The Economic Development Benefits of Streetcar

This comparison of the development along Streetcar alignments in various cities showed up in my e-mail box this week, courtesy of the national Community Streetcar Coalition.

Streetcar Benefits to Investment
  Start
of Service
Initial Track Miles Initial
System Cost Per Track Mile (Millions)
Initial
System Cost (Millions)^
Development
Investment (Millions)*
Return
on Investment (%)
Expansion Planned
Kenosha 2000 2.0 3.00 6.00 150 2400.00 Yes
Little Rock 2004 2.5 7.84 19.60 200 920.41 Yes
Tampa 2003 2.3 24.35 56.00 1000 1685.71 Yes
Portland 2001 4.8 11.38 54.60 2300 4112.45 Yes
^ This represents
the total costs of the project including maintenance facilities and in
Tampa’s case, land acquisition.
* This represents planned and existing development investments
directly related to the lines. Numbers
were through interviews in Little Rock and Kenosha, a development study in
Portland, and calculations of new planned development located three blocks or
less from the streetcar in Tampa.
8 Comments

8 Responses to The Economic Development Benefits of Streetcar

  1. mykle
    May 26, 2006 at 9:10 am Link

    hey, where’s that “development study in portland” at? did they give you a link?

    -m-

  2. Chris Smith
    May 26, 2006 at 9:24 am Link

    The report is on the portlandstreetcar.org web site at http://www.portlandstreetcar.org/pdf/development.pdf (PDF, 7M).

  3. Betsy WIlson
    May 26, 2006 at 9:29 am Link

    It’s a bit blending things to say “return on investment” because the investment is mostly(?) public, and the return is mostly private, except for taxes.

    If they’re really getting 4100% return it makes one wonder why the streetcar doesn’t just fund itself, instead of asking for large contributions from the City.

  4. Ron Swaren
    May 26, 2006 at 11:53 am Link

    I don’t think anyone will ever be able to establish an axiom or formula to show that fixed rail transit of a given type will necessarily produce favorable ROI. This is a decision that is a judgement call, based upon how dense the area is, what zoning allows for, what urban renewal plans are underway, the amenability of the people to this mode of transit, the respective costs in each city in which it is proposed. It is more art than science.

    Case in point: Do cable cars work well in San Francisco? Absolutely; what else would on such steep hills, in a city with the highest density outside of Manhattan and a tourist hangout, to boot? But probably not in Kansas City.

    The Central City Streetcar is pretty much a no brainer, since it is also extending to new areas of ultra high density and/or rider preference. The MAX to Milwaukie, I think, will spur little development, not enough, at least, to justify the cost. Any close in development to downtown Portland could be better served by other means.

  5. adron
    May 27, 2006 at 11:12 am Link

    Ron Swaren – Ditto.

    To any businessperson, economist or other decision maker that had to worry about THEIR money being spent on something all this chart shows is that there is no REALY traceable correlations whatsoever.

    It’s more dependant on the city’s people, business environment, city environment, density, and of course if some developer with x billion dollars is ready to plunk it down.

    As for ROI, all these forms should turn profit based off of their considered lifespan. At minimum they should break even. This chart just perpetuates a non-correlated idea that development is somehow related to rail development.

    There is an increase, but not to the scale that this chart and the ideals behind it would like to think.

    It’s funny I sit here typing this comment too. A year ago I would have wanted to believe what is being implied with this report. I even did for a short time, but between hard facts, hard stats, and real correlative data it doesn’t really count (the chart). Unless there is a REAL business case for building these things they aren’t going to create real growth. If there was a profit motive behind the lines (like in Japan) there would be growth at EVERY station on a massive level. Easily 3-10x what it is now.

    Hell, Jacksonville Florida was experiencing higher growth than PDX in the last 5 years. They have NO transit whatsoever compared to Portland. Their downtown people mover is an example of complete and utter failure, a joke among the citizens of the city, but still it beat Portland. The main reason, it’s been capturing high tech secter getting away from north east and west coast taxation and expenses. So how does that correlate to mass rail transit? Simple, it doesn’t.

  6. Chris Smith
    May 27, 2006 at 11:23 am Link

    Adron, at least in Portland, there is a very direct connection: development agreements. In these agreements property owners agree to pay into an LID to support the Streetcar, and in return for the City building the Streetcar, the property owners commit to build at higher densities. Investors are plunking down money because THEY see the connection.

  7. adron
    May 27, 2006 at 11:00 pm Link

    In Portland.

