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Nicollet Ave. project: a zombie streetcar and pot of Minneapolis money that nobody wants to talk about

If you talk to people off the record, nobody likes the Nicollet streetcar proposal, at least not as it’s currently drafted.

A rendering of Minneapolis’ Nicollet streetcar project.
A rendering of Minneapolis’ Nicollet streetcar project.
City of Minneapolis

To pay attention to U.S. transportation politics is to adopt a warped sense of time. Words like “quickly” and “slowly” lose most common meanings, and horizons telescope outward, until the year 2027 seems to be pretty soon. At the same time, big decisions made a decade ago can continue to haunt the present, as if they are still being decided over and over again.

Such is the case with Minneapolis’ Nicollet streetcar project, where a plan that dates to 2007 is still causing mild havoc in Minneapolis policy circles.

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One thing’s for sure: Nobody wants to talk publicly about the Nicollet streetcar these days. After reaching out to multiple past and present city officials over the past few weeks, I was able to procure exactly one quote. Here it is, courtesy of the mayor’s office:

Equitable transit remains a top priority for Mayor Frey and he will continue prioritizing inclusive transit options for Minneapolis residents. Nicollet Avenue is an important corridor – as noted in the City’s newly adopted Transportation Action Plan – and the City is exploring all options, especially in light of the newly acquired K-mart site, and the opportunity to reconnect neighborhoods.

Back in 2018, Mayor Frey admitted while on stage with the Theater of Public Policy that the Nicollet streetcar was dead. When pressed to elaborate, Frey had this to say:

I’m for the benefit of a streetcar, not for the transportation side but for the economic development that it could trigger along these corridors that need a little bit of a bump. Uptown is bumpin’. Downtown is happenin’. Northeast is rockin’. Up until you get to around … the plan was for it to go across the river and get to Central, and then to basically turn around. The portion of the city that could use a little bit of economic development is from the Central/Hennepin crossroad further down Central. There’s 5-6 blocks there where we could do something pretty amazing. But if the streetcar is not going that far anyway, what’s the point? I think we should be investing heavily in BRT.

If you talk to people off the record, nobody likes the Nicollet streetcar proposal, at least not as it’s currently drafted. Everyone I spoke to wants the city to prioritize different investments, and nobody thinks that the economic future of downtown or northeast hinges on a three-mile streetcar running from Lake Street to Northeast Central Avenue.

Meanwhile, the word “streetcar” only appears once in the newly adopted 2020 city Transportation Action Plan, to refer to a section deleted from the previous 2011 version. An omission like that is never an accident.

Yet despite being “dead,” the Nicollet streetcar retains a kind of zombie status. For example, the RBC Gateway project, a 37-story building under construction at the key Hennepin and Washington corner, includes a theoretical easement for a streetcar to cut kitty-corner through its lot. And in a recent Met Council aBRT study to select the metro’s next bus rapid transit line (the F Line), a proposed Nicollet Avenue alignment was automatically eliminated because streetcar planning is taking place.

So why is a “dead” project still causing ripples in the Twin Cities transit pool? Is the Nicollet streetcar  dead, or isn’t it?

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That the answer remains murky has everything to do with a special pot of money, at least $20 million dollars that has been legally set aside for the streetcar project that nobody really wants. Because the money is there, nobody is willing to officially kill the streetcar plan. And so it lives on.

A brief history of the Nicollet streetcar

The Nicollet streetcar project dates back at least to 2007, the middle of the R.T. Rybak administration, where it was the brainchild of policy director Peter Wagenius. At the time, parts of Minneapolis around the edge of downtown were not developing very quickly, and the City Council commissioned a study to examine the feasibility of a streetcar running through downtown. The resulting plan laid out lines connecting the downtown core with surrounding neighborhoods, at which point the lines were winnowed down to one that would serve as the highest priority: a connection from Lake Street up Nicollet Avenue over the river into Northeast, and stopping at Central Avenue.

A map of the Nicollet-Central modern streetcar.
City of Minneapolis
A map of the Nicollet-Central streetcar.

If ambitious streetcar plans made any real difference, U.S. cities would look very different from the way they do today. Rather, the problem with U.S. streetcars has always been money, as federal funding policies give short shrift to anything that’s not a freeway or an expensive (light or heavy) rail line. And without federal money, nothing happens.

