Don’t fall for the streetcar hoax


by Randal O’Toole

The so-called “modern streetcar” has become the latest urban planning fad, with cities from Albuquerque [Read] to Madison [Read] considering new streetcar construction. Leaders from these cities often make pilgrimages to my hometown of Portland, Oregon, which opened the nation’s first modern streetcar line in 2001.

There they learn that the streetcar has gotten people out of their automobiles and promoted economic development. After drinking the Portland Kool-Aid, the officials return home all fired up to build streetcar lines in their cities. Unfortunately, Portland tour guides typically feed these officials only half the story.

Portland’s streetcar line extends from the Pearl District, north of downtown, to the South Waterfront District, south of downtown. Both districts have seen huge booms in the construction of condos, apartments, offices, and shops, which Portland officials are quick to credit to the streetcar.

What they don’t tell you is that the developers of both districts have also enjoyed huge tax subsidies in the form of tax waivers, infrastructure subsidies, and direct grants. Portland taxpayers have paid or are shelling out more than a quarter of a billion in subsidies to these districts, not counting the cost of the streetcar or the ten years of property tax waivers that the city routinely grants to new construction along the streetcar line.

In short, the streetcar had nothing to do with the new construction. Without the subsidies but with the streetcar, virtually no new construction would have taken place. With the subsidies but no streetcar, virtually all of the new developments would have been built anyway.

If the streetcar is not promoting economic development, does it at least help get people out of their automobiles? In a word, “no.” An annual census of downtown businesses revealed that in 2001, when the streetcar opened, 1 percent of downtown employees took the streetcar to work. By 2005, it was still only 1 percent [Read].

At the same time, however, the number of downtown commuters who took other forms of transit to work declined by more than 20 percent, while the number who drove to work increased. One reason for this is that the large subsidies required for the streetcar and the developments along the streetcar line led to budget and service cuts in Portland’s bus and light-rail schedules [Read]. Because of those cuts, Portland’s total transit ridership has been flat despite high gas prices.

The clear lesson is that if you pay huge amounts of money for what amounts to a Disneyland ride, you end up hurting the average transit rider. And not just transit riders: Portland schools, fire, police, public health, and other essential services have all seen budget squeezes even as the city continues to give huge subsidies to developers along the streetcar line.

The full scope of these subsidies was uncovered in 2004, when a Portland newspaper revealed that former Mayor Neil Goldschmidt, considered the father of Portland’s rail transit system, had raped a 14-year-old girl when he was mayor. His disgrace allowed local papers to divulge, for the first time, that Goldschmidt led what reporters called a “light-rail mafia” that existed mainly to direct public subsidies to Goldschmidt’s friends and clients.

This mafia developed after Goldschmidt left public office and set up a consulting firm. He soon arranged for Bechtel to receive a no-bid contract to build a light-rail line; put a close friend–who happened to be a developer–in charge of Portland’s transit agency where he directed millions of dollars of subsidies to his company’s developments; and personally lobbied for the $250 million in subsidies for the Pearl and South Waterfront Districts, most of which would go to his clients [Read].

On September 17, 2006, Portland took a page out of Dickens when Goldschmidt-client Homer Williams, the developer responsible for most of the subsidized developments along the streetcar line, sat down to dinner at an outdoor restaurant near the streetcar. A few feet outside the restaurant, he witnessed police subdue a schizophrenic man named Jim Jim Chasse.

Five years ago, Portland had a community policing system, a crisis triage center, and other resources that would have allowed the police to help this man [Read]. But those services were cut while the city continued giving Williams and other developers hundreds of millions of dollars in subsidies to develop properties along the streetcar line. Instead of helping Jim Jim, the police simply kicked him to death.

Most cities that fall for the streetcar hoax will not be lucky enough to have a Goldschmidt-style sex scandal, so taxpayers will never know where all their money went. The best solution for those cities is not to waste money on a streetcar line in the first place.

© 2006 Randal O’Toole – All Rights Reserved

Randal O’Toole has spent three decades studying government planning, including both rural and urban plans. His work on national forest planning led to the book, Reforming the Forest Service, which proposes free-market reforms of public land management. His work on urban planning led to the book, The Vanishing Automobile and Other Urban Myths: How Smart Growth Harms American Cities, which promotes free-market solutions to congestion and other urban problems.

In 1998, Yale University named O’Toole its McCluskey Conservation Fellow. In 1999 and 2001, he was the Scaife Visiting Scholar at the University of California at Berkeley, and in 2000 he was the Merrill Visiting Professor at Utah State University. O’Toole is an economist with the Thoreau Institute and the director of the American Dream Coalition.

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©2007 Coalition On Sustainable Transportation