Commercial property owners may be asked to pay for part of streetcar costs

By Jonathan O'Connell
Monday, May 17, 2010

Commercial property owners along 37 miles of planned routes for a D.C. streetcar system may be asked to foot the bill for a quarter or more of the $1.5 billion system proposed by Mayor Adrian M. Fenty.

Hours before Fenty held a downtown news conference to unveil one of the city's three shiny streetcars, more than a dozen owners of commercial properties adjacent to the lines gathered at the Renaissance Washington hotel to hear a pitch from the city's Transportation Department and the Downtown D.C. Business Improvement District.

A BID-commissioned study by the Brookings Institution, Robert Charles Lesser & Co. (RCLCO) and Reconnecting America, a transit advocacy group, suggests that streetcars would increase the value of the revenue-producing commercial properties along H Street and Benning Road Northeast by $1.1 billion over 20 years.

"Anytime you can make transportation much more convenient and establish fixed connections from place to place, you are automatically going to increase value," said Shyam Kannan, an RCLCO vice president.

Fenty is looking to spend another $60 million to $70 million in public funds to finalize the H Street-to-Benning line and purchase six cars for it that could run as early as spring of 2012. That first line has to succeed before the city will request money for more of the 37 miles of tracks it plans, said Scott Kubly, who manages the streetcar project for the D.C. Transportation Department.

"We want to maximize the amount of private sector investment that the development community wants to make, and we think the best way to do that is to provide a local demonstration of success," Kubly said. "That means a system that is complete and operating successfully and demonstrating that investment from the private sector on that corridor will follow."

Private landowners paid about one-quarter of the cost to build the New York Avenue Metrorail station, and Kubly said that would serve as a starting point, whether the money is collected by a special tax district, or fees for zoning or density allowances, or another way. "That's sort of an opening number," he said, adding that the more property owners that contribute, the faster "we're likely to see streetcars at these other corridors."

Although fewer than half of the more than 40 commercial property owners invited to the presentation arrived, some developers say they see the value despite the expected costs.

Among the planned future lines is one that would run downtown past 901 K St. NW, a 260,000-square-foot office building by Carr Development. Robert O. Carr, managing partner, said the streetcar "is going to create more freedom of access to people who work at a K Street location."

"Nobody's wild about spending extra money now given the recession that real estate has been in for some time, but I think ultimately we would be willing to support some method to pay for it," Carr said.

Developer Jim Abdo, who built the Landmark Lofts at Senate Square condominiums on H Street, said he is an enthusiastic supporter and suggested that retail would see the benefits first, in part because a streetcar system could bring tourists to the city's neighborhoods. "When you see successful retail, cafes, restaurants, those things happening in the neighborhood, apartments then become more valuable, condominiums become more valuable," he said.

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