Should the Streetcar Be Free?

Will the city maintain The Hop as a free system beyond its first year?

“We would love to see it extended and we’re working to see if we can make that possible right now,” said Mayor Tom Barrett at a press conference Tuesday.

Beyond the Mayor’s statement, there is another sign the city is considering the option. A formal bidding process for equipment to actually collect fares has yet to be opened. The city anticipated charging $1 to ride the system through a proof-of-payment system beginning at the end of 2019.

Alderman Robert Bauman is also in favor of maintaining the streetcar as free for as long as possible, or until the system is extended. “I think that’s absolutely a wise idea,” said Bauman. “I hope we are able to put together sufficient business and foundation support to make it free.”

Rides on The Hop are free for the first year as a result of a 12-year, $10 million presenting sponsorship agreement with Potawatomi Hotel & Casino and an 18-month federal Congestion Mitigation and Air Quality (CMAQ) grant. According to the council-approved 2014 plan, additional sponsorships could come from station naming rights and other sponsorship arrangements.

Fares are anticipated to cover 20 percent of the system’s annual budget (the Milwaukee County Transit System recovers 29 percent). With a $3.5 million annual cost to operate and maintain the system, revenue from riders is estimated to reach $700,000 annually. The city would need to eventually replace all of that revenue to maintain the system as free.

The 2.1-miles-long system has exceeded ridership projections to-date, posting an average daily ridership of 2,453 in December, 28 percent more than the projected 1,850 riders. The December numbers were also an improvement over November, with ridership growing 6.6 percent (excluding opening weekend).

But Atlanta (down 48 percent) and Detroit (down 40 percent) saw drops in ridership once their respective systems started charging. Ridership eventually started to increase again in Detroit, where ridership has surged in the summer, and Atlanta as well.

Kansas City continued offering free rides beyond the first year, funded in large part by a levy on nearby properties, and has seen substantial higher ridership than peer systems. Planners projected 2,700 daily riders, but 2018 saw an average ridership of 5,794. The highest December ridership day on Milwaukee’s streetcar was the 15th, with approximately 5,000 rides taken.

Cincinnati, which has a relatively-straight route similar to Kansas City, continues to see declining ridership. Before the system could open it became a political wedge issue and a new mayor was elected who opposes the project.

Portland, launched it original streetcar line in 2001 and built it without federal funds. Up until September 1, 2012 it offered free service in an area known as the Free Rail Zone or Fareless Square (Downtown and Pearl District). The system recently raised the fare from $1 to $2. Ridership has continued to climb and the line, now 7.2 miles long, has been extended many times.

Ridership on modern streetcar systems is counted by in-door sensors.

Barrett said the lakefront expansion, for which much of the track is already in place, is on track to open next year. “I want to be clear. We want to expand this north into Bronzeville. We want to expand this south towards Greenfield [Ave].”

The city recently completed a federally-funded, land-use plan for expanding the route north and south. Urban Milwaukee reported earlier this month that the city is considering a one-stop extension north to the convention center by 2020.

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