Can a bunch of civically inclined businesses team up with the chronically cash-strapped federal government to build a streetcar line in the year 2013?
That is the question being asked in Detroit where this summer, a non-profit called M-1 Rail will break ground on a brand new, 3.3-mile streetcar line along busy Woodward Avenue, connecting the economic centers of Downtown, Midtown and New Center. Operations are projected to begin in fall of 2015.
M-1 Rail is the brainchild of wealthy Detroit investors Dan Gilbert and Roger Penske. Gilbert, the chairman and founder of Quicken Loans, owns 30 downtown buildings totaling 7.6 million square feet near the proposed streetcar line, according to the Detroit News. Penske, a former racecar driver with a Forbes-estimated net worth of $1.2 billion, owns a suite of auto-related businesses including Penske Racing, Penske Automotive Group and Penske Corporation. The two co-chair M-1 Rail, which is structured as a 501c3 non-profit to enable it to receive donations and grants — including the $3 million that Gilbert and Penske committed to giving in a business plan submitted to the Federal Transit Administration last April.
The plan estimates that it will cost $137 million to build the M-1. What’s unique with the Detroit plan is where those millions will come from. Unlike with most transit projects that are primarily underwritten by local and state governments, non-governmental organizations will foot most of the M-1 tab. And we aren’t just talking about Gilbert and Penske’s donations. There are 15 different organizations that have committed at least $3 million each to the project. The list includes major employers such as Compuware, the Detroit Medical Center, the Henry Ford Health Center, Illitch Holdings, Wayne State University and Chevrolet, as well as the Ford Foundation, the Kellogg Foundation and Blue Cross Blue Shield of Michigan.
The Kresge Foundation — a major regional funder and the guiding force behind a new 50-year plan for the city — has committed $35 million with an additional $3 million “backstop” grant, and the Hudson Webber Foundation has committed $1 million. A final $22 million is coming in via commercial loans.
Detroit has joined something of a national streetcar revival, driven in large part by changes in federal transportation policy and the availability of federal TIGER funds to implement projects. But while many other streetcar projects have gotten underway in recent years, M-1 is the first to be majority financed and operated by a non-governmental group.
“Nobody in America, no community, has ever raised $100 million for a project like this,” Transportation Secretary Ray LaHood told the Detroit Free Press in January. “That is unprecedented.”
On the public sector side, financing will include $16 million in New Market Tax Credits and a $25 million TIGER grant from the U.S. Department of Transportation.
After the rail is built, the same mix of public and private dollars will support its operations. M-1 has pledged to keep the line running and maintained for 10 years. After that, the non-profit has said it will transfer its assets to an appropriate public entity, potentially the newly created Regional Transit Authority (RTA). That entity would rely on a mix of fare revenue, advertising, sponsorships, donors and a subsidy from the State of Michigan to operate the line.
“[A regional subsidy] will be the only way to sustain the system so that it will survive,” said Heather Carmona, a spokesperson for M-1. “Right now we are beginning to work with the RTA to make sure we are starting this process early.”
If you ask M-1 president and CEO Matthew P. Cullen — who is also CEO of Rock Ventures, an umbrella entity created to manage Dan Gilbert’s portfolio of real estate, philanthropic projects and investments in downtown Detroit — the new rail line is fast on its way to becoming a “significant long-term economic driver for Detroit’s urban core. “
Already, there are signs that the Cullen is on to something. A Whole Foods has opened on Woodward, and a placemaking campaign sponsored by Gilbert is unfolding over the summer with new retail and outdoor plazas. A new $650 million hockey stadium served by an M-1 stop was recently announced at the intersection of I-75 and Woodward. The area currently has a 5 percent vacancy rate, Carmona said.
A streetcar on Woodward Avenue in the early 1900s.
The All-American Road
Woodward Avenue strikes a path through the heart of metropolitan Detroit, marking the boundary between east and west. But unlike that other famous Detroit road, 8 Mile, Woodward connects instead of divides.
As the main thoroughfare linking city to suburbs, Woodward extends 27 miles north from the Detroit River through the city and across 8 Mile, where it enters Oakland County’s middle and upper-middle class suburbs. It finally terminates in Pontiac, a post-industrial, mostly African-American town facing many of the same issues as Detroit.
Woodward epitomizes car culture. The road gained the National Scenic Byway “All-American Road” designation in 2008 for its significant automotive history — several state and national historic landmarks, including the Ford Motor Company Highland Park plant and the Diego Rivera mural at the Detroit Institute of Arts, are situated along its path. Every summer, an annual melee of classic car enthusiasts recreate 1960s-era cruising between 8 Mile Road and Pontiac.
It wasn’t always so. Starting in the 1890s, Detroit operated an electric streetcar system. By 1901, an interurban railroad provided more than 400 miles of service connecting Woodward Avenue with surrounding cities including Ann Arbor, Flint, Port Huron, Pontiac and Toledo. The railways petered out during the Depression, and the streetcars began to be converted to bus routes in 1953.
The revival of mass transit on Woodward is part of a broader rethinking of transportation in Motor City. After 23 failed attempts over a 40-year period, Detroit gained its first Regional Transit Authority in December, becoming the last major metropolitan area in the nation to establish such a body. (TIGER funding for the M-1 depended on the region taking that step.)
The new RTA is expected to develop a comprehensive regional transit plan as one of its first orders of business. Figuring out how to finance more projects like the M-1 will likely be a large part of that planning process. With the city of Detroit under emergency financial management and facing down bankruptcy, finding the money to fund transportation will not be easy. Raising tax dollars through a regional millage to support regional transit will mean some tricky politicking.
