San Francisco Streetcar 1077 painted in the livery colors of the former Birmingham Electric Company (of Birmingham, Alabama). The car was built for the Twin City Rapid Transit Co. (Minneapolis-St. Paul) in 1947. It was sold to Newark in 1953, and it was acquired by San Francisco Muni from Newark in 2004. (Wikimedia)

This article is part of a three-part series on streetcars and economic development. Read the articles by Yonah Freemark and Gabe Klein The opinion expressed here is that of the author and does not represent the Urban Land Institute nor its membership as a whole.

Once upon a time (1888 to be precise), the United States and the world launched a huge building boom for urban streetcars. Companies like Twin City Rapid Transit laid miles of track in fast-growing cities, extending well past the built areas to serve greenfield sites for emerging suburbs waiting to be platted and built. They did this because the streetcar promoters benefited directly from the land sales. The availability of a new, fast transit system connecting to downtown made houses much more valuable. The fares from the new passengers covered the operating costs of the system.

Networks continued to grow until the 1920s and 1930s, when the bloom came off the boom. The new motor car served the prospective suburbanite just a bit better than the sluggish streetcar. By 1950, the streetcars were upward of 60 years old and needed a major infusion of capital to be maintained. Instead, they were abandoned en masse across the United States for buses in a process that in the transportation field has been termed “bustitution.”

More on StreetCars and America: Freemark: Transportation First, then Economic Development | Klein: Streetcars and the American Commitment to Rail

The causes of the decline of the streetcar remain a sore point with urbanists, but this was a global phenomenon that happened in any country rich enough to see mass motorization defeat mass transit. The U.S. transit crisis—a collapse of demand and thus revenue beginning shortly after the peak of transit demand during the rationing of fuel and rubber during World War II—affected not only streetcars, but also commuter trains and urban subways.

In response, the federal government began implementing large capital subsidies in the 1970s, funding systems like the San Francisco region’s Bay Area Rapid Transit (BART), Washington, D.C.’s Metrorail, and Atlanta’s Metropolitan Atlanta Rapid Transit Authority (MARTA). Beginning in the 1980s, the underwhelming performance of this new generation of heavy rail—especially systems like those in Baltimore and Miami—led the federal government to support, instead, newly rebranded light-rail transit (LRT) systems.

This new generation of rail, including San Diego’s Tijuana Trolley and the Portland MAX, differed from traditional streetcars in subtle ways; even professionals have difficulty differentiating the two. In general, the LRTs are wider and longer than the streetcars of a century ago. More important, LRTs tend to run in exclusive, but not grade-separated rights-of-way. With federal matching dollars being just given away, cities bid for new light-rail systems, and many were constructed.

The modern streetcar was born when local governments balked at running LRT vehicles down city streets because it took away too much right-of-way from cars. The solution was to make a narrower, shorter vehicle that was back to historic streetcar proportions—although often modernized with low-floor boarding to comply with requirements of the Americans with Disabilities Act, among other amenities—and that could run in the street right-of-way.

Running in traffic has major downsides. A streetcar, unlike LRT in an exclusive right-of-way, cannot pass cars; it too gets stuck in traffic. In fact, because it is tracked, it is more likely to be stuck in traffic than a bus, which can change lanes. As any rider of legacy systems like that in Toronto can tell you, streetcars are no faster than buses, and in many circumstances no faster than walking. (Average streetcar operating speeds range from 4.4 miles per hour [7.1 kmph] in Little Rock to 7.7 mph [12.4 kmph] in Tacoma.) Tellingly, streetcars have been embraced by the “slow transportation” movement.

Portland opened a modern streetcar system in 2001. Along with introducing the streetcar, the city changed zoning and other development regulations, and the development machine took off. The zoning could have been implemented in the absence of the transit investment, but often rail justifies change.

This Portland example, excellently marketed, has been promoted in city after city as the latest urban elixir, both absolving the city of all its sins and growing city development muscles to Hulk-like proportions. Other cities followed Portland, though more have wound up with systems like that in Tampa (about 1,000 boardings per day) than Portland (about 10,000).

The most recent boomlet in streetcar construction responds to changes in federal funding priorities, as the Obama administration promoted livability through Transportation Investment Generating Economic Recovery (TIGER) grants. (Previous federal funding sources were not amenable to streetcar service). Most of the lines are local circulators, connecting tourist and entertainment destinations. Many in fact are heritage lines, using historic streetcars (or replicas) to deliver passengers in the same fashion as 100 years ago.

The problem of streetcars as transportation is inherent in the technology, but also in how the technology is operated. To rely on transit, prospective passengers want frequent service—every ten minutes or better. Almost none of today’s streetcars is providing service that frequently. It may look good on the watercolor rendering to have the streetcar in front of the building, but for actual users, a conveniently appearing streetcar is a rare occurrence.

In addition, though American streetcars seem to be cookie-cutter systems, in fact they all involve custom designs, driving up costs. From a cost-efficiency perspective, streetcar systems should all use standardized parts and cars.

According to David King of Columbia University, economic development accounts for about three-quarters of the prospective benefits predicted for modern streetcars—in particular, increased property tax revenue.

From a developer’s perspective, spending “other people’s money” on this urban amenity is a brilliant idea. Theoretically, streetcars should increase land value. Yet evidence on this is extremely limited. Unlike the case for light-rail transit and even bus rapid transit, the peer-reviewed literature provides little evidence that streetcars actually increase land value—and the absence of evidence, when a systematic search is involved, is evidence of absence. One study did find that the restoration of legacy streetcar service in New Orleans post-Katrina was associated with building permits.

An even better strategy for developers is to get a subsidy (often in the name of affordable housing) for the transit-oriented development (TOD) adjacent to these newly constructed lines. Programs in a number of cities, such as those of the Livable Communities Act administered by the Metropolitan Council in the Minneapolis–St. Paul region, subsidize development along transit lines.

The best strategy for developers, of course, is both—a publicly provided system and public subsidies for TOD adjacent to it.

Although only implemented sporadically, land value–capture techniques, such as special assessment districts or tax increment financing, present strong opportunities for cities to recover some, all, or more than enough revenue to pay the cost of many types of transit infrastructure and operations. If streetcars are important to developers, and not particularly important to the traveling public, property owners should follow the example of the Grove shopping center, a retail and entertainment complex by Caruso Affiliated in Los Angeles straddling an iconic trolley: they should fund the streetcars entirely themselves.

David Levinson is the Richard P. Braun/Center for Transportation Studies Chair in Transportation at the University of Minnesota.

This article is part of a three-part series on streetcars and economic development. Read the articles by Yonah Freemark and Gabe Klein The opinion expressed here is that of the author and does not represent the Urban Land Institute nor its membership as a whole.