    …and it wouldn’t have happened if there was no streetcar? Its candy but it’s not the reason. The reason is they know product will sell – i.e. condos etc. They also know the urban area here is attractive and being gentrified at a relatively high rate, so they know there are consumers for the high priced condos and all.

    I’m not saying that the streetcar isn’t’ kewl. Just that it’s not THE reason for the development. It’s just merely a part of. It’s like saying people are building downtown because there is a Safeway with Condos and apartments over the top.

    When telling many people in other cities that they’re going to get ROI for building a streetcar they need to look at other things, namely these “legally binding contracts” with developers. Otherwise the streetcar doesn’t’ incur ANYTHING. It’s the deal, not the cars (streetcars).

    Thus the reason I point out the JAX/PDX comparison. PDX is getting LESS growth right now, mainly because the city hasn’t been landing deals at the same rate that JAX has. Of course now again, as generally somewhat free markets go, this is shifting again and PDX is shooting thru the stratosphere of growth and Jacksonville is still plugging along at a particular rate. Both cities would bode well to look at particular things to enhance and benefit each other. Jacksonville is pro-business and it shows with the 20,000+ new jobs, something Portland desperately still needs, especially ones that would survive another recession instead of being known as the city with the highest unemployment in the nation. Jacksonville on the other hand has gridlock on its “interstate” section with no alternatives. Their bus system is a shambles and their skyway is a joke. They would bode well to learn something about transit planning. Even though they have somewhere to the tune of about 6x as much land (maybe a lot more even) to provide transit for than Portland there are many lessons to be learned.

    I’m just complaining because of the incorrect correlations shoveled onto society. I have no doubts why so many are so apathetic when they (society) are continuously fed half truth, double speak, and double talk along with statistically irrelevant data thru the majority of media outlets. For someone educated on statistics if they sit down for a minute they realize there are hidden agendas and far too much political motive behind far too many of the decisions in the area, especially in transportation.

    Simply put, truth would work just fine, no reason to use political exaggerations, simply stating we’d “like” to build a streetcar down this route, but we’ll make sure we make some “deals” to validate it’s existence is just as good as perpetuating the idea that the streetcar is the reason behind the developments. Either way the deals can and could be made without the streetcar, but should they? I don’t think so. The city would be at loss without it. Also on top of that if the LIDs and blagh blagh blagh pay the way for all of this why are we past 1 billion plus in federal dollars, millions past in operations cost for the streetcar, and untold millions past in other funds (Cascades)? A lot of these things COULD support themselves but they don’t because of the way they’re setup. If anything the land holders of the LIDs should be in charge of running and operating their specific lines. It worked years ago and it could well work again. They’d only have to recoup such a small percentage of the costs and could probably charge LESS than Tri-Met if things where setup right and bonds where allocated appropriately.

    The point however, of this whole rant, is to use truthful correlations to bring changes and things about. There is no need to lie about something that decision makers want anyway. The point is the streetcar is a desired feature, but not a necessary one. Light rail advocates around the country continuously perpetuate these half truths, but could simply organize, configure, and find lawmakers who would be willing to use zoning and land use laws pending the construction of mass transit that where used in the past. Most of these “creative” financing packages that cities keep conjuring up from nowhere, which amount to just more taxes from general funds and LIDs, are a poor excuse of finding individual and business motive to create mass transit and well organized cities.

  8. Chris Smith
    May 28, 2006 at 12:10 am Link

    Adron, I don’t think anyone involved in Streetcar thinks it’s just a matter of “build it and they will come”, clearly there are a tremendous number of factors at play.

    If Portland wasn’t experiencing very high in-migration in the 25-35-year-old demographic for the last 10 year or boomers weren’t becoming empty nesters during that same period, the Pearl probably wouldn’t have happened, regardless of whether we had Streetcar.

    But I also think the data makes it pretty apparent that Streetcar:

    1) Causes development to cluster around it (which in turn changes the character and number of the trips that development generates in a way that many of us consider very beneficial for society); and

    2) Prompts developers to build at a greater level of density than they would have without Streetcar nearby (reinforcing those same trip generation pattern benefits).

    Many involved in the development of the Pearl think it probably would have been a rowhouse neighborhood without Streetcar.

    I have no knowledge of what’s going on in Jacksonville. Is the development there happening at the same densities we’re seeing here in Portland, or is their urban area expanding at a faster rate than the Portland region for a given amount of new population absorbed?

    The core claim here is not so much that Streetcar generates development as that Streetcar captures development and funnels it into a dense form that the market (and much of the body politic) finds acceptable or even appealing.

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