Detroit Breaks Ground on Unprecedented Public Transit System

Ground has been broken for the M-1 RAIL Streetcar project, an unprecedented Detroit public transit initiative intended to generate new investment and development around the rail line.

Detroit—Ground has been broken for the M-1 RAIL Streetcar project, an unprecedented Detroit public transit initiative intended to generate new investment and development around the rail line.

The project, expected to be complete in late 2016, is the first major transit project led and funded by private businesses and philanthropic organizations in partnership with local, state and federal governments.

The 3.3-mile modern streetcar system will run along Woodward Avenue between Larned Street and West Grand Boulevard. M-1 RAIL is the non-profit organization leading its design, construction and future operation.

Construction costs totaling $140 million are being financed through an array of sources. They include foundation grants totaling $43 million; state and local government grants/programs totaling $24 million; corporate and other philanthropic pledges of $30 to $32 million; a TIGER grant from U.S. Department of Transportation for $12.2 million; and commitments totaling $30 million through the New Markets Tax Credits (NMTC) program. This is the first time NMTCs have been used to fund a public transportation initiative.

“Detroit’s M-1 RAIL epitomizes what NMTC investments should support, although this project is the first of its kind the credits [have been] used for,” says Mark McDaniel, president of Cap Fund New Markets, LLC. “We are excited to see this transit system further transform the City of Detroit, especially for city residents and those who need access to good jobs and public transportation most.“

It is expected M-1 RAIL will generate $235 to $297 million in crucially needed property tax revenue for Detroit and its schools, before any abatements. It is also believed it will enhance access to jobs and economic mobility for city residents, particularly those who are disadvantaged or transportation dependent.

Moreover, it is the foundation of a strategy to develop 10,000 new housing units, 5 million square feet of office and retail space, and attract 25,000 new residents to Detroit’s greater downtown area over the next decade.

“We are extremely pleased to assist in the financing of this high-impact project through Invest Detroit’s New Markets Tax Credit (NMTC) Program,” says Mary Seaberg King, senior vice president, Invest Detroit. “With $10 million in NMTC allocation provided for the first phase of M-1, Invest Detroit also plans to participate in the second phase with an anticipated allocation of $8 million. We . . . greatly appreciate the collaborative partnership efforts which helped to launch this light rail transit system and bring the project from vision to reality.”

Tahirih Ziegler, executive director of the Detroit LISC program, adds that the M-1 RAIL project will boost the impact of LISC investments in Detroit totaling more than $180 million by quite literally linking them. “By mutually reinforcing the redevelopment efforts in Grand/Woodward, Midtown and downtown, the project will serve to transform the entire corridor,” Ziegler asserts.

Following its construction, M-1 RAIL will operate the streetcar system for 10 years, before transferring its assets to the recently established Regional Transit Authority or a similar entity.