Even as millions of tax dollars are set aside for a streetcar line through the heart of Minneapolis, Mayor Jacob Frey on Friday painted a bleak picture of the project's prospects.

"Obviously there are numerous hurdles, including receipt of federal funding and from other jurisdictions, and that's a lift," Frey said.

He stopped short of saying the streetcar idea should be abandoned. The project enjoys the support of Council President Lisa Bender, and the city is completing a study that's a prerequisite for federal funding. The estimated cost of the project is $250 million.

The project was championed by former Mayor R.T. Rybak and approved by the City Council in 2013. State legislation passed that year allows the city to collect taxes for the streetcar from a designated area along the line, which stretches from the Kmart property on Lake Street north on Nicollet Avenue and Nicollet Mall, then across the Mississippi River on Hennepin Avenue, and perhaps north to Central Avenue.

The city has $10 million in the account and expects to collect another roughly $7 million in 2018 through the "value capture district" consisting of five properties within a block of the proposed streetcar line. Those properties account for about 1 percent of the city's taxing capacity.

The project has been slow to develop. The city used $7 million from the fund in 2017 to buy the land under the Kmart. Kmart's lease for the land extends to 2053.

Bender, who represents the neighborhoods around the south part of the line, said she supports the project because Minneapolis needs to improve transit even in parts of the city that are already growing.

"The streetcar project is still alive," Bender said. "Transit improvements in the Nicollet/Central corridor are really important to the city, along with bus rapid transit lines."

Frey told the Business Journal in December that the project "could potentially be dead." While he would not repeat that language on Friday, he offered no enthusiasm for the idea.

"We're not abandoning it entirely as a tool to generate economic development, but I want to make sure any routing is placed along corridors that can have a positive impact," the mayor said. "Areas like downtown and near East Hennepin are booming, regardless of the streetcar's presence. But I think Central, further northeast, could benefit."

He also said the city is seeking federal funding with other governments for the Southwest light rail line, and, to some extent, bus rapid transit lines.

"There are other projects that have a multi-jurisdictional approach that are ahead of the streetcar," Frey said.

Robin Hutcheson, the city's director of public works, said the lengthy assessment needed to request federal funding for the project is nearly complete. The document will evaluate the environmental, social and economic effects of a streetcar line.

After the assessment goes through public review, the city will hire engineers and architects to create a final design for the line.

Adam Belz • 612-673-4405 Twitter: @adambelz