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Light rail spurring development along transit line?
by Dan Olson, Minnesota Public Radio
October 19, 2004

Consultant Kris Brogan, left, and Alliance Housing executive director Herb Frey are planning an 80-unit housing development next to the Minneapolis light rail line. The apartment complex is for low-income workers. (MPR photo/Dan Olson)

Even before the Hiawatha light rail line was built in Minneapolis, boosters were predicting the transit service would be a potent development tool. Indeed, there are a lot of projects planned or already going into the ground along the rail line. Others take a broader view and point out there's a fairly rapid pace of development all around the Twin Cities, due in large measure to the region's fast growing population.

Minneapolis, Minn. — The Hiawatha line has been in operation less than a year, and already there are hundreds of new housing units being built along it -- including million-dollar condos, market-rate apartments and low-income housing.

Kris Brogan says light rail transit (LRT) is the reason her group is building housing on a former parking lot a stone's throw away from the transit service.

Brogan works for Alliance Housing. The private, non-profit Minneapolis company is putting up an 80-unit apartment building for low-income people, near the intersection of Lake St. and Hiawatha Ave. in south Minneapolis.

	Transit-oriented development in south Minneapolis

The building has fewer parking spaces because it's close to transit, and many of the prospective tenants don't earn enough money to own a car.

"So if it had been built it may have been a different project, may not be related to transit, would have had to have considerably more parking -- making it a different project if had been built at all," Brogan says.

Several miles south, near the 46th St. LRT station, concrete oozes onto what will be the first floor of a 61-unit apartment building. Developer Norm Bjornnes, Jr. says he and his partner decided to build the market-rate units here, specifically because of light rail. They're betting people with jobs in either downtown or Bloomington will rent the units, because the light rail station is two blocks away.

This building, like the one Alliance Housing is putting up near Lake St., has retail space on the first floor. Both projects will return more property tax revenue to the city than what was on the sites before them.

Bjornnes says the city is allowing him to put up a building with more apartments than the zoning code might otherwise allow because of the nearness to transit. He needs the extra units, he says, to make a profit.

	Developer Norm Bjornnes, Jr.

"Combining the transit orientation of it with some first-floor retail -- it should work in the long run," Bjornnes say. "In the short run it might be a bit of a pull, but in the long run we think it's a good place to be."

Evidence from some other cities shows Bjornnes' investment may pay off. Property values and rental rates near light rail lines in Dallas, San Diego and Portland are rising, along with other locations.

However, residents who live near the Hiawatha line don't want just any kind of development. Their attempts to pick and choose what developers build sparks controversy. Many residents favor smaller projects that don't offer enough profit to attract developers.

The Hiawatha line travels along highway 55 through several south Minneapolis neighborhoods dominated by owner-occupied, single family homes. Kevin McDonald lives in one of them, in the Longfellow neighborhood near the 46th St. station.

McDonald says he and many of his neighbors oppose transit-oriented development that allows fast food or bank drive- throughs, gas stations, big-box retail stores with sprawling parking lots, and any other projects which cater to drivers.

	New mall owner near LRT station

In fact, city zoning codes in many of the neighborhoods near the line won't allow that kind of development. Instead, McDonald says many residents favor smaller scale businesses that fit an idea of what they'd like their neighborhoods to look like.

"A small grocery store like a co-op, white linen restaurants -- people are interested in that. Potentially a library," McDonald says.

Those visions from neighbors don't always mesh with the realities of the market. One example is Lake St. and Hiawatha Ave., about two miles along the line from where Kevin McDonald lives.

The best looking structures near the Lake St. light rail station, where passengers are buying tickets, are the station itself and a new YWCA across the street. The rest of area is ripe for renewal.

Take the eight acre Hi-Lake Shopping Center. The dowdy l960s-era strip mall forms an L around a massive parking lot. The tenants are a collection of discount stores which cater to bargain hunters and low-income shoppers.

Mall owner Steve Wellington recently bought the property. He says he's spending $2 million to spruce the place up. Most of the existing businesses have long leases, he says, and will stay -- with one new addition, an ALDI discount grocery store.

	Expert says growth fueling development

The deal angers some neighbors. They'd been working on a detailed transit-oriented development plan for the area. As part of the plan, they hoped ALDI would build at a busy intersection a few blocks further away from the light rail station, and be a keystone business to help rescue another blighted area.

But neighborhoods along the Hiawatha line and the city of Minneapolis don't have money -- or much else in the way of financial leverage -- to subsidize the kind of private development they think is appropriate. That leaves more of the decision-making in the hands of private property owners and the marketplace.

Zoning is the city's main tool for influencing what happens. City officials have rezoned along the line in both directions. They've zoned up in some cases to allow more intense development, and have zoned down in other instances to preserve the residential character of some neighborhoods.

Hi-Lake owner Steve Wellington predicts transit-oriented development in neighborhoods will be limited, compared to what's happening at either end of the line.

"(Neighborhood development will be) small, challenging. It will happen," says Wellington. "But downtown, Mall of America, wow. You're going to see some big important type investment that will strengthen both those areas, and it will be directly related to light rail."

Some big developments on both ends have already been announced. St. Paul-based McGough Development, along with Great Northern Resorts, is proposing a $600 million housing and entertainment complex on 45 acres called Bloomington Central Station, near the south end of the light rail line.

	LRT service in Minneapolis

At the other end, in downtown Minneapolis, a developer is proposing two 20-plus story condominium towers on Hennepin Ave. a short walk from a light rail station.

Analysts say crediting light rail for fueling the new development misses the bigger picture.

University of Minnesota geography professor John Adams says all of the development, whether around light rail or elsewhere, is happening because of the region's fast population growth. Twin Cities growth is on a pace to add 930,000 more residents in 25 years.

"One of the larger pictures that's often overlooked here in the Twin Cities is the fast growth which creates the market, which creates the inflated property values in high demand neighborhoods, which creates an opportunity for people to cash out and move to something else," Adams says.

If present patterns are a guide, most of the people moving to the region will settle in the suburbs and continue to rely on personal vehicles for their transportation. A small but growing number are deciding to live near the Hiawatha light rail line, and their decision is attracting the interest of developers.

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