Development Magazine Winter 2014

Kansas City’s “Starter” Streetcar Line

After many failed attempts to garner citywide voter approval for a variety of light-rail and streetcar plans since 1997, construction is now underway on Kansas City, Missouri’s 2.2-mile downtown modern streetcar line. 

Kansas City, an attractive destination for millennial generation residents and workers, hopes to build on significant private investment in the downtown area by offering rail-based urban circulation that will connect three areas: 

  • The River Market neighborhood, with its mix of rehabilitated ware-houses and newly constructed lofts, weekly farmers’ market and locally owned restaurants. 
  • The central business district, with a growing residential population in repurposed early 20th-century office buildings, H&R Block’s new world headquarters and a new entertainment district adjacent to a world-class 19,000 seat arena.
  • Crown Center, a shopping and entertainment center with a new aquarium and one of only six Legoland Discovery Centers in the U.S. 

Innovative Financing

With a capital cost of roughly $100 million, construction of this “starter” line is being funded with approximately $37 million in federal grants, including a $20 million 2012 Trans-portation Investment Generating Economic Recovery (TIGER) grant. The remainder will be funded through bond financing that will be repaid with revenue generated by a transportation development district (TDD) that encompasses the service area. Formation of the TDD required approval of the voters within (but only within) the district, which was accomplished in 2012. 

headshot of Doug Stone

Douglas Stone

Voters within the TDD also approved a TDD-wide 1 percent sales tax and real property special assessments, the two revenue sources that will repay the bond financing and pay for operation and maintenance costs. The special district approach was a significant and controversial departure from previously unsuccessful citywide sales tax efforts, and was fashioned based on voter support within the boundary of the TDD that was evident from review of prior election results.

The TDD’s sales tax and special assessments will extend for 25 years. The special assessments are based on market value of the properties according to county tax records and apply to residential and commercial properties, as well as to exempt nongovernmental real estate owned by religious, charitable and educational entities, which are not entirely exempt from special assessments. A commercial property with a $1 million market value would pay an annual special assessment of approximately $1,530, a residential property with a market value of $200,000 would pay an annual assessment of about $265 and an otherwise exempt property owned by a charity with a $500,000 market value would pay an annual assessment of approximately $255, since the first $300,000 of market value for these “charitable” properties is exempt from the special assessment. 

In addition, even though city-owned properties cannot lawfully be assessed, Kansas City has agreed to pay special assessments on its properties and to make an additional annual contribution, together totaling approximately $2 million annually. The TDD’s sales tax is generating approximately $4 million annually and the special assessments are generating approximately $5.5 million annually, including the city assessments and its supplemental contribution. 

Public/Private Oversight

In response to business community concerns, the city established The Kansas City Streetcar Authority Inc., a nonprofit body comprised of downtown property owners, business owners and residents, which oversees and sets policy for the streetcar line and interacts with the third-party professional operator, Herzog Transit Services. The Streetcar Authority makes decisions relating to marketing and branding the streetcar, hours of operation, fare policy (rides will be free at the outset) and advertising sales. Working closely with the city, it also selected the vehicles and their configuration, designed the station stops and selected Herzog as the operator.

The starter streetcar line project includes the acquisition of four vehicles from manufacturer CAF USA and the construction of a vehicle maintenance facility. The streetcars will run in existing lanes of north-south traffic on opposite sides of Main Street. Ten stops are planned along the route, roughly two to three blocks apart. Headways are projected to be 10 minutes for peak and 18 minutes for nonpeak service. Ridership is estimated at approximately 3,500 per day initially. 

The starter line is expected to commence operations in late 2015 or early 2016. The development of the starter line has spurred even greater investment in Kansas City’s downtown core. According to estimates by the nonprofit Kansas City Downtown Council, approximately 2,500 new housing units, 450 new hotel rooms and 400,000 square feet of new office and retail space are attributable at least in part to the downtown starter line.

Next Steps

Unfortunately, a recent effort by Kansas City to pursue a much larger TDD to finance three new routes totaling an additional eight miles failed at the ballot box in August. Two of the new lines would have been constructed in economically disadvantaged areas. A third alignment would have extended the Main Street starter line another three miles to the University of Missouri-Kansas City, which is pursuing a new downtown arts campus that would have been connected to the main campus by that Main Street extension. Despite the recent electoral setback, transit advocates and many in the starter line’s TDD are expected to push for another attempt to extend the streetcar line. 

“NextRail KC,” the planning study conducted on behalf of the city in connection with that expansion effort, perhaps said it best: “Providing a fixed rail streetcar system that conveniently connects the areas of dense population with the most diverse employment centers would likely encourage more citizens to both live and work in the urban core, thus building a more resilient economy and stronger neighborhoods.” 

This is a potential solution to urban sprawl that can be realized not only in Kansas City, but in metropolitan areas all over the country where expansion has led to disconnection. One can hope that, as Kansas City’s starter line comes to fruition and its benefits become more tangible, an expanded “streetcar desire” will materialize.

From the Archives: Business / Trends Articles from the Previous Issue

By the Numbers: Economic Contributions to U.S. Economy 

This table shows the 2014 economic contributions to the U.S. Economy from the development of commercial real estate buildings.

interior view of a grocery store

Pop-Ups Transition to Temporary, Seasonal Venues 

What segment of the U.S. economy “popped up” around 2009 and has grown into an $8 billion industry with a 16 percent annual growth rate, according to the Alexander Babbage Inc. market research firm? The answer is pop-up businesses, also known as “temporary retail.”