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Transit-oriented development (TOD) refers to pedestrian-friendly, high-density areas in close proximity to a public transportation system. Following the principles of smart growth, TOD zones have planned residential and commercial mixed-use development situated within walking distance from a fixed-route public transit station. TOD projects are expected to foster economic development by boosting property values and mitigate the negative environmental impacts of transportation by reducing automobile usage by local residents.

Developers and urban planners work to create a comprehensive and integrated land use plan that encourages smart growth and new urbanism design principles for TOD projects. These principles include easy transit access, pedestrian friendly site design, residential and commercial mixed-use development, and variety of housing options and housing costs. The first goal of TOD is easy transportation access, allowing residents to live close to public transportation options. These residents can commute to work by walking or biking from their home to a transit station.

The most successful TOD designs concentrate development within two zones of the transit station: an initial quarter-mile zone and a secondary half-mile radius around a transit station. Planners consider the quarter-mile and half-mile zones around TOD development to be the distance an average commuter would walk to and from a transit station. Extending a TOD zone requires increased connectivity, such as regular and frequent bus services radiating from the transit station to facilitate a more interconnected transport system.

The second goal of TOD is spurring economic growth, as development projects reshape the topography of urban property values and embed spatial arrangements that establish new clusters of economic growth. The design of transportation infrastructure is thought to create areas of economic growth that can work with local efforts to create a more competitive regional economy. Long-term investment in alternative transportation infrastructure is an attempt to establish pockets of concentrated economic growth.

Embedded in these economic development initiatives are assumptions about the need to establish a “creative city” through amenity growth, resulting in a TOD designed to attract an expanded ridership of young, creative professionals. According to the creative cities thesis, transit systems meet many of the perceived prerequisites for creative growth by establishing transportation amenities and TOD zones around rail stations to attract capital investment and foster economic development.

The third goal is to reduce the environmental impacts associated with automobile transportation and mitigate the need to expand infrastructure to meet the needs of urban sprawl. By reducing the number of automobiles on the road during commuting hours, cities can reduce their greenhouse gas emissions. This becomes very important for urban areas that are designated nonattainment zones, which indicates the area has exceeded the Environmental Protection Agency's (EPA) threshold for air pollution. Encouraging public transit use and pedestrian commuting also reduces the need for expanding road capacity. By reducing the need to add more paved highway lanes, there are fewer impervious surfaces that generate polluted stormwater runoff and impact overall water quality.

TOD has become a key feature for rail transit projects. Rail transit, much like TOD projects, is conceptualized as a tool for managing urban sprawl, stimulating economic growth, and reducing environmental impacts, because transit systems establish dense urban corridors for future development projects. The subsequent TOD provides opportunities for cities to reshape their urban form and stimulate capital investment. By establishing dense mixed-use TOD projects adjacent to light rail, commuter rail, and metro stations, planners hope to foster the establishment of livable, economically prosperous, and environmentally sustainable communities.

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