Out of Control Policy Blog

Atlanta Streetcar Costs Increase by $22 Million

Earlier this week, Secretary of Transportation Ray LaHood flew to Atlanta to celebrate the ground-breaking of the Atlanta Streetcar. 

Before he handed out balloons and threw a parade, he should have take an objective look at the latest cost estimates. 

I previously disclosed the faulty economic analysis that USDOT used to justify the project. The price-tag of the project has increased according to The Atlanta Journal-Constitution,

The city now estimates the cost at $84.7 million plus $9 million to move water and sewer pipes along the route.

The U.S. Department of Transportation estimates the cost to be $94 million, up from $72 million at the time of the federal grant award last year.

“About $9 million of the added cost comes from a decision to use newer and more expensive streetcars that could last 20 years longer than the refurbished models initially envisioned,” said Duriya Farooqui, Atlanta’s chief operating officer. “The newer cars ride lower and comply with the Americans With Disabilities Act, while the older ones would have required ramps that could have interfered with local businesses,” she said.

It was common knowledge that water and sewer pipes would need to be moved. Yet the city omitted this information from its application for the TIGER Grant. The city also knew about the complications with the compliance of older streetcars with the Americans With Disabilities Act. Proper planning would have factored those costs into the project’s total costs. 

There are two reasons why Atlanta did not disclose these costs in its grant application for federal funds. The first is that the city had no idea that it needed to move water and sewer pipes or that it needed to comply with the American with Disability Act. Mayor Kasim Reed and other leaders should have known about these requirements. 

The second and more likely reason is that the more efficient the project, the more likely that the project will receive funding. City officials figured since some city would get the funds, the best option was to make its grant application as inviting as possible so that Atlanta was that city. The city did not disclose the total project cost. The mayor rightly calculated that the city council would have to approve spending more money on this project; otherwise the city would have to forfeit the grant. 

While the city of Atlanta will pay the additional costs, the funds could have supported other transit projects. Instead of improving transit services for local residents, the money will be spent according to Ray LaHood on, “…A magnet for tourism.” 

This funding is for a 1.3 mile one-way trip scheduled to take about 10 minutes. The average speed will be 7.8 miles per hour while costing riders $2.50 per trip and costing taxpayers much more in subsidies. 

Gaming the system is one of the many problems with the TIGER Grant Program. Despite recommendations from the Department of Transportation Inspector General and the U.S. Government Accountability Office, DOT has not disciplined applicants for submitting incomplete information. This problem is one of many reasons that the TIGER Grants are a poor program that should be abolished. DOT will award a fourth round of TIGER Grants this year.

How is it a good idea for the Federal and Local Governments to spend almost $100 million on this transit line?

Baruch Feigenbaum is Transportation Policy Analyst


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