(C-TOD): current and potential legal issues in the u.s.
Transit-oriented development is a planning strategy that is legitimized and encouraged by current legal and regulatory environments in the US.
A few regions in the US have explored and developed multi-agency frameworks to encourage and/or initiate TOD. Those frameworks have created new tools in many levels of government: state, county, municipality, transit agency, state DOT, housing agencies, MPOs. New regional authorities or councils of governments have been created and their powers are slowly being enhanced by state and federal mandates.
In practice, however, many agreements involving municipalities and transit agencies have been limited to single station area developments. Often, as is the case in New Jersey, TOD agreements among transit agency and municipality amount to multi-year efforts for expanding a parking lot or installing a newspaper stand at a single station. The stakes involved are usually so small they do not justify an active participation of either agency.
Rarely municipalities and counties are involved in the development of corridor-wide TOD planning strategies. Oregon is an exception in that it has developed region-wide strategies by mandating TOD principles in local plans. Several states, however, have new provisions that favor TOD implementation by transit agencies, MPOs, corridor-wide coalitions and private developers.
A major drawback of single-station TOD efforts is the fact that, generally, the level of accessibility offered by a single TOD development is not even close to generating, in and by itself, the interest of real estate developers. Most of what has happen till now in TOD is mostly the result of strong financial incentives, regional land-use restrictions and chance. As it happens in New York, Paris, London, Tokyo, real estate values skyrocket around transit stations because they offer astounding accessibility and the option of not-owning a car.
A strategy that integrated the creation of an extensive transit-based intermodal network along with a corridor-wide TOD plan would be much more efficient.
Today, integrated planning and financial structures could again coordinate transit and real estate developments, as was the case for streetcars in the 1900s and for large segments of Tokyo and New York subway systems. With new automated feeder systems unprecedented levels of accessibility to mainline stations and then to linear regions can be provided, while maintaining low and medium residential densities.
Recent US and worldwide surveys, as well as recent developments, suggest that a C-TODs (Transit-oriented corridor developments) could be organized in, literally, infinite ways.
Virtually all TOD plans in the US have been implemented by custom regulatory and financial tools appropriate to local conditions and opportunities.
The same has happened in the financing of recently built and planned transit systems in the US and abroad. Turnkey and Super Turnkey systems are now common in practice and increasingly so in proposed plans. Proposal and Requests for Proposals involving total or partial private financing of transit systems are now common.
The annual FTA-required financial report from transit agencies shows innumerous arrangements for financing capital and operating costs.
The drafting of an integrated transit/land-use corridor plan involves the choice of regulatory, legal and financial tools to ensure its actual implementation.
Major legal and financial issues involved with the realization of TODs, transit systems and regular real estate developments, as well as possible issues arising from their integration should be considered.
I will here discuss only those tools that I have identified as most probable in an effort of this kind.
The first step in a TOD implementation is the definition of the geographical jurisdiction of its special regulations. The size of the area and the number of properties involved might affect the legitimacy of certain regulations.
The definitions of station district areas of very small size, especially if not defined as a PUD, might be challenged as illegal spot zoning in certain states.
California 1994 legislation authorizes local governments to create Transit Village Districts comprising a quarter mile around a transit station.
Most TOD theorists have defined a quarter-mile to half-mile radius from the station as the area likely to be walked to the transit facility. I think this aggregative unit is way too coarse, and unnecessarily so. It is unlikely, in fact, that properties 1200’ from the station will show the same transit travel behavior as areas 100’ away. Also, irregular street and pedestrian networks might reduce the accessibility of certain parcels, regardless of their absolute distance from the station. Therefore, it might be better to devise a series of network-based concentric buffers around the nodes across which specific TOD regulations would fade away. For example, proscribed minimum density could be calculated as a function of network distance from the station.
Ordinances can be issued to encourage certain land uses through incentives and discourage others through disincentives and restrictions. This may be done through traditional zoning ordinances allowing only certain uses. Other methods devised to encourage favorable uses are density bonuses and tax abatements, donation of excess public land, redevelopment loans, streamlined processing, concurrency exemption.
High density is assured by requiring minimum densities for certain land-uses. Minimum densities in PUD plans are often required for their approvals.
Street patterns and design should encourage and facilitate pedestrian and bicycle use, as well as transit routing.
Parking restriction can ensure that more space is left to uses that attract traffic and that transit riders walk or bike to station.
Joint development is a technique to capitalize on the real estate value increase in areas surrounding the transit system. Properties “physically or functionally” related to the transit system are acquired and developed by some type of joint public-private entity.
Under current state laws and FTA grant requirements, transit agencies have great latitudes in making agreements with private entities.
Methods may include property taxes, property assessments, special assessments, excess land acquisition, land condemnation, negotiated private sector investment.
