Making the case for a 4th St Streetcar.
By Kevin Yates and Porter Stevens
Since Portland, Oregon’s modern streetcar system was first introduced in 2001, the U. S. has been experiencing a revival of the streetcar, a mode of transportation with its heyday in the early 20th century. Across the country, cities that scrapped their streetcar systems to make way for the automobile are now installing new streetcar lines. They do this because streetcars are proving not only to be clean and modern mass transit systems, but also great vehicles for revitalizing downtowns and the inner city. From Portland to Cincinnati, cities are rebuilding their streetcar networks and attracting investment and development. New residents and businesses are moving into streetcar neighborhoods by the thousands. Research suggests that a streetcar system attracts new investment to a neighborhood or corridor, and Louisville’s 4th Street corridor is one place where a new streetcar system could have a similar effect.
But why should Louisville build a streetcar line along 4th Street? Streetcars are expensive pieces of transportation infrastructure, and they require a substantial commitment of private and public resources to construct. Yet streetcar systems are proving to be a cost-effective investment, as well as a smart and forward-thinking idea.
For an urban corridor like 4th Street, a streetcar represents the best combination of cost and impact when compared to other mass-transit systems. According to the American Public Transportation Association, streetcars are significantly less expensive than light rail, typically costing $18-35 million less per mile. The cars are also smaller, run much slower, and use small, bus-style station facilities. This makes them much easier to integrate into the surrounding cityscape, and more amenable to areas with heavy pedestrian traffic. While more expensive than buses, streetcars can carry more passengers, are quieter, exhibit smoother rides, and run on clean electricity. But most importantly, streetcars run on rails.
The fact that the streetcar is a rail-based transit system is critical to one of its most important advantages: its ability to attract new investment along its route. The “magic” ability of streetcars to spur development is a phenomenon that is still being studied, but the relative permanence of this type of system has often been cited as the main cause. By investing in the heavy infrastructure of rails and overhead power lines, a city is sending a strong message to developers: this transit system will always be here to serve the tenants of an adjacent development. This gives developers the confidence to build denser, transit-oriented developments that, due to regulations such as parking requirements, would otherwise be too risky or financially unfeasible. It is important to note that this “magic” does not originate solely from the streetcars themselves, but also from the areas in which they are located. Successful streetcar systems are ones installed in neighborhoods already experiencing revitalization or reinvestment; the streetcar simply builds on that success and brings a desirable amenity to the area.
While the attractive nature of streetcars is not yet fully understood, their impact on cities across the U. S. is very real, and very powerful. Table 1 illustrates the amount of development attributed to streetcar systems installed in five U.S. cities. Evidence shows that each city has earned a phenomenal return on their investments; Portland’s famous streetcar system generated over a billion (with a b) dollars in new real estate, yielding a 1,795% return on its investment. The projected benefit/cost ratio for Cincinnati’s streetcar system is 15.2/1; for every dollar the city invests, it expects to earn $15.20 in development and tax revenue.
|City||Cost Per Mile||System Cost||Estimated Development Investment||Return on Investment|
|Kenosha, WI||$3.1 million||$6.2 million||$150 million||2,319.35%|
|Little Rock, AR||$7.84 million||$19.6 million||$200 million||920.41%|
|Tampa, FL||$20.13 million||$48.3 million||$1 billion||1,970.39%|
|Portland, OR||$11.5 million||$55.2 million||$1.04 billion||1,794.93%|
|Cincinnati, OH (Projected)||$40 million||$102 million||$1.48 billion||1,350.98%|
A Possible Streetcar System
The most successful and cost-effective streetcar system is simple in design, built on flat terrain, and connects popular destinations containing a diverse mix of uses. All of these elements can be found in the 4th Street corridor, and they have helped shape the proposed system seen in Figure 1. In this proposed system, the 4th Street streetcar would begin its journey at the intersection of 5th and Main Street, in the heart of downtown Louisville. From there it would travel east along Main Street, utilizing a counterflow lane until Main Street is returned to two-way traffic. The streetcar would then turn onto 3rd Street, heading south through downtown, SoBro, and Old Louisville, until it reached the northern edge of U of L’s Belknap Campus; 2.6 miles in all. Once it passed Cardinal Boulevard, the streetcar would then turn right onto West Brandeis Avenue. This short, low-traffic side street is in the heart of campus and is ideally suited to become the southern terminus for the streetcar line. This would be a major stop at U of L, and streetcar operators could begin or end their shift here.
Explore the Potential Route for the 4th St Streetcar
Let’s stop for a moment. The proposed streetcar line would not continue farther south to Churchill Downs for several reasons. The intersections of 3rd and Eastern Parkway and 4th and Industry Road each contain an underpass, allowing cars to travel under the railroad line. These underpasses are low, narrow, and prone to flooding. They would need to be substantially modified (at substantial cost) to ensure that a streetcar could safely pass through. Additionally, the planned construction of a roundabout at 4th and Industry Road creates another obstacle the streetcar would have to navigate. Also, plans to turn the southern end of 4th Street into a trucking route makes the possibility of a streetcar line there unlikely.
Moving again, the streetcar would turn right onto 4th Street and head north to downtown, looping back through Old Louisville and SoBro. However, once the streetcar reached Broadway, it would turn left and proceed west for one block, then turn right onto 5th Street. Finally, the streetcar would head north along 5th Street until it reaches Main Street. Because 4th Street is routinely closed at 4th Street Live! (a decision which is controlled by Cordish Cos., not Louisville Metro), the streetcar must make an inconvenient detour around the entertainment complex.
