Economic Effects of the Potential I-35 Conversion in Downtown Duluth

Abstract

In response to growing community interest in a redesign of the I-35 corridor through downtown Duluth, Minnesota, the Bureau of Business and Economic Research (BBER) at the University of Minnesota Duluth’s Labovitz School of Business and Economics examined the potential economic effects of such a redesign. The study area for the research includes the one-mile segment of the freeway that separates the city’s central business district from the Lake Superior waterfront, as well as the area immediately surrounding the freeway. The study includes a summary of the literature on the economic effects of highway removal and rightsizing projects throughout the U.S., the results of interviews and surveys with local stakeholders, case studies summarizing five similar highway rightsizing projects, and a summary of the feasibility of a rightsizing project in Duluth. In response to growing community interest in a redesign of the I-35 corridor through downtown Duluth, Minnesota, the Bureau of Business and Economic Research (BBER) at the University of Minnesota Duluth’s Labovitz School of Business and Economics examined the potential economic effects of such a redesign. The study area for the research includes the one-mile segment of the freeway that separates the city’s central business district from the Lake Superior waterfront, as well as the area immediately surrounding the freeway. The study includes a summary of the literature on the economic effects of highway removal and rightsizing projects throughout the U.S., the results of interviews and surveys with local stakeholders, case studies summarizing five similar highway rightsizing projects, and a summary of the feasibility of a rightsizing project in Duluth. Our research team estimated that the economic impact of a one-year $50 million construction project (based on average cost per mile in case studies) could support 450 jobs, provide labor income of $29 million, contribute nearly $39 million to the study area’s GDP, and produce nearly $74 million in spending. These estimates do not represent the economic activity that might occur from development opportunities that arise after the project is completed. If Duluth were to redesign the segment of I-35 through the downtown waterfront area in a way that freed up land for alternate uses, survey respondents overwhelmingly felt that there would be private sector interest in developing that area (86% answered yes). Stakeholders identified housing (53 comments); mixed-use commercial development (39 comments); leisure and hospitality (37 comments); and other commercial developments like retail, office, and manufacturing (33 comments) as being the most likely development opportunities. This study is just one step in determining whether highway removal or rightsizing is a viable solution in Duluth. Some potential next steps for this effort include more extensive community engagement efforts, a broader look at the impacts of highway rightsizing on the case studies, and/or a more comprehensive community profile for downtown Duluth, among others. The Duluth-Superior Metropolitan Interstate Council (MIC) is currently conducting an extensive I-35 corridor planning study that includes the downtown Duluth I-35 segment. The results of that study will also play an important part in developing the long-term goals for the corridor and determining appropriate actions for transportation planning and economic development in downtown Duluth.