Better Coordination of Transportation and Housing Programs to Promote Affordable Housing Near Transit

by HUD USER

Better Coordination
of Transportation
and Housing Programs
to Promote Affordable Housing Near Transit
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A Report to Congress
from the
U.S. Department
of Transportation
Federal Transit
Administration
and the
U.S. Department
of Housing and Urban
Development

www.fta.dot.gov
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FTA-HUD Affordable Housing-Transit Plan August 2008
Better Coordination
of Transportation
and Housing Programs
to Promote Affordable Housing Near Transit
A Report to Congress
from the
U.S. Department of Transportation
Federal Transit Administration
and the
U.S. Department of Housing and Urban Development

Federal
Administration
Aflordable
Tramit.
fiuther
Simpson kJf +
U.S. Department
Of Transportation
Transit
Administration
September 9,2008
The Honorable John W. Olver
Chairman, Subcommittee on Transportation, Housing
and Urban Development, and Related Agencies
Committee on Appropriations
U.S. House of Representatives
Washington, DC 205 15
Dear Mr. Chairman:
The Federal Transit (FTA) and the Department of Housing and Urban
Development (HUD) are pleased to submit a joint report entitled Better Coordination of
Transportation and Housing Programs to Promote Housing Near Transit to the
House and Senate Committees on Appropriations. This report is in response to the directive in
the Joint Explanatory Statement accompanying the Fiscal Year (FY) 2008 Consolidated
Appropriations Act (Pub. L. 110-161).
The report outlines strategies developed by FTA and HUD to continue and expand
coordination in the area of mixed-income and affordable housing near transit over a 3-year
period (FY 2008 - FY 20 10). The report is a follow-up to recommendations made in the April
2007 joint FTA and HUD study entitled Realizing the Potential: Expanding Housing
Opportunities Near
Please do not hesitate to contact us if we can be of assistance.
Sincerely,
es S.
Administrator Secretary
Federal Transit Administration Department of Housing and
Urban Development
Enclosure

FTA-HUD Affordable Housing-Transit Plan August 2008
?

This report responds to the Joint Explanatory Statement
issued by the House-Senate Conference Committee with the
FY 2008 Consolidated Appropriations Act. Congress has
directed FTA and HUD to continue expanding their work in
the area of mixed-income and affordable housing and transit
as follows:
The conferees direct FTA and HUD [to] develop a best
practices manual which will serve to assist communities
as they seek to establish mixed-income transit-oriented
development. FTA and HUD should also jointly
report back to the House and Senate Committees on
Appropriations within six months of enactment, on new
ways FTA and HUD can better coordinate transportation
and housing programs to promote affordable housing near
transit.
2

This report outlines strategies developed by FTA and HUD for
the planning and implementation of this task over three years
(FY 2008 – FY 2010).
2 FY 2008 Consolidated Appropriations Act, Publ. L.
110-161, Joint Explanatory Statement, December 26, 2007.
Introduction
Transit-oriented development (TOD) is increasingly
recognized as having the potential to improve the quality
of life for American households, by creating vibrant, livable
communities in proximity to transit. Improved access to
transit can reduce transportation costs for working families
and mitigate the negative impacts of automobile travel on the
environment and the economy.
The need for a mix of housing types that is affordable to
a range of family incomes in proximity to transit is an
important policy concern at all levels of government, including
the federal government. Through its policies and investments,
the federal government can help shape opportunities at the
regional and local level to meet the growing demand for
affordable housing near transit.
Congress has directed the Department of Housing and Urban
Development (HUD) and the Federal Transit Administration
(FTA) to address this issue. The House Committee on
Appropriations, in its Fiscal Year (FY) 2008 Committee
Report, stated that “the Committee strongly believes that
transportation, housing, and energy can no longer be
viewed as completely separate spheres with little or no
coordination throughout the different levels of government,”
and has directed FTA and HUD to “better coordinate public
transportation and housing policies and programs. Better
planning and coordination on the federal, state and local
levels can ensure that affordable housing is located closer
to public transportation and employment centers.”
1
The
Committee also indicated that “the preservation of affordable
housing should become an integral part of transit-oriented
development policies.”
1 House Report 110-238 to the “Departments of Transportation, and Housing
and Urban Development, and Related Agencies Appropriations Bill, 2008,”
July 18, 2007.

