New tax district brings streetcars in Minneapolis one step closer

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University Avenue streetcar
Passengers wait to board a streetcar on University Avenue in the early 1950s. Streetcars could once again roll through the city's busiest corridors with the creation of a new tax district which would be used to pay for part of the project.
Photo courtesy of the Minnesota Transportation Museum

It's been nearly 60 years since streetcars last ran on tracks in Minneapolis, but they could once again roll through the city's busiest corridors.

Two Minneapolis City Council committees on Tuesday approved the creation of a new tax district which would be used to pay for part of the project to bring back streetcars.

The resolution adopted by the council's budget and transportation committees would create a "value capture district." Based on the assumption that properties benefit by being located along the streetcar line, the district is designed to capture the increased property tax value from those properties.

The money would be used to pay back the loans the city will take out to pay for its part of construction and other costs.

The Como-Harriet Streetcar Line
The Como-Harriet Streetcar Line is part of the Minnesota Streetcar museum. Minneapolis' streetcar route is planned to run along Nicollet Ave. in the south central part of the city through downtown, across the Hennepin Ave. bridge and north on Central Ave.
MPR Photo/Cathy Wurzer

The resolution passed nearly unanimously. Councilmember Meg Tuthill, who represents Minneapolis' uptown area, chose to abstain because she said she still had questions about the streetcar plan. The full council will vote next Tuesday during a special meeting.

Peter Wagenius, policy director for Mayor R.T. Rybak, said the plan sounds like tax increment financing, or TIF, which was used to fund part of the Block E development downtown. TIF involves using public money to fund private development projects in hopes of stimulating more development. However, Wagenius said this new tax district would use public dollars to fund a public project designed to boost private investment.

"We are not attempting to use a form of value capture, of which TIF is only one. We're not attempting to use a form of value capture to subsidize development," Wagenius said. "We are seeking to build a transit line itself. And our experience with other cities is that when you build the right kind of transit in the right place, the private sector will take care of the development with their own money."

The new district would consist of taxable properties along the streetcar route, which is planned to run along Nicollet Ave. in the south central part of the city through downtown, across the Hennepin Ave. bridge and north on Central Ave.

Not everyone is cheering the prospect of streetcars or the funding plan. A few people spoke at a public hearing on the streetcar funding plan.

"I'm afraid it's going to destroy the character of the streets."

Clarence Shallbetter lives in the Bryn Mawr neighborhood in south Minneapolis, which is not near the streetcar route, and says the new tax district will draw money away from areas that need it most.

"This decision you are about -- maybe going to make, or maybe not -- is a decision to divert a large amount of revenue from the general tax base of the city of Minneapolis from the school district, from the county, to set it aside for other purposes," Shallbetter said.

Sue Frenzel who lives on Hennepin Ave. said, "I'm afraid it's going to destroy the character of the streets."

She worries that streetcar construction will displace the immigrant communities that have built restaurants and shops along the corridor.

"I like Central and I like Nicollet the way they are," she said.

Two mayoral candidates, Cam Winton and Bob Carney, Jr., also raised concerns about the plan.