Transit agencies can facilitate developers by exacting contributions from development around the station, including easements, access points, improvements, connections, and even fees that would aid in station development.
Transit agency and local government can both participate in a joint development, bringing together all the power of public intervention.
Concurrency laws tie the validity of certain approved regulation to the creation of adequate infrastructure of public services. It is usually applied based on level of service of roadway surrounding a certain location. Few areas apply concurrency based on public transportation service levels, because usually those levels are so low to be irrelevant for the estimation of traffic levels.
Assuming high levels of transit accessibility, and therefore ridership, concurrency laws could be used to justify concentrations of high-demand uses around transit nodes and restriction of their location in other areas.
TDR allows owner to swap their development rights to newly defined growth areas.
Areas around transit stations could be defined as TDR receiving areas and, therefore, benefit of development that would have gone somewhere else.
These agreements allow a property owner to be exempt of a certain regulation for a defined period of time. In exchange, he makes some kind of substantial contribution to the agency. A number of states, including New Jersey, permit these agreements.
These are documents in which the local government commits to a schedule of infrastructure and other improvements. It can be an essential tool to convince developers to invest in the area, especially if it is bonding in some way.
Too often private developers do not embark in developments that assume the completion of a public project to make economical sense.
TOD initiatives can be challenged on state and federal constitutional grounds, including the takings, due process and equal protection clauses. Also, the use of public domain and financial incentives can be challenged for the lack of valid public purpose.
Traditionally however, state and federal courts have tended to apply “judicial deference” to those regulations issued to create a shift to a desired transportation performance. Local zoning requiring large single-family housing with large required parking provisions have been permitted to enable the locality to choose its desired lifestyle. Extensive TOD ordinances should be upheld on the same grounds.
A taking happens when a certain regulation affects the value or potential for use of property to such degree to render it useless. It can be of three kinds: taking without compensation, due process taking and substantive taking.
Taking is not generally an issue in station areas, because generally properties within the designed area are increased in value and utilization. It can become an issue when drafting growth boundaries, when choosing alignment for transit guideway right of way or during general rezoning of non-station areas. Environmental impact of a new guideway can be judged to be so high as to constitute taking of some adjacent properties.
Down-zoning or rezoning of non-station areas can be considered substantive taking if a valid public purpose is not stated successfully. Those same regulations can be challenge on the base of “equal protection” if the relationship between the specific ordinance and the public purpose is not found logical. Any ordinance should be the evolution of a public purpose due to changed conditions and circumstances.
Regulations defining minimum lots size and minimum floor space have been upheld has legitimate tools to control traffic congestion.
Although, the impact of TODs on travel behavior and traffic levels is uncertain and controversial, courts will oppose local regulations to control traffic only if obviously irrational.
Court rulings have denied a special ordinance when it conflicted with underlying zoning or comprehensive plan.
Just as requirements of minimum parking provisions have been accepted to manage the availability of on-street parking, so maximum parking can be use to encourage a shift of transportation mode. Local governments are not state or federally required to provide enough space to park cars.
In fact, this practice is authorized by the Clean Air Act to protect the environment.
Most states accepted the practice of requiring developers to install or dedicate transit or pedestrian facilities. These regulations, however, should be drafted as design criteria within the zoning ordinance, rather than a arbitrary exaction from a single property.
In some states, mandatory impact fees are allowed to charge developers for the provision of dedicated public facilities. These fees must be roughly proportional to the benefits enjoyed by the property.
Impact fees regulated by voluntary development agreements between locality and developers are not challenged on constitutional grounds.
Maximum density zoning has been allowed to control for optimum use of road facilities. Similarly TOD regulations that mandate minimum density are increasingly accepted to achieve the optimum use of transit ones.
In Maryland a court upheld station density bonuses in exchange of open space and other facilities and amenities.
“Numerous cases have upheld the establishment of small areas to permit the operation of neighborhood shopping centers or neighborhood commercial uses within short distance of residential areas”.(TCRP,1999)
Courts have upheld the rezoning of areas along highway interchanges from residential to retail on the basis that, unless authorized, traffic would have increased in other areas.
In many states a PUD is a “floating zone” that “hovers over the entire municipality until subsequent action causes it to embrace a specific area”. TOD could be similarly implemented as a floating zone, therefore giving it great geographical flexibility during its implementation.
PUD is especially useful when the new TOD district extends across different land-use zones.
Non-cumulative zoning has been upheld in several court cases. It permits to allow a certain use (mostly residential) in all zones while restricting others in some.
Several policies have been upheld that restrict parking provisions. Connecticut authorizes municipalities to accept fees in place of required parking; these are then used to sustain and enhance transit service to reduce parking need.
