A new bill in Congress would create new financing option for transit-oriented development

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Transit-oriented development (TOD) can make it easier for people to live and work near public transportation. These places are in high demand and real estate developers are eager to build them, but because they’re often complicated TOD projects can be difficult to secure financing for.

A new bill in Congress would help make it easier to finance TOD projects. On Thursday, Senator Cory Booker (NJ) introduced the Railroad Infrastructure Financing Improvement Act (RIFIA). This legislation would expand the scope of the Railroad Rehabilitation and Improvement Financing program, which currently provides financing for railroad infrastructure development, to include TOD projects near passenger rail stations.

Only $1.7 billion in loans have been processed since RRIF’s inception. RIFIA would not only broaden the scope of the program to a variety of development projects, but also streamline the process to make application easier. With the addition of TOD projects into RRIF, communities will have an additional tool to utilize existing infrastructure for economic revitalization.

“Historically, RRIF has been underutilized,” said Christopher Coes, Director of LOCUS: Responsible Real Estate Developers and Investors. “The reforms included in this legislation would ensure that local communities have the tools they need to unlock the enormous economic potential of transit-oriented development while encouraging greater private investment in passenger rail infrastructure.”

“The areas around our country’s passenger rail stations are often economic sleeping giants,” said John Robert Smith, co-chair of Transportation for America. “Finding ways to finance and catalyze smart development in and around them is a proven strategy to boost local economies. Through the renovation of our historic train station in Meridian, MS, we were able to kickstart millions in adjacent development in our small city’s core. Countless mayors all over the country are eager for ways to stimulate the kind of smart, walkable growth that is in such high demand right now, and providing access to low-cost loans for these kinds of projects will give small and large cities alike another valuable tool to revitalize their city and support their local economy.”

In addition to providing financing for TOD, the new program would invest loan repayments back into rail infrastructure to help fund capital and operations expenses. This presents a unique opportunity for private-public partnerships between real estate developers and passenger rail agencies.

In January, Transportation Secretary Anthony Foxx voiced his support for new financing options for TOD. “When you build a transit station, it captures the imagination of real estate developers, and they start to build dense developments and bring amenities to communities. I would urge that we do more to partner with local communities, and to help them develop the tools to utilize land use opportunities.”

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