That’s why the brilliant move for Minneapolis’ Nicollet Avenue streetcar was the inclusion of a special “value capture” funding source, what my Cityscape predecessor called a “pretty clever device.” Thanks to a state law passed in 2012, the City of Minneapolis, only in this specific instance, has set aside tax dollars from five specific development parcels. All of that property tax revenue since then has been accumulating for the project.

Despite the lack of streetcar champions in Minneapolis City Hall, the money has been building up. It even came in handy last year when, thanks to a liberal interpretation of the streetcar legislation, Minneapolis allocated almost $10 million of the fund to pay the retailer to end its lease at the long-maligned Kmart site at Lake Street (and the spot where Nicollet should be). In 2017 it used $7 million from the fund to buy the property under the Kmart.

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The downtown streetcar trend

Another longstanding rule of transportation wonkery is that certain types of projects become trendy, peak, and disappear. The 1970s saw the popularity of the “people movers” (actually built in Detroit and Seattle), while the late 2000s were the heyday of downtown streetcar loops. (The trends these days revolve around self-driving cars and the immensely impractical “hyper loop.”)

Blame or credit for the 21st century U.S. streetcar trend can be placed at the feet of Portland, Oregon. Its downtown “Pearl District” streetcar line opened in 2001 and became closely linked to the resulting wave of downtown development in a great many urban planning PowerPoint presentations. As a result, more than a dozen downtown streetcar projects have been built around the country — none of which extend for more than 4 total miles. Most of them are half that distance.

Blame or credit for the 21st century U.S. streetcar trend can be placed at the feet of Portland, Oregon.
MinnPost photo by Bill Lindeke
Blame or credit for the 21st century U.S. streetcar trend can be placed at the feet of Portland, Oregon.
I’m personally a fan of urban streetcars, even ones that run in mixed traffic, if they’re in the right context. Unfortunately, in my experience, that context is often Europe, where streetcars and trams are great additions to already robust transit networks. In the American context, with far less density, worse walking conditions, and many times the number of entitled drivers, downtown streetcar projects have not fared particularly well — at least not when judged by traditional measures like ridership. A key problem is that the downtown streetcars I’ve personally ridden — in Milwaukee, Tampa, Cincinnati, Seattle, Kansas City — are both slow and don’t go very many places. While they look nice, most have struggled to attract riders, even when subsidized to the point where a bunch of them are free to ride.

As Frey pointed out in his 2018 interview, the winds of transit policy have begun to blow against downtown streetcars in favor of far more affordable and practical projects like the Metro Transit aBRT program.

The convenient and flexible TIF-like fund

One reason nobody at City Hall wants to officially kill the Nicollet Streetcar is that, in general, U.S. cities have more trouble funding things than they ought to. State laws have long placed strict restrictions on municipal taxes, and the big cities’ most flexible tax arrangement, tax-increment financing (TIF), comes with a lot of strings and restrictions about how it can be used.

Those fiscal limits are a double-edged sword, to be sure. They prevent cities from spending scarce resources on boondoggles, but at the same time, they keep cities from making good investments with their resources. All this is to say that having a pot of city-controlled money available through a value-capture district [PDF] is not necessarily a bad idea. But once a project like the Nicollet streetcar is funded, it becomes extremely hard to kill it, and Minneapolis’ pot of money is eventually going to have to go somewhere. At some point, Minneapolis will have to either build its dubious streetcar, which nobody quite wants to do, pull some serious legal strings to rewrite its state legislative streetcar-funding permission slip, or else be “creative.” A generous reading of the legislation could permit the funds to be used in ways similar to the Kmart acquisition plan, such as “improving transit stations” that might benefit the existing buses that already run on Nicollet every day.

But that’s fine-grained hair-splitting, and cannot be done if plans for the streetcar disappear. The alternative is to simply abolish the special tax district, returning somewhere between $5 million and $10 million a year back into the city’s general fund to pay for things like city services, staffing, and (the ever increasing) police budget. To do this would be to lose the flexibility and impact of the tax district, and a special pot of money that might theoretically be a boon to a creative or ambitious city politician.

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Though nobody will actually admit it, a Nicollet Avenue streetcar is not likely to be built. Nobody in City Hall really supports it; it doesn’t fit well into the Met Council regional planning; downtown and northeast economic development is hardly a priority in 2020; and the national examples of similar projects are not very impressive these days.

At least we’ll always have that one amazing streetcar rendering, depicting a car in mixed traffic at 26th and Nicollet, with a few cars threatening to block the tracks in front of the station.