Oregon requires local governments in MPO areas to provide a 10 percent reduction in the number of parking available over the planning period (10 years). This can be done by a combination of building restriction and required conversion of existing parking facilities to other uses.
California authorizes local variances that shift the provision of required parking space to an off-site location, if this provides better guideway transit access.
In some cases, and not all states, “use variances” can be used if they prove “undue hardship”.
EIS are required of all large-scale publicly funded transportation projects. Some states require it of privately funded projects as well.
A few court cases have tried to mandate EIS applicants to include transit-based alternatives to all highway proposals, with some success.
One EIS has been used in Oregon to propose alternative transit-based scenarios. This alternative scenario, called LUTRAQ, was since selected. Its intents are to locate 65% of future residential housing and 78% of future employment within walking distance of a transit stops.
Main obstacles to this agreements are the “public emolument clauses” in most states constitutions that prohibit public agencies from using and lending credit to private interests.
Recent FTA regulation expands the scope and type of financial arrangements accepted in plans submitted by federal grant applicants. Even losing investments are accepted if it is proven they will provide corridor-wide or area-wide benefits (economic and non).
Special assessments have been approved in California to enable transit agencies to capture some of the property increased valuation.
Many states have mandated express local permitting procedures for the location of transit facilities.
In some states, such as California, transit agencies are considered state agencies, and therefore exempted from local zoning and ordinances.
Oregon authorizes local governments to allow for an “ad valorem exemption” from taxes for TOD development (for a maximum of 10 years). It justifies this program on the basis of its regional and state-wide benefits. Areas entitled to this tax exemption are high density developments around stations, “with or without parking”, that are“physically or functionally” related to the transit system.
Arizona authorizes intergovernmental agreements that include joint developments for transportation projects.
In Washington, transit agencies and local government have entered in binding agreements to adapt zoning to a projected increase in transit service levels.
Regional General Welfare has been successfully used to challenge local zoning on the basis of its regional impacts. A famous New Jersey case forced a local government to provide adequately for affordable housing in its plans.
This same base can be used to force localities to issue flexible zoning provisions, such as PUD or TOD, that implement regional goals of providing affordable housing and increasing transit use.
Some states, such as Washington, affirm the right to a healthful environment: local zoning could be challenged on the basis that it denies that right to neighboring communities.
Many zoning ordinances and architectural review criteria have been successfully challenged for their vagueness. The 14th amendment requires legislation to be worded “with precision sufficient to enable reasonable people to know what conduct is proscribed”.
PUD ordinances, being often considered re-zonings, are allowed a less definite wording.
Most states do not require local governments to issue comprehensive plans. The few that do, require local ordinances to comply with the plan.
Many of those states require the comprehensive plans to specifically assess certain issues.
Some states, such as Florida and California, bring this further by requiring that local comprehensive plans be “externally” consistent to statewide planning objectives.
“Oregon, Florida, California, New Jersey, Maine, Vermont, Rhode Island, Georgia and Hawaii have developed a vertical planning structure with mandatory statewide planning requirements as well as statewide planning goals binding to local governments”(TCRP, 1999).
In certain instances, Oregon mandates the use of TOD regulations as part of local comprehensive plan implementation process. A statewide plan mandates a series of goals to be embedded in comprehensive plans. In Oregon, MPOs areas regional and local governments must achieve a reduction in automobile VMT per capita, to equal zero to no increase within 10 years of adoption of the plan, a 10 percent reduction within 20 years, and a 20 percent reduction within 30 years. Local governments are required to evaluate high density, mixed-use clusters and maximum parking provisions when drafting their plans. Local plans are mandated to: allow TODs on lands along transit routes, and require all major activity centers to provide a transit stop on-site or a connection to one. Further they must: allow redevelopment of a portion of existing parking areas around stops for transit-oriented uses, built road systems that can adequately be used by transit and pedestrians.
In Florida, Oregon and Washington local plans must include transportation concurrency measures for developments. Washington, in particular, requires level of standards to include transit routes as well as arterials and allows the definition of LOS (levels of service) as a district, area or corridor. The latter can be used when implementing corridor-wide TOD strategies.
Condemnation, or eminent domain, is a procedure that a transit or other state agency can initiate to acquire properties they could not directly purchase. It happens when the owner of the property either does not want to sell or asks a price that the agency is not prepared to pay.
A study of 5 states found that 80% of all ROW acquisitions are settled without initiating condemnation proceeding. Of those that are initiated, a majority is settled before going to court.
The process of condemnation has to follow procedures mandated by the state and, if it involves federal funds (as it is mostly the case), by FTA regulations.
The process of condemnation can be very costly and cause long delays.
