TOD Stalls as Lenders Continue to Bank on Parking
Elana linked to this story out of Salt Lake City in the Capitol Hill headline stack this morning, and it’s worth everyone’s full attention. Derek Jensen reports on what may be the biggest impediment to urbanism of them all: The widespread bias of banks against walkable development.
Salt Lake City’s
new-urbanism epiphany — fervently backed by Mayor Ralph Becker and the
City Council — appears to be catching static from an unlikely source.Transit-oriented development isn’t stymied by outdated zoning,
unwilling developers or a lack of space. It turns out, banks, wedded to
old-fashioned lending standards that stress parking, may pose the
biggest blockade by denying financing.The reason: Lenders operate from a tried-and-true principle that
maintains more parking means less risk and a higher return on their
investment. But ditching cars is the whole point of urban developers
looking to create 24-hour live, work and play environments that hug
light-rail hubs.
Real estate lending standards: A work in progress. Photo: MSN.That’s right, the same sector that got such fantastic returns from the car-dependent suburban fringe isn’t sold on the viability of neighborhoods where you can get around without driving. Salt Lake City banks are hardly the exception. Based on informal conversations I’ve had with people who deal with local lenders and developers, I can tell you that real estate finance in transit-rich New York City is far from enlightened.
If we’re ever going to reverse the tide of car-centric development that is gradually suburbanizing New York, we’ll need banks to change their assumptions. As Jensen reports, Portland shows that it can be done.
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