You Paid for It: Milwaukee streetcar costs

CREATED May 13, 2013 - UPDATED: May 13, 2013

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MILWAUKEE - In busy downtown Milwaukee, you will find plenty of restaurants, bars and people enjoying the lakefront. But what you can’t find is a streetcar, at least not yet.

The opinions differ from the streets to city hall. It’s all about the estimated $65 million dollar rail project. The streetcar would run about two miles in downtown’s business district.

“I think the debate will change from why are we doing this to how can we get this extended into my neighborhood,” said Milwaukee Mayor Tom Barrett.

Barrett is hoping the debate shifts. The project received federal funds and approval from the common council, but there’s an effort by opponents to knock this streetcar off track. Mayor Barrett said the streetcar will revitalize downtown.

“We think there's an economic component absolutely,” he explained.

But that component comes with a big price tag. Here is the break down from the city’s numbers:

Right now the streetcar is estimated at $65 million. The federal government will pay for $55 million. That leaves the city to cover the balance of $10 million.

“This has to be economically feasible,” said Barrett. “That we are not spending the money because the money is there.”

Milwaukee isn’t the only city building streetcars. More than 20 cities nationwide have projects in the works or are considering installing tracks. Milwaukee’s streetcar will be designed to resemble Portland, Oregon's streetcar.

Not only will it be modern, like Portland’s, Milwaukee wants the streetcar to become vibrant and successful.

“The example from Portland I think has misled city leaders all over the country,” said Randal O’Toole.

O’Toole is an advocate for reduced government regulation, and also wrote a report arguing Portland’s streetcar success came at a price. It required millions of dollars worth of subsidies.

“City after city is finding it’s having to spend more money than expected, and getting less than expected,” said O’Toole.

The city of Cincinnati is one of those 20 cities building nationwide. When contractors made bids this year on the project, the price doubled, and jumped from $45 million to $75 million. It nearly stopped the project all together.

“Cincinnati is a warning for Milwaukee we need to stay on top of this.” said Brett Healy, with the John K. MacIver Institute.

The Milwaukee streetcar will make money for the city, but not enough to cover operations. The city estimated the streetcar will average around 500,000 riders a year, and each will pay a dollar a ride. That’s $500,000 dollars coming in. But currently the city said the streetcar will cost around $2.6 million to operate every year.

“We're moving forward with this project. We do expect to build it,” said Jeff Polenski, Milwaukee city engineer.

Polenski heard from all the critics. Such critics include Healy, who filed a petition with the Public Service Commission of Wisconsin about possible WE Energy price hikes. Those hikes could be imposed on every WE Energy customer in the state.

“I hope to get some real answers from the Public Service Commission on who's going to pay for this project before we get too far down the road,” explained Healy.

The city argued it already cut some of utility costs when considering certain routes, saving millions in utility costs. Milwaukee would become the second city in Wisconsin with a streetcar. Thirteen years ago, people started jumping on the streetcar in Kenosha.

More than a decade later on average 55,000 people grab a seat every year. So we asked the Mayor of Kenosha if the project has been profitable.

“I think it's a value,” said Keith Bosman, Kenosha Mayor.

Bosman admits the streetcar is not profitable. It costs around $135,000 for operation and maintenance a year, but he added that his city benefits, and believes Milwaukee will too.

“It's about 90 percent tourist attraction and 10 percent transit value,” explained the mayor.

But Milwaukee Mayor Barrett insisted this project will not put a strain on the city’s budget.

Currently there’s a push by the GOP to change the law to make sure the utility costs for Milwaukee’s streetcar will not be pushed on to WE Energies customers. The city said it is doing everything it can do to get those utility costs down. But this issues affects you and your budget.

If you want to weigh in you can contact the city of Milwaukee at (414) 286-2221 or the Public Safety Commission of Wisconsin at (608)266-5481.