KC streetcar plan: pricey transit or economic magnet?

Many skeptics of Kansas City’s streetcar plan have one big question:

Does the city really need expensive trolleys to move people through downtown when buses already do that?

But as downtown prepares for an election to help pay for a $100 million streetcar system, supporters say that’s missing the point.

The proposal isn’t primarily about transit. It’s about creating a magnet for more apartments, condos, retail and high-tech — doing what progressive cities already have done to lure the next generation of young entrepreneurs, workers and hipsters to their downtowns.

Streetcars get credit for bringing thousands of new residents to downtown Portland, luring Amazon to a blighted Seattle neighborhood and spurring new condo complexes in Tampa.

Now Kansas City is poised to get into the act, with a proposed 2-mile starter line from River Market to Union Station. If all goes as planned, it could open in 2015 with a daily ridership of about 2,700.

“The strongest argument is that we need to be building a city for the next 25 years,” Mayor Sly James said. “We’re going to have millennials, those people who believe that having an Internet connection is much more important than having a car.”

Councilman Russ Johnson, the City Council’s most ardent streetcar advocate, agrees. Just as 20- and 30-something mavericks such as Joyce Hall, James Stowers and Ewing M. Kauffman profoundly shaped Kansas City’s past, so now Johnson says the city needs to provide amenities, such as streetcars, that will appeal to a new wave of business giants who don’t care about the car culture.

“They’re voting with their feet, to hip, high-density, walk-able cities,” he says. “You have to be competitive to lure this next set of brain thinkers or entrepreneurs.”

But some longtime business owners who have propelled downtown for decades raise doubts that the promised economic development will materialize — or be worth the tax increases that fewer than 700 downtown residents will vote on.

In fact, some commercial owners worry the new sales and property taxes could actually be a disincentive to customers and businesses coming downtown, especially given fierce competition from Johnson County.

“It’s just one more obstacle we’ve got to overcome to attract and retain tenants,” said Thomas R. “Buzz” Willard, president of Tower Properties, which owns the Commerce Trust Building and other major properties.

Shifting technology

For 15 years, Kansas City voters have repeatedly considered — and repeatedly rejected — the idea of a massive, $1 billion light-rail system to cover the whole city. Meanwhile, Johnson points out, the technology changed. Modern streetcars became the trend de jour because they’re cheaper, smaller and more geared to an urban environment.

Advocates say they’re attractive not just to young people but to tourists and aging empty nesters who don’t want to worry about a car or spend time stuck in traffic.

The HDR Engineering consulting firm has predicted more than $500 million in added development potential along Kansas City’s streetcar corridor through 2025.

And while an enhanced downtown bus system would be more versatile and far less expensive ($20 million versus about $100 million), buses don’t prompt spinoff development, consultants say.

Johnson thinks streetcars are a proven economic stimulus in other cities and says he’s talked to people interested in doing deals along Kansas City’s streetcar line, although he wouldn’t provide specifics and none of the deals is guaranteed.

Some national experts familiar with Kansas City say streetcars and other rail are the wave of the future, and Kansas City can either get on board or be left behind.

“It is as important as building the freeways in the late 20th (century),” said Chris Leinberger, a nonresident senior Brookings Institution fellow who specializes in downtown redevelopment. “Failure to make this investment will condemn Kansas City to be a 20th century economy while the rest of the country exploits the 21st century knowledge and experience economies.”

Leinberger recently visited Kansas City and said downtown is ideally situated for streetcars, which could knit together River Market, the central business district, the Crossroads and Crown Center, and fill underused lots in between in a way that buses never do.

“You’ve got four very impressive, existing walkable urban places that fulfill a significant role,” he said. “It’s critical that these places get linked.”

As an example of how it can work, he cites specifically the Pearl District in Portland, where a $55 million investment 11 years ago has resulted in $3.5 billion in private sector investment, primarily housing and retail.

But even the Portland streetcar has its critics who think the trolley is sheer folly.

“These lines are really expensive to build, even if you get federal money,” says Jack Bogdanski, a Lewis and Clark Law School professor who blogs on Portland politics. Bogdanski mocks the type of development that streetcars bring, and says that while Portland touts this trendy gimmick, its basic services and city finances are suffering.

“It helps sell apartments to 25-year-old kids, but it doesn’t create much,” he said. “Young millennials need a job. This is taking them from their crummy apartment to their job making coffee.”

Some Kansas City civic leaders also have major concerns.

Commerce Bank Chairman Jonathan Kemper said his bank is the largest property owner along Main Street where the route will run, and yet the city — in its haste to start construction next year — has done no comprehensive traffic studies or other analysis of how the streetcars will affect traffic and businesses. The trains travel slowly, he noted, and could severely affect buses and cars. He’s also concerned about the impact on aging underground utilities and said the city has not been forthcoming with information.

“We have over $100 million in assets that will be impacted, and we don’t know how it’s going to work and have reasons to be concerned,” Kemper said.

Kemper also is skeptical that the hoped-for development will occur and doesn’t expect it will bring his bank additional employees or customers.

Johnson said the city’s newly appointed streetcar authority will work to address Kemper’s concerns, and if the process needs to slow down, it will. But for now, it’s full steam ahead.

National trend

Kansas City is not alone in pursuing streetcars. In fact, more than 15 cities (including Salt Lake City and Little Rock) have already opened starter lines or have secured the finances to start construction. At least 50 cities are exploring the feasibility, including Omaha and St. Louis.

