Tempe has endorsed plans to build a streetcar line on Mill Avenue - and to figure out how to fund its $3.6 million yearly operating expense.
The City Council agreed Thursday to create a $160 million transit line on Mill Avenue that it expects to spur economic development.
Councilwoman Shana Ellis said she considered the 2.5-mile line a risk worth betting on, much like Tempe Town Lake, the Metro light-rail line or the Orbit neighborhood bus.
Mayor Hugh Hallman said he didn't consider the streetcar risky based on the development that the Metro line spurred on Apache Boulevard. The city spent substantial amounts of money on Apache for years without seeing any improvements - until the new transit line encouraged multiple new developments, Hallman said.
"I don't believe this is much of a risk," he said.
The line would run from Southern Avenue to Rio Salado Parkway, and a downtown loop would take it along Ash Avenue. Further study could eventually justify extensions on Rio Salado Parkway, on Southern Avenue to Rural Road, and perhaps down Rural Road to downtown Chandler, transit planners said.
Tempe resident Kolby Granville objected to the route, saying he supports transit but that Mill is the wrong place for a streetcar. The area along Mill and south of Arizona State University doesn't need higher density that a streetcar would encourage, he said, and he suspects Tempe would use eminent domain to take over land.
Hallman said Tempe isn't looking to forcefully take properties, just as it let private development decide what to build along Apache. The transit line will encourage redevelopment of declining shopping centers, including the long-struggling Danelle Plaza at the southwest corner of Mill and Broadway Road, Hallman said.
Tempe's approval will lead to federal review of the project, as about 70 percent of the cost would come from Washington, D.C., and the remainder from regional funding. Tempe would pay the operating costs, which it has not secured yet.
The city estimates it can fund $1.3 million of operating costs by refinancing debt, increasing transit efficiency and eliminating redundant bus service when the streetcar starts operating. Transit planners will consider closing the gap by looking at naming rights, charging transit users during special events, parking meter revenue, a special assessment district for commercial property along the route and by charging development fees. The City Council asked planners to study the feasibility of those options.
Also, planners will study exact track alignments, station locations and other design elements of a system that would start operating in late 2016.
First-year ridership is projected at 1,100 to 1,600 passengers a day, said Wulf Grote, Metro's project development director. But that could grow quickly, he said, based on a Seattle streetcar line that was projected to begin with 800-900 riders a day but rose to 2,500 a day in two years.
"We expect that type of growth to occur here," Grote said.