Joe Biden administration offers $35 billion in low-interest loans to support US transit-oriented development

Transit-oriented development is a planning development pattern in which housing, jobs, and other amenities are centralized around public transportation stations, especially rail stations. Reducing the distance between transit stops and destinations that people care about – such as their homes, workplaces, and leisure locales – reduces end-to-end travel times via transit. This increases the time-competitiveness of transit and thereby decreases car dependency.

Not everywhere has to be full of skyscrapers or train lines. But everywhere there's transit, there ought to be density. And everywhere there's density, there ought to be transit.

Also note that density =/= high-rise buildings. You can have a very successful TOD orientation with only low and mid-rise buildings as long as they are relatively close to each other, and ideally mixed-use. And of course, the exact amount of density can vary depending on the extent of the transit service offered, and vice versa. The important part is that communities make an effort to link them together.

The Biden administration's loan program gives developers a financial incentive to build more multi-family transit-oriented housing. The goal is to reduce the pressure of housing costs by increasing the supply in a way that does not further entrench car dependency, which is expensive (and inefficient) for individuals and society.

The Department of Transportation is using two lending programs — the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation & Improvement Financing (RRIF) — to open up about $35 billion in federal cash with below-market interest rates for multi-family construction within a half-mile of mass transit stations. DOT staffers say the loan programs are underused and they want developers to take advantage of the new offerings.

The subsidized loans will have about a 5% interest rate — approximately the 30-year US Treasury rate — and can be paid back for 35 years with a five year deferment after construction, making them much more affordable than private sector loans. Meanwhile, market loan rates tend to be a few percentage points higher.

The new construction wouldn't just create much-needed additional housing. It would also boost the subways, passenger rail lines, buses, and other mass transit nearby by filling those systems with more riders and increasing revenue. In fact, in order to qualify for the loans, developers need to show that their projects would boost ridership.

Developers would still have to submit their proposals to local authorities and pass federal environmental reviews, which are arduous and expensive. However, this program will still make it easier for sustainable development to be built around the country.