A streetcar system named development

Mayor says city would reap economic, environmental benefits by building lines

We can get a glimpse of the mayor's transportation vision by looking at the city's past. But we'll need to see into the future to understand why it's worth funding.

That was the message of a speech last week by Mayor R.T. Rybak, who was encouraging people to envision the eventual economic and environmental benefits Minneapolis could reap from investing in a citywide streetcar system.

&#8220In many ways we are going ‘back to the future' to recreate the Minneapolis we grew up in,” Rybak told reporters and supporters Thursday in an auditorium at the Central Library.

A streetcar task force is studying 10 possible routes and plans to lower that list down to the four or six most likely options in the next couple months. Corridors under consideration include Chicago, Hennepin and Washington avenues.

The streetcars would replace existing bus lines at a cost of about $30 million per mile. The mayor has committed money in next year's budget for a finance work team to continue studying the potential projects.

An exact mechanism hasn't been designed, spokesman Jeremy Hanson said, but the mayor would like the work group to explore ways to leverage some of the property value increases expected along the routes to help pay for costs of building the lines. And public-private partnerships would also be key, he said.

Cory Reiman, owner of Uptown Appraisal, was skeptical of whether the city could depend on property values rising as a result of the construction of streetcars.

&#8220It's an extraordinary assumption,” Reiman said. &#8220Only the market is going to say whether that comes to fruition. It's just as likely to not help. It's a gamble.”

It's possible perceptions about noise and traffic could hurt residential property values near streetcar lines even if they boosted business properties, Reiman said.

Jim Erkel, land use and transportation director for the Minnesota Center for Environmental Advocacy, said it's true the market will decide what happens, but other rail transit projects offer strong evidence for success.

A light-rail line that opened this month in Denver cost $875 million to build but $4.2 billion worth of construction was built, underway or in planning before a single fare-paying passenger got on board, Erkel said. Portland has seen about $2.4 billion worth of development along a three-mile streetcar line, he said.

&#8220It's very likely that a streetcar line would provide the kind of development the mayor is looking for,” Erkel said. &#8220These transit lines that are rail-based provide the certainty that developers need to move forward with new developments.”

Rodger Skare, senior vice president for appraisal with Colliers Turley Martin Tucker, has studied the impact of the Hiawatha Light Rail line on property values and development and thinks streetcars would have a similar, positive impact.

&#8220There would definitely be a value impact,” Skare said. &#8220That's been proven around the county.”

A light rail station can increase property values between 20 percent and 50 percent within a quarter-mile radius, he said. That includes single family homes. Streetcars would have a more linear effect, boosting values along properties facing the street and maybe going in half a block or so, he predicted.

The multi million-dollar question, Skare said, is whether there's any way for a government to harness any of that value in advance to help start construction of transit projects. It'd be complicated at best, he said.

The city could identify a route and set up special tax breaks and zoning to encourage dense, mixed-use development along the line before it's actually built, he speculated. That way it could see some benefit before it was built.

Some of the same characteristics that make streetcars appealing to developers also attract riders, primarily that the route doesn't move, said Teresa Wernecke, director of the Downtown Minneapolis Transportation Management Organization.

Rybak said rail transit typically attracts 40 percent more riders compared to buses. Erkel said that estimate may be on the conservative side.

&#8220With rail, you know where you're going,” Wernecke said.

Dan Haugen can be reached at dhaugen@mnpubs.com or 436-5088.