Kansas City is one special election away from starting construction. Just under 700 downtown registered voters have qualified for ballots, which will be mailed out Oct. 30 and are due back Dec. 11. They are being asked to approve a 1-cent sales tax increase, plus residential and commercial property tax increases within the downtown transportation district.

City officials have said they are optimistic it will pass and are continuing the planning as if it has.

Downtown supporters say they’re willing to pay higher taxes to get the streetcar. But some large commercial property owners — who don’t live downtown and don’t get to vote — say the tax burden on them is high. They argue it should have been put to voters (and taxpayers) citywide.

“We are surprised that a citywide asset would fall on a small group and that the city has chosen to deal with this the way they have,” Kemper said, adding that his accountants estimate the new taxes would cost Commerce Bank between $60,000 and $80,000 per year.

City officials note that commercial property owners (including The Kansas City Star) would contribute about 20 percent of the total cost in the first year of operations, while residential owners would contribute about 6 percent.

But Johnson says the proposed tax increases are predicated on no new development downtown. If the streetcar does spur growth, which he believes will happen, that would spread the tax burden to those new developments and reduce the toll on existing businesses such as Commerce Bank.

City officials also point out that, in the last 10 years, Kansas City has spent well over $100 million on downtown parking garages, which serve small segments of the population. None of those decisions went to the voters or sparked much hue and cry.

Down the track

Other cities offer well-established streetcar projects that Kansas City can learn from:

•  Portland, Ore.: Portland was first out of the gate in 2001 with a modern streetcar that covered 2.4 miles in an area dominated by warehouses, rail-yards and offices. That first leg cost $54 million, paid for by downtown property owners, parking revenues and other local sources. (Costs to build these systems have skyrocketed since then.)

Portland officials said the costs are worth it, and they have added three extensions since 2001. The 2.4-mile starter route helped bring in about 7,000 housing units and 3 million square feet of commercial development, according to Rick Gustafson, director of operations for the Portland streetcar.

In an email to The Star, Portland resident Mark Workman said he rides it often. “It’s clean, reliable and travels through desirable areas to work, shop, dine, educate and live,” he wrote.

But some downtown Portland residents disagree. In another email to The Star, Bob Whelan said he lives across the street from a streetcar stop. “For me, with two kids, it is cheaper to walk and even cheaper to take the car,” he said. “They also have cut bus routes to compensate for the streetcar.”

Seattle: Billionaire Microsoft co-founder Paul Allen and other investors looked at Portland and wanted to transform the industrial South Lake Union neighborhood into a biosciences hub. Local landowners taxed themselves for half the $52 million construction cost for 2.6 miles of track, which opened in 2007. According to a Brookings Institution study, property values rose faster along the line than elsewhere in the city, and Amazon relocated its headquarters to be close to the line.

“You have to start small,” said Lori Mason Curran, investment strategy director for Vulcan Real Estate, which directs real estate investments for Paul Allen’s companies. “It took a lot of work to get that first line funded and for people to buy in.” Now, Curran said, businesses like the system so much that they are buying extra streetcars for it.

•  Tampa, Fla.: A 2.4-mile route opened in 2002. The $56 million cost was paid mostly with federal and state funds. The city claims $1.2 billion in private investment along the line, including many high-rise condos and apartments.

But Tampa is a cautionary tale. The streetcar, which did not go into the heart of downtown, has ended up being used mainly by tourists, and annual ridership has dropped from 420,000 in 2003 to 306,000 in fiscal year 2012.

Tampa Mayor Bob Buckhorn, who opposed the system when it was proposed, is now trying to figure out how to cover operating costs.

“A trolley can be successful, but it depends on the route,” Buckhorn said. “I think a well-run trolley, placed correctly, can be an economic development tool.”

Will it work here?

Willard and others say they support high-quality transit. But they’re not convinced the city can deliver it with this starter streetcar system.

“I suspect there will be some economic benefits, but there are still so many concerns about the plan that’s been laid before us,” Willard said. “This is a major 25- to 50-year decision, and we’re trying to cram it all into such a short period of time.”

But others see the streetcars as essential to building on downtown’s momentum.

Downtown already is attracting some millennials such as Garmin software engineer Mikael Nelson, 28, and Chris Snyder, 30, who does business development for an international company.

They’ve chosen to live downtown because they like the vibe. They have cars but would like to get rid of them. Snyder often works from his Quality Hill apartment, and Nelson takes the bus to Olathe from his downtown library district condo.

When Snyder first moved to Kansas City from Florida, he admits he considered it “like a military assignment” in which he would stick it out for a few years and move on.

“But I’m pleasantly surprised at how much I’m liking it here,” he said. “There is definitely a very progressive, active community.”

Both think streetcars would work well in Kansas City’s downtown.

“We’re rejuvenating neighborhood by neighborhood, and we really need to connect those patches,” Nelson said.

Representatives of businesses that have recently opted to locate downtown, including the Larson Binkley design engineering firm and Sporting Innovations smartphone application company, said they support the streetcar and think it can enhance their businesses.

When Sporting Innovations decided to invest $20 million in the Hanna Rubber building at 1517 Baltimore Ave. as its new headquarters (and to employ 120 employees over the next three years), the company knew about the possibility of a new streetcar property tax. But that wasn’t a deterrent.

In fact, the streetcar was considered a big positive, said Polsinelli attorney Chase Simmons, who handled Sporting Innovations’ development deal.

“It really creates a unique amenity and opens up the possibility for employees of a lifestyle rare in much of this region,” Simmons said.