This proposed route is the best option for the 4th Street corridor. By utilizing Louisville’s street grid, the route minimizes the number of turns, which decreases transit time and installation costs. The route also connects a diverse mix of land uses, including residential areas, shopping, dining, and entertainment venues, cultural institutions, and major centers of employment. Finally, the proposed route is lined with many opportunities for new development. SoBro, U of L, and downtown are littered with surface parking lots and underutilized properties that could become sites for new, mixed use, transit-oriented development.
The most critical aspect of any proposed project is, of course, its cost. Unfortunately, properly estimating the cost of a streetcar system is a complicated affair. The American Public Transportation Association estimates the average capital cost of a streetcar project to be $12-15 million per mile. This figure includes costs associated with installing rails and overhead lines, purchasing vehicles, and building power and maintenance facilities. Using this estimate as a guide, at 5.54 miles, the proposed streetcar system for 4th Street would cost roughly $72.02 million to $83.1 million. However, it is important to emphasize that $12-15 million per mile is only an estimate. As Table 1 shows, the cost per mile for completed projects often falls outside of the estimated range. For example, Cincinnati, Ohio’s streetcar system is projected to cost $40 million per mile, while Kenosha, Wisconsin’s system cost only $3.1 million per mile. Currently, Savannah, Georgia can boast of having America’s cheapest streetcar system. Using a disused 2.3 mile railroad branch line and a vintage streetcar (pictured below) powered by a bio-diesel generator, the entire system cost $1.5 million.
This wide range of costs is primarily the result of the desired complexity of a city’s streetcar system. Portland’s streetcar system, for example, was built using a lower cost design approach that favored keeping design simple and economical in order to stay within a limited budget. The type of streetcar used (modern, hybrid, or vintage) can also have a significant impact on the final cost of a project. Vintage streetcars, or streetcars that first operated in the early 20th century, can be purchased and operated at a fraction of the cost of their modern equivalents.
The system’s power source is another significant factor in its total cost. Building the traditional system of overhead wires is extremely expensive; a quarter of the projected budget for a 10 mile streetcar project in Charlotte had to be devoted to installing the overhead catenary system. However, several alternatives do exist. Remember Savannah’s remarkably low total system cost? This is largely because the system does not use overhead wires. Savannah’s streetcar is powered by an onboard diesel generator, which runs on bio-fuel synthesized from used cooking grease collected from local restaurants. Another promising power source is hydrogen fuel cells. Several companies produce wire-free streetcars that utilize hydrogen fuel cells, and this technology is in use in downtown Palm Beach, Aruba.
Other factors can impact the final cost of a streetcar project. Underground utilities may have to be moved to ensure that maintenance crews can have access to them after the streetcar tracks are installed. If the project encounters significant opposition (as was the case in Cincinnati), legal fees can also add to the final dollar figure.
No two streetcar projects are the same. They each have different goals or design standards, and each face their own set of challenges. All of these factors have an impact on the final cost of a project, and any streetcar study would do well to include them in the calculations that will determine a project’s financial feasibility.
Potential Sources of Funding
The streetcar boom of today was jump-started by the introduction of federal funds, including those from the Transportation Investment Generating Economic Recovery (TIGER) program. Enacted during the Obama administration, this program allows the U.S. Department of Transportation to direct funds to specific transit capital projects. Additionally, the Federal Transit Authority (FTA) offers grants through its New Starts program, which awards funding for major transit capital investments, including light rail, bus rapid transit, and streetcars. For example, the Memphis, Tennessee streetcar line on Madison Avenue was partially funded by a $46.7MM grant from the FTA New Starts program.
Part of the appeal of a streetcar system is its permanence. Assuming related conditions such as zoning are favorable to development, capital investment and economic development tend to blossom along the path of the streetcar line. Because the streetcar track is fixed, a value premium is typically created, and financing strategies are used to capture some of this monetary increase seen as a result of the streetcar. One of the most thorough studies of the value premium generated by the introduction of a streetcar was conducted by Dr. Robert Cervero at the University of California-Berkeley. In this study, the author found housing value premiums in cities with fixed transit systems ranged from 6.4% to 40%.
A tax-increment financing (TIF) district is a public financing strategy in which future projected gains in tax revenue is used to help fund new construction of a variety of capital projects. Louisville has used a TIF district to capture the value premium resulting from the KFC Yum! Center, a $238 million arena completed in 2010. Unfortunately, as Louisville is currently experiencing, actual receipts from TIF districts are routinely lower than initial projections. Under a local improvement district (LID) strategy, a group of property owners can contribute to the cost of capital projects. This financing method is particularly amenable to the public, because those property owners most likely to earn higher rents as a result of a streetcar have paid toward the project. Locally, Mayor Greg Fischer is advocating for a local option sales tax referred to as “LIFT”, or Local Investments For Transformation. This one percent increase in sales tax would fund specific capital projects, as voted on by citizens. After the project has been fully funded, the additional sales tax is eliminated.
Municipal parking bonds and parking revenue are typically part of the financing mix of a streetcar project. In Portland, Oregon, as of 2008, 27.7% of its streetcar project had been funded by city parking bonds. In Savannah, Georgia, the city’s parking fees pay for operating costs of its streetcar. Parking and streetcar projects typically have a symbiotic relationship. As the streetcar spurs growth and economic development in the area, this attracts visitors and, in turn, increases the demand for parking.
Today, over thirty U. S. cities are in the process of planning new streetcar systems or extensions to their existing lines. Cities that offer a streetcar system have experienced noticeable growth in their downtown and urban neighborhoods. Areas adjacent to streetcar lines have experienced a substantial influx of new investment and construction, new residents, and new businesses. What has been happening in these cities makes a very convincing argument for why Louisville should strive to be included on that list. A streetcar line along 4th Street would be nothing short of transformative, both for the corridor and the city. All Louisvillians should come together and try to make it a reality.