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How much have University Avenue businesses been hurt by light rail construction?

A crew working on new traffic lights at Fry on University Avenue.
Photo by Laura Baenen
A crew working on new traffic lights at Fry on University Avenue.

Last week, a group representing businesses along University Avenue were back in federal court, complaining that the financial assistance being provided to help them during light rail construction has been inadequate.

“Customers are not willing to navigate the congested, treacherous and ever-changing traffic patterns of University Avenue,” said a motion filed by the University Avenue Business Association. “The sounds and vibrations of jackhammers, revving engines of heavy-duty equipment, honking and yelling create a ruckus.”

The group and the St. Paul chapter of the NAACP renewed an earlier request that the court halt construction of the $957-million Central Corridor LRT project. The Midway and St. Paul Area Chambers of Commerce are not parties to the action, and remain supportive of the project.

The court action came as the project neared the end of its first year of construction on the street, sidewalks, rail bed and stations on Fourth Street in downtown St. Paul and on University Avenue west of Hamline Avenue.

Lanes reopened
Contractors reopened the lanes on the north and south sides of University to traffic on Wednesday, although lane restrictions remained in place in several locations. Construction is not scheduled for completion until 2014.

The Metropolitan Council, the cities of St. Paul and Minneapolis, and several philanthropic partners put together an $11.1 million package to help businesses survive construction.

It includes $4 million in zero-interest, forgivable loans of up to $20,000 for small businesses with less than $2 million in sales to compensate them for revenue lost during construction.

Adequate or not, direct financial assistance to businesses during the construction of infrastructure projects appears to be unprecedented in Minnesota. A former attorney for the Minnesota Department of Transportation says the department is not even permitted under state law to provide such assistance.

Worth the investment
Nancy Homans, policy director for St. Paul Mayor Chris Coleman, believes the public money being spent to help Central Corridor businesses is worth the investment.

“If it turns out in a billion-dollar project that we can mitigate the most serious impacts on businesses for something less than $4 million, that might not be a bad thing,” Homans says. “We all see the benefit of this transit investment, and we all will enjoy the benefits.”

LRT outreach coordinator Shoua Lee, right, talking with a University Avenue business owner about the project.
Photo by Laura Baenen
LRT outreach coordinator Shoua Lee, right, talking with a University Avenue business owner about the project.

So far, Homans says, 60 businesses have applied for loans and 51 loans totaling more than $753,000 have been granted. Eight applicants were found to be ineligible, and one was granted a loan and then decided to close its doors instead.

“I am hearing that the people who go through the process find it easy to do — it’s not onerous,” Homans says. “Given that 26 of the 51 [loans] were for less than $20,000, it means we totally compensated them for their losses.”

All of the loans have gone to businesses located in portions of the corridor where construction has started — generally in downtown St. Paul and on University Avenue west of Hamline Avenue. Next year, construction will move to University Avenue east of Hamline.

Here is how the program works:

• Business owners are asked to meet with a loan officer and document their monthly sales during the three years preceding the start of construction and their monthly sales since the start of construction.

• Businesses are given loans compensating them for the decline in their sales from the average of the last three years or 2010, whichever is more beneficial to the applicant.

• One fifth of the loan will then be forgiven each year for the next five years that the business remains in operation in the corridor.

To simplify the process, Homans says, the sponsoring agencies did not attempt to make any deduction in the sales losses that might be attributable to the recession rather than LRT construction.

“Most of them are long-established businesses that want to stay in the corridor, and we want them to stay,” she says.

Interestingly, Homans says, the business losses documented in the loan process have not been nearly as severe as some of the claims made in public.

“A number of them have been quoted in the press saying, ‘Oh, I’ve lost 50 percent of my sales.’ Then they go through the loan process and say, ‘Oh, I guess it was more like 15 percent,'” she says. “It has really helped in some ways to clarify the impact of construction.”

Kari Canfield, president of the Midway Chamber, says she knows some of her members have applied for loans and “have received the maximum of what they have requested.” Whether the assistance is adequate “depends on who you talk to,” she says.

Forgivable loans
In a separate initiative, the city of St. Paul authorized up to $2.1 million in forgivable loans to businesses for expansion or improvement of off-street parking along the corridor. The program is intended to help make up for the loss of some 950 on-street parking spaces, which are being eliminated to help make space for LRT tracks and stations.

As of last week, the city had approved 23 parking loans ranging from $25,000 to $250,000 and totaling $1.3 million.

In addition, several programs have been funded to help promote patronage of Central Corridor businesses during construction, improve storefronts and provide technical assistance to business owners.

So far, according to the Central Corridor Project Office, more businesses (44) have opened along the corridor than have closed (34) since construction began. Another seven have relocated outside of the corridor and 13 have relocated within the corridor.

