Proponents of high-density residential development near rail stations, or “transit-based housing,” argue that such projects will get more people onto trains, reduce developers' expenses, and potentially lower commuting costs, housing prices, and air pollution. This paper focuses on a separate question: Whatever virtues transit-based housing may have, what are its prospects? We find that transit-based housing faces a much steeper uphill battle than the conventional wisdom suggests. Cities' parochial fiscal and economic interests often conflict with transit-based housing, a view strongly supported by our behavioral analysis of zoning data for all 232 existing and proposed Southern California rail transit stations. Municipalities behave as if they prefer to use rail transit stations for economic rather than residential development. These results suggest that a planning framework should account for and reconcile the local as well as system-wide costs and benefits of transit-oriented policies. Regional incentives to encourage transit-oriented land uses are justified, for example, only where regional benefits outweigh both the direct cost of the intervention and the indirect costs to the tax and economic base of each affected community.
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