June 27, 2021 Adam Jancsek

The Importance and Potential of Transit Oriented Development


Transit and housing are inextricably linked. However, in most of the United States, including the Bay Area, public transit cannot live up to its full potential due to a variety of policy decisions over the past half century that have eroded funding.


The public demands better reliability and service from public transportation, yet often votes against measures that would help fund such goals. The COVID-19 pandemic has amplified these budgetary shortfalls. Transit agencies across the country are facing huge deficits, with ridership numbers still at a fraction of pre-COVID levels. One of the most promising concepts to bolster ridership and improve agencies’ finances is Transit Oriented Development (TOD), which maximizes residential and commercial space in areas with existing public transportation. In many cases, transit agencies own land adjacent to stations and lines, currently in the form of parking lots, which are an inefficient use of land and provide transit authorities with little revenue. TOD maximizes housing near job centers, is environmentally-friendly, and presents a possible economic opportunity for transit agencies struggling to find revenue sources. 


TOD History

The history of TOD is rooted in 20th century city planning. Before the advent of trains and cars, people lived next to or close to their workplace, as transportation was obviously limited. The electric streetcar eventually changed the way cities could develop because people were no longer limited by living within walking distance of work. By 1907, only 20 years after the first electric streetcar began service in the United States, there were over 34,000 miles of track in American cities. (1) Streetcars connected existing portions of cities and also extended beyond, initiating the development of new “streetcar suburbs.” These ranged from single to multi-family home neighborhoods, but were generally denser overall than later suburbs built around the automobile. Car ownership was still low, so the streetcar was the dominant mode of urban transportation. In San Francisco, the private Market Street Railway operated on over 280 miles of track in 1929, and competed with the public San Francisco Municipal Railway (MUNI). (2)


The rise of the automobile brought the streetcar era to an end. While streetcars were convenient and cheap, they required a two man crew and were federally mandated to keep fares low. By the 1930s, the vast majority of streetcar companies were losing money. The personal car also allowed families to move even further away from cities, to where even streetcars did not serve. Families fled to new suburbs that promised more space. Streetcars became a relic of a bygone era, and federal funding reflected this change. 


Enacted in 1956, the Federal Highway Act was the largest public works project ever, responsible for 46,000 miles of interstate highway. It also catered to automobile manufacturers like Ford, who had argued for years that roads were a public interest that should be publicly funded. (3) In fact, Dwight Eisenhower’s Secretary of State, Charles E. Wilson was the former CEO of General Motors. Previously, private streetcar companies built roads in exchange for long-term profits, while most other roads were not even paved. This was the first national transportation alternative to boat or rail service, and finally made car travel outside cities practical. 


The Federal Highway Act ultimately allowed suburban development to accelerate, and drove a nationwide “white flight” from cities to suburbs. Locally, cities tore up streetcar lines, instead of catering streets and highways to suburban commuters. (4) Only a handful of American cities preserved their streetcars, and this was mostly out of necessity. San Francisco and Pittsburgh only kept lines that went through tunnels and would make a conversion to automobiles too costly and impractical.


San Francisco, like many cities, replaced its streetcar lines with the bus routes we know today. Yet despite San Francisco’s comprehensive transit grid, MUNI ranks as the slowest public transit in the United States. (5) This is in a city whose populace utilizes public transit at double the average of other large American cities. So if San Franciscans drive less and take the bus more, why is MUNI so slow? There are numerous factors at play, including MUNI vehicles breaking down more than at comparable agencies, but the main one is simple: Roads are more clogged with cars than ever before. The U.S. is now a suburban nation, and that has fundamentally changed the way we travel. In virtually every large metropolitan area, a greater percentage of the population lives in suburbs, not cities. Rust Belt cities have consistently lost residents, yet their suburbs continue to grow. Metro Detroit’s population swelled to over 5.3 million people in 2019, for example, yet the city’s population of about 670,000 represents a 61% decline from the 1950 census, when over 1.8 million people lived within the city proper. In that same year, Metro Detroit counted 3.2 million residents, meaning more than half of them lived in the city itself. (6) 


The Bay Area didn’t suffer the same economic decline as Detroit, and San Francisco’s current population is the largest ever. Even so, the trends are the same. Roads are congested, slowing down public transit operating on surface streets. Instead of building more within the urban core, where people could live car-free, we have continually extended the suburbs farther and farther away. These new suburbs, called exurbs, generally have even less transit than older suburbs. In the Bay Area, only 5.9% of people living in exurbs use transit to commute, compared to 11% of inner ring suburban dwellers. (7) It’s no wonder, then, that in the nation’s 53 largest metropolitan areas, 60% of daily commuters on public transit lived in the urban core even though they only make up approximately 15% of the population.