FTA-HUD Affordable Housing-Transit Plan August 2008
?
Background
On average, Americans spend 5? percent of their incomes
on housing and transportation. The average American
household spends approximately ?8 percent of its annual
income on transportation – and lower-income families spend
as much as ?? percent.
?
For lower-income families, rising
transportation costs present a particular burden, with oil
prices surpassing $?00 per barrel and gasoline prices exceeding
$4 per gallon. In some metropolitan areas, households spend
nearly as much on transportation as on housing.
One approach to lowering the combined cost of housing and
transportation is to expand housing opportunities adjacent
to transit. TOD presents unique opportunities to create
housing in proximity to public transportation, and to address
zoning, land use and financing issues that affordable housing
developers typically encounter when developing mixed-
income housing projects.
Transportation and Housing
A ?004 study commissioned by FTA estimates that the
demand for housing near transit will increase to ?4.6 million
households by the year ?0?0, more than double the six million
households that currently reside within a half mile of transit.
4

There are several examples of linkages between housing and
transit aimed at capturing this demand. An early example
is the BART Fruitvale Station in Oakland, California,
where a HUD-funded senior housing project anchored
the entire development. San Francisco’s Metropolitan
Transportation Commission’s Housing Incentive Program
provides additional funds to transit agencies as an incentive
to build housing within a quarter of a mile from the transit
station, using Federal Congestion Mitigation and Air
Quality (CMAQ) program funds. California includes
points for TOD in its allocation of Low Income Housing
Tax Credits. In addition, cities that are developing new fixed
guideway (rail and bus rapid transit) systems or extensions,
such as Denver, Colorado, Portland, Oregon, and Phoenix,
Arizona, encourage development around their new stations.
Particular emphasis is placed on providing a broad mix of
3 Realizing the Potential: Expanding Housing Opportunities Near Transit,
Center for Transit Oriented Development, April 2007.
4 Hidden in Plain Sight: Capturing the Demand for Housing Near Transit,
Center for Transit Oriented Development, September 2004.

FTA-HUD Affordable Housing Plan August 2008
4
commercial, residential and retail uses, pedestrian-scale
approaches to stations, and station-area development plans
coordinated with existing neighborhoods. Also, Atlanta’s
Livable Communities Initiative is an innovative example of
regional action to stimulate housing development adjacent
to transit.
Although not as easy to accomplish as with a fixed guideway
rail or bus system, joint development can also jumpstart
TOD along non-fixed guideway bus routes.
5
The Linden
Transit Center in Columbus, Ohio, is an example of a
partnership between the Central Ohio Transit Authority and
community development groups to establish a multi-purpose
transit center that serves as the catalyst for the revitalization
of the South Linden neighborhood. This neighborhood
redevelopment project, in addition to providing affordable
housing, has helped retain a local factory, thereby preserving
jobs within the community as well.
A ?004 Transportation Research Board study found,
“The state of practice with TOD in the United States is
generally a healthy one.”
6
Local governments, redevelopment
authorities, regional planning organizations, and even
public transit agencies have, over time, accumulated an
arsenal of tools and techniques to get the job done. However,
many challenges still remain, including how to achieve the
appropriate mix of uses, the density required to achieve the
locational and transportation benefits, and the level or type of
transit service necessary to serve TOD.
The focus of this report is on how TOD can address the
need for housing that serves an array of incomes. More
specifically, how can the increased property and land values
generated by public investment in transit be captured to assist
in the provision of critically-needed mixed-income housing?
Developing mixed-income housing near transit presents
several significant challenges. Primary among these is
typically the high land cost that results from the market
demand for housing, office space, and amenities within
walking distance of transit. This means that attracting
or supporting mixed-income housing as a significant
component of TOD will require incentives or policy tools
that ensure that housing is available for all income groups.
Other challenges include: zoning and other regulatory
5 FTA Livable Communities Paper, 1997.
6 Transit Cooperative Research Program Report 102, Transit-Oriented
Development in the United States: Examples, Challenges, and Prospects,
Transportation Research Board, 2004.

