Detroit’s New Streetcar is an Example of Philanthropy’s Rising Power in Cities

Detroit, a city with a fraught relationship with transit, just got a downtown streetcar. After years of complex administrative and funding hurdles, the QLine recently opened, an impressive achievement, and one many hope will be a catalyst for economic and transit-oriented development.

What’s truly remarkable about the QLine, however, is that while it was cobbled together from many funding sources and engineered by many people, it is a piece of urban transit infrastructure that is essentially a product of philanthropy and private investors.

The Kresge Foundation and other private donors played a huge role in the concept, and in making the QLine a reality. It's a case study of the tremendous influence foundations and private wealth have in cities right now. That power has been rising as municipal governments face new fiscal constraints and may portend a longer-term shift in leadership in tackling urban challenges. While we've reported often that private funders are orchestrating city parks projects, playing a growing role in public education, and forging major new partnerships with local governments to build housing for the homeless, the QLine is the first case we know of where philanthropy has played a critical role in creating new transit infrastructure.

According to Kresge president Rip Rapson, who retold the story in a speech to a transit conference, he first floated the idea of light rail along the city’s Woodward Avenue over lunch with Detroit automotive company magnate Roger Penske, and they ran with it.

“At one level, it was a crazy idea – municipal governments, not foundations, build streetcars,” Rapson recalled before a Rail-volution audience. “But the audacity of the aspiration justified the risk, or so it seemed to me. I agreed, and we moved forward.”

Rapson, Penske, then-regional transit czar John Hertel, and other business leaders formed a “philanthropic-private sector consortium” called M-1 Rail, which raised funds for the estimated $100 million budget, and gathered a team of engineers and project managers. The consortium pushed hard for the project, navigating all levels of government and more than one near dead end.

Kresge itself gave about $50 million to the QLine toward a total cost of nearly $180 million, a budget that includes $24 million for the first 10 years of operations and maintenance. It’s a complex mix of funds, including major private backing from Penske, Quicken Loans and several other businesses and donors. Funding from local, state and federal government totals $74.2 million, including two stimulus grants.

On the one hand, this is a victory and a potential model for city-focused philanthropists. Cities are increasingly turning to similar collaborations between governments, the private sector and philanthropy. Foundations, in particular, have some distinct advantages when it comes to advancing projects that have otherwise struggled to materialize. Aside from money, they have the ability to sustain leadership and focus on a project over a long time, which elected officials might not, especially in a beleaguered city like Detroit. They can also navigate different layers of decision-making power.

M-1 and its leadership—including Rapson, Penske and Quicken Loans Chair Dan Gilbert—were champions for creating this transit line for years, wrangling the state, city and feds in a place that had failed for decades to establish a regional transit authority.

But on the other hand, QLine raises real concerns over the power funders and businesses are wielding in city planning, especially in this cash-strapped city.

For example, M-1 was in competition early on with a different transit plan with a longer commuter rail line that the Detroit mayor at the time was pushing. M-1 didn’t like it and fought the plan, the two parties reached a compromise, but then the plan collapsed with the city’s finances. Later, federal, state and local officials developed an alternative $500 million regional bus rapid transit plan, but M-1 convinced them to go with its approach after it was able to satisfy a list of federal demands.

They certainly had to work for it, but that’s a huge amount of influence for philanthropy and the private sector over public transit decisions that profoundly impact the entire city. As Next City points out, the city’s elected leaders were mostly uninvolved with this project.

Aside from the influence M-1 wielded and whether that's an appropriate role, not everyone in Detroit is happy about the new streetcar. It runs 3.3 miles, and critics say it doesn’t serve enough people, acting mainly as a development engine. Then there’s the fact that “QLine” is corporate branding for Quicken Loans. Quicken Loans owner and QLine Vice Chairman Dan Gilbert also owns tons of real estate in the downtown area, the site of any possible resulting economic development would happen. That’s not to mention potential displacement many cities are seeing when these downtown resurgence projects move in.

The QLine may ultimately be very good for Detroit and, as proponents anticipate, just the first component of a transit system that can now grow under the leadership and management of a public Regional Transit Authority. It’s also a good example (albeit an extreme and meandering one) of what kind of commitment it takes to make a project like this work. You can read more about Rapson’s insights on the process here.

But with these emerging financing arrangements and partnerships we’re seeing that are reshaping cities, it’s a reminder that residents and leaders need to be vigilant about who’s calling the shots, why they get to decide, and how the public will benefit.