PORTLAND—Five years after opening the first modern streetcar system in North America, Portland is a furnace of redevelopment and economic expansion, according to Homer Williams, one of the city's leading developers and, until recently, truly a trolley skeptic.

"This place is on fire," said Mr. Williams, a principal at Williams and Dame Development, which maintains offices in Portland and Los Angeles. "Look at all the cranes in the city. Outside of two or three exceptions, it's all because of the streetcar."

A quick look around this bustling Pacific Northwest town confirms Mr. William's claim: there’s Oregon Health and Science University's $103 million Center for Health and Healing on the banks of the Willamette River; the Strand, $95 million worth of condos, townhouses, eateries, and offices rising in the form of three modernistic towers; and the $65 million Fox Tower, a 28-story office building complete with a built-in cinema.

In all, since the original streetcar route was announced in 1997, developers like Mr. Williams have stoked Portland’s economy with approximately $2.8 billion in new condos, commercial space, and other redevelopment projects. Remarkably, all are located within two blocks of Portland’s new, 4.8-mile, downtown streetcar loop. And the developer hardly sees that as coincidence.

"We have about $1 billion of new development going on in the city right now," Mr. Williams said. "And we wouldn’t be doing about $750 million of it without the streetcar."

Now, as a delegation of civic leaders from Grand Rapids, Mich. heads here to study how Portland’s trolleys sealed this town’s stunning comeback, their journey again raises a crucial question: When will the Great Lakes region’s many fading cities, particularly Michigan’s, see investing in transit as necessary for restoring the region’s once-boundless prosperity?

Many civic leaders there now acknowledge that vibrant cities are essential to competing successfully in the world economy. But, despite strong voter support for local transit, many still view mass transit not as a crucial economic development tool, but as an expensive, big-government social service for getting poor people to work and old people to the doctor.

Early this month, for example, the Southeastern Michigan Council of Governments released a presentation asserting that an envisioned rapid commuter rail line between Ann Arbor and Detroit would not attract enough users. The transit-wary Detroit News editorial page trumpeted the study, while the transit-friendly Detroit Free Press edged away from rail, suggesting that buses might best span the 40 miles separating the two cities. Transit advocates criticized the presentation, saying it lacked publicly available data to support its conclusion.

Success Formula
A handful of common denominators today define America's most successful regions.  Portland. San Jose. Chicago. San Francisco. Phoenix. Denver. Seattle: College grads and high-tech companies regularly cite these metros of means as choice destinations. All have vibrant urban hubs with parks, public art, and round-the-clock entertainment. All embrace cultural diversity. And all are building or expanding mass transit systems in order to stimulate private development and give people more affordable and convenient options for moving around town.

Slowly but surely, however, as places like Portland soar, and cities across the Great Lakes region continue to de-industrialize and decline, public opinion in cities like Detroit and Grand Rapids is pulling well ahead of official wisdom about cars, highways, buses, trains, and railways.

"Transit is not a popular issue," said Congressman Vern Ehlers, a Republican who represents greater Grand Rapids and advocates strongly for transit. "It's just not viewed as important. Despite all the good work from citizens, churches, and local officials, lawmakers just don’t see value in it."

The arrival of the Grand Rapids delegation tomorrow indicates that more leaders are paying more attention to what Representative Ehlers and transit proponents are saying. Like most Great Lakes cities, greater Grand Rapids has lost thousands of manufacturing jobs. It is mounting an aggressive revitalization campaign to better compete in the knowledge economy, and officials want to evaluate a proposed streetcar route in their downtown, one that is similar to Portland's. They intend to learn how Portland’s leaders planned, funded, and constructed their “downtown circulator.”

A Rail Renaissance
What they'll find on their visit is a city undergoing a stunning, streetcar-driven renaissance. Thirty years ago, the City of Roses looked more like the cities of the Rust Belt. Underused industrial property and highways obstructed the waterfront along the Willamette River, just as they still do along Cleveland's Lake Erie shoreline. Vacant commercial property plagued the urban core, just as it still does in desolate Gary, Ind. Urban living was a daring choice to some people, just like it is today in Detroit.

