City considers help from private sector to realize Beltline streetcars sooner

City leaders say the cling-clang of a streetcar bell could be heard along the Atlanta Beltline far sooner than originally imagined if they had a little help from the private sector.

The Beltline, which aims to encircle the city with a 22-mile necklace of trails, parks and transit, is projected to be finished by 2030. But city officials are eyeing a public-private partnership as a potential way to realize the most expensive portion of the project, a $2.3 billion streetcar system, as early as this decade. The Beltline’s light-rail system will connect with the city’s streetcar currently under construction.

“If all the right pieces are put in place, it’s not inconceivable a public-private partnership could be launched under (Mayor Kasim Reed’s) term,” said Paul Morris, CEO of Atlanta Beltline Inc.

But lots must happen first. The idea is in its earliest stages of discussion at Atlanta City Hall, officials caution, as they consider what such a deal would look like, who would be involved and whether they want to go that route. Key to the arrangement would be hammering out contingency plans for everything from cost overruns to what happens should a deal fall through.

Still, Reed told an audience at a recent Northwest Community Alliance meeting that such an arrangement could result in $3 billion to $4 billion in private funding. He intends to work toward public acceptance of a private backer for the transit portion over the next year, he said.

The city’s first-ever strategic implementation plan, released last week, estimates the total cost of the Beltline at $4.4 billion. The transit portion is expected to cost half of that and without a public-private partnership, would take every bit of 17 years to build, Morris said.

“We can do transit without the public-private partnership,” Morris said. “A public-private partnership moves up the schedule … but (doesn’t) materially change the cost.”

But in seeking a public-private partnership that could speed up the project and perhaps make it more cost-efficient, there are trade-offs, city officials said.

Such a partnership would change the level of public engagement the Beltline now seeks and require the city to cede some control to the private sector.

When it comes to public-private partnerships, often known as “P3s,” the devil is in the details. Some public-private partnerships involve a private company funding, designing, building and even operating a project, such as a streetcar, while the city makes payments over time to give the investor a steady return.

If Atlanta entered into such an arrangement, it would be the first time a public-private partnership would be used to fund transit in Georgia’s modern era. Public-private financing deals are commonly used in Europe and Asia to construct buildings, bridges and roads. The concept has grown increasingly popular in the United States in recent years as federal and state transportation funding became less reliable.

Atlanta COO Duriya Farooqui said gathering public feedback on the Beltline project would be a critical component of any type of financing plan, but that accelerating the timeline for a streetcar would likely mean that much of the public’s input would be front-loaded, with fewer opportunities for shaping the finer details of the plan along the way.

After all, a financier with billions of dollars in investment at stake wouldn’t want to alter plans midstream, officials said. But in exchange, building the streetcar lines all at once with a single builder yields the project sooner and potentially more efficiently.

In many ways, Atlanta has every incentive to consider a P3. The Beltline receives about a third of its funding from a tax allocation district, or TAD. Under that complex structure, a portion of property tax revenue is divided between the city, county and Atlanta Public Schools. The Beltline receives the rest.

Thus, the faster the entire project gets built, officials expect development — and property tax revenue — to grow.

Morris believes the project can attract big-time investment banks because it has already shown potential to draw users and businesses. Over the past eight years, public and private donations to the Beltline total more than $360 million, yielding about $1 billion in development.

Best known for its Eastside Trail, the Beltline has captured the hearts of joggers, cyclists and ogling tourists who flock to the path that begins near Piedmont Park. Since opening last year, the Eastside Trail attracted close to a million visitors, Morris said.

Kent Rowey, head of Allen & Overy law firm’s public-private partnership practice, believes such partnerships can be good for cities because private companies assume the risk of construction cost overruns — and sometimes the costs of maintenance and operations, too.

The city usually assumes the risk of ridership revenue and agrees to make payments back to the investor after the streetcar system is operating, Rowey said. Because transit systems often operate at a deficit, cities typically chip in money from other sources such as TADs or their general fund.

Emil Frankel, a transit expert with the Bipartisan Policy Center, said key to the success of such deals are the upfront terms the public entity must iron out with the investor.

“I think if the agency is well equipped to manage this process effectively, you can get higher quality,” he said.

Many residents, like Karan Meilhan, are wary of any changes to the Beltline. Meilhan said she worries the streetcars could make her beloved Eastside Trail “a little too bustling.”

“I knew they were trying to bring in some kind of trolley or train system, but I’m really not into it,” Meilhan said.

Kate Colpitts, who was exercising near Ponce City Market recently, was uncertain if private investors would be a good thing, but likes the idea of using streetcars to link intown neighborhoods.

“It would be nice to have transit get you where you want to go and not take all day,” Colpitts said.

Streetcars, which are making a comeback as a way to spark urban renewal in cities across the U.S., have their detractors.

Baruch Feigenbaum, a policy analyst at the conservative think tank Reason Foundation, says buses would be a far more practical and less expensive investment for Atlanta.

“For the amount they are spending, they could really improve the bus network, which helps all Atlantans out,” Feigenbaum said. “The Beltline is only a good thing if you live on the Beltline.”

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