Transit Oriented Development and the H+T Index

MoveLA held their 4th Annual Transportation Conversation last week, and, as usual, it was filled with golden nuggets of knowledge delivered by the wise men and women who work in the fields of transportation, urban development and housing.

One of the themes was the need to link new transit with the businesses, workers and residents of the communities being served by LA’s growing fixed guideway public transportation system.  It is recognized that transit location has an effect on property values and development patterns.* (See the post Getting Ahead of the TOD Train in this blog for some examples of how Century has worked with developers in this arena.)  There was some discussion on how LA can accelerate its transit construction program and how best to plan for the kinds of development that will optimize the use of the transit and benefit the community, without leading to gentrification. We will be talking more about some of those ideas in the coming weeks and months.

There was one thought that bubbled up from the conversation that struck me as particularly important–not because it was new, it is not, but because we so often forget it.  One of the speakers referred to the “H+T Affordability Index.” This is a formulaic way to calculating the combined effect of housing costs and transportation costs upon household incomes.  Traditionally, a prospective buyer who was not wealthy was told as the old saying went,  to “drive ’til you qualify” in search of an affordable home.  As distance from employment centers, amenities and services increased, prices declined, and thus the suburbs were born where the buyer found a price that was affordable.

Now this isn’t a new thing, in fact it is a century old, long before the private automobile became the primary mode of commuting.  The “streetcar suburbs” of most American cities began with horse-drawn transit, and moved to electric streetcars and railroads over time, carrying workers from their jobs in the central city out to the surrounding suburbs.  The pattern of growth in Los Angeles was just as much the result of streetcar alignments as were Chicago, Boston, Atlanta or New York.

Because the streetcars were relatively inexpensive to ride, the added cost of commuting was relatively small, so the savings in housing costs made the time lost in the commute more than worthwhile.  But that changed as the streetcar systems were replaced by private automobiles and highways after World War II.  Now, commuters pay an ever increasing price for their long commutes, and the H+T Affordability Index is designed to help calculate how that price affects the overall affordability of the remote housing locations that were encouraged by the streetcar suburbs.

The Center for Housing Policy, in conjunction with the Center for Neighborhood Technology and others, reported the effect of the H+T Affordability Index on working families in 2006, in their report “A Heavy Load: The Combined Housing and Transportation Burdens of Working Families.”  Several other reports have followed, including some evaluating the situation in specific cities.

In general, what the research shows is that the price advantages of living in suburban areas remote from employment centers is lost due to the increased cost of commuting, and that lower income households spend from 55 to 70 percent of their income on the combined costs of housing and commuting, while somewhat better off, but still modest income households spend between 40 and 50 percent of their income.  There seems to be a “sweet spot” about 5 miles from employment centers, where housing costs and transportation costs are both lower than average, and total costs are lowest for residents, but beyond that costs just keep rising.

The total combined cost of housing and commuting as a proportion of income seems to remain fairly stable across different cities, varying primarily by the distance from employment centers.  While it seems that expanding the public transit system would help to reduce the cost of commuting and thus reduce the overall H+T Affordability Index for residents living near the new transit, it is not clear that will happen.  A study by the Dukakis Center for Urban and Regional Policy at Northeastern University concludes that new transit can lead to gentrification.

The question we have ask ourselves is, how can we provide more opportunities for lower income working families to benefit from the huge investment in fixed guideway transit underway in Los Angeles, or is it inevitable that the market will price those residents out of the future transit oriented development as it has done in Downtown Los Angeles as a result of the adaptive reuse ordinance?

* Note that there is still some question about how long the effect on property values takes to manifest, as discussed in this Center for Housing Policy paper.

Don’t worry, we will be talking about gentrification and how to avoid it, in future posts.  For now, you might want to read an article or two.