Launch of controversial streetcar project even has some skeptics thinking about the economic development potential

Milwaukee has for years been listed among the largest American cities without easy-on, easy-off urban rail transit. But that ends Friday when the city officially opens the initial 2.1-mile line for “The Hop,” the new downtown streetcar system.

The Hop will be winding through downtown Milwaukee, carrying bus and Amtrak riders from the Intermodal Station in the city’s Third Ward neighborhood, past familiar downtown sites like the Milwaukee Public Market, City Hall, the Milwaukee School of Engineering and Cathedral Square Park, to the city’s Lower East Side, just a few blocks from Veterans Park along Lake Michigan.

The first year of fares will be free to all riders as part of a 12-year, $10 million sponsorship agreement with Potawatomi Hotel & Casino. After the first 12 months, the expected fare will be $1. Eighteen stations dot the route, with the streetcars expected to arrive every 15 minutes from 5 a.m. to 12 a.m. Monday through Friday, 7 a.m. to 12 a.m. Saturday, and 7 a.m. to 10 p.m. Sunday.

“This week is going to show the naysayers that this is a really modern mode of transportation for a city like Milwaukee,” said Rodney Ferguson, CEO/GM of Potawatomi Hotel & Casino.

Milwaukee has a long history with streetcars. The earliest, dating back to 1860, were horse-drawn cars on rails. In 1890, an electric streetcar system was formed through the Milwaukee Electric Railway Company (later, We Energies); it eventually served all of metro Milwaukee on 190 miles of track. Eventually the company chose to take out the tracks, and the streetcar system came to an end in 1958.

The new streetcar system will officially get underway on Friday at noon with a kickoff event centered around Cathedral Square Park, with activities planned along the route to introduce riders and the downtown Milwaukee community to the new $128 million project that includes federal grants and local tax incremental financing.

“We’re very excited, and we remain very hopeful,” said Milwaukee Mayor Tom Barrett, a longtime champion of the project. ”Our goal all along has been to connect people and connect places. This is both a transportation project and an economic development project.”

The project’s economic development potential is what has even some of the streetcar skeptics — and there are many, with an October 2017 Marquette Law School poll showing only 28 percent support among city residents — optimistic about success as the cars hit the tracks.

“(The streetcar) is a lightning rod, and it has been since it was initially talked about,” said Tracy Johnson, president and CEO for Commercial Association of REALTORS Wisconsin (CARW). “But when you talk about the economic development opportunities of transit-oriented development, I’m not sure you can dispute some of the long-term benefits that have played out in other cities.”

The commercial real estate community, she said, has had its doubts about aspects of the streetcar project, particularly its funding mechanism and its long-term viability. But now that it’s here, “When people are looking for properties, when they’re looking to lease space, they ask about the proximity to the streetcar, because I think it is a selling point for downtown office buildings. Many of the downtown building owners and developers are bullish on it. You’ve already seen it.”

The volume of real estate development happening along the streetcar line is undeniable, boosters say. Milwaukee developer Irgens is building a new 25-story, $133 million office tower for BMO Harris right on the streetcar line. A $47.7 million redevelopment project for the Milwaukee Athletic Club building is also happening right alongside the streetcar route. A 20-story, $100 million apartment tower from Mandel Group is planned right alongside the Lower East Side edge of the initial route. The list goes on.

“Anybody who’s looking at the heart of Milwaukee right now recognizes that there is an economic renaissance that’s occurring,” said Barrett. “We are seeing investment unlike investment we have seen in decades here.”

And Barrett says the streetcar is a big part of why that investment is happening. Property values within a quarter mile of the streetcar route have climbed more than 28 percent to nearly $4 billion since the Milwaukee Common Council approved the project by a 9-6 vote in February 2015.

Alderman Tony Zielinski cast one of those six no votes and is one of only two aldermen who cast votes against the project to still sit on the Common Council today. He has announced his intentions to challenge Barrett in the 2020 mayoral election, and he remains vehemently opposed to the streetcar project. He expressed concern with both the initial capital cost and the ongoing operational costs of the project, seeing the project as an example of misguided priorities for the city.

“Right now, (the city is) strapped as it is,” he said. “They’re cutting cops, they’re cutting firefighters, they aren’t fixing potholes. We have a lead crisis here… We have to fulfill our core responsibilities and functions.”

