Streetcars Spurring Urban Development

The streetcars that many cities are building now are very different from the ones that crisscrossed the country in the early 20th century — and not just because they’re air-conditioned and wheelchair-accessible. Streetcar lines are being built as catalysts for urban development and economic revival. They are connecting to other parts of a city’s transit system, connecting neighborhoods that were not previously connected and creating a new cityscape in the process.

Modern streetcars have been in place for a while in Portland, Ore., Memphis and Little Rock — not cities typically thought of as trendy urban centers. Seattle and Dallas are adding second lines. Streetcar systems have opened or will open this year in Tucson, Atlanta and Washington, D.C. Another 11 are planned for 2015 or later in cities ranging from Fort Lauderdale to Milwaukee to Tempe, Ariz.

There are 38 streetcars in cities around the country today, up from just seven in 1980. And usually one of the goals when a city builds a streetcar — successfully met in the ones that have been built so far — is to spur development.

“Transportation and development go hand in hand and always have,” says Art Guzzetti, vice president of policy for the American Public Transportation Association. “The current streetcar wave is back to the future because it’s hard to comprehend how much of urban American life revolved around the streetcar from 1890 to 1930. There was huge urban development in that era, largely around streetcars.”

Streetcars (also known as trolleys) have some definite advantages over light rail. “Streetcars are typically smaller, lighter, less expensive than light rail and usually operate in mixed traffic, rather than in their own exclusive right of way,” DC Streetcar writes on its website. “Streetcar systems can be built more rapidly, are more cost-effective and cause less disruption to businesses and communities during construction in comparison to light rail.”

Once they are built, streetcars have a different function from light rail, serving more as circulators. “Streetcars are not geared for mass commuting because they’re not huge time savers,” says Guzzetti. “They do serve an important circulator role. You have an activity center here, an activity center there, and you need a link.”

Streetcars have a role beyond just being “a mobility provider,” Guzzetti says. “Many of the projects around the country are sponsored not by the transit system but by the city. You want to shape the community, you want to spark vitality, you create a sense of place.”

Streetcars do have some disadvantages. They are expensive for the amount of ground they cover, and they’re slow because they share the right of way with cars. “They aren’t intended to be fast,” Guzzetti says. “They’re intended to be part of a system.

“What’s making them ripe is a demand for urban living and for the mobility that goes with that.”

Atlanta: Connecting historic districts with downtown

Atlanta is a prime example of the streetcar as a vehicle for urban development. In the first part of the 20th century, Atlanta had a streetcar system reaching over 200 miles. The last streetcar ended in 1949. Then a few years ago, the city looked at the success of streetcars in Portland, Charlotte and Seattle, and decided to build one in its own downtown.

The venture is a public-private partnership between the city, the Atlanta Downtown Improvement District (ADID) and the Metropolitan Atlanta Rapid Transit Authority (MARTA). ADID is itself a public-private partnership aimed at creating a livable downtown.

Like many cities building streetcars, Atlanta got its initial funding from a TIGER — Transportation Investment Generating Economic Recovery — grant from the U.S. Department of Transportation.

The 2.7-mile track, slated to open before the end of the year, has a $98-million budget, $47 million of which is from the 2010 TIGER grant. The $98 million covers more than the construction of the system, says Atlanta Streetcar communications director Sharon Gavin.

“A lot of decisions were made to enhance the project and help the whole downtown area become more walkable,” Gavin says. Designers paid careful attention to streetscaping, with actions such as changing a one-way street to two-way to improve walkability. The rest of the funding came from ADID and from a car rental tax that the city council voted to divert to the streetcar.

Why does the city want to fund the streetcar? “The Atlanta streetcar’s role is to enhance the downtown area to attract more residents and businesses,” says Gavin. Developers have so far agreed to invest $450 million along the streetcar line, and more than half of that has already been spent.

About half of the investments are for small businesses such as restaurants and boutique shops and half are for large institutional, corporate and retail establishments, says Jennifer Ball, vice president of economic development and planning for Central Atlanta Progress. Since 2010, there are seven new restaurants and nine more planned — a triumph for an area that used to have none — and 20 real estate transactions for buildings and land.

Some of Atlanta’s largest companies and developments are along the streetcar route. The Flatiron Building, the city’s oldest skyscraper and a designated historic landmark, has just been bought by a new owner who wants to develop the office building into an entrepreneurial hub for startup businesses, with a planned investment of $14 million. Georgia State University has spent $5 million to build classrooms and dorms along the streetcar line, and Coca-Cola has spent $35 million to expand its building.

The streetcar line includes two historic districts. Because of the nature of the neighborhoods, says Ball, “we don’t want to see wholesale redevelopment, we want to see adaptive reuse.”

To be awarded a TIGER grant, a community must show that the money will benefit economic competitiveness, job creation and stimulus, safety, sustainability and livability, with the goal of a 1:1 benefit/cost ratio. Atlanta says it has achieved a benefit/cost ratio of 2.56.

Included in the analysis is $159.3 million representing incremental property value appreciation over 20 years for existing property one-quarter mile from station areas.