Then, Portland’s civic leaders decided to get serious about mass transit. They killed a new highway in the late 1980s, built a light rail connecting the suburbs to the central city in the early 1990s, and, in 1997, publicly announced a 2.4-mile, $56.9 million streetcar system. The original route was specifically designed to accelerate revitalization and circulate people into and out of major downtown hubs such as Portland State University and Good Samaritan Hospital.

Initially, local developers like Homer Williams were among the disinterested if not skeptical stakeholders. Mr. Williams worried the proposed streetcar project would generate noise, scare off prospective condo buyers, intensify traffic congestion on narrow city streets, and diminish property values in the central business district.

Today, however, Mr. Williams is an eager streetcar booster. He credits the streetcar with ramping up demand for downtown housing, increasing property values, and improving mobility for residents and commuters. His firm even decorated one new building with a giant neon sign that encourages people to "Go by Streetcar."

"In many ways, it had the exact opposite effect from what I expected," Mr. Williams said. "If the average [city] block is selling for $3 million, that block would be $4 million on the streetcar line. One block off it would be about $3.5 million. Two blocks off it would still be over $3 million. So there's been about a 35-40 percent bump in value on the streetcar line."

In fact, 55 percent of all development in Portland’s central business district during the past decade has occurred within one block of the streetcar route, according to city records. And the city today regularly ranks as one of the most attractive, sustainable, and economically competitive places to live in the United States.

‘An Amazing Tool’
There are plenty of examples from other cities of the power of streetcars. Little Rock, Ark., opened a 2.5-mile route in 2004 at a cost of approximately $20 million and already has experienced more $1.2 billion in new development. Tampa's 2.3-mile, $56 million streetcar system, opened in 2003, already has leveraged $1 billion in private investment. And Tacoma's $89 million streetcar system, opened in 2003, already has generated nearly $1 billion in redevelopment.

But Portland's own popular Pearl District offers the most graphic illustration of the streetcar's power to transform blight into bounty. Once a polluted and abandoned rail yard, the 70-acre site immediately north of downtown is now a thriving new neighborhood complete with grocers, restaurants, galleries, and boutique clothing shops. The streetcar route cuts through the middle of it all.

"Ten years ago, there were one or two restaurants [in the Pearl]," Mr. Williams said. "Now there are probably 40. There might have been a couple of hundred people living here. Now there's thousands. Frankly, I didn’t have that high of expectations."

The South Waterfront is Portland's next big thing. Currently under construction and scheduled for completion in 2015, the redevelopment of the old shipyard is projected to add 10,000 jobs, 3,000 housing units, and 250,000 sq. ft. of ground-level retail to the central city. Anchored by Oregon Health and Science University, the South Waterfront is the largest economic development project in Portland's history and—like electricity, water, and roads—streetcar tracks are already installed as basic infrastructure.

In all, since announcing the initial phase of the streetcar system, Portland has added thousands of jobs, more than 7,200 new housing units, and 4.6 million sq. ft. of office, institutional, and retail space. What's more, the city has become a magnet for young workers, the new economy’s most coveted commodity.

"Portland is one of the top in-migration locations for 18 to 34 year-olds in the country," said City Commissioner Sam Adams, who refers to the streetcar as "an amazing economic, environmental, and social improvement tool."

"Talented people have many choices of where they want to live," Commissioner Adams added. "If you can't offer them a vibrant, creative city you're not going to attract or keep them. And if you don’t have that resource in your community, you're not going to vault into the top tier of competitiveness in the new economy."

Ridership is perhaps the most accurate indication of the Portland streetcar's success. It also offers a vivid example of just how far off the mark surveys—including, perhaps, the one SEMCOG is using to wave off rapid rail in metro Detroit—can be. Before officially going on line in 2001, transit managers projected the system would carry 3,500 riders a week. More than 9,000 riders were riding the line each day by the fall of 2005. Now city leaders are planning to expand service.

When they do, Homer Williams suggested the development business is guaranteed to heat up even more.

"The next step is to bring it to the east side [of the river] and loop it back around," he said. "It's all about connecting the city."

And, frustrated transit advocates in Michigan would say, it’s also about connecting the dots.