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Take Private Money and Going Public

Something major happened Wednesday to Detroit, and we all should be standing up applauding this game-changing event.

The first part of the story is the $25 million the U.S. government committed to the M-1/Woodward Avenue Light Rail Project on Feb. 17. The big news is the partnership between public and private money that made this federal grant possible.

The project combines the power of Detroit, the state via the Michigan Department of Transportation and at least four financial superstars (including Roger Penske, Mike Ilitch, Peter Karmanos Jr. and Dan Gilbert) who are doing everything within their power to get Detroit where it needs to be. Bless you, boys.

Say what you will about some of their other financial decisions (re: Kwame), but this light rail thing is a winner.

“Your business community should be congratulated,” said Frank Rapoport, Chair of the Global Infrastructure and Public Private Partnership (P3) team for international law firm McKenna, Long & Aldridge LLP. “Detroit is out front here. It's a great example of a public-private partnership.”

Rapoport, an expert on these unique funding structures, has studied Detroit's partnership. And he is impressed. He called our project “a model” for the rest of the nation. He noted that every state governor, city mayor or chamber of commerce should take note of how Detroit created this money-generating project – because it is the future of economic funding for the whole country.

The private funding, sponsored mostly by the Big Four Money Guys through the M-1, is a cool $125 million. The $25 million from the feds comes through a TIGER grant – discretionary funds known as the Transportation Investment Generating Economic Recovery program. All told, the project will take much more than this to complete, especially with plans to take it as far as Ann Arbor.

The key word there is discretionary. The feds didn't need to give us this money, Rapoport said. The reason they did is because the private money from the M-1 guys (and gals) is there.

“This is a competitive award based on what local government is doing and the federal government added to it,” Rapoport explained.

This funding structure is significant because municipalities like Detroit may not have the funds to get these projects off the ground. And the federal government may not have or doesn't want to put its money in these areas. But private dollars are there, and they are willing to get their payback on the back end of the project to make sure things like schools, roads and light rail gets built.

“The model that Detroit is using is a little more innovative because millionaires are stepping up,” Rapoport said. “This is the future of private financing for public infrastructure.”

This type of funding has happened in Europe, Canada and elsewhere for decades, Rapoport noted. Canada's program is so good that Gov. Arnold Schwarzenegger checked in with them about three years ago when he wanted to learn how to do it, Rapoport said.

Some background: The M-1/Woodward Avenue Light Rail Project will construct a light rail system connecting downtown Detroit to the New Center district along the area's main artery, Woodward Avenue. The project is 3.4 miles long with 12 station stops. The light rail system will run on both sides of the street in the second lane from the curb and will be co-mingled with vehicular traffic. TIGER funds will be used for road rehabilitation, a streetscape enhancement project and the purchase of light rail cars.

The U.S. Department of Transportation lauded the project in its award press release:

The project will have significant short-term benefits for Detroit's beleaguered economy, including job creation and economic activity. The city also expects the project to provide for significant long-term economic growth in the corridor, while improving mobility on a congested portion of Woodward Avenue, which carries 27,000 vehicles per day, on average. The project is also expected to enhance mobility options in this corridor, and attract investment to Downtown Detroit and the New Center area.

USDOT also noted the public-private partnership, mostly because it “leverages significant co-investment–almost half of the project's costs–from local and private sources, including station sponsorship, a development authority and a non-profit foundation.”

There are some opponents to the project -- check them out here.

Here's some more about the project from our friends and partners at CNN/Money.

I'm cheering on this project and trying to learn as much about it as I can. How about you?

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  • 1

    This is a terrific development for Detroit and Michigan. Light rail will eventually make some sense out of getting around efficiently in SE Michigan. But it is also important to develope an efficient feeder system along with the light rail. This system if modeled after the Curitiba, Brazil system and tweeked for Detroit, would be able to move Michigan's economy forward more expeditiously. With newer and greener technology in transportation I think we can improve on the Curitiba system and manufature the transport vehicles here.

