The Atlanta Streetcar may be the Worst Transportation Project Ever Built–Part 2: The History
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The Atlanta Streetcar may be the Worst Transportation Project Ever Built–Part 2: The History

Yesterday we described the current state of the Atlanta Streetcar. But to understand why things are such a mess, we have to step back to the beginning of the project.

The city of Atlanta’s 500,000 residents live in a region with more than 5,000,000 people. So even though the city is the center of the region, it has a Rodney Dangerfield concept of not getting enough respect. In the Atlanta region, as in most major metro areas, projects are determined on a regional basis with input from cities and the state of Georgia. Residents often work in one city, live in another, and shop in a third so deciding transportation policy in just one city is fairly pointless.

However, if you are the mayor or an Atlanta city councilman and want to cement a legacy, promoting a one-city transportation project makes sense.

Knowing that the Streetcar scored poorly as a regionwide transportation project, Atlanta leadership made four moves. First, to increase the city’s profile leadership decided that Atlanta would apply to become a recipient of federal transit funding, so that the city–not MARTA–would operate the line. Second, the transportation staff began examining innovative funding to support the Streetcar. Third, the city developed a supposedly quantitative-driven project prioritization list that showed the Streetcar near the top. City officials argued that while the Streetcar may not have been a priority regionally, it was a big priority for the city of Atlanta.

Fourth, leadership sought the cooperation of business leaders including the Atlanta Chamber of Commerce and Central Atlanta Progress (CAP) to help him promote the project to non-traditional funding sources. The Chamber and CAP produced several glossy publications making the argument that the streetcar would rejuvenate the economy, despite a lack of research supporting that argument. The Chamber also convinced business leaders to prioritize the Streetcar over other city of Atlanta projects. Armed with a plan to secure funds and a prioritization list that was more propaganda than research, the city was ready to proceed.

The stimulus and the initial Transportation Investment Generating Economic Recovery (TIGER) grant process came just as the city started applying for grants. The city failed to secure funding during the TIGER I project, but persistence, coupled with a lack of Georgia projects receiving funding during TIGER I, led to the streetcar becoming the largest grant recipient of $47.5 million during the TIGER II process.

Armed with more than half the total funding required for the project, the city contributed the remaining $22.4 million needed and construction began. Initially projected to cost $69 million, total costs rose to $93 million so that additional cars and pedestrian enhancements could be included. These expenses were omitted from the initial project cost either due to poor management or due to a deliberate attempt to make the project look cheaper than it was. In addition, the city failed to account for the costs of moving underground utility lines despite the fact that some city leaders knew these lines had to be moved. This increased the cost to $98.7 million. Those project modifications led to massive delays due to engineering changes and the time needed to move the power lines. The Streetcar was supposed to start operating in May 2013. In reality, it began the last week in December of 2014.

But the problems did not stop once the streetcar started passenger service. The city had intended to start charging after 3 months of operation, but challenges with the Breeze Card payment system led the city to operate the streetcar free of charge for the rest of the year. Federal Transit Administration (FTA) reports complained that the city had a complete lack of knowledge of transit system operations. Because the city had never operated such a system, it failed to properly train its employees in the 2-years leading up the opening.

As a result, the city had to depend on MARTA as federal rules require any transit project to be overseen by a proven transit agency. The pairing was described as a “forced marriage” that led to conflicts as the entities launched the system. A 2014 audit found that both MARTA’s director of streetcar services and the city of Atlanta’s hadn’t read the system safety program. The Atlanta director denied any active management responsibilities for the system despite that being one of his prime job duties.

The streetcar had other problems. Even after a rough start, it struggled to hire qualified experts. During the first year there was nearly a 100 percent turnover in management. The absence of leadership resulted in critical oversights. Several drivers were not licensed. Service was suspended due to problems with the electrical system. Safety checks were not documented, and may not have been performed. On some days drivers never showed up or would call in sick. Often only one streetcar was running and passengers had more contact with the customer service employees than the streetcar drivers. After disastrous operations through much of 2015 the city finally hired a private contractor, under an emergency contract to operate the service.

Ridership failed to live up to projections. The streetcar was projected to carry 1.1 million riders in 2015. Yet it carried fewer than 900,000. And that understates the problem because the streetcar was supposed to offer free service for 3 months, but offered free service for the entire year. Not surprisingly, streetcar ridership plummeted after the $1 fare was introduced. Ridership decreased 48% during the first quarter of 2016 compared to the same time period last year, including declines of 62 percent in January and March.

Payment of fares is another problem. The Streetcar has a $1 fare for a one-way ride, but 91,373 riders in the first quarter of 2016, paid only $45,186 in fare box revenue. This means more than fifty percent of riders are not paying. Farebox evasion rates for transit systems without a closed boarding system range from 10-50% depending on systems. Given the characteristics of the Atlanta Streetcar, a 50% rate is among the worst.

The economic development arguments were overstated. A City of Atlanta publication argued the Streetcar led to 100 projects totaling more than $2.5 billion. However, an independent analysis by the Atlanta Journal-Constitution revealed that many of the projects touted as being drawn downtown by the streetcar were conceived of before the route was identified. These include the Georgia State University renovation, the Georgia Aquarium expansion and the construction of both the National Center for Civil and Human Rights and the College Football Hall of Fame. Other projects were lured from other city of Atlanta or suburban developments, not creating more development but using taxpayer dollars to poach businesses from other Atlanta areas.

The Atlanta Streetcar is a major mess. It may become one of the first modern transit projects to be shut down. And while some of the fault lies with the city of Atlanta’s decision to operate the project and the rationale for building streetcars in the first place. The bigger problem is a federal policy that encourages cities, instead of regions, to build transportation projects and prioritizes community development and environmental protection above the reasons for building transportation assets: namely the movement of people and goods to aid the economy is the bigger problem. More on that tomorrow.

Baruch Feigenbaum is senior managing director of transportation policy at Reason Foundation and lead author of Reason's Annual Highway Report.