The Tasman Apartments development in San Jose is one of many examples of TOD along VTA routes. Photo courtesy of VTA.

Transit-oriented development (TOD) is not a new idea, but Bay Area bus and rail operators are increasingly pushing the approach because land they own near stations is ripe for creating affordable communities adjacent to job centers.

TODs can incorporate a mix of high-density housing, office, and retail space into a neighborhood that’s within a half-mile of a rail station, ferry terminal, or high-frequency bus line. They benefit transit riders and the community, mixing affordable targets into residential developments and offering close proximity to retail and commercial areas so there’s less need to drive.

To build TODs, public transit agencies like BART and VTA are turning over former parking lots and making other critical land-use decisions that are consistent with regional goals for building around stations. The effort entails greater collaboration with local jurisdictions and developers well-versed in the nuances of low-income housing tax credits. When agencies increase ridership on multi-modal transit systems, they generate revenue to maintain operating costs.

“BART and VTA have taken a particular leadership role by adopting smart policies for encouraging homes for residents across the income spectrum on lands near their stations,” said Matt Vander Sluis, deputy director at Greenbelt Alliance.

The emphasis on improving access to housing, jobs, and transit comes as more residents are considering leaving the region. About 46 percent said they are likely to move out of the Bay Area in the next few years to less expensive locations in states like Texas, Oregon, and Nevada, according to an annual survey by the Bay Area Council, a business-sponsored advocacy organization. That’s up from 40 percent mulling departures in 2017 and 36 percent in 2016.

People are contemplating relocation because of the region’s housing shortage and affordability crisis, the council’s survey found. The rising cost of living is another motivating factor (particularly for low-income families), as well as record traffic congestion that eats up as much as two hours of a worker’s weekday.

Many factors have motivated BART to become more involved in TOD. But one, in particular, was the opportunity to partner with cities in the wake of Governor Jerry Brown’s 2012 decision to eliminate 400 local redevelopment agencies, a move that impeded TOD creation and funding.

“We realized we own some of the most important property and could play a leadership role in helping cities achieve their community investment goals through TOD on BART sites,” said Abby Thorne-Lyman, a TOD program manager for the agency.

But in pursuing housing plans, transit agencies can confront challenges that touch everything from financing and parking replacement to the potential to hurt vulnerable populations and change a community’s cultural identity.

Anecdotal evidence underscores TOD benefits — most important, that it helps limit car-reliant sprawl and contributes to regional traffic and greenhouse gas emission reduction goals. Consider that people are more likely to hop on public transit if they live within half a mile of a centrally located hub. Job sites within a quarter-mile of transit are also often more appealing to workers.

Last summer, the Metropolitan Transportation Commission and the Association of Bay Area Governments adopted Plan Bay Area 2040, which included devising “a strategy for the use of public land proximate to major transit assets to facilitate the development of housing affordable to low- and moderate-income households through conditions and provisions on funding sources.”

“The reality is we need housing in this state,” said Matt Raimi, founder of Raimi + Associates, a planning firm that focuses on healthy, sustainable, and equitable community projects. “We’ve been behind for decades related to our population growth.” While housing production goals were largely met for market-rate units (catering to people earning above moderate income) across the Bay Area between 2007 and 2014, only 28 percent of units allocated for lower income households were issued permits, according to a 2017 study by the Great Communities Collaborative (GCC).

BART’s TOD policy follows U.S. Department of Housing and Urban Development definitions of low and very low income, which can go up to 80 percent of area median income. The transit operator’s portfolio-wide goal is to produce 20,000 residential housing units — 7,000 of which would be affordable — on station-owned property by 2040.

BART has seven “under-construction” projects in its portfolio, one of which will produce 430,000 square feet of office space for Workday World Headquarters at the West Dublin-Pleasanton Station. Another transit village at the MacArthur BART Station is taking shape on a former parking lot and will yield 877 residential units in Oakland’s Temescal neighborhood when all is said and done by mid-2020. Retail space is planned at MacArthur, along with a parking garage.

The seven sites represent the “most under construction at a single time in BART’s history,” Thorne-Lyman said. “We will double the size of the residential portfolio in a matter of years.”

