Humphrey School News—April 27, 2017

Green Line Light Rail Spurred Economic Activity, Humphrey School Researchers Say

When local officials proposed plans for light rail transit lines in the Twin Cities area in recent years, they envisioned more than a system designed to get people from point A to point B. They expected the new lines would lead to major economic development.

A recent study published by scholars at the Humphrey School of Public Affairs is the first of its kind to confirm those predictions were right, and shows a definite link between construction of light rail transit and economic development activity along the rail line.

An earlier report by the Metropolitan Council noted several billion dollars of new development along the Blue and Green light rail lines, but didn’t address whether the development would have taken place regardless of whether the lines were built.

Jason Cao, an associate professor in the Humphrey School’s Urban and Regional Planning area, and researcher Dean Porter-Nelson (MURP ’14) looked at real estate development plans along the Green Line LRT—which runs from downtown St. Paul along University Avenue to downtown Minneapolis—in the years before it began operating.

They found that as soon as final funding plans came together in 2011, applications for building permits along the Green line increased significantly, compared to permit applications for new construction and remodeling along existing transit routes.

Green light for the Green Line

“Our study is different from the Metropolitan Council announcement because it investigated whether or not real estate development would have happened ‘but for’ the construction of the Green Line,” said Cao.

Cao and Porter-Nelson compared the building permit activity near the Green Line’s 13 St. Paul stations to activity along a few high-frequency bus lines in St. Paul that had similar major intersections. Compared to the bus routes, the number of building permits issued within walking distance (1/4 mile) of the light rail stations went up by 24 percent, while the value of those building projects increased by 80 percent.

Porter-Nelson said their findings—and their methodology—are significant.

“Other studies out there are looking at things like the total dollar value of development that’s occurring along light rail lines, but not using any kind of control to understand whether we are having greater than expected development,” said Porter-Nelson. “This study provides the evidence that the Green Line LRT did, indeed, drive development.”

The study also shows that light rail has a bigger impact on the development of surrounding areas than bus service, even along major bus routes. Simply put, trains have more appeal than buses.

“Developers and property owners don’t respond in the same way to bus service as they do to light rail,” he said. “Rail physically changes the landscape, and it has the potential to attract people who want to live or shop in the area because it’s a permanent fixture in the neighborhood.”

The research notes that the Green Line project supported redevelopment in downtown St. Paul as well as in the neighborhoods along University Avenue, but that the types of development were different in each area. In downtown, most development involved individual “high value” projects like apartment buildings, new retail, renovation of the Union Depot, and the like, while small business owners and residents along University Avenue led neighborhood reinvestment, by making improvements to their properties.

 Is LRT worth the investment?

Given that an individual light rail project can easily cost $1 billion or more and take up to a decade to build, many question whether the investment pays off.   

“We don’t have a firm answer on whether all LRT investments are worth it, but from an economic development standpoint, the Green Line was well worth the investment,” said Porter-Nelson, adding that the study is important for future transit planning in the Twin Cities.

“If stakeholders want to revitalize particular areas, or direct development and investment along transit lines and away from car-centric projects, our study provides some strong supporting evidence that LRT investments can indeed drive geographically-concentrated investment,” said Porter-Nelson.

But the researchers also note that successful economic development requires a lot more than building new light rail lines.

“Transit-supportive land use policies are also critical to success,” said Cao. “The city of St. Paul’s planning efforts, including its Central Corridor Development Strategy and zoning code amendments, played an important role in facilitating the economic activities along the corridor.”

The Center for Transportation Studies at the University of Minnesota funded this research. The full paper can be found here

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