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Do New Streetcar Lines Promote Development?

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Do New Streetcar Lines Promote Development?

The South Lake Union Streetcar lays over at the Westlake Terminus Station. A future streetcar line is planned to head east from here, up onto First Hill.

Christopher MacKechnie

Streetcars and Development

One of the rationales that lays behind most of the currently planned modern streetcar lines in North America is that these streetcar lines will promote development. Have streetcar lines already constructed promoted development? Note that when I discuss modern streetcars I am referring to lines that have opened in the last ten years, and not legacy streetcar lines in places like Boston, Philadelphia, and San Francisco that have operated continuous service for over one hundred years.

Before we answer that question, let us look at another question: are these streetcar lines being built in areas that lack existing transit service? The answer: in every case in which modern streetcar lines have been planned and built in the United States there has been existing bus service. For example, the first phase of Washington, D.C.'s streetcar system - a route along Benning Road - already has extensive bus service operated by WMATA's Route X2, which operates frequent service on weekdays, every ten minutes on Saturdays, and every twelve minutes on Sundays. Future phases also duplicate bus service. In the case of Seattle's South Lake Union Streetcar, the corridor has seven parallel major bus routes operating within three short blocks of the streetcar. Does it really make sense to spend significant sums of money (even though streetcar lines are much cheaper to build than light rail lines) on service that essentially duplicates what we already have when there is still so much unmet transit demand and need to rehabilitate what we already have? Interestingly, the Portland (OR) Streetcar - the modern streetcar that has been built that has been touted as the biggest success of them all - serves a corridor that did not have as good existing bus service, although the extension on the east side of the river duplicates existing bus service.

In terms of streetcars promoting development, the experience in Portland has been held up as an example of what the new lines can deliver. In a 2008 report on how the streetcar has affected development ever since its final alignment was identified in 1997, we learn:

  • $3.5 billion has been invested within two blocks of the streetcar alignment.
  • 10,212 new housing units and 5.4 million square feet of office, institutional, retail and hotel construction have been constructed within two blocks of the alignment.
  • 55% of all CBD development since 1997 has occurred within 1-block of the streetcar and properties located closest to the streetcar line more closely approach the zoned density potential than properties situated farther away.
  • Developers are building new residential buildings with significantly lower parking ratios than anywhere else in the region.

The result has been similar in Seattle, where since the South Lake Union Streetcar line has been planned $2.4 billion in investment has occurred within roughly three blocks of the line, amounting to 2,500 housing units and 12,500 jobs (including 8,000 jobs from the new headquarters of Amazon.com). Of course, an important question is whether this development would have taken place anyway in the city, but perhaps at a different location. It seems highly improbable that Amazon.com might have relocated to, say, Wichita without the streetcar, and notwithstanding the construction adjacent to the Portland rail line the city is not an economic hotbed, with an July 2012 unemployment rate of 8.2%, which was good for a tie for 190th place (out of 372) in American cities.

Compared with Seattle and Portland, the situation in Tampa, FL is much worse. "Credited" with only $450 million in development, the 2.7 mile line has had declining ridership for several years. Worse, the first trip is not until noon - making it useless as public transit. The less said about Detroit's proposed new line the better. One is tempted to think that already successful cities will have successful streetcar lines, while also-ran cities (Oklahoma City, Tucson, etc.) will have less successful streetcar lines, but we will not know for sure until these additional lines are built. Transit planner's note to self: this is not a Simpsons episode.

If these streetcar lines actually promote development, then why is the public sector paying for them? After all, this situation seems similar to the heyday of the streetcar era , when real estate moguls laid streetcar track so that buyers could access their new developments. If landowners are going to enjoy the increased property values that will happen when their parcels are close to a new rail line, then should they not contribute to their construction? In fact, in at least three cases - the proposed downtown Los Angeles streetcar line, and the two lines operating in Portland and Seattle - property owners have or will pay a significant portion of the capital costs. In terms of Los Angeles, the property owner share of the capital costs are going to come from tax increment financing (TIF). Unfortunately, all of the subsidized operating costs are going to come from Los Angeles Metro - and it is unclear whether Metro has the funds to pay for it. In Portland, owners paid for 25% of the capital costs while in Seattle they paid for 50%. In neither Seattle nor Portland do the property owners pay any direct operating cost subsidies, although of course their existing taxes continue to support the two transit systems.

Overall, my main concern with these streetcar lines is that they will take transit funding away from other projects. It would be madness for King County Metro to have to cut bus service elsewhere in order to pay for the operation of their planned First Hill streetcar line, which operates along a corridor served by the busiest and most frequent bus routes in the city. Another concern is the poorly planned and executed streetcar projects will provide fresh ammunition for transit critics in much the same way that the mostly empty light rail lines of San Jose, CA's Valley Transportation Authority have done in the past.

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