California Transit Agencies Bring Affordable Housing to Scale

Posted by Geeta Rao, Abby Thorne-Lyman, and Ron Golem on September 15, 2016

In a recent Shelterforce blog post, we discussed the catalysts for the adoption of equity and sustainability as core principles in a new development paradigm for the Los Angeles County Metropolitan Transportation Authority (Metro), the Bay Area Rapid Transit (BART), and the Valley Transportation Authority (VTA) in the San Francisco Bay Area. With our recently adopted affordable housing policies, we are taking bold, proactive steps to address both climate and affordability challenges that high-cost regions face in California. LA Metro discussed its plan in the previous post, here we follow up with BART and VTA.

BART: Affordability is Critical to a Bold Vision
The San Francisco Bay Area’s Sustainable Communities Strategy (SCS), Plan Bay Area (PBA) sets a bold vision to end automobile-dependent sprawl and direct the future population growth (2 million people by 2040) into already existing communities. PBA has been called the most progressive SCS in California because it meets the mandated greenhouse gas (GHG) reduction target by accommodating 100 percent of new growth (1.1 million new jobs and 660,000 new homes) within urban boundaries. PBA directs 95 percent of the region’s growth toward 5 percent of the Bay Area’s land, and two-thirds of the region’s housing production will be accommodated by only 15 Bay Area cities.

The Great Communities Collaborative, or GCC, is a multi-sector collaboration that addresses the challenges of climate change and equity by influencing local and regional policies, practices, and investments. It was founded on the idea that shaping local TOD plans and securing private and public funding to catalyze sustainable and equitable development would transform the region from auto-dependent sprawl to one made up of thriving and affordable neighborhoods linked to economic opportunities by a premier transit network. GCC realized that catalyzing BART’s and VTA’s land for more intensive development with rigorous affordable housing outcomes could significantly help accommodate the region’s growth and meet equity and sustainability goals.

GCC funded BART’s advocacy campaign, spearheaded by TransForm, an advocacy organization that promotes walkable communities with transportation choices to connect people of all incomes to opportunity, and East Bay Housing Organizations (EBHO), a nonprofit organization that aims to preserve, protect, and expand affordable housing opportunities. For over two years, TransForm and EBHO engaged BART board members and agency staff to craft policy parameters and garner support among other advocates. GCC also convened the TOD Implementation Table, a neutral space to engage with transit agency staff, other public agencies, and advocates to further their regional equity and sustainability goals and align philanthropic and public resources. Through GCC’s advocacy efforts, in 2015, BART’s Board of Directors initiated the creation of an Affordable Housing Policy.

In January 2016, the board adopted a policy requiring a minimum of 20 percent of units built on BART-owned property to be affordable. The policy requires each station area to cumulatively achieve a minimum 20 percent requirement, but leaves flexibility as to how the units are achieved so that projects can be phased in a way that makes financial sense. The affordable housing policy also includes direction to BART staff to develop a development solicitation process that favors quantity and depth of affordability, with a preference for housing units serving low- and very-low income households. Affordability is one of many requirements placed on the development of BART property. Other requirements vary by site, but universally include prevailing wage requirements and project stabilization agreements. 

In addition to affordable housing policy, BART has worked over the last several months to update its decade-old TOD policy, which offers a more comprehensive policy statement. The new TOD policy, which was adopted on June 9, 2016, addresses three critical updates:

  • Reinforces that BART will take a role in helping implement PBA to increase development near stations, reduce auto dependence, and reduce greenhouse gas emissions;
  • Incorporates the Affordable Housing Policy, and establishes a 30 percent affordability target for the system as a whole; and
  • Acknowledges that with the loss of redevelopment, California cities face increasing barriers to implementation of TOD, some of which BART may potentially be able to address (such as assembling parcels adjacent to BART property, or building catalytic projects).