FTA-HUD Affordable Housing-Transit Plan August 2008
5
Previous Interagency Efforts
Over the past five years, HUD and FTA have explored
opportunities to coordinate housing and transportation
planning and investment decision-making. A June ?00?
roundtable hosted by the National Academy of Sciences
focused on possible data sharing and development of
geographical information systems (GIS) by the two agencies.
Following the roundtable, HUD and FTA entered into a June
?005 Interagency Agreement (IAA) to help communities
realize the potential demand for transit-oriented housing.
The IAA was aimed at closing the gap between the projected
demand for housing near transit in particular metropolitan
regions, and realizing the development of that housing in
proximity to new or existing transit corridors in these regions.
The IAA provided support for a study completed in April 

?007 entitled Realizing the Potential: Expanding Housing
Opportunities Near Transit
8
. Conducted by Reconnecting
America’s Center for Transit Oriented Development, the
study included case studies of transit corridors in five
cities: Charlotte, North Carolina; Minneapolis-St. Paul,
Minnesota; Portland, Oregon; Boston, Massachusetts; and
Denver, Colorado. Underutilized land that was potentially
suitable for development was mapped in these locales. The
study included a number of recommendations for improved
coordination between FTA and HUD, as well as strategies at
the State, regional, and local levels.
8 Reconnecting America, Realizing the Potential: Expanding Housing Oppor-
tunities Near Transit, April 2007. Available at www.reconnectingamerica.org.
barriers to affordable housing; the added complexity of joint
development projects involving transit agencies, private
investors, and other public authorities; and the preservation
of existing affordable housing in the face of upward pressure
on housing prices.
The actions described in this report are intended to address
three separate but related facets of the housing challenges
near transit:
?. Expand mixed-income and affordable housing
choices in the immediate proximity of new and
existing transit stations. With a growing number of
transit stations funded through FTA’s capital programs,
there is a need to develop new approaches to financing
affordable housing within a walkable, half-mile range
of transit stations, including state and local targeting
of housing subsidies such as Low Income Housing
Tax Credits, state bond financing proceeds, and rental
assistance, as well as the potential use of innovative
mortgage finance techniques, such as location-efficient
mortgages.
?. Develop a more comprehensive approach to
address household expenditures on housing
and transportation. It is becoming increasingly
apparent that housing location choices affect household
transportation expenditures. Increasingly, families have
found that while affordable housing could be found
further out in suburban or exurban locations, often
without good access to transit, this housing comes at the
expense of higher transportation costs. A more flexible
approach to financing and underwriting housing that
recognizes the associated cost of transportation may be
needed.
?. Preserve existing affordable housing. A recent
study showed that there are a significant number
of HUD-assisted properties that have expiring use
mortgages in close proximity to transit.
7
The preservation
of these and other federally-subsidized housing units
within walking distance of transit stations are an
important element of a mixed-income, transit-oriented
housing strategy.
7 National Housing Trust and Reconnecting America, Preserving Opportuni-
ties: Saving Affordable Homes Near Transit, 2007, documented 100,000 expir-
ing use units in proximity to transit in eight cities, including 23,000 Section 202
senior housing units.