Environmental and Health Hazards of Urban Sprawl

Climate change is making long commutes untenable in the long run. California in particular has set high climate goals. Enacted in 2016, Senate Bill 32 set target levels of GHG emissions to be 40% below 1990 levels by 2030. (8) To meet these goals, Governor Newsom announced that California will transition away from gasoline powered vehicles by 2035. (9) However, Californians will have to do more than just switch to electric. Personal cars are the state’s largest emissions culprit, and research conducted in 2018 shows that Californians are driving more than ever, with car ownership still outpacing population growth. (10) A mere switch over to electric vehicles, while still driving at the same rates, means California would still be prioritizing space for gasoline powered cars. Realistically, these cars will not disappear for years after 2035. Additionally, electric vehicles still produce emissions through the process of being charged. California set the goal of a carbon-neutral power grid by 2045, (11) but until that point, an electric or hybrid vehicle will contribute between 3.5 and 12.2 pounds of carbon dioxide each day, depending upon the time of day it’s charged and the energy source of the local electricity grid. (12) This is less than the average of 13 pounds per day from a gasoline powered vehicle, but still not enough to meet the state-mandated target. California will need to somehow decrease the number of people enduring long commutes to combat climate change. Additionally, many of these new housing developments in far-flung locales are within the wildland-urban interface, meaning they are at elevated risk of wildfire. Besides the expensive reality of California’s housing shortage, the environmental consequences of long commutes and building in wildfire zones means that we cannot keep building outward forever. (13)


The detrimental environmental impact of car-centric infrastructure extends beyond CO2 emissions as well. Cars are a main contributor toward a variety of chronic health problems. Research indicates that people living near highways are at elevated risk for long term respiratory problems due to car exhaust, with children being the most vulnerable. (14) The California Air Resources Board recommends living beyond 500 feet away from a highway, and the Los Angeles City Council recommends 1,000 feet. (15) California state law prohibits building schools within 1,000 feet of a freeway. Due to the government policy of using highway construction as a tool to physically segregate or destroy communities of color, the people most likely impacted by the health hazards of living near highways are people of color. (16) This is both a major health and equity problem in the Bay Area and the country as a whole. If we continue to develop homes and roads around the personal car, the harmful effects on the environment and on people within our communities will only worsen.


Economic Benefits of TOD

In addition to the environmental benefits of building housing near jobs, TOD presents economic opportunities for transit agencies that lack federal funding, and are forced to heavily rely on fare revenue. BART, for example, has historically relied on fares for about 70% of its revenue. The COVID-19 pandemic exacerbated these problems. In April 2020, BART ridership bottomed out at less than 10% of pre-COVID levels. That number has slowly risen to 13%, but BART is planning for ridership to not exceed 40% of pre-COVID numbers at the end of 2021. (17) MUNI’s decline was similar but less drastic. From a low of around 15% of pre-COVID ridership numbers, they have rebounded to 30%. (18) The economic fallout from COVID-19 has transit agencies facing unprecedented deficits. Many own land adjacent to stations or track, and that land could be productively used for homes.


Across the country, transit authorities are implementing formalized TOD guidelines. The Washington Metro Area Transit Authority (WMATA) in Washington, D.C. has similar ridership and mileage numbers as BART and faces a budget shortfall of around $200 million. (19) In its TOD outline, WMATA states that it prefers ground leasing as opposed to selling land because of the long term financial revenue it brings. They do not have affordability goals and defer to local guidelines. (20) Seattle’s Sound Transit Authority is committed to high affordability levels, offering 80% of its TOD units to those making 80% or less of the area median income. (21) Sound Transit has built over 2,100 homes using this policy. Atlanta’s MARTA committed to 20% affordability across its TOD portfolio in 2010. (22) Others, such as MBTA in Boston and SEPTA in Philadelphia, are developing land for TOD, but do not have definite affordability, density, or land use goals. Across the country, transit authorities are beginning to define their goals in developing housing. While the details differ, they all see TOD as a way to increase value in their system and increase ridership. 


BART has been a leader in TOD in the Bay Area since the 1990s. BART’s first TOD project was a 100% affordable, 96 unit development built on BART owned land adjacent to the Castro Valley station in 1993. Since then, 3,000 homes have been built on BART land across the Bay Area, 28% of which is affordable. (23) BART’s goal is to have 35% of its homes be subsidized affordable, with that number increasing in high opportunity areas, such as the inner East Bay. Over 50% of BART ridership earns less than 50,000 dollars per year, so keeping housing costs affordable for low-income people also ensures those most likely to ride are living right next to a station. BART leases its land at a significant discount, typically around 30%, but up to 60% for developers committed to building with high affordable housing percentages. Though this may lessen actual revenue, BART leadership understands that without equity in their TOD, ridership suffers. 


