STREETCAR: A futuristic blast from the past at only $45 million per mile.

WHEN GREG HERMENS sees the streetcar ease to a stop outside Nob Hill Bar and Grill—his business of 25 years—he couldn't be happier. Every 15 minutes, the car unloads waves of curious tourists, many of which walk in his door.

Portland Streetcar, Inc., the nonprofit that owns the streetcars and works under contract with the City of Portland, celebrated its 10th birthday on August 12. In the next decade, its sights are set on expansion. Along with completing a $148 million citywide loop, Portland Streetcar is adding five locally produced streetcars to its Czech-made fleet of 10. But, with a price tag of $45 million per mile, it's one of the pricier transportation projects around. Looking toward the future, streetcar enthusiasts and critics alike consider one critical question: Is it worth it?

To Hermens, the Nob Hill Bar and Grill owner, the streetcar means business.

"We definitely have seen a spike in customers since it was put in," Hermens says. "It's a no-brainer, really."

And that's exactly what Portland Streetcar wants to hear. While it is built with cash from transportation funds, the streetcar is intended, above all else, to be a development tool. Sure, it gets Portland State University students and Legacy Good Samaritan Medical Center workers from point A to point B, but it also aims to establish multi-use communities in between.

The streetcar's $5.7 million budget comes from a combination of ticket sales, urban renewal money generated by development along the streetcar line, and city, state, and federal transportation funds. Even with the diverse funding sources, the new Eastside Loop that stretches from the Broadway Bridge to the Oregon Museum of Science and Industry is $5 million short for their 2011 budget, as that money is being put toward building a soaring new rail/bike/ped bridge over the Willamette River. The Eastside Loop is also five months behind schedule.

In 2009, a city-sanctioned public input group on the streetcar plan polled Portlanders and revealed that though 83 percent of Portlanders were in favor of the streetcar, 72 percent thought it shouldn't be paid for from city funds.

But Executive Director Rick Gustafson of Portland Streetcar appears unfazed by the numbers.

"Now is a very uncertain time for business as usual," Gustafson says. "But we create and serve an atmosphere people want: mixed use. We have the city on our side."

While Portland Streetcar never predicted the amount of jobs that their business would create, a study by the Institute for Sustainable Communities shows that Oregon Iron Works, the Clackamas-based streetcar manufacturer, has added 20 jobs in response to the streetcar's growth. Additionally, Gustafson says that it has ignited the creation of 10,000 housing units within 750 feet of the track since its initiation.

However, economist and Portland State University professor Eric Fruits sees the streetcar in a different light.

"Looking at the bigger picture, streetcars are expensive art," Fruits says. "The streetcar cannibalized the bus system. Yeah, on a bus you run the risk of your bus being rerouted, but at least it's frequent."

Over the years, the amount of transportation money that goes toward the development-driven streetcar has irritated advocates for other forms of transit. In a push to increase streetcar use, two TriMet bus lines in Northwest Portland were rerouted.

"The bus will do anything that the streetcar will do," says former TriMet employee and Northwest District Association (NWDA) Co-Chair Phil Selinger. "But the reality is, a lot of people won't step on a bus." Selinger says he often sees his Northwest Portland neighbors who work downtown pass up the bus to ride the streetcar.

Beyond sucking up transportation funding, the streetcar's tracks impede another form of transportation: bikes. According to a 2008 study by Alta Planning and Design, nearly 70 percent of Portland cyclists crash on the tracks at some point. The streetcar currently carries 12,000 riders every day, while the US Census estimates that 17,500 Portlanders bike to work daily ["Track Attack," News, Jan 6].

Joan Martocello, manager of the downtown Bike Gallery, says she supports the streetcar's purpose, but she's tired of doling out Band-Aids and Neosporin to track-battered bicyclists.

"I remember when the streetcar tracks were first laid, my biker friends and I thought, 'Oh God! They're ruining our town!'" says Martocello, who estimates she has at least three bicyclists a week coming in with bikes damaged from the streetcar tracks.

While Portland Streetcar's Gustafson says this is a top issue for him, he remains uncertain about how to improve it. For now, he remains set on future development. "It may take some time to be an instant success," he says. "I think that after the loop is finished, people will finally see how dramatically different the streetcar is."

For now, Southeast businesses are uncertain about the looming loop. Eastside construction will have disrupted Martin Luther King Jr. Boulevard and Grand Avenue for over two years. Terry Taylor, director of the Central Eastside Industrial Council, calls the construction a "nightmare," and dreads the business taxes to follow.

But the overarching sustainability aspect of the streetcar leaves many convinced.

"At the end of the day, it's an important tool in creative a livable, workable neighborhood," NWDA's Selinger says. "If it gets households to drop from two cars to one, then it's worth it."

Streetcar by the numbers

Portland Streetcar budget for 2011-2012: $5.7 million

Projected 2011-2012 net income: $275,000

Daily ridership predicted in 2001: 3,500

Weekday ridership in 2008: 11,900

Number of streetcars on the line: 10

Miles of streetcar tracks in Portland in 1916: Over 300

Cost of new 3.3-mile streetcar loop: $45 million per mile

Jobs created at streetcar manufacturer Oregon Iron Works: 20

Housing created within 750 feet of rail since creation: 10,000 units

CORRECTION: The original online version of this article misstated the current delay in the Eastside Loop project. It has been corrected.