Developers eye building projects near Southwest light-rail stations

John Haga, owner of Bongo's & Bud's Music Center in downtown Hopkins, envisions hopping on the Southwest light-rail line near his shop and heading over to the Turf Club for a bit of live music in St. Paul.

Now that construction of the $2 billion light-rail line has begun, that kind of one-seat public transit trip to the Capitol City, once unfathomable, isn't so far-fetched.

Despite Southwest's yearslong planning process and persistent controversy, developers have already begun building apartments, shops and offices along the nearly 15-mile route between downtown Minneapolis and Eden Prairie.

Metro Transit estimates more than $1 billion in development has occurred near Southwest's 16 stations, and more projects are likely now that ground has been broken for the line — an extension of the existing Green Line that begins in St. Paul. Passenger service is expected to begin in 2023.

"Is transit the sole criteria in analyzing a project? Probably not," said Kelly Doran, founder of Twin Cities-based Doran Cos., which built the Moline, a $50 million upscale apartment complex near the planned Southwest light-rail stop in downtown Hopkins. "But it is a nice addition when you do make a decision."

Between 2011 and 2017, more than 2,000 multifamily residential building permits were pulled within a half mile of Southwest's planned stations, according to Metro Transit. In addition, the transit agency logged $386 million in commercial development, and $59 million in public and institutional projects, such as parks and hospitals.

"Twenty years ago developers weren't sure if transit-oriented development had value, so it took awhile," said Lucy Galbraith, director of Transit Oriented Development for Metro Transit. "Now, there's so much agreement in the development community that it's occurring earlier."

Yet some observers said the development would have likely happened anyway, given a strong economy and demand for multifamily housing.

Samuel Staley, of Florida State University, said a new light-rail line to the suburbs won't do much to spur development. "What it might do is redistribute existing investment, but the net effect on the economy will be minimal," he said.

In Eden Prairie, for example, Southwest is slated to end at a park-and-ride facility already popular with commuters. A new building called Elevate is planned nearby featuring more retail and restaurant space and 222 apartments.

Eden Prairie Economic Development Manager David Lindahl said the expansion would likely have occurred with or without light rail.

"It's obviously still a great location," he said, noting the site needed extra preparation to ready it for a dense, more urban type of development. "Light rail helped a lot in the sense that developers said, 'Let's go the extra mile and work through these difficult issues because it will be a bustling place full of people.' "

Staley, who heads FSU's DeVoe L. Moore Center for public policy research, said many factors influence private investment along transit lines, including public safety, access to jobs, tax rates, financing and zoning. Transit, he said, is lower on the list.

To smooth the effort, Hennepin County's Southwest Community Works program has been working with cities to improve infrastructure along the Southwest route for nearly a decade, including stormwater treatment and bike and pedestrian connections. To date, Hennepin County has contributed more than $27 million to support over 60 development and infrastructure projects near Southwest stations.

Despite all that work, research from the University of Minnesota indicates development falls more quickly into place once public funding for a transit line is assured, according to Jason Cao, an associate professor at the Humphrey School of Public Affairs. Cao and researcher Dean Porter-Nelson studied development patterns along the existing Green Line light rail, which connects the downtowns of St. Paul and Minneapolis.

Cao found that once the Green Line received a federal grant in 2011 covering half of the nearly $1 billion in construction costs, applications for building permits near proposed stations surged by 24 percent. The research suggests that light rail spurred large downtown redevelopment projects, "while supporting modest neighborhood reinvestments that do not wholly change the character of these areas."

Southwest has yet to receive the final go-ahead from the Federal Transit Administration (FTA). The Metropolitan Council, which will build and operate the line, is counting on $929 million from federal funders sometime in 2019.

But last month, the FTA indicated the regional planning body could begin spending local money to build the line with the expectation that federal money would follow. Within a day, $799 million contract was awarded to Lunda/C.S. McCrossan to start construction.

"There's been a lot of interest," said Karen Barton, St. Louis Park's community development director. "Now there's a green light, there's even more interest."

Southwest's largely suburban route is diverse — ranging from archetypal office parks to a quaint downtown to former industrial sites. Cities along the line — Minneapolis, St. Louis Park, Hopkins, Minnetonka and Eden Prairie — predict much of the activity will involve redevelopment of older commercial and residential stock.

Downtown Hopkins will likely see more activity when light rail comes to town, including turning the 17-acre Cold Storage site into a mixed-use development. Mayor Molly Cummings said transit will offer residents and employers access to jobs, and entice visitors to come to Hopkins.

Still, some shopkeepers along Mainstreet there privately expressed concern that rents may increase as a result of new development activity, and existing businesses could be priced out.

But Steve Bickett, owner of the Liquor Store and More on Mainstreet, said "if you want to grow as a city you have to have mass transit. Building more highways is not going to solve the congestion problem."

And others, including Haga, of nearby Bongo's and Bud's music store, said more people will discover the city's unique mix of small shops and restaurants. "It will be the train to Mayberry," he said.

Janet Moore • 612-673-7752 @MooreStrib