Comments (10)

  1. Submitted by Rachel Kahler on 12/01/2011 - 11:24 am.

    In the end, I expect the corridor to bring more business. Regular mass transit to a business area can only bring more customers.

  2. Submitted by Michael Mischke on 12/01/2011 - 12:26 pm.

    I have no beef with Mr. Dornfeld’s article per se, but wouldn’t full disclosure call for stating that he is a former public affairs director for the Metropolitan Council, which will operate the light-line line?

  3. Submitted by Don Effenberger on 12/01/2011 - 02:09 pm.

    Re: #2: We do acknowledge Steven’s work with the Met Council in every Cityscape piece he does. It’s in the right-hand column as part of his bio: “From 2003 to 2011, he was the Metropolitan Council’s director of public affairs.”

  4. Submitted by andrew stephens on 12/01/2011 - 02:21 pm.

    @Michael Mischke – Your Highland Villager newspaper is way behind the times – no online edition, stuck in the 1950s automobile mindset so I understand how you may not be well versed on the internets. Websites, including this one, have sidebars that provide static and dynamic information. Cityscape articles have a brief bio for Dornfeld on the right side bar that lists his previous affiliation with the Met Council.

  5. Submitted by Zoey Mann on 12/01/2011 - 03:10 pm.

    I understand the frustrations these businesses feel, but in the end having the CC will help their businesses so much! To demand the “halting” of a half-completed project is just beyond insane- to permanently have University Ave. all chewed up? I’ve been impressed how quickly it’s moved along, actually!

  6. Submitted by David Greene on 12/01/2011 - 05:00 pm.

    It’s very unfortunate that LRT gets blamed for all of this. Let’s remember that the LRT project itself is only in the center of the street with some utility work impacting various other areas (and that is quite significant in some places, particularly downtown).

    Most of the traffic on University Ave. is being disrupted by road reconstruction. That really has nothing to do with LRT _per_se_. But the road needed reconstruction anyway and it’s convenient and smart to do it at the same time we build LRT.

    Now, the fact that the LRT budget has to pay for this road reconstruction is another thing that’s completely wrong. The county and state should be paying for the road reconstruction. Some of that $1 billion “for LRT” actually goes to roads and it’s not a small amount.

    But this is nothing new. Roads always get “free” funding while transit has to scrape by with whatever it can manage to secure for the next year.

  7. Submitted by Dennis Tester on 12/01/2011 - 06:41 pm.

    “Regular mass transit to a business area can only bring more customers.”

    “I understand the frustrations these businesses feel, but in the end having the CC will help their businesses so much!”

    You people are delusional. University avenue has had regular bus servide since the 50s and and street car line before that.

    This whole debacle is nothing but a multi-billion dollar monument to the oh-so progressive politicians and bureaucrats, none of whom would be caught dead within a half-mile of that route before and after the project’s ribbon cutting.

  8. Submitted by Rachel Kahler on 12/02/2011 - 10:52 am.

    @#7
    I resent being called delusional. Especially since, if I called you anything of the sort, my post would not be published.

    University Avenue has regular bus service. That doesn’t change the fact that the light rail will bring MORE traffic without road congestion. The train is almost always on time. The buses are not. The train is something people enjoy riding. The buses are not. How many people show up to games downtown by car? By bus? By train? By rank, it’s Car>Train>Bus (train is averaging 13% of game attendance, while public transit overall is about 20%), DESPITE the fact that buses have been running to downtown since the 50s and service more areas of the metro. Most of these people have cars (over 80%), so they are choosing to ride the train and not drive, reducing traffic, keeping roads in better repair and reducing commuter stress.

    It is, by definition, NOT delusional to state a fact. Trains bring passengers, no matter if buses are available.

    What IS delusional is ranting about the failure of a project despite evidence to the opposite.

  9. Submitted by Nathaniel Hood on 12/12/2011 - 04:49 pm.

    If businesses are able to survive the construction phase, I firmly believe they will be in great shape in the long run. Surviving the construction may be troublesome for a handful of businesses, but I feel there as been a good deal of local and public support (as well as City grants, etc) towards small businesses on the corridor.

    To a certain degree, I do not think we should hinder transportation progress (i.e.: light rail transit) in lieu of a number of businesses being temporarily less profitable. Consideration ought to be given, but only to a certain, reasonable extent.

  10. Submitted by Nathan Roisen on 02/23/2012 - 12:33 pm.

    Thank you to David Greene for making a very good point that doesn’t get made nearly often enough. University Ave. would require reconstruction at some point in the near future, anyways, and such a process would have shut down the street in an equally disruptive way as LRT construction – see East Lake Street in 2008-2009. At least now, we get vastly improved transit service out of the bargain.

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