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UW-Milwaukee - Center for Economic Development

Policy Research Report Abstract

Light Rail in Milwaukee: An Analysis of the Potential Impact on Economic Development, May 1992, by Marc V. Levine

Abstract

Researchers at the University of Wisconsin-Milwaukee Center for Economic Development (UWMCED) have studied the potential economic consequences of a light rail transit (LRT) system in the Milwaukee region. We examined the available evidence on the economic development and land-use impact of fixed rail systems in cities such as Portland, Buffalo, Toronto, Baltimore, St. Louis, Atlanta, and San Francisco, and have reviewed public policies used in various cities to encourage economic benefits from urban rail investments. In addition, UWMCED used an input-output model to estimate the impact of the proposed LRT system on regional employment, earnings, and output.

The UWMCED study concludes that, although the economic benefits of LRT should not be oversold and will require supportive public policies to be fully realized, a light rail system could contribute significantly to economic development in the city of Milwaukee and the entire region. Our chief findings:

Employment, Output and Income Impact

LRT will provide an important public works stimulus to the regional economy. Using an input-output model of the regional economy, UWMCED estimate that during the four or five year construction phase of the project, 6,041 jobs will be created. This total includes jobs directly created in construction and related employment, as well as the employment that occurs as the initial expenditures for LRT ripple through the regional economy.

UWMCED estimates an increase of $465 million (in 1990 dollars) in total output in the Milwaukee region as an LRT system is constructed. Total wages would increase by $179 million, with state and local governments receiving an increased $44 million in taxes.

Operating and maintaining the LRT system could generate an estimated 625 permanent jobs in the Milwaukee region.

The long-germ economic impact of LRT can be augmented by creative local procurement and industrial policies. Cities such as Montreal have used rail investments to spin-off several mass transit-related industries, and Los Angeles is considering a similar strategy by attempting the local production of rail vehicles heretofore imported from Japan.

UWMCED estimates that if light rail vehicles for the Milwaukee System were produced locally, an additional 959, mostly family-supporting jobs could be created in the region, producing $80.8 million in additional output, and $29.0 million in wages in the four county Milwaukee metropolitan area.

In light of this potential, UWMCED recommends that the City of Milwaukee and State of Wisconsin strongly explore the possibility of using LRT investments as a strategic linchpin for the development of a Milwaukee-based mass transit manufacturing industry.

Land Use and Neighborhood Development Impacts

There is little evidence that fixed-rail systems have meaningfully altered patterns of employment decentralization and residential sprawl in North American metropolitan areas.

On the other hand, cities such as Atlanta, Portland, and Toronto provide good examples of development activity around the system routes and station locations. UWMCED concludes that light rail can have a modest, but positive impact on neighborhood development and land use.

Fixed rail transit offers the opportunity for development, but, in itself, is usually not sufficient to spur significant spin-off development around routes and stations. The experience of cities examined by UWMCED suggests that transit-related development requires coordination of transit planning, economic development, and land use policies. The "Field of Dreams" approach to transit and economic development -- "if we build a station, developers will come" -- is rarely successful.

One of the lessons learned from other cities is that decisive and active public policy may be required to achieve even modest development impacts of LRT, especially in station-areas located in neighborhoods with weak private investment markets.

Therefore, UWMCED concludes that city, county, and state governments should take an active approach toward stimulating development around the LRT routes in this region. In addition, a broad, participatory process should be established at an early stage in the planning process, so that neighborhood development issues are considered in route alignment and station location decisions. LRT will be one of the largest public infrastructure investments ever undertaken in Milwaukee. As such, it is imperative that local policies and complementary redevelopment resources be coordinated to maximize its economic impact.

Light Rail, the Inner City, and Minority Economic Development

The record in urban American on using rail transit investments to revitalize inner city neighborhoods or promote minority economic development is not a strong one. However, given the magnitude of the economic problems facing Milwaukee's inner city and the rare opportunity offered by a major public works investment such as LRT to inject resources from the federal government into the central city, UWMCED believes it is essential that Milwaukee develop a strategy to successfully link LRT to inner city revitalization.

UWMCED concludes that if inner city and minority concerns are properly considered in transit planning, building a light rail system could yield significant economic benefits for the inner city and for minorities. Specifically, we recommend the following policies:

  1. Explicit minority hiring and contracting requirements in the construction and operation of LRT;
  2. Implementation of reindustrialization strategies around mass transit manufacturing in Milwaukee;
  3. Creation of public-private partnerships for development around inner city LRT station-areas;
  4. Public investment to enhance the market for investment around inner city stations;
  5. Routing of light rail lines to improve access of inner city residents to industrial parks and suburban employment locations.

No city has ever implemented all these approaches in building fixed rail systems, and as a result there have been limited economic benefits for inner city residents. Milwaukee has an opportunity, with this major public investment, to establish new and productive links between mass transit and minority economic development.

Therefore, UWMCED recommends the formation of an Inner City-Light Rail Task Force whose purpose would be to develop concrete and explicit plans to maximize the economic benefits of LRT for Milwaukee's innercity.

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