Simultaneously, the BART board also adopted a new Station Access Policy, which reinforces that BART will help invest in non-auto access to BART stations. This policy categorizes BART’s 45 existing stations and three forthcoming stations into five different access "place types" with different priorities (pedestrians, shuttles/buses, bicycles, cars).  These "place types" also define potential parking replacement targets for the TOD Policy–and in an innovative move, BART will start with the assumption that urban stations will not have any replacement parking, which potentially removes a critical financial barrier to creating new TOD in general, as the cost of replacement parking has been significantly absorbed by local redevelopment agencies in past TOD projects. In practice, less parking means more space for affordable housing.

The Affordable Housing Policy, TOD Policy, and Station Access Policy are the first steps in refreshing the programs addressing the use of BART facilities and BART’s involvement on and off BART property to enhance station areas.

Now that the policies are adopted, the real work begins: defining BART’s investment priorities for the next four years and establishing performance targets by which the TOD and Station Access Programs may be measured. In particular on the affordable housing side, BART will be working with affordable housing developers in the East Bay to identify strategies to achieve the 30 percent target, modify the solicitation process to favor depth and quantity of affordability, and generally accelerate development on and adjacent to BART property.

VTA: Intensifying Land Use through Affordability
The Vallet Transportation Authority serves a significant portion of Silicon Valley where job growth fueled by the tech sector has placed significant demand on housing. Santa Clara County (the primary service area of VTA) has met the county’s market-rate housing needs, but the county has fallen short on affordable housing production, only meeting less than a third of the housing need for low income and very-low income households. The focus on the use of public lands to increase affordable housing production across California led VTA to realize the need to create a systematic approach to affordable housing inclusion in joint development, rather than relying upon a site-by-site approach.

Similar to BART, the creation of VTA’s affordable housing policy was initiated by its board, and was deeply influenced by advocacy groups. GCC funded a campaign spearheaded by the Silicon Valley Leadership Group (SVLG), Working Partnerships USA, and SV@Home. The Silicon Valley Leadership Group is a public policy organization that represents over 400 of Silicon Valley’s largest employers. Working Partnerships USA is a community organization that leverages research, policy advocacy, and grassroots mobilization to advance campaigns for equitable growth, health communities and quality jobs. SV@Home is a membership organization that advocates for policies, programs, land use, and funding for affordable housing. VTA worked closely with these advocates to identify issues, evaluate options, and build stakeholder support. VTA also had influential and progressive board champions including board chair Santa Clara County Supervisor Cindy Chavez and San Jose Mayor Sam Liccardo.

VTA staff and board sought to incorporate the lessons learned by other California transit agencies in adopting affordable housing policies. The current and evolving policies of Metro and BART provided a framework for identifying and evaluating policy options. Since joint development relies on agency public-private partnerships with developers, the experience of VTA staff in soliciting development proposals and negotiating long-term ground leases was important for the evaluation.

The affordable housing targets adopted by VTA are ambitious, establishing a goal that at build out, the residential units in VTA’s joint development portfolio will include 35 percent units affordable to low-income households (60 percent AMI). To ensure that a significant portion of those units are available to VTA riders, at least half of that amount must be available to very low- and extremely low-income households (50 percent AMI or less). The overall goal provides flexibility, while a minimum requirement of 20 percent affordable units in any individual project ensures that each joint development with a residential component generates a significant amount of affordable units. VTA expects that a combination of mixed-income development with 20 percent or more affordable units, combined with a number of 100 percent affordable developments will enable it to achieve the 35 percent target. It’s important to note that this has been the experience to date of VTA, BART, and Metro, all of whose joint development to date exceeds 35 percent affordability.

