Transit-oriented development part of Harris’ affordable housing plan

As affordable housing has stepped into the spotlight in the presidential election, including during Tuesday’s vice-presidential debate, Vice President Kamala Harris is touting transit-oriented development as a way to increase housing in urban areas.

“Some of the work is going to be through what we do in terms of giving benefits and assistance to state and local governments around transit dollars,” Harris said in a recent MSNBC interview, referring to her policies to increase the housing supply.

The government needs to be “looking holistically at the connection between [transit] and housing, and looking holistically at the incentives we in the federal government can create for local and state governments to actually engage in planning in a holistic manner that includes prioritizing affordable housing for working people,” Harris said.

Transit-oriented developments, or TODs, aim to encourage growth along transit corridors with public buildings or housing near modes of public transportation like light rail, subways and busy bus routes. TODs have started to gain momentum among cities that are increasingly focused on building more houses. The Build America Bureau, the U.S. Department of Transportation’s P3-focused office, boasts a $12 billion pipeline worth of TOD projects in the works, bureau director Morteza Farajian said in a previous interview.

More than 70% of applications submitted to the bureau’s new innovative financing asset program featured TOD and downtown redevelopment initiatives.

In May, the agency announced its first-ever Transportation Infrastructure Financing and Innovation Act loan for a TOD, in Washington state. And in June, the DOT finalized a rule — authorized under the Infrastructure Investment and Jobs Act — that will make it easier for borrowers to tap TIFIA and Railroad Rehabilitation and Improvement Financing loans for real estate developments near transit stations.

“Given the substantial advantages of RRIF and TIFIA financing compared to the commercial alternatives available to private developers, there are likely many more such projects to come,” said law firm Nixon Peabody in a June public finance alert. on the final rule.

The Biden-Harris administration has made an effort to promote more housing and TODs but it’s been slow going, said Yonah Freemark, a researcher at the Urban Institute who focuses on housing, transportation and land use.

“There is a lot of enthusiasm about trying to leverage the transit infrastructure that we have in a way that supports higher ridership and encourages higher housing in those areas,” Freemark said. “There’s a lot of opportunity out there from TIFIA and RIFF, but we’re not seeing anything yet,” he said, noting that the Washington project is the only TOD so far to tap the expanded loan authority.

The FAST Act, passed under former President Barack Obama in 2015, allowed TODs to use TIFIA and RRIF loans, but under President Donald Trump, the guidance was never finalized, Freemark said.

“The Trump administration had the ability to implement it and chose not to,” he said. “That’s part of the reason it’s been so slow” to take off.

Trump has pointed to opportunity zones, created in the 2017 Tax Cuts and Jobs Act, which encourages investment in low-income areas by deferring capital gains, as a path to creating more housing. He has also said he wants to build homes on federal lands.

The need for affordable housing popped up repeatedly Tuesday night during the vice presidential debate between Gov. Tim Walz, D-Minn., and Sen. JD Vance, R-Ohio. The candidates agreed that part of the problem is too much regulation, with Walz saying that Harris will encourage local governments and states to “cut red tape.”

“Look, we can’t do at the federal level, but local folks make it easier to build those homes,” Walz said.

Vance blamed federal regulation and illegal immigration for high housing costs. Lowering energy prices would quickly bring down home prices, as would Trump’s plan to build on federal land, Vance said.

Lawmakers on both sides of the aisle appear to support some level of encouraging cities and states to “do things differently in terms of zoning policy,” said Freemark. Regardless of federal policies and efforts, loosening local zoning regulations remains essential to significant housing reform, he said. “But frankly the momentum on that is challenged by the reality that people in Congress have a hard time telling localities what to do.”

On the TOD front, Harris’ economic plan calls for “streamlining transit-oriented development projects,” and calls for faster approval and financing for housing near transit. The policy could “lead to more dense, mixed-use development in areas with high demand for housing,” said Redfin economists in an August report on Harris’ housing proposals. “That would increase supply where it’s needed most and potentially bring down transportation costs.”

Harris’ housing plan also includes creation of a $40 billion “local innovation
fund for housing expansion,” which would provide money to cities, states, and private developers to invest in “innovative” strategies to boost supply.

“This could include financing the construction of new housing paired with efforts to reduce regulatory burden and cut red tape, employing innovative building and construction techniques to lower costs, and using self-sustaining financing mechanisms to scale new housing construction,” according to Harris’ plan.

Any new administration would need Congress to pass significant housing reform, said Freemark, recalling that the Biden administration proposed a housing package as part of an early Build Back Better bill but it was later dropped amid lack of support by Congress.

The amount of attention that housing has snagged in the election has surprised even advocates like Freemark.

“The reality is that housing is not typically been part of the presidential conversation so it’s been exciting to see that and maybe that will encourage Congress and others to care,” he said.