But the biggest benefit may be harder to measure. Over the years, “we’ve created an image for Atlanta: traffic and lack of transportation options,” says Lennie Shewmaker, government affairs director of the Atlanta Board of REALTORS®. “Hopefully, we’re changing that. So when people visit, they can take MARTA to their downtown hotel, hop on the streetcar line and go to the Old Fourth Ward. They never have to rent a car.” The Old Fourth Ward is the rapidly gentrifying neighborhood where the Martin Luther King, Jr., historic site is located.

The streetcar is affecting residential patterns, too. “People are moving back into town,” Shewmaker says. “For the first time there are more single adults than married. They want to be near restaurants and green space without needing to own cars.”

Tucson: Successfully bringing people downtown

Like Atlanta, Tucson wanted to build a streetcar to connect different communities and to create economic stimulus. The goal was to provide easy access to five distinctive areas along a four-mile corridor, says Jeremy Papuga, the transit administrator for the city of Tucson. Bus rapid transit or heavy rail would not have worked on that route.

“We wanted a vehicle that could run in the right of way with automobiles, an agile vehicle that could handle narrow streets, something friendly to pedestrian access,” Papuga says.

The Sun Link streetcar, which opened in late July, now sometimes gets stuck in auto traffic created by the streetcar’s success in reviving downtown. “We’ve seen tremendous activity in the downtown corridor,” says Papuga. “It’s a very active pedestrian environment.”

Funding came from a combination of federal and local moneys. In 2006, Pima County voters approved a half-cent sales tax to fund a 20-year, $2.1-billion regional transportation plan. Of that, $87.7 million was to be used for the streetcar. That money was later supplemented by a 2010 TIGER grant for $63 million and $10 million from other federal programs.

“We did see a lot of economic development prior to startup,” says Papuga, starting as soon as the TIGER grant was awarded. As of March, private investment totaled $360 million, and public investment was $930.7 million. The largest share of commercial private investment has been $97.8 million in office construction.

“There has been an influx of new businesses — mostly restaurants, bars and some retail — and a tremendous amount of residential development,” Papuga says.

In the past two years, 2,600 residential units have been built, mostly student housing for the University of Arizona. The streetcar has helped the university expand its landlocked campus and has given students an affordable, car-free way to commute from downtown to campus. Papuga expects the next wave of development will be market-rate housing. “Our goal is to bring residents to the core of our community, or people on weekends,” he says. With 4,000 passengers a day in the first two months, “we’ve achieved that.”

Washington, D.C.: Reviving a neighborhood

Washington’s streetcar is scheduled to start in November, but it has already generated more than 4.3 million square feet in planned or completed construction along the initial 2.4-mile track. In 2013, approximately 558,000 square feet of commercial space was built or under construction along the route on H Street NE.

Anwar Saleem, executive director of H Street Main Street Inc., had asked for several years for the neighborhood to be put on the city’s list of beautification projects. Once the streetcar route was established in the mid-2000s, beautification was scheduled. Since then, 186 new businesses have opened up along the route, Saleem says.

“The streetcar was the promise to a better H Street,” Saleem says. “We had developers who weren’t going to do [any building] until the streetcar was running.”

Says Sam Zimbabwe, associate director of policy, planning and sustainability administration in D.C.’s Department of Transportation, “On H Street, the installation of streetcar tracks came with full reconstruction of the neighborhood.”

Washington, which has an extensive subway system through the city and suburbs, has been studying light rail and streetcar options since the 1990s. A 2010 study looked at building 37 miles and eight lines of streetcars across the city, which the Office of Planning expects would bring up to $8 billion in new development within 10 years of completion.

Now, a 22-mile streetcar system is in the planning or construction stage, says Zimbabwe. The current plan calls for another 45 miles of transit, whether it’s bus lanes, streetcars or light rail. The city will decide corridor by corridor.

But with concerns about immediate costs, officials from outgoing Mayor Vincent Gray's administration said in late October that they will push the city to build only about eight miles of streetcar line, down from the previously planned 22 miles. The long-term goal of 37 miles remains.

So far, the streetcar has been funded almost entirely from city revenue. The original plan was for 25 percent of all of the city’s incremental revenue, including income tax, to go toward streetcar construction until most of it was built. Then last May, the city council, unhappy about cost overruns, cut funding to $50 million a year.

The first segment of the streetcar along H Street has spurred development, but it will not connect the neighborhood with downtown, just connect it closer to a Metro subway station. The next phase will connect H Street east to Anacostia and west to Georgetown, two very different neighborhoods that are not at all connected now.

The initial H Street segment will help connect people within the corridor and should cut down on the number of private cars and taxis driving to a neighborhood that has become a big nightlife area, Zimbabwe says.

“The value of the streetcar system isn’t only measured by how many people are riding it, but by how it’s helping to direct investment and meet some of the citywide goals around sustainability.”

Joan Mooney is a freelance writer who has written extensively about transportation for Urban Land magazine and other publications. She also wrote the NAR’s water infrastructure toolkit. 

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