Articles



The Modern Streetcar Movement: Federal Opportunities, Local Challenges

July 20, 2001. The opening of the first leg of the Portland Streetcar. Could anyone at that time have predicted the transformation of the Pearl District, the Portland, Oregon, neighborhood served by the streetcar, or the subsequent renaissance in streetcar transit across the US? Since the construction of Portland’s starter line (which has been extended three times), modern streetcar systems have opened in Seattle, Tacoma, and, most recently, Salt Lake City. According to the Community Streetcar Coalition, over 30 urbanized areas in the US are currently planning or constructing new streetcar systems. Indeed, cities are increasingly looking to streetcar investments as a strategy and tool to help revitalize communities, to support new development, and to provide more transportation options to serve the mix of residential, commercial, and retail markets such development encourages.

There are a number of factors which have contributed to what both advocates and transportation professionals have called the modern streetcar “movement.” Certainly, the economic development experience in the Pearl District has caught the attention of many urban planners, city officials, and local politicians throughout the US—although measuring the true impacts of the streetcar investment on the local economy versus other city policies and development incentives is elusive, and debatable. What is clearer is the role that federal policy and transportation grant programs have played in sustaining the modern streetcar movement.

What is equally clear are the challenges shared by many streetcar projects along their path through implementation to revenue operations. This article presents both the policy impetus that helps support the modern streetcar movement, and the risks that threaten it.

Federal Policy

While the initial Portland, Seattle, and Tacoma streetcar lines were funded almost entirely with local resources, the advancement of streetcar projects from concept to implementation outside of the Pacific Northwest has been prompted largely by federal policy. Specifically, the Obama administration’s efforts to promote livable communities—places where coordinated transportation, housing, and commercial development results in affordable and environmentally sustainable mobility and accessibility options—has aligned with initiatives in many cities aimed at achieving the same objectives. Importantly, the President’s Partnership for Sustainable Communities between the US Department of Transportation (USDOT), the Department of Housing and Urban Development, and the Environmental Protection Agency has shone a light on the interdependence of transportation, housing, development, and the environment. The partnership identified six livability principles (Box 1), perhaps none more important than the fifth, which challenged the three agencies to create funding and policy opportunities to facilitate local accomplishment of the others.

To that end, USDOT made “livability” a key criterion in its evaluation of projects pursuing funding under its multimodal Transportation Investment Generating Economic Recovery (TIGER) grant program. Transit projects have done relatively well in the program, winning $455 million—nearly one-third of the $1.5 billion available—in its first year (2009). Additionally, FTA made $130 million available in 2010 for Urban Circulator projects intended to promote, in part, the partnership’s livability principles.

The emerging federal role in the funding of streetcars cannot be understated. Before 2009, only three streetcar projects had been funded under the Federal Transit Administration’s (FTA) discretionary programs over the prior 20 years. Since then, however, fourteen new streetcar projects have been federally-funded. Box 2 presents FTA-funded streetcar projects since 2009.

Nine of the 14 projects in Box 2 have received funding under TIGER’s five annual programs, while four received funding under FTA’s Urban Circulator program (the Cincinnati Streetcar project received funding from both programs). However, as the Urban Circulator program was a one-off competition, and the TIGER program continues to grow smaller—indeed, its future beyond 2013 is not guaranteed—more streetcar project sponsors are eyeing FTA’s Section 5309 Capital Investment Grant Program and, in particular, a category of funding within the program for Small Starts projects, defined in law as fixed-guideway rail and bus projects (as well as corridor-based bus rapid transit projects) costing $250 million or less and requiring $75 million or less in Section 5309 funding.

In order to receive funding, candidate Small Starts projects must be evaluated and rated against specific criteria defined in federal transit law, most recently the Moving Ahead for Progress in the 21st Century (MAP-21) Act. Whereas streetcar projects have traditionally not fared well under the Small Starts program (the eastside extension to Portland’s streetcar system being the only project to have received Small Starts funding), MAP-21 and FTA’s approach to implementing the new law provides some expectation that streetcars may prove more competitive.

For example, FTA’s new benefit measure for cost effectiveness is based on the estimated number of trips, not time savings, which had previously disadvantaged streetcars in competition with more rapid forms of transit. Moreover, the calculation of costs in the cost effectiveness measure (and also for the environmental benefits measure) for Small Starts is limited to the federal share, rather than total project costs, and excludes operating costs from the calculation. Finally, FTA is continuing its policy, first adopted in 2010, to equally weigh all six project justification criteria. That means that MAP-21’s economic development criterion, which streetcars typically perform well against, counts as much in a project’s overall rating as cost effectiveness (which, when serving as 50 percent of a project’s overall rating, as it did prior to 2010, undermined the competitiveness of most proposed streetcars).

The Challenges Faced by Streetcar Projects

FTA’s Small Starts evaluation process is relatively new, and it remains to be seen just how competitive streetcars will actually be in comparison to light rail, commuter rail, and bus rapid transit projects. In the meantime, experience over the past few years suggests that streetcar projects, while growing in popularity, typically face a number of shared challenges as they progress through development.

