While the city of Saint Paul continues to slide around on dangerously icy streets, Mayor Chris Coleman patted himself on the back yesterday at the US House Subcommittee on Highways and Transit hearing, suggesting that Federal Transit Administration’s (FTA) Capital Investment Grants program, commonly known as “New Starts,” helps Saint Paul and is good for our nation.
Mayor Coleman has spent his entire mayorship advocating for light rail and big downtown projects. But, do these big government projects help neighborhoods? Do they help residents? Do they help business? Do they encourage transit?
“Already, we have seen more than $1.2 billion worth of investment in new housing and investment opportunities within the 18 station areas along the 11 mile route,” Coleman testified.
He went on to say that, “The last time there was a major transportation investment in this same corridor, it was the construction of Interstate 94 which, while linking Saint Paul to Minneapolis with Chicago and points east, also sapped the economy of those neighborhoods, leading to 40 years of disinvestments.”
Of course, even though the city, state, and federal governments made no major investments over 40 years, local businesses were making investments. Many of those businesses suffer because of the University Avenue rail as the street was narrowed and parking was lost. The Rondo neighborhood, split by I-94, fought against light rail.
Mai Village made news last year when it was facing foreclosure. There were those who petitioned to save the restaurant and those who said the restaurant was losing business because of its own business practices. Nonetheless, no one disputed the fact that Mai Villiage’s investment in the neighborhood twenty years ago helped to build a strong community of Asian businesses and restaurants.
In fact, the corridor had an interesting mix of small and large businesses for many years with minimal vacancy rates due to prime locations on University Avenue, near the state capitol building, and with easy freeway access. Business vacancies began to increase with the building of light rail while residential vacancies along the corridor have trended upward between 2000 and 2010.
To counter the large amounts of businesses that have left University Avenue during light rail construction, Saint Paul has invested in subsidies. During a debate earlier this year, Mayor Coleman stated that every business that asked for help from the city remained in business.
Coleman also expects the light rail to assist those who lost housing through foreclosures. During his testimony, he said, “Over 7,500 housing units have been or will be built along the line, many of them financed to be affordable to students or lower income households.”
He further anticipates that this will allow families to reduce spending on housing and transportation, and funnel the savings into “school, buying a house, or starting a business.”
Of course, this doesn’t take into account the problems with building too much too fast. Development that happens in anticipation of demand rather than in response to actual demand might increase vacancy rates or prove to be popular to a different audience than intended and produce artificially inflated values, thus gentrifying an area.
In fact, chasing trends tends to artificially inflate the economy only for a brief time before reality hits. One only has to go back to the burst of the housing bubble to consider the damage done by government interference with rates on housing loans.
Coleman’s history with business development is also not necessarily positive. During his administration, businesses like Cupcake and Pizza Luce have not felt the love from their city. But, perhaps the most glaring lapse in judgment came when Coleman was a city councilmember.
According to the Minneapolis Star Tribune, Coleman as city councilmember in 1999 “fought downtown business interests” to get the Palace Theatre listed as a historic building. 14 years later, the building is still vacant, as are a growing number of buildings in Saint Paul. Of course, saving the Palace Theatre from private enterprise may come at quite a cost to taxpayers if Coleman’s pre-election announcement actually happens.
Despite Metro Transit’s express bus service which is faster between Saint Paul and Minneapolis than the planned light rail, FTA administrator Peter Rogoff cites the Twin Cities’ light rail project as a successful use of New Starts money. He notes that this project “promotes transit investments” which result in “linking major job centers.”
Of course, the testimony of Rogoff and Coleman neglects to mention that Metro Transit is on balance reducing transit service within the area, making travel less efficient between the “major job centers.”
Given the support to the Coleman campaign from construction PACs and law firms representing major construction companies and the Saint Paul Chamber of Commerce, perhaps the most honest testimonial statement came from Randal O’Toole, Senior Fellow at the Cato Institute.
“The only thing that can be said is the rail provides cities an excuse to subsidize new development,” he said in his testimony.
O’Toole concluded that he recommends “Congress abolish New Starts and put New Starts money into a formula fund that rewards transit agencies for increasing transit ridership and fares.”
One would think, given that the St. Paul light rail has been deemed the "Green Line" and given the rhetoric about reducing automobile usage, that increasing transit ridership would be considered important. But, look at the New Starts/Small Starts Fact Sheet. That goal is simply not there.
Will “New Starts” investments such as light rail along University Avenue improve neighborhoods, help residents, improve business climate and improve transit? Mayor Coleman has testified to Congress that they will. The icy roads of the “most livable city” indicate that not all promises come true.