the City’s vast transit infrastructure is an asset around which to build, literally, rather than a liability to starve or avoid.

Many of Philadelphia’s neighborhoods grew up around transit and railroad lines. In fact, much of the real estate development in the first half of the 20th century was undertaken jointly with transit development. Before the predominance of the car, private incentives were well aligned for TOD; with the advent of the car, that link has been broken. Highways are developed and financed independently of residential and commercial development, and as there is no single entity that has the incentive or authority to undertake TOD, there is no easy coordination between land use, transportation planning, and private development. Further, as the region has decentralized, more and more areas are not accessible except by car.

In evaluating sites for TOD, one must consider the value of the site’s nearby transportation services. The extent to which transit offers real value to residents and businesses in a TOD will determine the profitability and therefore the viability of its realization. After all, developers engage in a TOD when they can expect a sufficient return for their efforts. Developer’s profits, in turn, depend on the extent to which households and firms are willing to locate in the TOD.

The price that the site commands, then, will increase if the transit service is perceived as having long-term value, value that people and businesses are willing to pay for to be in close proximity, and value that is determined in part by the following considerations:

 

  • The long-term certainty of the service. The prospect of insufficient funds has frequently resulted in SEPTA proposing to cut or end services and/or raise fares. The significant uncertainty regarding the frequency, cost, and very existence of SEPTA services is a major impediment to successful TOD. Conversely, positive developments, such as the State’s recent multi-year commitment of funding to SEPTA, are positively accounted for in the decisions of people and organizations that depend on transit.
  • The number and desirability of destinations.

An important aspect of the value derived from proximity to a rail station is the access afforded by that station. For example, of the considerable evidence demonstrating that people are willing to pay more to live near transit stops, it has been proven that much of the value conferred is as a result of access to employment centers. Access to employment centers is of huge consequence to neighborhoods, particularly low- to moderate-income ones. To the extent that car ownership percentages are low, access for such neighborhoods to employment centers via public transit is the difference between a relatively small universe of job opportunities and a much larger, more promising universe.

 

  • The frequency of service and integration with other services. High frequency routes, wide spans of hours of operation, and service integration, all increase the comfort level riders have about the transit system and thus the value developers can derive from locating new uses in close proximity to its stations.
  • The importance of service amenities. Riding transit can be made to be a more enjoyable means of traveling, since riders do not get stuck in traffic, they can concentrate on their work or on a good book, and do not have to worry about the cost or hassle of parking once they have arrived at their destination. The stations themselves could be sources of value enhancement, to the extent that they adhere to the TOD principle of being aesthetically pleasing, friendly to pedestrian access, and authentic to their particular place. Well-lit and well-greened transit stations could reduce crime, noise, and pollution, three important potential factors that otherwise could confer negative value on transit-proximate sites.
  • How automobile access integrates with TOD. Successful TODs are able to balance the need for cars with the need for density, and are designed in such a way to extract the value of good automobile access without that accessibility rendering the transit service less valuable. At the very least, parking structures could be designed to enhance the pedestrian experience, by including retail or other visually appealing uses at the street level.

Barriers to Transit-Oriented Development in Philadelphia

Construction costs in Philadelphia are significantly higher than those in the surrounding suburbs, making it expensive to supply Philadelphia with TOD. Furthermore, decentralization of residential, employment, and retail centers has resulted in a significant loss of population, jobs, and shopping activity in Philadelphia.

The fact that the impacts of this decline in population and jobs were not felt equally across the city is even worse for the existence of TOD in Philadelphia. Typically, the oldest, most obsolete development is abandoned first. In Philadelphia’s case, this meant that the oldest communities that developed along the major transit lines were the most adversely affected. Thus, instead of TOD-friendly sites attracting more development, they experienced more disinvestment.

Structural Hurdles

 

  • Site assembly with multiple small and/or odd-sized lots
  • Demolition and environmental clean-up costs
  • Union costs – rates and work rule changes required Governmental Hurdles
  • Time consuming and uncertain zoning permitting and entitled processes
  • Regulatory requirements with excessive costs
  • Lack of government promotion of TOD
  • Outdated and excessively restricted zoning
  • SEPTA’s regulatory and monetary constraints in advocating for TOD
  • Need for public subsidy

Therefore, all things being equal, developers will tend to gravitate towards developing in the suburbs rather than in the city. The City could change that equation and make development in the city more desirable in terms of amenities, and/or by lowering the cost to develop in the city.