  • 2

    If I used the term "out of scale" few of you would understand that.

    How much money has the people mover made in it's lifetime? Can you answer that?

    Being rational, how about that?

    Showing three and four cars stacked together is beyond absurd. The demand is simply not there. Will it be there in another 30 years? Doubt it.

    Street cars are much cheaper and perform exactly the same function.

    Overhead cables were an anathema, now they are great?

    Woodward wide enough for this? Not really.

    I was at the unveiling of the Tacoma Light Rail system. It made senst there because they had brought Tacoma back from the brink of abandonment. It'll really be great if they hook it up to Seattle and Olympia but we do not have those conditions.

    Anybody look at the population curves around here?
    Where are they? I refuse to believe that, at present, this makes any kind of sense at all.

    Remember the last Bond Issue for the Schools? Did anybody look at the population curves back then?
    Nope. So it was a costly fantasy land.

    This may well be that too, unless we get something going Downtown, We need a University there.

    Anybody thinking that transportation engineers are the most integrous group of all had better start rethinking.

    Remember that we had a wonderful street car system and then the politicians decided that it should not be owned and operated by the Canadians. And then there was the mad rush to tear down the last vestages and ship the cars off to Mexico City.

    Those were beauties.

    And there were one whole hell of a lot more people around here back then.

    This should be viewed as a nother terrifying boondoggle. Or maybe an inverse Disneyland ride. Solving nothing.

    How many of those willing to fork in really know anything about Architecture, Architectural Historic Preservation and City Planning?



  • 3

    I don't think street cars will work. At least...I hope they won't. In my opinion, this new light rail system has to be a first step in a larger light rail system that can connect the Woodward corridor all the way up to Royal Oak and all the way over to Grosse Pointe and Metro Airport.

    Sure, street cars, as ia likes to remind us everyday, could go up and down Woodward. But they would have the same, short-sighted limitations of the People Mover.

  • 4

    It is my understanding that the project would only extend from Jefferson to New Center. MDOT is proposing a rail system that would travel all the way to 8 Mile, if I'm not mistaken?

    Anyways, this is an awesome proposal. What the Planning Commission and city needs to think on, is beginning with this project, and as sui44 stated, continue on into other communities. But will Oakland, Macomb and Washtenaw counties follow suit, and be interested in investing into the CITY'S infrastructure?

    I pray for a change of heart from Metro Detroit. Realistically, for the past 4 decades (maybe beyond), they and their residents have aided to the plight of the inner city.

    Where there is a will there is a way!
    God Bless,

  • 5

    I love the idea of Detroit with light rail. I love the thought of mixed-use, walkable places that could spring up around stations. I love that this is public private-partnership!

    But stores and businesses won't cluster around stations unless PEOPLE come to these stations. What's going to make people want to use this service on a daily basis?

    The rule of thumb is that most people will walk up to half a mile (about a 10 minute walk) to get to an LRT stop. How many people work within half a mile of these stations? What subset of those people also live within a half mile of those stations? And even then, how many will be willing to walk to a station and wait for a train on a chilly winter morning if they can hop in a car, avoid paying a transit fare, and zip up Woodward?

    Transit works when lots of people have common starting points and destinations - and that's not how Detroit or the metro region works anymore. When you look at the residential densities that transit planners typically use to determine what's workable, Detroit can support Dial-A-Ride service - which is what you'd expect in a rural community.

    Transit works when it's cheaper or faster or less of a hassle than driving. Transit works when it's the best way for large numbers of ordinary people to get from place to place. In this context, transit works poorly. How is LRT going to change that?

    I'm a metro-Detroit native, but I'm also a city planner. A successful transit system supported by successful transit-oriented development is a hard, hard thing to make work - even in bustling, growing, strong-market regions.

    There are a zillion things we can do to become a stronger, healthier region of great neighborhoods and vibrant communities. But I'm not sure this is the right step to getting us there.

  • 6

    I love the idea too. But where are the people that would use this. Where do they live?

    I have done architectural renderings and know that they can blow smoke.

