Urban Freeways: A Question of Value

Was it worth it to run interstates right through built-up areas of Minneapolis and St Paul? That’s a tough question to answer, and maybe an impossible one given the complexities of the discussion.

I35W Minneapolis Proposal

These fine gentlemen sure thought it would be worth it. (Source: Star Tribune)

And yet we constantly hear public officials tout the benefits of our freeway capacities, and the economic value they bring, not only to their respective downtowns but the city and its residents at large.  When the I-35W bridge collapsed in 2007, not a single person from the mayor’s office up to the President of the United States bothered to pause and wonder if life (and our regional economy) would go on without that link, did the estimated economic losses justify the amortized capital and annual maintenance costs of the replacement bridge, or if that money would be better spent on other transportation projects.  Ask a friend or random stranger on the street if it was worth it – my guess is the response is simply pure shock that you’d even ask.

Defining the System, Outcomes

The 1960s and early 70s gave rise to the majority of our urban freeways, with the last connection (I-394) finishing in the early 1990s.  Others were planned – some even cleared out buildings in preparation; some real, some satirical:

Minneapolis Planned Freeways

Astute readers will know the difference (Image Sources: Left – Adam Froehlig, Right – The illustrious Minnesota Citizens for Roads, Asphalt, and Parking)

Neighborhood group opposition and a change in federal highway planning processes halted progress on some routes, but we still ended up with about 67 centerline miles of freeways ( ex. I-35W) and highways (ex. Hiawatha Ave and Olsen Memorial Highway) inside Minneapolis.  What did this new found mobility give Minneapolis residents? The ability to leave, for one:


The media can’t stop reporting on Minneapolis’ recent surge, that small nudge up on the right there.

Population peaked in 1950 at about 520,000 residents and began plummeting afterward. Yes, other factors were certainly at play in the city’s population decline; household sizes began dropping after the 50s, home preferences changed, etc. But it’s pretty hard to ignore the interstates’ effect on housing location and transportation choices.

Property Taxes: A Proxy for Value

But Minneapolis leaders (and, presumably, many residents) believed this was still a positive for the city, or at least necessary to compete with burgeoning suburbs.  Were they right?  Did property values increase city-wide as a result of the mobility gains afforded to its residents and businesses?  I took a bike ride to the Minneapolis Central Library to gather some data:


Data collected every 5 years because, well, 80 years is a lot of annual city budgets to look through.

Tough claim to make.  In real (2013) dollars, property values after 1940 began dropping.  The post-1995 crazy valuations make my head spin (housing market bubble? crazy county estimators? urban revival?), but it’s hard to say freeways made Minneapolis a substantially more valuable place to live or do business in the decades following WWII.  What about the taxes collected in the same period?


Missing data points are a result of bad smartphone camera skills…

Again, tough to discern a positive pattern here.  Aside from a bump in 1970, the 80s and 90s saw lower taxes collected city-wide.  Plus, prior to the freeway era, property taxes accounted for a larger share of the city’s revenue stream:


Once the city began bleeding residents (I’m not sure if the same can be said for businesses/jobs, but I do know there are plenty urban-friendly office jobs along the 494/694 beltway), Minneapolis began relying more on sales taxes, state aid, and other forms of revenue to provide services, to say nothing of the tax burden per-capita.  Only in the last decade, as the state has cut back on LGA and other programs to Minneapolis, do we see property taxes, both absolute value and share of revenue, climbing back up.

What could have caused the stagnant-to-declining property values and taxes collected during that timeframe?  Well, there’s a big difference between putting a freeway through this:

…and this:


Image Source: UrbanMSP

The land freeways paved over not only has value, but it had even more value when buildings were there.  Using road and highway area calculated here, I was able to calculate the foregone revenue to Minneapolis given average property taxes per developable square mile:


Plus St Paul, Eden Prairie, and some other measures to stir up debate.

Minneapolis gave up over $23 million in property taxes to ram freeways through itself. That’s over 7% of what it’s currently taking in.  This is likely conservative since the per-square mile tax rate is higher as a result of non-profits, government buildings, and universities – entities that consume large swaths of city land but pay no property taxes, effectively raising other properties’ rate.

We also know that freeway noise de-values nearby properties (0.40% per decibel according to one study), and pollution is disproportionally high near them as well (we won’t even tabulate those health costs here).  At least the noise study notes that housing mobility isn’t affected – time on the market isn’t longer near freeways, just price (I guess that’s one way to build affordable housing).  I calculated the opportunity cost of property taxes near freeways by using I-35W between 36th and 37th Streets (a neither exceptionally wealthy nor slummy area of our city) as a sample:


Without the aid of GIS, I had to manually grab property taxes radiating outward from I-35W and average the two slopes representing lost dollars by distance from the freeway. This yielded the lost revenue within 1,000 feet of freeways, per 1/8 acre parcel, which I then multiplied by all 67 miles of freeways and highways in the city (minus space for local streets and parks).  The total bill came to roughly $20 million.  Again, this is likely conservative as high value places with apartments, small condos, and commercial properties pay far more per acre in property taxes than the single family homes evaluated.

That brings the total property taxes foregone to $43 million city-wide, a solid chunk of change.  To put that in perspective, the roughly 580,000 vehicles driving on Minneapolis highways and interstates would need to pay $0.22 per trip on an urban freeway to cover just the property tax losses alone.  Am I suggesting every mile of freeway in the country charge users this way?  Not necessarily, but it’s a real cost that not a single driver is currently paying (at least not directly).

Moving Forward

While the investments of the past should pragmatically be viewed as sunk costs, we need to have the tough conversations like this, which is why I encourage commenters to poke holes in my numbers and theories. Seriously. I believe this is a debate worth having, since it’s been nearly 50 years and we’re still replacing bridges over freeways without even considering mitigation options (to my knowledge).  A 50-year plan to slowly convert freeways to value-building boulevards and parks (with thru-traffic taking our soon-to-be 6 lane beltway, adding a couple minutes of drive time) is a laughable proposition at best.  Let’s be honest about the costs, impacts, and, yes, benefits of our current system, but constantly push for better and challenge the status quo.

Note: I apologize for some loose data referencing. There’s so much buried in this post that doing so would be a challenge.  I’m more than happy to send my mess of an Excel spreadsheet if anyone is interested in reviewing my work.

Alex Cecchini

About Alex Cecchini

Alex likes cities. He lives with his wife, two kids, and two poorly behaved dogs just south of Uptown (Minneapolis). Tweets found here: @alexcecchini and occasional personal blog posts at fremontavenueexperience.wordpress.com.