Transit Oriented Developments (TODs)

Transit Oriented Developments (TODs)

Introduction to TODs

According to the World Bank “Transit-oriented development (TOD) is a planning strategy that aims to concentrate jobs, housing, and services around public transport stations…. this approach has helped many cities reduce their carbon footprint while becoming more productive and more liveable. However, TOD principles cannot be applied uniformly across an entire city or transit network”. TODs will not be viable everywhere and they will have a different character in city centre centres, sub-centres and suburbs. Funding arrangements will vary country to country based on local laws, planning regulations, governance and taxation.

TODs work best alongside good public transportation

Ideally cities would first build their transit networks in advance of urban development but that rarely happens. Although London developed the world’s first metro/urban transit system in 1863 to combat street congestion, it was Hong Kong in 1975 that pioneered the rail plus property “R+P” development concept where urban rail systems are first developed and then building dense urban areas or TODs around key stations. Income from real estate development is used to help fund the rail infrastructure and operations which is used to fund affordable public transport. Today over 90% of Hong Kong’s population use public transit, the highest in the world. Most city leaders have not been so insightful and retrofitting transit into already developed areas is the norm. That retrofitting process enables city planners to rethink how their cities could be restructured with transit systems acting as the spine.

Restructuring Cities around TODs

Restructuring is necessary as cities are constantly evolving with old economic sectors in decline and new sectors emerging, requiring new skills and new real estate typologies supported by new infrastructures. As the level of sophistication of the economy increases so too is the need for improvement in productivity and higher skilled employment. Higher densities and mixed uses accompanied by better services and public realm that TODs provide is attractive for many newer economy higher value jobs. There are great examples worldwide of urban regeneration in areas of deprivation or underutilized land with a focus on TODs which have transformed cities. Best results are achieved when planning of land uses, public transportation and infrastructure are undertaken as part of an integrated process. Although piecemeal plot by plot regeneration has its role, higher socio-economic benefit can be derived from an integrated approach.

Use of Land Value Capture (LVC)

Land Value Capture is a term used to describe a suite of mechanisms to facilitate landowner in contributions for the provision of public infrastructure. In total there are approximately thirty mechanisms in use around the world but only a small number are typically used in each country as they need to align with the local legal, regulatory and taxation systems. Land values generally reflect a complex constellation of public investment, private investments and public policies and regulations. Without major investments in infrastructure the value of land would broadly reflect agricultural uses. In most countries the majority of land is privately owned, and in urban areas often in smaller parcels. Urbanization and regeneration usually require adjustment of land boundaries and densification is often necessary to create new urban centres. LVC mechanisms can help fund that transitioning.

Some of the key factors that influence successful delivery of TODs

We have been directly involved with or have undertaken detailed case studies on more than thirty TODs around the world under different legal, regulatory, financing and implementation arrangements. Key lessons from this work are:

  • The need for high quality leadership and delivery organization
  • The Need for Support and catalytic investments by government
  • Land as a strategic asset
  • Use of government funding/guarantees to de-risk private sector investments
  • Importance of Public Transportation
  • An Agile/Adaptable Masterplan
  • Patient capital can facilitate allows long-term approach
  • Start with creating an economic proposition not just a financial one
  • Curated heritage and culture can create unique and memorable places
  • Growth focus around inner urban areas can add high value
  • Legal and regulatory certainty is needed for long term investment

In Indonesia the development of the legal and regulatory support for TODs, and LVC within urban areas have been underway for the last ten years by both DKI Jakarta and the National government. Despite all these initiatives, delivery of TODs has not been progressing well for a variety of reasons including, regulatory uncertainty, fragmented land ownership, available funding and capability and capacity of the designated Master Developers. There are signs with the new Presidential Decree on LVC that the both the National government and DKI Jakarta are making renewed efforts to finally make TODs happen.

In Indonesia the development of the legal and regulatory support for TODs, and LVC within the urban areas have been underway for the last ten years by both DKI Jakarta and the National government. Despite all these initiatives, delivery of TODs has not been progressing well due to many factors including, regulatory uncertainty, fragmented land ownership, available funding and capability and capacity of the designated Master Developers. There are signs that both the National government and DKI Jakarta are making renewed efforts to finally make TODs happen.