Two Bay Area lawmakers introduced a bill this year that aims to provide more low-income housing options, but it contains zoning provisions being met with mixed views. Assembly Bill 2923 (Chiu) would require BART to adopt TOD zoning standards on agency-owned plots within a half mile of an existing or planned station. It also instructs cities and counties to update their zoning ordinances so they are consistent with BART within two years. Greater alignment will expedite production, according to Michael Lane, policy director at the Non-Profit Housing Association of Northern California, a co-sponsor of AB 2923. “It’s a powerful way to deliver affordable housing,” he said.

But opponents like the American Planning Association’s California Chapter said the measure strips cities of land-use policy control. In a June 25 position letter the 5,000-member nonprofit contended, “The bill gives every incentive for BART to maximize its land value regardless of the impacts on surrounding properties.”

In late May, Berkeley’s city council voted to oppose the bill due to zoning authority concerns, joining other East Bay municipalities like Lafayette, Concord, and Hayward. The bill is currently still under consideration by the legislature.

In the meantime, BART is finding new ways to help production time and value. The agency has discovered that factory-built housing can cut an estimated 40 percent of construction time. All 200 of the affordable units at the San Leandro BART Station are factory-built, making it the largest such affordable housing project on the West Coast, Thorne-Lyman said.

VTA provided an update on developing land near its stations during a May webinar, projecting its overall development potential at over 5,000 units, with about 40 percent being affordable. The transit operator counts 25 sites in its joint development portfolio, spread as far north as Mountain View and Milpitas, and then down to Gilroy. Most of the sites are VTA light rail station lots, but a handful are Caltrain, too. One of them, Evelyn Light Rail Station, will be “100 percent affordable housing,” said Jessie O’Malley Solis, a VTA senior real estate agent, during the webinar.

“Our goals are to create long-term stable revenues to help supply revenue for our service and create community assets, including affordable housing,” she said. “We’d like to utilize TOD to enhance transit ridership and infrastructure.”

Additionally, VTA expects to create about 4.3 million square feet of commercial space through TODs, resulting in 13,000 jobs. Caltrain is also getting on board with TOD, and laid out initial aspects of its planning process in early June during a regular board meeting.

Even as agencies lay out plans and begin construction, limited funding and financing for affordable housing production remain challenges to transit-oriented transformations. BART, for example, is short about $36.5 million annually (beyond existing funding sources) to bring to fruition its high-density housing goals. Some affordable housing allocations will be delivered via additional bridge toll revenue from the recently passed Regional Measure 3. And selected proceeds from the California Air Resources Board’s cap-and-trade program are being directed at TOD projects, including Laurel Grove Family Apartments, which are adjacent to San Jose’s Diridon Station. But overall, the Bay Area lacks regional grants to subsidize affordable housing production, according to the GCC.

Funding woes, coupled with some residents’ tendency to be concerned about TOD creation in their neighborhoods, can make it difficult to understand how transit hubs and communities could eventually come to co-exist.

Oakland’s Fruitvale Transit Village, a predominately Latino neighborhood, is often cited as a model of why TOD works. Phase I, constructed on a former BART parking lot, opened in 2004 as a mixed-use project with 47 units. Ten of those units are affordable to Bay Area residents whose household income is at or below 50 percent of the area median income.

Fruitvale also is distinct because it successfully incorporated housing and other elements like public art, plazas, and office space for nonprofit organizations into an established, ethnically diverse community without compromising the neighborhood’s context or character, according to Raimi.  “When we make changes in lower-income neighborhoods around transit, it could have implications for gentrification, and we want to make sure changes that are happening are not displacing people,” he said.

By some measures, Fruitvale has avoided such outcomes. Researchers from UCLA’s Latino Policy and Politics Initiative said in a March report that between 2000 and 2015 the transit village experienced “substantial increases” in homeownership and household income. More residents graduated from high school and earned bachelor’s degrees. All the while, the transit village’s Latino population remained largely unchanged.

Cities should consider Fruitvale a case study for “positive community transformation,” according to the report. The transit village provides “insight into how TOD, coupled with positive community-based intervention, can improve the economic and social well-being of residents without resulting in displacement.”

Cecily O’Connor covers transportation for the Monitor.