Condemnation procedures are fairly similar among states:
- Pre-condemnation Process. Letter of notification and request of appraisal by owner, visit to owner, property appraisal by agency sent to owner. The timing for these procedures vary by state between 1 and 5 months.
- Initiating Condemnation Procedures. if agreement is not reached during pre-condemnation, the agency files the condemnation procedure with a state court. The likelihood of this initiation is strongly related to whether the state laws require the agency to reimburse the owner’s legal fees.
- Court Proceedings. The objective of the court proceedings is to assure the following:
Finding of public use and necessity, finding of just compensation. Both this conditions need to be met for a successful condemnation award.
FTA condemnation approval, when required, is regulated by the Uniform Act of 1970. This requires that “owners be treated fairly and consistently and equitably; and that acquiring agencies implement regulations in a manner that is efficient and cost effective”.
The following are some of the requirements:
- Acquisition. “Any decrease or increase in value caused by the project or caused by the likelihood that a particular property is to be acquired for the project will be disregarded in determining just compensation for the property”. This is a very interesting opportunity for a large scale TOD plan, where condemned properties might increase substantially in value. The agency would gladly incur the delays and costs of potential court proceedings if they have the prospect of making large profit in the sale or lease of that property.
- Relocation. At least 90 days warning must precede relocation action. Owner must be reimbursed for moving expenses. Relocation dwellings must be comparable to the original ones. In addition, they must be decent, safe and sanitary; located in the same area or in area with similar accessibility.
The responsibility for eventual site contamination clean-up rests with the original title owners.
FTA “concurrence”, or approval, is required when property value exceeds $250,000 and in the case that a settled agreement sets the price of property at $50,000 above the original agency-appraised value.
In the case of a major project with many condemnation cases, the agency can request from FTA the approval of an alternative process, which will set higher dollar thresholds for the required FTA approval.
FTA permit agencies the maximum flexibility in determining the best and most cost-effective use of FTA-funded property. The agency can sale or lease the property, as wella as enter in joint development agreements.
Land acquisition during a C-TOD should rely mostly on a voluntary station land assembly process, partial condemnation and on the financial power of joint development consortiums.
These consortiums, based on the large projected property value increase and flexibility in transit station location, could achieve a very competitive position for the purchase of property.
They would be in a position to offer compensations that are substantially higher than current market value, because of expected appreciation. The owner (seller) would be encouraged to sell at that price and not attempt a speculation because the transit agency could:
- Choose another station location, another station configuration that does not need the owners’ property. The consortium could, for example, start parallel negotiations for different station location scenarios, so to instill competition among sellers.
- Go toward court proceedings, which, if successful, would provide the owner with “only” the current market value, rather than the higher original offered by the consortium.
For this strategy to work, the transit/land-use plan must give reasonable expectations for a high increase in value of condemned properties.
There exist a wealth of possibilities for state, regional planners and private entities to implement corridor-wide TOD strategies. Certain states, like Florida, California, New Jersey, Washington and, above all, Oregon offer a number of TOD planning tools. These tools can be used to establish regional joint agreements and legally uphold TOD and C-TOD plans.
The legal obstacles to TOD are fully preventable and resolvable in most states, especially in large and progressive ones.
The largest obstacles are seemingly political but, in reality, financial.
C-TOD plans, in particular, would greatly benefit from the willing participation of a number of local governments. Being that the main task of local governments is to protect the quality of life of its residents, and therefore their real estate investment, it is essential that any TOD plan creates such added value to share large dividends to all participants.
Legal issues arise when some property owner or local authority is unwilling to participate in the corridor strategy. The overwhelming majority of these oppositions can be bought out by an adequate compensation; it is therefore essential that the consortium has the financial power to do that.
If all financial negotiations fail, the consortium has many legal options to force the compliance to the C-TOD plan on individuals and agencies.
Condemnation proceedings could be initiated, for example, for two or more properties that are needed in two or more substitutable alignment scenarios. This way, the chances of failure in the acquisition of the necessary land would be reduced and a competitive edge would be introduced for those owners that are trying to speculate.
Condemnation proceedings are expensive, especially if the agency has to pay for the owner’s legal expenses. Again, it is important that the agency or the consortium have large resources to invest in land acquisition processes.
Given the large role that negotiations and settlements play in this country’s legal system, it seems that a C-TOD plan that gives reasonable expectation of large dividends, might attract enough financing to give more than a fair share of benefits (i.e.”pork”) to all originally unwilling participants. Given the difficulty, inefficiency and, at times, impossibility of charging many individual and entities for the benefits they receive from TOD plans; it is, again, imperative that those benefits be very high.
The development of measures for the regional economic impact of a C-TOD plan is no trivial matter; an attempt at devising one was developed by the author in the following paper(http://www.linearcity.org/rufo/pts-eval.htm).
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