    The fact is that we do not have a Planning Commission with a legitimate planner in charge.

    So this is another ad hock piece of junk.full of bells whistles, blue birds and blue sky.

    Detroit's history of the Interurbans and street cars, trolleys and such is a checkered one. Always they started out as a grand idea and then economics forced their demolition.

    And with modern street cars you can barely tell the difference when you look at one from a light rail. And they are exceedingly less expensive.

    This is another obscene costly boondoggle..

    It would seem that the heart is in the right place but without a head to direct it.

    Where is the City Planner?
    Doesent exist.

    Utterly preposterous like the last school bond issue.
    Yes some good work was done, nice to get hugged by a teacher but where is the overall oversight in all this blue sky bluebird stuff.

    This is beyond disgusting, it's obscenely out of scale.

    Detroit is not Shanghai. It doesn't have enough people to warrant this.


  • 7

    This is great news, but only a first step. There needs to be a comprehensive transportation plan executed for the entire region.

    Without a broader implementation this is a rail system to no where.

  • 8

    I slept on this and got so angry that I had to let it out.

    What is all this Dorris Day stuff, everything is hunky dory...We can do anything!!!


    I just read Amyjlaa's post.

    There you have it from a planner. A legitimate planner!

    That is very reasoned and you had better listen to her or watch huge sums of monies being wasted by idiots.

    We had better get the children taken care of first.

    That is number one!


  • 9

    You see, we have a culture here that says education, what's that??

    Education, Degrees, Certifications, Experience mean nothing.

    And that goes for the white guys trying to manipulate the city.


    • 9.1

      ia, well thuoght out as usual, but I don't agree on your opnion, at least not this time. Sure feeding, clothing, education, have to be #1. In Detroit, Haiti, whrever the need exists. ...BUT!!!>>>We don't live in an Utopian Society, and our current form of govt. is the best around. THE FACT THAT ANYONE would put up this kind of seed money, is truly , amazing. The $100-$125 million from FEDS WOULD NEVER GO towards those core ideas and values. Those are transportation funs, and realisticly, detroit has been shortchanged for DECADES by the petty Fiefdoms of the suburbs and detroit. San Francisco didn't turn down B.A.R.T. funding in eaerly '70s, laste '60s. SF went from burned out ex-Hippie -drud -town , IN A VERY LARGE PART from those Federal $$Billions. Same for Boston, D.C., almost every other city that has had Massive infusions of funds. Is this the best use of Mass Transit?..Probably not, but at least 1/2 of these funds serve same purpose of start-up "baNKS". tHE TERM , AGAIN, IS CRITICAL mass! i LOVED dOWNTOWN TROLLEY , AS DID MY pARENTS, and my kids. How many other things as this exist: 3 gens. that actually use these systems simply because THEY EXIST? SF doesn't rely only on the Trolley cars. They only exist at all, due to smart marketing(including Rice-A-Roni!..Seriously!) I , too, am tired of wasting what's left of OUR Architecture>>>I actually tried to buy part of Monroe Block for, I think, $65,000. With a Mortgage! City already had decided to tear it down(Night of the Living Dead-Sam Raimi?). Take the funds and RUN; I mean RIDE!

  • 10

    ps?..Did ANY OF US TRY TO KILL MASS TRANSIT IN Seattle, Portland, L.A...ANYWHERE ELSE BUT Detroit!?..I don't think so. Detroit had much larger Population base than ANY other city had, Even Sf. Bot., D.C. Why do us detroiters decry getting back SOME the $$billions WE HARD WORKERS WHO BUILT THE MIDDLE CLASS in THOSE cities, get OUR Federal Share Of Dollars?..Please!...$20plus $$Billions for 6 mioles in Boston?..Does THAT MAKE ANY Economic case, at ALL?!!

