I feel like I should apologize to everyone because I'm consistently being a wet blanket when folks bring up a recent report about Fruitvale Transit Village. I tell them that they may not be able to afford their own set of Villages and that we'll likely need to keep looking at a suite of other tools to address their gentrification concerns.
I do a lot equitable TOD and joint development-related work and our clients express many concerns about the gentrification and displacement impacts that TODs can have on communities, so it was great to see that LCCI at UCLA put out a policy brief in March about a victory in this regard. The study got a lot of media coverage, at least in part because of the optimistic finding that the Village stymied displacement.
This study found that the Fruitvale Transit Village TOD increased the socio-economic well-being of residents in the immediate neighborhood while preserving the area's diverse racial/ethnic diversity.
That's great! This is a wonderful example of a TOD where displacement concerns have not come to fruition. It's well worth examining!
However, I am concerned about some commentary related to the study's findings. For example, Brock Keeling at Curbed was full of optimism: "Perhaps the only downside of the project—the languid time it took to get moving." In particular, CityLab put out an article that quoted the study's lead author, Sonja Diaz, who said, “This strikes me as a scalable project to ensure that there is economic mobility and opportunity for the most disadvantaged while still being something that makes economic sense for the wider community.” But from a financial perspective, is Fruitvale a scaleable approach to addressing gentrification and displacement risks?
I fall in the camp of the skeptics. Carolina Reid questioned the study's data sources and whether they are appropriate for reaching their conclusions, but let's assume for now that the findings are completely valid. I doubt that communities can afford to address gentrification by building their own Village projects.
My own studies of TOD for the City of Los Angeles's Transit Corridors Strategy and stalled equitable TOD projects included case studies of Fruitvale Transit Village that found that more than two thirds of the funding for the Village's $69M first phase was provided by sources that required no repayment. Typically, real estate development relies on equity investors that seek to recoup their original investments and also demand an attractive return on top of that original investment.
In addition, the Village's grant funds were complemented by low-interest loans with very beneficial repayment terms. Unlike a typical market-rate real estate project where something like two thirds of the funds come from loans, the Village's loans were a smaller part of the overall project's capital sources because the project was unable to generate enough income to justify larger loans.
All that's to say that the numbers don't look good for replicating this across the country. A simple extrapolation suggests that hundreds of billions in grant funds would be required to copy this model across half of the country's fixed-guideway transit stations.
Does anyone have a spare $100B to hand out to TODs?
So, I'm hopeful that we can do more research into Fruitvale Transit Village to understand what elements of this noteworthy TOD are contributing to the wonderful results found in this UCLA study. If we can determine that some aspects of the TOD do more to address displacement than others, we can do a benefit-cost comparison. Hopefully there are some key elements that are easier to deliver than an entire Village that required $50M in grants. Boy, I'd like to be able to deliver that good news story!
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Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.