Three Visionary Real Estate Developers and the Downtown LA Streetcar

The demand for federal transit funding is so great in the U.S. that getting a project through the funding queue is a decades-long process. To give you an idea: 37 states have proposed 400 projects worth $250 billion, according to a recent report by the national nonprofit Reconnecting America, and at the current rate of federal investment building these projects would take 77 years.

The $100 million downtown LA streetcar is a newcomer to this game, and has to get in line and wait its turn – unless it attracts significant private investment, which can boot it to the front of the line and open up all kinds of funding streams. That makes last week’s fundraiser at LA Live a significant milestone.

The event at the Target Terrace was hosted by LA City Councilmember Jose Huizar, with Eli Broad, Rick Caruso and AEG CEO Tim Leiwecke, and attended by LA City Councilmember Jan Perry as well as a host of major property owners and reps from the downtown business improvement districts. Governor Schwarzenegger sent someone, as did Congresswoman Lucille Roybal-Allard, a longtime downtown streetcar champion. Enough money was raised to keep the nonprofit LA Steetcar Inc. in the business of moving the streetcar project forward during these lean years.

Modern streetcars in other cities have won significant private investment. Property owners along Seattle’s new South Lake Union Trolley (yes, she’s a SLUT) line paid for half the $52 million pricetag, massive development has continued along that line despite the recession, and the city has already planned more lines. Property owners in Portland, where the streetcar attracted $3.5 billion in private investment along the line, also raised significant funding – and almost 40 percent of the cost of the first segment came from increased parking fees – and have even traveled to other cities to preach the streetcar gospel.

Michael Powell, proprietor of the Powell’s Books in Portland, calculated the property owner benefits this way at a national streetcar workshop in LA two years ago: The number of pedestrians in the crosswalk in front of his store numbered three an hour before the line opened in 2001, he said. But when he counted again in 2008 there were 938 pedestrians. Meantime, 400 new businesses had opened along the streetcar line, 90 percent of which were locally owned – the vast majority owned by women and ethnic minorities. And in the meantime, he said, his property values had increased more than tenfold.

That kind of information snapped downtown property owners to attention, and they were all in attendance at LA Live, including Steve Needleman, owner of the Anjac Fashion empire and Orpheum Theater, and Michael Dilijani, owner of the LA Theatre – both of whom are LA Streetcar Inc. board members – as well as Andrew Meieren, designer and owner of the Edison Bar and new owner of the historic Clifton’s Cafeteria. The streetcar would run past their properties on Broadway, connecting LA Live to Broad’s new art museum atop Bunker Hill.

Consider the impact of a streetcar in combination with the downtown Regional Connector, due to open in 2019: Downtown LA could become a real downtown again. “Where does growth and major activity happen in cities? Around transit because there is no room for cars,” noted LA Metro’s Diego Cardoso, one of many enthusiastic transit builders in attendance at the LA Live event. LA Metro’s Robin Blair says once funding for the streetcar is secured building the line would take only two years.

Streetcar stakeholders do the calculus this way: They hope downtown property owners will agree to pony up half the cost of the streetcar and note that another $10 million has been committed by the CRA. And they believe they can get the remainder from the feds and other state and local sources. The streetcar is in LA Metro’s $40 billion long-range plan, which makes $25 million seem like chump change.

The streetcar is currently undergoing environmental analysis, and LA Metro’s Blair said much of the new route could be overlaid on old streetcar lines. It’s important to keep repeating – for those who insist that LA was built up around the car – that LA was actually built up around what was the largest electric trolley system in the U.S., with 6,000 trains running on 144 routes into four counties. It should also be pointed out that in those days, transportation averaged about 3 percent of the household budget, compared to an average of 19 percent today.

The Obama Administration looks much more favorably upon streetcars – they’re urban and urban areas tend to be Democratic – than the Bush Administration. Since Obama took office the US Department of Transportation has invested $258 million in streetcar projects in Portland, Tucson, Dallas, Cincinnati, Charlotte, St. Louis and Fort Worth.

Will the LA streetcars return? “The hosts came together because they know a good investment when they see it,” said Jessica Wethington McLean, executive director of Huizar’s Bringing Back Broadway Initiative. “They know a great downtown will make the city ­– and the region – stronger.” Added LA Streetcar Inc.’s Dennis Allen, “Look at it this way: Three of the most visionary minds in the real estate business are hosting this fundraiser, and it’s attended by important downtown property owners, business owners and real estate developers. Clearly the streetcar is going to be built. The only question is, ‘How soon?’”