FTA-HUD Affordable Housing-Transit Plan August 2008
7
Proposed Actions
Building on previous efforts, and in response to Congress’
direction, the following strategies are new ways that FTA
and HUD can better coordinate transportation and housing
planning and programs to promote affordable housing
near transit:
Federal Interagency Working Group
?. Implement Joint FTA/HUD Working Group.
As directed by Congress, FTA and HUD have established
an Interagency Working Group to coordinate activities
between the two agencies. The Working Group meets
quarterly to coordinate FY ?009 and subsequent research
activities; monitor development of a Transportation-
Housing Affordability Index and its possible application
to specific projects, programs, or policies; identify
outreach opportunities for coordination of programs or
housing and transportation planning; develop ongoing
action plans; and provide input into joint products.
The Working Group was initially convened in October
?007 by members of both HUD and FTA headquarters
offices. Membership includes representatives of the
following HUD offices: the Office of Community
Planning and Development, which oversees HUD’s
consolidated planning requirements; the Office of
Policy Development and Research, which has sponsored
previous joint research with FTA on housing and TOD;
and the Office of Public and Indian Housing and the
Office of Housing, both of which manage or finance
a significant volume of mixed-income or affordable
housing. FTA is represented by: the Office of Planning
and Environment, which oversees FTA’s transportation
planning requirements; the Office of Budget and Policy,
which has sponsored previous joint research with HUD
on housing and TOD; the Office of Program Manage-
ment, which oversees FTA’s grants programs; and the
Office of Chief Counsel, which provides legal advice on
TOD. HUD field and FTA regional office representatives
will be included in the Working Group in the future.
Best Practices Manual
?. Develop a Best Practices Manual for mixed-
income housing near transit. As directed by
Congress, HUD and FTA will prepare a best practices
manual on mixed-income housing and TOD. The manual
will provide guidance for local officials on successful
strategies for implementing mixed-income housing
near transit. The manual will communicate promising
initiatives, practical methods for overcoming common
regulatory barriers, and successful tools for joint or
coordinated housing and transit planning. Case studies
of successful mixed-income housing near transit, lessons
learned, and a compilation of principles and strategies
used will be included to motivate and guide local
communities in developing their own projects.
The manual will be completed and published in FY ?009.
Outreach and Capacity Building
?. Identify opportunities for joint outreach to
housing and transit providers and stakeholders.
HUD and FTA will develop an outreach plan that
identifies opportunities for engaging stakeholder groups,
as well as venues, for advancing the joint program
to both housing and transit providers. The plan will
outline conferences, symposiums, and workshops where
joint presentations can be made to diverse transportation
and housing audiences. These sessions will present best
practices, resources available for technical assistance and
project development, projects that can be easily replicated,
and other tools that can be utilized to better coordinate
transportation and housing programs and projects.
The outreach plan will also identify training opportunities
that can provide insight into the relationship between
transportation, land use, economic development, and
affordable housing, through webcasts, National Transit
Institute curricula and other options. The HUD-FTA
Working Group will collaborate with industry partners
to promote these outreach and training opportunities
through a variety of media.

FTA-HUD Affordable Housing Plan August 2008
8
4. Conduct briefings and workshops for FTA and
HUD staff. HUD has 8? field offices and FTA has ?0
regional and five metropolitan offices responsible for
implementation of programs and services across the
Nation. HUD and FTA will convene teleconferences with
their field and regional staff to facilitate coordination of
FTA and HUD activities at the local level. The purpose
of these sessions will be to expand awareness of regional
FTA and HUD staff of their respective programs and
activities, and to improve coordination and delivery of
joint projects and services.
5. Enhance capacity building program(s). FTA will
include mixed-income housing development near transit
as a specific focus of the joint FTA/Federal Highway
Administration Transportation Planning Capacity
Building program, as part of its continuing technical
assistance to transit providers, public officials, and other
stakeholders. HUD provides technical assistance through
the HOME Investment Partnerships or Community
Development Block Grant (CDBG) programs. The two
agencies will explore opportunities for utilizing these
programs in integrating Federal transportation and
housing planning and program requirements.
To support these activities, HUD and FTA will share
information and links on their respective websites to provide
a clearinghouse of resources and information for promoting
mixed-income housing near transit. The websites would
provide links to pertinent documents and resource agencies,
as well as contain materials developed by the two agencies
(e.g., workshop presentations, guidance).
Regulatory Barriers
6. Identify regulatory barriers to housing near
transit. HUD and FTA will identify regulatory barriers
to the coordination of HUD and FTA investments in
projects adjacent to or near transit. This will be done
on two levels: first, barriers that might exist in HUD
and FTA’s own regulations; and, second, state and local
regulatory barriers to joint development and TOD.
At the Federal level, barriers might include inconsistent
planning requirements between HUD’s Consolidated
Plan and the Department of Transportation’s (DOT)
metropolitan and statewide planning requirements,
or concerning possible restrictions on FHA mortgage