  • 11

    ...pss...amy, young people rarely use their cars as main form of movement in Portland, Seattle..AA. EVEN! It's their bikes or the bus or Light rail. ia , me, and anybody who grew up in '50's and '60s WOULD NEVER USE A BUS , NO MATTER HOW EFFECTIVE! every other block and on time! WE didn't use 'em THEN, and WE probably won't use a BUS, EVER, NOW!! These systems are aa practical way to infuse OUR COMMUNITIES with $Billions of OUR TAX $$$ Detroit and MI. have helped rebuild every part of this country. Those days may be over...In a Democracy, the Greater Good... Silicon Valley, Boston, New York have used our Billions in Taxes, to rebuild. Why all the rationalization regarding OUR HOMES?!..I just don't getr it/!

  • 12

    I don't need to be a planner to know that if you put mass transit down the sides (and not in the middle) of the road, you will kill foot traffic for local businesses, and rail against existing non-motorized master plan, aashto standards, complete streets initiatives, and so on and so on.

    the corridors either side of woodward are tailor made for parallel non-motorized access to widely spaced stops, but the last time i heard anything, the new center-downtown line had as many stops per mile as the people mover. if that stays the same, it will be a complete mockery.

  • 13

    Pssst Dave...

    How many young people live downtown?

    Not very many but the cities that you cite do.

    When the University Cultural Center first started they hired a transportation consultant and they came up with all kinds of OD studies saying that we needed a bus line from Downtown to the University Cultural Center to the New Center.

    Funds were generated for that. Special busses and routes.

    Guess what? Ridership was about 1 or 2 people per trip.

    Didn't last for long... seeing that was painful and this is virtually the same route being proposed.

    So the thing to conclude is: We don't have the population to support this thing. Didn't before, less now.

    Another thing to conclude is that transportation planners are the least integrous of all the consulting groups. They have an inherent conflict of interest.

    This is cackamamie as it gets... totally irrational.

    And another thing to remember is that these donors are the ones that kept throwing monies at Kwame.
    Go figure. Somebody surely isn't.


    • 13.1

      ia-Bill...,...Agreed mor 'young-uns' do live in those cities' d'towns. BUT...Could more young, old, ..even middle-aged people use our d'town than do now? I guess you could say' $hundereds of millions in: $ millions out' as a financial loss/return.. Doesn't matter! NONE oF THOSE CITIES' riderships can even COVER operating expenses! THE Rail-what-EVER-Just_NOT-Buses systems are a convenience. Even in all cities ,except, perhaps, Boston, New York, People COULD TAKE CARS! These systems have to be easy and convenuient, and, OK, "kitschy" be of any use. Facts remain, that if an entity or Business Interest dumps $$loads of cash into a small grouping-groupings, THEIRS and OURS interests will be served! No one needs a ballpark, right? The Superdome WAS THE EXACT PLAN FOR DETROIT's Riverfront Stadium...Remember? NEW O. has profited, literally, several times over initial public taxes. Same with Trans. funding! If there isn't something New and Exciting, public WILL NOT USE IT! I've already stated that ours' and older gens. WILL NOT USE A BUS---EVER!!. Semcog(I forget current name!) buses from 'burbs into detroit, were always more full going back to suburbs. Why?...Shopping opportunities, 'the necessities', etc.,. Workers, some tourists, STIIL USED their cars!. Only something that ultimately makes car use easier D'twn, Neighborhoods eventually, will ever come close to cover operating costs! I don't think there is (after that PBS Spain example Re Modern "rail') ANY SYSTEM IN THE WORLD that can cover expenses! That's not the idea! Synergy, or critical mass, or Getting people to live and work together is MAIN reason for a system! Eventually money into an area, WILL 'turn -over 7or8 times. ..NOW THE PUBLIC COSTS ARE JUSTIFIED! WE NEED more day visitors AND residents D'twn., yes, ..The initial constr. $$$ are huge BUT THAT type of money will ultimately bting thousands of jobs. These trns. funds, as I earlier stated, will 'synergize(?) several areas of the "D"...Eventually the gaps-resdential, business, entertainment, will be filled in, becoming an even larger base for more gaps to be filled in...At least that's my story and I'm sticking with it! dpb

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