Thus, for example, the continuation of the ten-year property tax abatement is vital to continuing to make development economically feasible in the city. Other citywide policy decisions, such as reducing the wage tax and Business Privilege tax, improve the viability of TOD by making access to Center City and its retail and employment locations all the more valuable.

Finally, the City could work with SEPTA to shore up its uncertain funding base. There is very little contribution to transit services at the local level, and this translates into a lack of focus on transit at the local level and a lack of coordination between SEPTA and the City around transit and development. This lack of collaborative mindset has resulted in major investments in transit infrastructure, such as the rebuilding of the elevated portion of the Market Frankford Line (MFL) in West Philadelphia, with virtually no consideration of TOD surrounding its station areas.

TOD, with its focus on transit access, good urban design, and multiple housing price points, could be an effective mechanism by which previously disinvested locations, such as those around MFL stations in West Philadelphia and Broad Street Line (BSL) stations in North Philadelphia and South Philadelphia, could be rejuvenated in ways that are aesthetically pleasing and that produce lively, mixed-income settings. Other opportunities exist in communities served by the Regional Rail and bus transit service. Thus, such an uncoordinated effort as what has taken place with the reconstruction of the elevated portion of the MFL in West Philadelphia represents a huge loss in opportunity to consider approaches that foster healthy and vibrant neighborhoods and that encourage development that fully capitalizes on the transit resource that the MFL represents to the City.

Solutions That Encourage MoreTransit-Oriented Development

There are three key steps that the City of Philadelphia and SEPTA must take to make transit-oriented development (TOD) a reality:

Creation of transit-oriented zoning overlays for neighborhood TODs and regional TODs. In order to encourage and facilitate TOD, the City could create zoning overlays appropriate for neighborhoods near transit stations.

 

  • For station areas in Philadelphia that are appropriate for residential neighborhood TODs, the zoning rules could include parking maximums, higher residential density allowances, facilities for pedestrian access, neighborhood-oriented mixed-use development and transit inter-connections. Such mechanisms could help ensure that development activity results in affordable housing, safe passageways, good urban design, and other positive outcomes for neighborhoods.
  • Zoning overlays could also be used to stimulate regional TODs, where existing transit services make the station area accessible to a wide area of the region by transit. These overlays can attempt to spur development by increasing allowed densities. The developments can be multimodal in nature, providing good auto access as well as transit access. Zoning overlays could ensure, however, that parking does not interfere or detract from transit access.

 

Transit Revitalization Investment Districts (TRIDs). The Transit Revitalization Investment District Act was enacted in 2004 by the Commonwealth of Pennsylvania to enable local governments and transit authorities to create TRIDs. TRIDs enable municipal governments and transit authorities to more closely coordinate transportation infrastructure, land use, and private development. Both the City and SEPTA have much to gain from the aggressive pursuit of TRID as a means to creating more TOD:

 