FTA-HUD Affordable Housing-Transit Plan August 2008
9
insurance for mixed-use development. Examples
of barriers at the state and local levels may include:
zoning codes that are overly restrictive, restrictions on
density allowances, parking requirements, burdensome
permitting requirements, complex or duplicative
planning processes, or outdated rules covering real
property disposition.
FTA and HUD will first invite experts from both the
housing and transportation industries, along with
stakeholders, to participate in a roundtable panel
discussion to identify common barriers. This will be
followed by an FTA-HUD sponsored white paper on
barriers to improved coordination, as well as possible
public policy solutions. Finally, topics for future research
will be identified that contribute to the knowledge base on
overcoming barriers to improved land use, housing, and
transportation planning at all levels of government.
These efforts to identify and review State and local
regulations are supportive of HUD’s priority of reducing
barriers to affordable housing through HUD’s Affordable
Communities Initiative, as well as of FTA’s broader
community development goals.
Joint Regional/Metropolitan Planning
7. Improve coordination of housing and
transportation planning through HUD’s
Consolidated Plan and DOT’s Transportation
Planning requirements, and other mechanisms.
Both HUD and FTA require local communities to
prepare long- and short-range plans as a requirement for
receiving Federal housing and transportation funds.

•
HUD requires states, cities and counties to prepare a
five-year Consolidated Plan and a one-year Action Plan
that together identify long-range housing needs, as well
as short-term funding priorities for HUD’s formula
grant programs.
9
Guidance provided to grantees
on metropolitan/regional connections includes the
following:
Clear connections should be established between
communities, neighborhoods, and the larger
metropolitan region. Does the jurisdiction’s strategic
or comprehensive plan connect its actions to the
9 Community Development Block Grant (CDBG), HOME Investment Part-
nership programs, and Emergency Shelter Grants (ESG).
larger economic strategies for the metropolitan
region? Does the plan reference the plans of other
agencies that have responsibilities for metropolitan
economic development, transportation, and workforce
investment?
In addition to the Consolidated Plan, public housing
authorities (PHAs) prepare a PHA Plan that could
also address transportation. The PHA Plan is a
comprehensive guide to PHA policies, programs,
operations, and strategies for meeting local housing needs
and goals. There are two parts to the PHA Plan: the
Five-Year Plan, which each PHA submits to HUD once
every fifth PHA fiscal year, and the Annual Plan, which is
submitted to HUD every year.

•
DOT requires metropolitan areas to develop a ?0-year
Metropolitan Transportation Plan and a four-year
Transportation Improvement Program (TIP); states
are required to develop a Long-Range Statewide
Transportation Plan and a four-year Statewide
Transportation Improvement Program (STIP).
Together, these documents identify transportation
projects proposed for development over both long
and short time frames. Metropolitan planning
organizations (MPOs) also are required to prepare,
over a one- or two-year period, a Unified Planning
Work Program that describes the planning activities
for undertaking that work. Preparation of these plans
and programs is required to be collaborative and
coordinated with state and local land use, growth, and
economic development plans.
Coordination between the plans required by HUD and
DOT could result in improved leveraging of housing
and transportation funds, and in more effective
strategies for addressing metropolitan area housing
and transportation needs. These include preservation
of expiring-use multifamily properties near transit,
and prioritizing funding for affordable housing near
transit facilities. Similarly, in preparing transportation
plans and programs, state and local officials could
assign a higher funding priority to transit investments
that serve mixed-income communities with affordable
housing. At the same time, different jurisdictions and
time frames for submission of the Consolidated Plan,
of metropolitan area TIPs, and of state STIPs present a
significant challenge to enhanced coordination.

FTA-HUD Affordable Housing Plan August 2008
?0
Actions to be explored by HUD and FTA may include:
(?) encouraging collaboration of MPOs or regional
councils of government with local transit providers
and housing and community development agencies,
(?) identifying demonstration projects, and (?) pro-
viding better guidance on coordinated housing and
transportation investments for Consolidated Plan, TIP,
and STIP submissions. In addition, HUD and FTA
plan to support the development of a model regional
housing-transit plan that can provide a template for other
jurisdictions.
Policy Analysis, Research and
Development
8. Identify opportunities for joint research and
development and policy analysis. HUD and FTA
will annually identify possible topics for joint research,
including but not limited to the following:

•
Land use and place-based analysis to link housing
and transportation planning (including TOD),
aligning the consolidated planning and metropolitan
transportation planning processes, and developing
demonstration projects.
•
Development of alternative tools, techniques, and
methods for addressing housing and transportation
(e.g., an affordable housing-transportation index that
reflects combined household expenditures on housing
and transportation).