Zielinski also notes that “Downtown is going to happen on its own,” and that other parts of the city are more in need of that investment.

But project supporters see this initial line as a starting point located in a high-density area where more than 25,000 people live and more than 83,000 people work. If it works here, it creates a foundation for a larger system.

There’s already another extension in the works that will be going to the lakefront, part of the $128 million project cost. Opening in late 2020, it is a key component of making the $122 million Couture development a reality.

The goal is for a line to extend north past the new home of the Milwaukee Bucks, Fiserv Forum, and up along Dr. Martin Luther King Jr. Drive to the city’s Bronzeville neighborhood. Also envisioned is an expansion south to the city’s Walker’s Point neighborhood, which has seen its own development boom driven by a thriving restaurant industry. Those north and south extensions were also subjects of a new $750,000 study examining “transit-oriented development’’ in those near-downtown neighborhoods.

Transit-oriented development is a term that keeps coming up in discussions around the streetcar, and “fixed rail’’ transit carries a different weight with developers.

Years ago, before this project was approved, philanthropist and business leader Michael Cudahy, who in many ways provided the spark for this project, traveled to Portland with city and regional leaders. He told Milwaukee Magazine that developers respond to fixed rail, because of the certainty it brings.  “Once you put the tracks in the ground, a developer says, ‘Hmm, I guess those will be there for a while.’ Whereas if it’s a new bus route, the bus department can change their mind any minute and change the route,” said Cudahy.

Or, as CARW’s Johnson puts it, “Certainty fuels real estate.”

Other pieces of the larger economic development puzzle are impacted by the presence of the streetcar as well.

Matt Dorner, economic development director for the Milwaukee Downtown Business Improvement District (BID) #21, said its connection to the Intermodal Station, which sees 1.6 million annual users, is a big deal.

“If you think about people coming up from Chicago for a business meeting, they’re not driving,” he said. “(The streetcar) greatly interconnects what is an already transit-dependent population that’s coming in to use that facility and connecting it into the larger urban network. That’s a really critical key connection.”

And connection is also a key goal of even the initial route, said Dorner. The BID #21 has created a development and investment guide for the streetcar, and he identifies a number of gaps or underutilized connection points that could benefit from having a fixed-rail transit connection.

“It’s going to stitch these neighborhoods together,” he said. “If you look at how The Hop is going to cross underneath the freeway in two locations, it’s going to really help stitch together the central business district and the Historic Third Ward. …We’re looking at how you interconnect neighborhoods, and the streetcar is a big part of that.”

A 2015 analysis comparing Milwaukee to other peer cities noted the lack of connectivity between different downtown hotspots and identified the streetcar as a way to address that issue.

Another component is talent attraction and retention, and that element is a big reason Potawatomi Hotel & Casino made the long-term commitment that it did, said Ferguson.

“The state has been losing quite a few of its residents over the past few years, and we just needed something more in the city to retain more talent, attract more talent and attract more businesses,” he said.

Ferguson added that this is a way for Milwaukee to compete with other cities in the Midwest. And Johnson noted that the talented people who might respond to the streetcar’s presence aren’t necessarily coming from more suburban or rural communities, but from other large cities that already have transit options.

Barrett also points to large companies like development firm Hammes Company and advertising agency Bader Rutter deciding to relocate their headquarters to downtown Milwaukee in recent years.

It’s been a long, contentious path for the streetcar to become a reality. What began as a federal appropriation specifically tied to fund a rail project in Milwaukee more than 20 years ago became a political football for the better part of the last decade. Now, after surviving numerous lawsuits, changes in state law, and failed petition drives that looked to stop the project dead in its tracks, The Hop was completed on time and on budget, and is ready for riders.

The city of Milwaukee estimates that the initial route will see 1,850 rides per day and more than 595,000 in 2019, its first full year in operation.

“Give the streetcar a chance,” said Ferguson. “I know there are folks on both sides. They should give it an opportunity to be successful. Folks outside of the Milwaukee area — give it a ride and see for yourself how modern, how sleek, how fantastic it is. What’s good for Milwaukee is good for the state as well.”

The next chapter in the streetcar saga will be to see how people use the service and who ultimately hops on board.

“Now we’ll see what the ridership is,” said Barrett. “That’s the big test right now.”  

By Dan Shafer