Besides setting an appropriate target for affordable housing production, VTA felt it was essential to focus on implementation strategies in order to actually produce units while also realizing VTA’s overall goals for joint development that includes revenue generation. An important realization in evaluating current entitlements for VTA joint development sites is that most of them are actually at low densities and/or did not permit residential uses (this is a legacy of the tendency of Bay Area jurisdictions that are charter cities to not have their General Plans be consistent with their zoning code, as well as obsolete strategies in their General Plans). Because most jurisdictions are seeking to increase affordable housing production, a commitment by VTA to affordable housing can facilitate consideration of General Plan amendments or rezoning that allows more typical TOD densities. Entitlements that allow greater density can produce both a substantial number of affordable units as well as a larger number of market-rate units that increase bottom line revenues. This insight was important for generating VTA Board support for a new affordable housing policy. VTA’s policy seeks to incentivize jurisdictions to up zone properties by splitting the increase in density 50/50 between market-rate and affordable units until VTA reaches its overall affordable housing target.

Other implementation strategies include:

  • Providing scoring incentives for developers who provide more affordable units, or a greater proportion of larger units (3- and 4-bedroom) in RFP submittals.
  • VTA will provide a scoring benefit to market-rate developers who include an affordable housing developer on their team to incentivize the formation of development entities with the capability to implement mixed-income developments.
  • Create partnerships with local jurisdictions in order to leverage their resources and assistance for creation of affordable housing, including recapture of affordable housing impact fees or other payments required by jurisdictions on VTA joint development projects). These partnerships would also include VTA support in local jurisdiction grant applications for funding to support other affordable housing development near transit.

The final step in creating VTA’s affordable housing policy was to incorporate implementation that addresses other agency priorities. These include providing the general manager with the authority to pursue new approaches to address the evolving landscape for affordable housing production. VTA’s policies establish that it will not provide a write-down in the value of its land or other direct financial assistance (although calculation of fair market value for ground leases and Federal Transit Administration review will include the economic impact of the policy).

Finally, to provide transparency and accountability, VTA will publish an annual report identifying its affordable housing production to date, as well as the number of affordable units currently in pre-development or under construction.

Among Metro, BART, and VTA, there are several policy highlights to consider:

  • Metro has set the bar with a 35 percent system-wide affordability target, but has also deepened its commitment by discounting land for affordable housing (up to 30 percent of land value, proportionate to number of units).
  • BART’s affordable housing policy is among a suite of policies (TOD Update and new Station Access Policy) that are laying the foundation for a bold vision. BART envisions leveraging the 300 acres of land it owns to produce 30,000 new units of housing, with 10,000 affordable. If this vision is realized, the impact would be large enough to make a dent in the region’s affordability crisis.
  • VTA’s 35 percent system-wide affordability target focuses on units affordable to low-income households (60 percent of AMI) and at least half of that amount must be available to very low- and extremely low-income households (50 percent of AMI or less). VTA’s policy has been crafted to significantly increase densities in the jurisdictions it serves, helping to transform Silicon Valley into a more urban, sustainable region.

(Photo credit: Franco Folini via flickr, CC BY-SA 2.0)

About the author more »

Geeta Rao is a senior program director at Enterprise Community Partners, where she oversees the Sustainable and Equitable Communities Program for Northern California. She brings 18 years of experience in affordable housing, community development, and transit-oriented development including: program design and administration, technical assistance, policy development and analysis, legislative advocacy, community organizing, and coalition building. Abby Thorne-Lyman is a manager of planning in the Strategic and Policy Planning group at BART, where she helps develop systemwide policies and programs, and is currently working on implementing BART's new TOD Policy and agency-wide Strategic Plan. Formerly, she was the director of the National Center for Transit-Oriented Development where she developed policies and strategies related to TOD for transit agencies and regional governments around the country. Ron Golem is deputy director, Real Estate & Joint Development at the Santa Clara Valley Transportation Authority. Ron oversees development at 25 sites comprising more than 200 acres. He has over 20 years experience in Transit Oriented Development, urban revitalization, urban park development, and public-private partnerships. Prior to joining VTA, Ron was a principal at a national urban economics consulting firm, where he supported TOD corridor and station area plans, and feasibility studies, in more than two dozen cities throughout the US. He has provided transaction support for more than $4 billion in public-private partnership development.

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