•
Bridging the gap between local and regional
scales in data collection, analysis, and information
dissemination, including the development of user-
friendly analytic tools and capacity building for
the development of local area cadastral databases
(computerized maps of property boundaries).

•
Improving the use of geographical information systems
(GIS) to support mixed-income housing near transit,
including refining techniques for identifying and
mapping underutilized parcels that may be suitable
for housing development, and/or ongoing mapping
of expiring use properties within close proximity to
transit.

FTA-HUD Affordable Housing-Transit Plan August 2008
??
•
Joint research into the relationship between household
expenditures on housing and transportation, to better
understand the inverse relationship that can exist
between affordable housing and transportation costs as
a share of household expenditures.

•
Monitoring and assessing the effectiveness of policies
and tools that have been deployed to promote or retain
mixed-income housing in key transit corridors.

•
Assessing the role of mortgage financing tools such as
location-efficient mortgages, which take into account
the location of properties near transit and include
transportation cost savings in the underwriting of such
loans.

•
Identifying how HUD and FTA can improve policy
coordination and provide incentives through new and/
or existing programs to further promote affordable
housing near transit corridors, and to include the
preservation of affordable housing as an integral part of
TOD policies.
Legislative Research and
Recommendations
9. Address affordable housing and mixed-income
housing needs in new legislative initiatives.
Based upon the recommendations of the HUD-
FTA Interagency Working Group, FTA will identify
legislative initiatives for the next surface transportation
authorization bill and other legislation to increase the
opportunities, and reduce the challenges, to affordable
housing near transit. This would improve the alignment
of FTA and HUD programs.
Performance Measurement
?0. Assess the effectiveness of the HUD-FTA Action
Plan. The Working Group will develop performance
measures and an associated management information
system for assessing the effectiveness of the results of joint
actions taken by the two agencies. Elements may include
an inventory of affordable housing developments near
transit, federal funding sources deployed, incremental
impacts on transit ridership from such developments,
changes in zoning ordinances that promote affordable
housing near transit, and other performance indicators.
A baseline will be established from which annual progress
would be measured.
Incentives
??. Identify financial incentives for funding
affordable housing near transit. There are
currently no direct incentives through HUD- and FTA-
funded programs for locating affordable housing near
transit. HUD funding for housing is provided in several
ways: through competitive and formula grants, mortgage
insurance (for both single family homes and multifamily
rental housing), and tenant- and project-based rental
assistance. FTA funding for transit is provided through
various discretionary and formula grants. FTA’s
major formula grant program, known as Section 5?07
Urbanized Area Formula grants, provides public agencies
and bodies with planning, capital, and in certain cases,
operating assistance to expand transit services on routes,
communities, and corridors of their choosing.
HUD and FTA will assess the feasibility of encouraging
and/or providing targeted incentives for financing
affordable housing near transit through these and other
programs. These might include set-asides of a portion of
grant funds for jointly funded projects that address both
housing and transportation, or awards of bonus points in
rating applications for competitive grant awards through
such housing programs as HOPE VI or Section ?0?
Supportive Housing for the Elderly. Consideration could
also be given to using set-aside funding for the HOPE VI
program to award bonus funds for projects located near
transit. For those programs that require a non-Federal
match, a reduced match or more flexibility in allowing
non-cash contributions could be considered. However,
specific statutory authorization from Congress is required
to support such incentives.
At the state and local levels, incentives to be considered
might include density bonuses or establishing faster
approval and permitting procedures for TODs that
contain mixed-income housing. Housing authorities
could also consider incentives for locating Section 8
project-based developments, and of Replacement Housing
Factor (RHF) Fund units near transit.
?0
10 HUD’s Capital Fund Formula rule at 24 CFR 905.10(i) provides that a
PHA may receive grants to replace units that are demolished or sold. PHAs
must submit an RHF plan containing a description of the proposed replacement
housing.