Transit-Oriented Developments in Austin, Texas Falter

Perhaps we shouldn’t be surprised, but Austin, Texas is having trouble making its transit-oriented development (TODs) work. From the Austin Chronicle (11/26/2010):

“Five years later, Austinites can survey the land surrounding the rail stations they paid for and proudly point to … a whole lot of nothing.

“Okay, that’s not entirely fair. There are a few somethings occurring in the TOD zones around the stations, but certainly not nearly at the level of fully realized visions. There’s a nice brewpub. And some mixed-use residential/retail, including a project that has just broken ground. But more common are wide expanses of open grasslands and vacant lots. And strip mall retail. And warehouses. And a moribund mall.”

While the faltering economy is one culprit, Texas’ housing market has remained relatively strong–down because of the national economy not the housing bubble. Housing projects in weak markets and segments are delayed and cancelled first.

Moreover, the hype around TODs is pretty high, with advocates supporting them with rhetoric that seems to imply these investments are failsafe and immune to larger economic trends. In fact, they claim, TODs are supposed to redirect and spur economic growth. Unfortunately, they simply don’t have the economic influence to do that. At least in Austin, local officials are becoming more realistic. Again from the Chronicle article:

“There are a number of plausible reasons [for Austin’s anemic TOD economic effect]: The rail line started two years late; it’s not on a very good route; maybe the TOD concept isn’t as great as urban planners think. But the strong consensus explanation among those whose business it is to work on or monitor the TODs is the most obvious one: It’s the economy, stupid.

“I think we’ve got a really bad case of timing,” says Molly Scarbrough, the city of Austin’s lead planner on TOD issues. Scarbrough says the city performed station-area planning on three of the nine TOD zones in Austin — Plaza Saltillo, East Martin Luther King Boule­vard (near Airport Boulevard), and Crestview (North Lamar at Airport Boulevard) — with the plans being officially adopted in late 2009 and early 2010, “and that’s pretty much when the bottom fell out of the development market. … We continue to have a lot of conversations with developers that have interest in the areas — but, like all over town, it’s just difficult for developers to get funding right now to do their projects.”

“That’s pretty obvious at the Crestview, Lakeline, and MLK stations — all feature enormous swaths of undeveloped fields. For now, there are outside factors governing all the other TOD zones: Saltillo’s development is being driven more by its proximity to Downtown than by rail, and the others are not on a rail line; some don’t even have zoning boundaries yet, and in the case of the potential Highland TOD, nothing will happen until the mall gurgles its final death rattle. But at Crestview, Lakeline, and MLK, city planners and local developers had real hopes and plans for the TOD zoning.”

But, the real lesson here is that TOD economic success depends almost completely on the local economy and local regulation that allows the private sector to capture the value in the land market. Transit provides very little real economic value in most U.S. cities; most transit, rail included, simply doesn’t have the ridership–the feet on the pavement–to sustain significant economic development. Transit can be an important supporting player along certain corridors, but (outside of New York) its not enough to drive development or shifts in development patterns.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.