  • The enabling mechanism of value capture, whether through tax increment financing or other avenues, means that TOD-related development and amenities could be funded with no negative impact on the City budget, but rather by taking a portion of future property tax increases that will materialize around the site as a result of the new enhancements. A typical value capture at a neighborhood level might, for example, generate anywhere from two to four million dollars upfront, which could be used for infrastructure improvements and paid off over time with the incremental increase in property tax revenues that result from higher property values in and around the TOD.
  • As for SEPTA, it has already been discussed that TOD could equate to increased ridership; TRIDs are an effective way for SEPTA to work with the City towards that end. Developing a priority list of TOD sites. In addition to an overall, citywide TOD strategy, the City could develop a priority list of TOD sites, and mobilize funding, leadership, and administrative efforts towards developing such sites, in order to achieve early success and build momentum for even more aggressive and comprehensive action. Specifically, all possible sites could be identified and then classified by demand and by use. Perhaps early successes will provide lessons for stakeholders to warm to the potential of TOD to rejuvenate other locations around the city. Not insignificantly, TOD is somewhat fuzzy to grasp on paper but distinctly clear to all when built out, so quick wins are not only useful for building momentum but also for creating images around which more and more supporters could rally. In parallel, City funds could be identified and allocated towards this effort, which would further stimulate additional private sector attention and investment.
  • In the long-term, all MFL and BSL stops could be considered for TOD; after all, these very areas were once major residential and retail centers, during the first half of the 20th century, when such uses truly were transit-oriented. Such an orientation to transit use has a deep lineage in Philadelphia, and is a major reason for the remarkable socio•economic diversity of its neighbor•hoods. It is inspiring to think that sites that once thrived because high density and transit access were considered assets, and then deteriorated because those same characteristics were deemed liabilities, could now be evaluated anew as promising places for development.
  • The need for early successes from which to build leads us to suggest that a few attractive sites should be targeted for immediate action. We agree with NeighborhoodsNow’s focus on the 46th and Market and the Temple University sites, as they represent highly attractive, high-density locations primed for early TOD success. Importantly, both sites represent opportunities to organize existing positive momentum around private development towards ends that ensure a healthy evolution to mixed-use, mixed-income communities that are transit-oriented and aesthetically pleasing.
  • Other locations, particularly the Wayne Junction station, the North Philadelphia station, and the Broad and Girard station exhibit characteristics conducive to TOD, as do other subway, bus, and rail stops.

 

Recommendations for Stakeholders

Transit-oriented development (TOD) is, like all real estate development, a collaborative exercise. Thus, it is important that all stakeholders work collectively to pursue both individual TOD sites as well as an overall environment that is more conducive to TOD. Several nonprofits including the Pennsylvania Environmental Council, the Economy League of Greater Philadelphia, and PennTrans are contributing to elevating the significance of public transportation. The following stakeholders are critical to ensuring successful TOD:

 

  • The City of Philadelphia. The City should pursue an aggressive implementation of TRIDs and of TOD zoning overlays, as well as of value capture mechanisms to generate funds to support reinvestment, and affordable housing initiatives that induce a greater mixing of house price levels. City funds could be identified and allocated, further stimulating additional private sector attention and investment. Accompanied by reduced development costs (via the continued property tax abatement on new development) and reduced administrative costs (via unified TOD checklists and inter-agency orientations), these measures help create an environment friendly to development and especially to TOD.
  • The Commonwealth of Pennsylvania. The TRID Act is a great start and the Commonwealth resources it commits could be appropriately expended; the Commonwealth could also work with the City to identify dedicated funding sources for transit, thus reducing uncertainties around service levels, as well as additional public subsidies in support of TOD. The Commonwealth’s recent commitment to funding SEPTA is also a huge step towards fully capturing the value of transit proximity, and thus represents positive momentum upon which to build.
  • SEPTA. The TRID Act provides SEPTA with greater flexibility to consider collaborations with the City, as well as operational objectives that more closely coordinate land use and development opportunity with transportation infrastructure; SEPTA could also build TOD plans into all major infrastructure investments.
  • Developers. If the public sector is stepping forward with incentives to encourage TOD, private and non•profit developers need to step forward with proposals that deliver the intended results: mixed-income, pedestrian-friendly, and aesthetically pleasing developments.
  • Institutional Anchors. Institutional anchors including universities and hospitals could enter into dialogues with the City and SEPTA, such that issues of mobility, parking and pedestrian friendliness are incorporated into their development plans.
  • Neighborhood Groups. Neighborhood groups could take advantage of their strong community voice and demand not no TOD or any TOD, but TOD that helps lead to more vibrant, livable neighborhoods; they could also sell residents and policymakers alike on the merits of TOD by championing small-scale examples of successful TODs that have been brought into existence by the efforts of local CDCs.
  • Delaware Valley Regional Planning Commission (DVRPC). The big-picture perspective of metropolitan planning organizations (MPOs) comes in handy as TOD initiatives intersect with regional issues of land use, trans•portation policy, and environmental stewardship. Accordingly, DVRPC could advocate for more dedicated and secure sources of funding for SEPTA, and could continue to make TOD a priority in is funding allocation process, thus using its influence in setting land use to encourage private development that is oriented to transit and that adheres to TOD principles.