Inexperienced Project Sponsors 

Many streetcar sponsors lack experience with not only transit project delivery but also basic federal grant compliance requirements. Only one-third of federally-funded streetcars have sponsors which are both federal grantees and project owners. Three streetcar sponsors (the cities of Milwaukee, Kansas City, and Atlanta) became new federal grantees and will serve as project operators; a fourth, the Transit Development District in St. Louis, was created as a public entity solely to serve as a grantee and presumed operator on behalf of the private Loop Trolley Corporation. The M-1 Rail streetcar in Detroit is owned by the private M-1 Rail consortium, but their federal grant is being managed by Michigan DOT. M-1 Rail plans to operate the streetcar system for 10 years and then transfer the system to the newly established Southeast Michigan RTA. Although neither the project owner nor the FTA grantee, Dallas Area Rapid Transit (DART) is playing an important role in the delivery of the Oak Cliff streetcar line, including managing the design, construction, and procurement of off-catenary-capable streetcar vehicles. DART is the likely operator of the system. The Dallas model is preferable to others where the transit agency is neither the project sponsor nor FTA grantee.

Lack of Clear and Committed Governance

The lack of experience means that streetcar projects require strong partnerships between cities, transit agencies, and funding partners in order to succeed. The Atlanta Streetcar is being advanced as a partnership between the city, MARTA, and the Atlanta Downtown Improvement District. Future phases will be overseen by Atlanta BeltLine, Inc. and integrated into its proposed streetcar system. The Ft. Lauderdale Wave Streetcar involves seven partners: the city of Ft. Lauderdale, its Downtown Development Authority (the original project sponsor), Broward County, Broward County Transit (the owner and eventual operator of the project), the South Florida RTA (the federal grantee and project manager for design and construction), the Broward MPO, and Florida DOT, who is contributing the largest share towards the project’s capital budget. Each agency’s responsibility for the project is documented in a memorandum of understanding (MOU) which guides the project’s development process, and which FTA required as a condition of an $18 million TIGER grant. On the other hand, many projects have suffered from weak partnerships, lack of trust, and inefficient governance structures. It is to be expected that different stakeholders would have different objectives and priorities for their projects. These sometimes competing objectives can result in slow decision making at best, and the withdrawal of funding from key partners at worst—ultimately jeopardizing the project.

Capital Financing Plans are Built on Multiple Sources

Most streetcar projects rely on a diverse mix of capital funding sources. This is somewhat a reflection of the fiscal realities facing many transit capital projects. Tax increment financing (TIF) and benefit assessment district revenues are two common sources which help streetcars capture increases in property values that are expected to occur along the corridors they serve. But these sources do not cover all necessary costs. With most cities loathe to tapping general revenues for streetcar construction, many financial plans are cobbled together by a mix of federal, state, local, and private funds. The Seattle South Lake Union Streetcar is fairly unique to date in not using any federal discretionary program resources, instead relying on nine capital and six operating revenue sources to deliver and operate the project. The M-1 Rail project is supported by over a dozen separate, and mostly private, funding sources. Administering multiple sources is a challenge for many project sponsors, and leaves many financial plans vulnerable when any one resource cannot meet expected cash flow requirements.

Operations and Maintenance is Often an Afterthought

There has too often been very little thought on, and corresponding planning for, how to pay for project operations and maintenance (O&M) and the service levels needed to make for a truly successful transportation system. Some projects have unrealistic cost estimates, others do not provide the necessary scope to permit frequent service (i.e. not enough vehicles or passing track), and many do not have reliable operating revenue sources. As a result, many projects are expected to suffer from very long headways (20-minute peak period frequencies are not uncommon) and constricted hours of operation.

Project Implementation Schedules are Far Too Ambitious

Only one federally-funded streetcar project—the Sugar House Streetcar, designed and constructed by the experienced Utah Transit Authority—has maintained the schedule it proposed in its original grant application. Major schedule drivers include vehicle procurement and utility relocation. Vehicle procurement is a critical path item for most systems, but most schedules are not realistic, owing to the sponsor’s lack of experience in procurement, and lack of understanding of the time required for vehicle design and delivery, particularly for new (i.e. off-catenary) technology. Utility relocation agreements have typically taken longer than scheduled to negotiate, and most utility work has proven to be more difficult than expected, typically resulting in added cost as well as schedule slippage. General project management inexperience has also resulted in delays associated with inefficient contract packaging and procurement.

Conclusion

The continued growth of the modern streetcar movement depends in part on the successful delivery—in terms of budget and schedule adherence, delivery of adequate levels of service, and achievement of economic development expectations—of the current pipeline of projects. Otherwise, congressional support for a future federal streetcar grant program, or even the current political support for maintaining the policy framework which has made streetcars more competitive for federal discretionary funding in recent years, may wane, along with local interest in these projects. The year 2014 will see the opening of three new starter streetcar lines in Atlanta, Tucson, and Washington, DC. Both streetcar advocates and critics will be closely tracking these projects’ performance, and their experience may help inform the next federal surface transportation authorizing law.

 

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