No one is sure if suburban voters, accustomed to their automobiles, will vote to fund regional transit.
“The RTA will need to make the case to opinion leaders and the public that regional transit provides great benefits to the wide community and hence is worthy of public investment,” RTA Washtenaw County representative Elisabeth Gerber told the web magazine Model D in May.
Christopher Leinberger, a private real estate consultant, Brookings Institution fellow and University of Michigan urban planning professor, said M-1 Rail is the city’s best and only option to get out of its dire fiscal situation.
“M-1 Rail is the most important infrastructure investment in southeast Michigan in this century,” Leinberger said. “This will put a fiscal base under the City of Detroit.”
Leinberger points to the Washington, D.C. suburb of Arlington County, Va. as a model for Detroit’s regional economic future. According to his research, transit-oriented development, which has quadrupled the density around the Orange Metro Line, accounts for 10 percent of the region’s land area but 55 percent of economic activity — a figure he said is growing.
“What Quicken Loans and General Motors Headquarters and Compuware have done is vote with their feet and their pocketbooks to reinvest in Detroit up and down Woodward, and M-1 Rail is absolutely essential to that,” Leinberger said.
“This will spread out to the suburbs,” he went on. “Oakland County’s future economic development will be centered in walkable urban places like Royal Oak and Birmingham. Detroit as a region can accept or reject this economic reality.”
Map showing how the southern end of the M-1 would intersect with the Detroit People Mover. Credit: M-1 Rail
M-1 Rail: Back to the Future
This is not the first time Motor City has turned to rail to revive its downtown.
Detroit was one of only three cities to install an elevated, driverless monorail loop during the 1980s. The Detroit People Mover was completed in 1987 at a cost of more than $400 million and never met ridership projections. The system has been dubbed a “model of inefficiency,” a “train to nowhere” and a “rich man’s rollercoaster.” Some have pointed out that the system’s effectiveness was limited by the region’s failure to build out public transit.
Heather Carmona from M-1 said that the People Mover, as an elevated system, was never connected to activity on the street as M-1 Rail will be. Look at the routes, she said: M-1 Rail is situated in the densest part of the city near cultural and sporting attractions and nightlife, while the People Mover only connected office buildings.
“I think the comparisons are unfair,” Carmona said. “This is a linear system. It’s intended to bring people to Woodward to transit stops where the transit-oriented development is planned.”
Carmona’s logic does not calm everyone’s fears. Todd Scott, a coordinator for the Michigan Trails & Greenways Alliance, has strong concerns about M-1 Rail.
“People hold up public-private partnerships as this wonderful thing, but they are not always wonderful,” Scott said. “M-1 rail is a perfect example of the ugly side of public-private partnerships.”
Scott listed a litany of concerns that boil down, in his view, to a prioritization of the investors’ real estate development interests over public transportation needs.
The big sticking point with critics is this: Investors plan to build curb-running streetcars for most of the project’s length, which Scott said have been shown to be slow and unsafe for pedestrians, cyclists and motorists. M-1 Rail has suggested cyclists reroute to parallel streets, none of which run the full stretch of the line. Detroit’s original streetcar system ran at the center of the street — as does the streetcar in Portland, Ore., an example pointed to as a model for Detroit. The center-versus-curb issue has been the focus of much debate (and a hilarious video); center-running rail is generally faster and safer, but curb-running rail can have more stops and better supports transit-oriented development.
“The private side brings so much money to the table that politically, the public side has to go along with it, whether it’s good or not,” Scott said. “When the private partner[s] control the design, they don’t have to involve the community, they don’t have to follow what the community needs.”
Sommer Woods, director of government and community affairs for M-1 Rail, said the investors did their due diligence during the environmental review process, and are now forming a business advisory council and community advisory council to engage stakeholders, including cyclists, residents and the disabled.
“We are trying to be all-inclusive,” Woods said. “We want everyone at the table.”
Private investment in streetcars to serve private real estate interests is not without precedent. Leinberger pointed out that in the pre-automotive era, streetcars in most U.S. cities were owned and operated by developers who owned the land around them.
“Transit in particular is not the goal,” Leinberger said. “The goal is economic development. The means is by moving people.”
M-1 would have been set up to serve as a commuter link between the city and suburbs had the 9.3-mile incarnation bringing it to 8 Mile Road been pursued. Now, the Woodward Alternatives Analysis is looking at developing a separate rapid transit option, likely bus rapid transit, to serve the commuter function, with M-1 serving primarily as a local circulator and catalyst for transit-oriented development. M-1 will service the Detroit Amtrak station, linking it to a proposed regional commuter line connecting Detroit with Ann Arbor.
Scott is concerned that bus riders who have been impacted by cutbacks in the bus system will not benefit from the project. It is currently not clear how or whether M-1 Rail will interact with existing buses or potential future rapid transit servicing Woodward. The route does not connect to the multimodal Rosa Parks Transit Center, Cobo Hall or the Renaissance Center.
“When you look at how they’ve cut back the bus lines… it has hurt so many people,” Scott said. “People can’t get to school, people can’t get to jobs, and we are putting all this money into something that’s not going to be any better than duplicating a small portion of the existing bus system.”
Megan Owens, executive director of the advocacy group Transit Riders United, echoed Scott’s concerns.
“I’m concerned that the planning process has been somewhat secret,” Owens said. “Decisions have been made by the investors and donors without enough consultation with the local community about their needs.”
But overall, Owens was more optimistic. “We do see it as a positive step forward in providing more transportation options,” she said. “No one piece of a transit system is the silver-bullet solution.”