Foundations Playing Role Developing Detroit's M-1 Rail Project

Friday, December 20, 2013

Mike Gallagher
CMF Editorial Correspondent

A unique partnership between the philanthropic and business communities in Detroit is helping move forward a modern, multi-modal regional transit system that is expected to be a catalyst for job growth, economic vitality and improved mobility. Add in the help of city and state leaders and federal agencies and Motown’s M-1 Rail Project with its proposed 21st century streetcar system along Woodward Avenue is designed to foster additional private development, generate new residential and retail options and create thousands of new jobs.

Laura Trudeau, Senior Program Director
Kresge Foundation

“This is a remarkable, game-changing project for the City of Detroit,” said Laura Trudeau, The Kresge Foundation’s senior program director/Community Development Detroit at a recent meeting of Detroit Area Grantmakers (DAG) held at the Rattlesnake Club.

Trudeau manages Re-Imagining Detroit 2020, The Kresge Foundation’s nine-point framework to reverse decades of disinvestment in Detroit and reposition the city as a model for revitalization. She is also a strategic advisor on the M-1 Rail project.         

“I’ve come to understand how important it is to build a new transportation system in Detroit,” she noted. “And I also know how political and expensive it is and the need to convince every single person in the community…how much the city needs and will benefit from this project.

Trudeau introduced Paul Childs, M-1 Rail’s chief operating officer and president/CEO of M2 Rail which has been created as a company to help develop the M-1 Rail system.

“M-1 Rail is a nonprofit organization formed in 2007 to lead the design, construction and future operation of a 3.3-mile circulating streetcar along Woodward Avenue between Larned Street and West Grand Boulevard in Detroit,” explained Childs.

“It is an unprecedented public-private partnership and model for regional collaboration. Notably, it is the first major transit project in the nation being led and funded by both private businesses, philanthropic organizations, in partnership with local government, the State of Michigan and U.S. Department of Transportation.”

The capital cost for the M-1 Rail streetcar project is estimated at $140 million, noted Childs, with an anticipated annual operating cost projected to be $5 million.

“This (operating) cost will be covered by a combination of fare box revenue, private funding support, advertising revenues and public sector support,” said Childs, noting the project assumes a fixed-fare policy of $1.50 per ride with transit pass options for frequent riders.

Currently, the projected streetcar line now calls for 11 station stops and will entail such things as new street designs, revamped overpasses, updated electrical systems, etc., allowing an estimated 1.8 million passengers annually (more than 6,000 riders a day, seven days a week).

Additional planned perks include the streetcar line being ADA accessible, climate controlled and providing WI-FI, bike storage, on-board ticketing and an option to operate without overhead wires.  A $10 million Capital Reserve Fund also is being planned for the project as well.

Before all is said and done, shared Childs, “We will invest at least $2 billion to turn this into an organized and connected regional transit system” linking to Detroit suburbs and other parts of the state and nation through Amtrak and other rail lines, bus terminals and airlines.

As part of an informational strategy to let people throughout Detroit and the state learn about M-1 Rail, the Southeast Michigan Council of Governments (SEMCOG) recently concluded a series of public meetings explaining the development, construction, costs and impact of the venture.

Thanking the philanthropic community, Childs singled out the commitment and dedication of The Kresge Foundation which has pledged $35.1 million, part of which already has been spent, and an additional $3 million the foundation as a “backstop” grant.

“This level of private funding support for public transit is unprecedented and it is indicative of the strong commitment from the region’s philanthropic community and from local business leaders to secure Detroit’s future as a vibrant and desirable place to live and work,” he said.

Up to $60 million of M-1 Rail’s private funding can be used as federal matching funds to secure additional U.S. government dollars, added Childs.

M-1 Rail is led by Penske Corp. founder Roger Penske and Quicken Loans Inc. founder Dan Gilbert, the project's co-chairman; Peter Karmanos Jr., founder of Detroit-based Compuware Corp.; and the Ilitch family, owners of the Detroit Tigers, Detroit Red Wings and Little Caesar Enterprises Inc.

Major construction commitments of $3 million have been secured from Wayne State University, Quicken Loans, the Ilitch companies, Penske Corp., Compuware, Chevrolet, Chrysler Group, Blue Cross Blue Shield of Michigan, the Detroit Medical Center, Henry Ford Health System, Wayne County government, the Ford Foundation and the W.K. Kellogg Foundation. The Hudson Webber Foundation has pledged $1 million.

The $3 million commitments are for the display advertising rights to a station along the route. Additionally, the Detroit Downtown Development Authority has earmarked $9 million for M-1 Rail with another $16 million coming from federal New Market Tax Credits, which have to be sought annually. Plans also include a $22 million commercial loan.


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