Transit Oriented Development Doesn't Just Happen!

Transportation networks are fundamental to how we grow, develop, and prosper. We, being here today, are the converted. We are a key demographic in driving TOD development. For about 50 years, our national, state, and local funding programs have driven decentralization of settlement patterns and, ultimately, suburban sprawl. That pattern of growth is no longer sustainable. We know that congestion, long commutes, and gas prices are driving more infill, urban, and TOD development.

Statistics explain the impact of the demand for TOD development. According to a Reconnecting America report from 2008, almost a quarter of all renters and buyers will want TOD housing in 2030. L.A. is expected to have a 544 percent increase in demand for TOD housing, or approximately 1.4 million households, by 2030. That compares to 261,000 households in 2000. That's tremendous growth. The other top cities for TOD demand are major U.S. cities that are the economic engines of their regions: New York, San Francisco, Philadelphia, Boston, Miami, Dallas, and D.C.

The concept of livability and sustainability-the notion that growth and development should enhance the human and natural environments in the present and also protect them over the long term-has taken root across the United States, introducing new frameworks for local, regional, and federal partnerships, planning, and funding. We have to change the way we think; we have to look into the new frameworks for global, regional, and local partnerships. I am encouraged that we are moving toward a new direction at the state level, the federal level, and with initiative such as Measure R at the local level.

This potential for collaborative policy and planning could provide solutions from my development perspective. Forest City is a national private sector developer, but these points resonate to the non-profit sector as well. We are both facing the same challenge of trying to implement financially feasible TOD products at the local level. SB 375 is a model of cooperation between federal, state, and local policies that resonates to the demand for TOD development, but cooperation and planning must also be accompanied by real incentives for the development community. We are the ones who are ultimately going to build these kinds of projects and they tend to be more expensive and more challenging than greenfield development.

Specifically, I would like to highlight three perspectives that are important as we begin to implement these planning and policy efforts. One is providing clarity and certainty to developers. Understanding where municipalities and communities desire to grow through development, and when development should be curbed, is essential to providing that clarity. SB 375 has the potential to do just that if implemented effectively. Coupling local zone changes to support TOD/urban infill and streamlined entitlements to support TOD will go a long way to realizing implementation.

To highlight one example in Los Angeles, the Cornfield Arroyo Specific Plan (CASP) is being undertaken by the Los Angeles Planning Department adjacent to a couple of Gold Line stops. CASP is a great example of the type of collaborative effort that local planning departments can implement. In that project example, the city has taken a large geographic area, looked to rezone, looked to create high density, looked to create a mixed use district that is potentially in the wave of the next development cycle and asked what we could do to support "smart development" and encourage developers to build here. They have gone a step further by working to complete an environmental impact report based upon potential density scenarios that future developers who come into build in that particular area can then tee up and tier off of this master EIR. That will save time and money and the headache of baseless legal challenges. That provides a tremendous amount of clarity.

The other neat aspect of this example is that the Planning Department went out to the community, both the development community and the surrounding residential community, to facilitate a collaborative discussion of density, height, and the like. The community signed on to the level of density that they thought was appropriate. The project area happens to be adjacent to the L.A. River, so if you decide how you set that density out you can do it in a much more elegant way. This is an example of a model that other municipalities should look at on the local level. From the developer perspective it really helps us say, "We understand the time of cost of getting from point A and point B."

The second point I'd like to consider is for streamlined environmental clearance. The focus of some of the CEQA intentions outlined in the SB 375 legislation is a good beginning. However, the hurdles for realizing these exemptions must be achievable to have value and support development of higher density and/or TOD. SB 375 opens the door for reform, but it doesn't go far enough. If any of you are familiar with exemptions outlined in the legislation, you'll agree that there is a lot more that needs to be done.

The third point is funding to support this type of development. Grants are a godsend to developers, both non-profit and for-profit. An example of collaborative effort that has worked in the state of California, notwithstanding the downturn in the economy, is the California Prop 1C bond fund program. This is an example of good funding priorities that help fund infrastructure costs, including parking for catalytic TOD projects in urban core communities, which is the number one cost for the development. Transit oriented development is not just about getting people out of their cars, it's about providing a variety of transit alternatives that reduce vehicle miles traveled (VMT).

A good TOD must include of the right amount parking to be market driven, balance against the right incentive needed to get individual people out of their cars. But parking is a huge impact on a developer's cost. Focusing on those kinds of funding sources to support the cost of TOD is essential. Federal funding programs should try to mimic these programs. They have the ability to offset the construction costs of these non-revenue generating aspects of a project and help achieve a financially feasible project. It's very simple as a developer. My math needs to work. If my math works and I can get a return, I am going to move ahead and do that project. Again, Prop 1C, as a statewide example, is the type of effort that helps us develop in certain areas.

Forest City is a national developer. We have focused on smart development in our core communities for over 35 years. Our experience ranges from a 664-unit mixed use TOD project adjacent to a BART station in Oakland, California, where we are pushing alternative forms of transportation-flex cars, bicycles, and partnering with local farmers for produce delivery to our residence. We also have an example of redevelopment at the old Denver Stapleton Airport, a vibrant mixed-use community-a sustainable community with 25 miles of walking trails, biking trails, and key linkages to other transportation projects. Both of these projects and the majority of our projects are done in conjunction with public agencies-the so called public-private partnership.

We found that the public-private partnerships that result in successful projects are true partnerships, aligning of goals, sharing risk, and providing gap funding to support public benefit and economic development potential when needed. It is in these instances that we've moved forward to transform communities and create places that are vibrant economic engines.

It should be expected that planning and funding decisions take into account the realities of the planning and development environment, including issues of the mixture of entitlements, financing, demand, and timing. To start a major project-be it a private sector project or a TOD project-requires the talent of private development, therefore policy and funding programs should take this reality into account.

Although most TOD projects share national similarities, it is really at the local level that they are unique. To the extent we can provide examples of TOD, there should be a push to give more control to local governments, both for funding and policy priorities, to make sure that TPD projects are making impactful changes at the local level. All politics are local, and all TODs are local as well.