In these challenging economic times, it is important for transit agencies to include in their strategic plans joint transit-oriented development (TOD) with commercial developers. TOD’s direct benefits to mass transit include increased ridership, improved facilities, and additional amenities and services for riders. Indirect benefits include economic development in partnership with other public agencies. TOD, the integrating of land use and public transit in the development of residential, office, retail, civic, entertainment venues and mixed-use projects, offers transit agencies and commercial developers unprecedented opportunities by creating jobs, expanding the local tax base and improving a community’s overall quality of life.

If transit agencies properly manage TOD, they can use the know-how and financial resources of real estate developers to generate much-needed revenues from rental income that projects generate, and attract matching funds from state and local governments and private foundations.

TOD projects offer more than financial rewards. They include improving overall quality of life, promoting neighborhood stability, strengthening public safety, promoting sustainable development and expanding the tax base. The success of TOD projects depends upon transit agencies and commercial developers understanding, and respecting, each other’s perspectives.

Transit agencies measure return-on-investment (ROI) in financial and non-financial terms, including ridership levels, facilities improvement, quality of life, sustainability of construction materials and methods and ability to share costs with commercial developers. In contrast, commercial developers gauge the success of a project by factors such as ROI on capital raised for the project, timeliness, public approval, leverage and available property rights.

Differences in how both parties perceive one another can also affect the success of a project. Transit agencies can, at times, regard commercial developers as being self-motivated, impatient, assertive, discrete, risky and calculating. In contrast, commercial developers believe transit agencies are slow-moving, focused on process instead of results, pre-occupied with the political implications of potential actions, academic and impractical, risk averse and unable to function in a business environment. As usual, the truth lies somewhere in the middle.

Breaking Barriers
When transit agencies and commercial developers accept each other’s differences through understanding each other’s different economies and clearly define responsibilities, TOD can flourish, enabling everyone to benefit.

The most successful TOD projects with which I have been associated are ones in which the transit agencies and commercial developers work closely on all aspects of the project, and communicate with each other frequently and directly.