So how much money does BART actually gain from TOD, and can that significantly ease its deficit? That’s currently a difficult question to answer. Most of the money that BART has already made from ground leases goes right back into infrastructure upgrades. Leadership’s ballpark estimate puts BART’s net income from TOD ground leases at $6 to $8 million dollars. That will not put much of a dent in BART’s deficit, but the outlook is not all bad. BART projects an increase of 20,000 daily riders from TOD by 2040. That is a significant number of people who will rely on BART for daily transportation, even in a crisis like a pandemic. TOD’s benefits for BART are long term in that it will help build system resiliency in times of crisis. BART sees the importance of TOD in its long term economic success, which is why BART’s TOD team was not affected by budget cuts during the pandemic. (24) Other transit agencies also see TOD’s chief economic benefit as increasing ridership, more so than actual revenue from the buildings themselves.


The benefits of TOD also address a variety of California’s most pressing problems. By increasing transit ridership, TOD will help bolster transit agencies’ service, reducing the negative environmental effects of car-dependency. While cars will not magically disappear, reimagining who and what our built environment prioritizes is essential in reducing our reliance on private automobile use. TOD is not a panacea towards transit authorities fully recovering from severe deficits, but it is one of the most necessary, practical, and efficient ways to help do so. And with ridership heavily concentrated among lower-income populations, TOD’s ability to improve public transit demonstrates impactful equity benefits that extend beyond just the affordable percentage of individual projects. Developing transit-adjacent land into dense, thriving communities can and will help address our crippling housing shortage in an equitable and environmentally-focused way because homes will increase ridership and create system stability. As the Bay Area confronts its housing shortage, TOD on transit agency owned land can and must play an important role in shaping how our region responds.



  1. Konvitz, Josef W. (1987). “Patterns in the Development of Urban Infrastructure”. American Urbanism. Greenwood Press: 204.
  2.  O’Shaughnessy, Michael (May 1929). Report on the street railway transportation requirements of San Francisco with special consideration to the unification of existing facilities (Report). City and County of San Francisco Department of Public Works. Retrieved October 30, 2018.
  3.  https://www.history.com/topics/us-states/interstate-highway-system
  4. https://www.vox.com/2015/8/10/9118199/public-transportation-subway-buses
  5. https://www.sfgate.com/travel/resources/transit/article/public-transit-muni-bad-worst-slow-bart-bus-13111924.php
  6. 2018 Population Estimates. United States Census Bureau, Population Division. April 18, 2018. Retrieved April 18, 2019.
  7. https://www.newgeography.com/content/006495-distribution-transit-work-trips-urban-core-vs-suburbs-and-exurbs
  8. https://clear.ucdavis.edu/explainers/how-california-working-reduce-greenhouse-gas-emissions
  9. https://www.gov.ca.gov/2020/09/23/governor-newsom-announces-california-will-phase-out-gasoline-powered-cars-drastically-reduce-demand-for-fossil-fuel-in-californias-fight-against-climate-change/
  10. https://www.govtech.com/fs/study-california-has-work-to-do-to-meet-its-emissions-goals.html
  11. https://insights.som.yale.edu/insights/californias-path-to-carbon-neutral-grid
  12. https://afdc.energy.gov/files/u/publication/ev_emissions_impact.pdf
  13. https://www.mercurynews.com/2021/06/05/bay-area-home-prices-top-1-million-in-april/?utm_email=3513C5F444712436646694F069&utm_source=listrak&utm_medium=email&utm_term=https%3a%2f%2fwww.mercurynews.com%2f2021%2f06%2f05%2fbay-area-home-prices-top-1-million-in-april%2f&utm_campaign=bang-mult-nl-full-house-nl&utm_content=curated
  14. https://www.lung.org/clean-air/outdoors/who-is-at-risk/highways
  15. https://www.latimes.com/archives/la-xpm-2007-sep-24-me-freeways24-story.html
  16. Rothstein, Richard. The Color of Law, 2017.
  17. https://www.bart.gov/sites/default/files/docs/10.22.20%20FY21%20Budget%20Outlook_Final%20for%20Posting%2010.16.20.pdf
  18. https://www.sfmta.com/reports/muni-ridership
  19. https://www.bart.gov/about/business/tod
  20. https://www.wmata.com/about/news/Proposed-FY21-service-changes.cfm
  21. https://www.soundtransit.org/system-expansion/creating-vibrant-stations/transit-oriented-development
  22. https://itsmarta.com/uploadedFiles/More/Transit_Oriented_Development/MARTA-TOD-Implementation-Policies-Adopted-Text-November-2010.pdf
  23. https://www.wmata.com/business/real-estate/upload/Joint-Development-Program-Guidelines-1.pdf
  24.  All BART information from interview conducted on April 28, 2021 with Abigal Thorne-Lyman, TOD Program Manager at BART


Stay Up to Date

Get weekly updates with housing news, HAC updates, and more!