Streetcar Confronts Limited Funding, Operations Challenges

The Hop streetcar in Milwaukee. David Wilson (CC-BY)

Milwaukee’s streetcar faces an uncertain future after a bipartisan law to overhaul local government funding placed stipulations on how the city can fund the streetcar.

Meanwhile, the streetcar system manager was forced to resign last year after he missed deadlines to apply for federal grants. A state inspection also found “significant deformation” on the wheels of the vehicles.

“We’re pretty much dead in the water right now, as far as expansion is concerned,” Milwaukee Alder Bob Bauman, one of the streetcar’s biggest supporters, said in an interview with WPR.

But funding for the system has been stuck in limbo for years. State Republican lawmakers have complained about the streetcar, with Assembly Speaker Robin Vos calling it a “boondoggle.”

The streetcar used tax incremental financing to help fund its initial line. But Wisconsin Act 12, signed into law in 2023, said Milwaukee cannot use “moneys raised by levying taxes for  … developing, operating, or maintaining” the streetcar. It also says the city cannot use a tax incremental financing district for “direct or indirect expenses related to developing, constructing, or operating” the streetcar.

Tiffany Shepherd, spokesperson for the Milwaukee Department of Public Works, said the city is still looking for additional revenue sources to fund expansion.

“We are looking for additional grant and sponsorship opportunities for The Hop to be able to expand this great service that we are able to provide to residents and visitors of Milwaukee,” Shepherd wrote in a statement.

Jeff Fleming, a spokesperson for Milwaukee Mayor Cavalier Johnson, said Johnson wants to see The Hop “extended beyond its current service area.”

“With limited funding options for expansion, the city is looking for alternatives,” Fleming wrote in an email.

Milwaukee’s streetcar can be seen here on Friday, March 24, 2023. Evan Casey/WPR

Former streetcar manager forced to resign

Andrew Davis-Lockward, the former streetcar system manager who was hired in January 2022, was forced to resign last year. An Oct. 15 resignation letter said he was resigning from city employment “in lieu of discharge.”

A letter obtained through an open records request found there was a pre-discharge hearing for Davis-Lockward on Oct. 14. The letter said the hearing was held for violation of standard work rules, and because he was “incompetent or ineffective” in his performance. The letter said he did not submit a Federal Transit Administration grant audit report before he was out of the office for an “extended period of time.”

In his resignation letter, Davis-Lockward said the workload had reached an “overwhelming level.”

An open records request also revealed he had a  pre-disciplinary hearing in 2023. That letter said he failed to submit another federal grant in 2023. The letter said he did not tell his supervisor he didn’t have time to complete the application before he was on a “pre-approved vacation.”

“The city engineer prepared and submitted the application instead and had limited time to prepare a thorough and thoughtful application,” the letter said.

That resulted in the potential loss of $4.8 million to the streetcar system, according to the letter.  Shepherd said the city was able to submit that application, but ultimately did not receive the federal grant.

Milwaukee Department of Public Works Commissioner Jerrel Kruschke declined to comment on the resignation. Shepherd said there’s still an ongoing search for a new manager.

Bauman said he didn’t believe Davis-Lockward had much impact on the day to day operations of the streetcar system.

“I don’t know that we need a person in the same role as the previous guy, particularly when it doesn’t appear that expansion is on the horizon,” Bauman said.

The Hop streetcar in Milwaukee. Corri Hess/WPR

ARPA funds for the streetcar expired in 2024

The streetcar is free for riders. More people ride it in the summer months, according to ridership data. The Hop averaged 1,948 riders a day in June last year and 2,045 riders a day in July.

But less people generally ride the streetcar in the winter. The Hop averaged 1,036 riders a day in January of last year, and 1,297 riders a day in February, according to the ridership data.

Funding for the streetcar is included in the transportation fund, an enterprise fund which is outside of the general city budget, according to Nik Kovac, the city’s budget director. Ari Brown, a researcher with Wisconsin Policy Forum, said the streetcar is mainly funded through grants and advertising revenues that go into that fund.

“Every year that it has existed, it has spent more than it has made,” Brown said. “But that has been completely fine because the gap isn’t more than a couple million dollars, and the rest of the transportation fund is able to make up for that.”

In 2024, The Hop cost $5.5 million to operate, according to a Wisconsin Policy Forum report. The Hop generated $4.5 million in revenue in 2024, the report found. That revenue also included federal American Rescue Plan Act funds.

But those American Rescue Plan Act funds expired last year.

In 2025, the streetcar is expected to cost $5.7 million to operate and make $1.7 million in revenue.

“So that gap is larger,” Brown said about the expiration of the federal funds.

Brown said parking citations make up a large portion of the transportation fund. The transportation fund also includes money generated from city parking lots and from parking meters. But Brown said the city could get less money from the transportation fund in the coming years, which could be an issue for funding the streetcar.

“Because of the way that commuting and jobs have transformed over the last couple of years, fewer people are using those parking assets that the city offers,” Brown said.

Brown did say the streetcar could start charging riders, but he said that wouldn’t generate a “significant source of revenue.”

People wait in line to ride Milwaukee’s new streetcar dubbed The Hop. Ximena Conde/WPR

Wisconsin DOT: ‘Significant deformation’ on streetcar wheels

In September, staff with the Wisconsin Department of Transportation conducted an inspection on the streetcar system, according to a letter received in an open records request.

“During the inspection, the wheels on several streetcar vehicles appeared to have significant deformation from wear, similar to an issue that had been noted and addressed two years ago,” Eric Stoegbauer, the safety oversight program manager for the Wisconsin Department of Transportation, wrote in the letter.

The letter said new wheels had been ordered for the streetcar. Shepherd confirmed that those wheels are on the streetcar vehicles now.

Meanwhile, an October letter from Kruschke with the Milwaukee Department of Public Works to Laura Skiver, the chief operations officer of Transdev U.S., said the city had a “loss of confidence in Transdev’s ability to operate the Milwaukee Streetcar System safely and provide the required service.”

Transdev operates the streetcar system in Milwaukee. The letter said the wheels and tires of one streetcar vehicle were “worn to a state of near condemnation.” It said five derailments “didn’t follow the required Accident Investigation Report procedure.”

A spokesperson for Transdev didn’t respond to a reporter’s request for an interview for this story.

Listen to the WPR report

Future of Milwaukee streetcar clouded by limited funding and operations challenges was originally published by Wisconsin Public Radio.