How would Atlantans pay for Beltline rail?

Dismal ridership numbers for the Atlanta Streetcar haven’t exactly inspired confidence that its extension onto the Beltline would serve many riders.

You’d have to raid a lot of public kitties to build some $3 billion worth of Beltline rail.

Don’t take our word for it.  The case has already been made by the advocacy group Beltline Rail Now.

In January 2021, BRN published the Atlanta Beltline Rail: A Blueprint for Transit Funding.  It was in the process of pressing city politicians to endorse the rail loop.  The report set out to prove that funding the entire 23-mile line was feasible. We think it shows the opposite.

Last month, we published our own findings.  They substantiate that the loop can be expected to cost more than $2.8 billion, plus financing, real estate, site prep and rolling stock.

This begs a question for elected officials and MARTA Board members who are still promising Beltline rail to the masses:  Where do they expect to find that kind of money?

BRN’s Blueprint gives us some idea.  It purports to identify $2.5 billion that could be spent on the project over the course of a decade.

It also makes clear that Beltline rail can be built only by grabbing public funds from a widening array of other community needs.  These range from new transit and bike lanes, to trails, schools and bridge repairs. BRN also proposes $755 million in new taxes for Beltline property owners. And even then, the Blueprint comes nowhere close to providing enough money to complete the circumferential rail line.

For starters, the report argues, MARTA should steer $930 million – about a third of all revenue from the More MARTA half-penny sales tax – to Beltline rail. That’s $360 million more than was planned for Beltline rail at the time and $700 million above what More MARTA’s current financial model calls for. While BRN doesn’t highlight the point, this would mean 700 million fewer More MARTA dollars for other transit projects.

Our annotated look at BRN’s Blueprint for Transit Funding.

The Blueprint proposes to redirect another $400 million from other transit and mobility priorities via other funding sources.  Atlanta’s voter-approved Transportation Special Local Sales Tax would provide $150 million of that.  Voters approved four-tenths-of-a-penny T-SPLOSTs in 2016 and 2022, and are expected to get another chance to vote on one in 2026. The T-SPLOSTs have largely been spent on bike lanes, paths, bridge and street repairs, safe streets and traffic calming – much of it on Beltline trails and connections.

The other $250 million in redirected money would come from the largest funding source for the Beltline.  In 2005, City Council and the Atlanta School Board approved the 25-year Beltline Tax Allocation District.  Beltline TAD revenue is currently spent on multipurpose trails, affordable housing, real estate, operations and other Beltline priorities.

The TAD isn’t a tax hike.  Instead, it temporarily shifts to the Beltline a portion of school and city property taxes that can be attributed to growth in the value of Beltline-area properties.  But it doesn’t create free money either.  As more families pour into the city, school and city expenses increase.  The schools particularly dependent on property taxes.  Without growing tax receipts by tapping rising property values in much of the city, both the School Board and the city would have to seek increases in its property tax rates — not just within the Beltline TAD but across the entire city.

For this reason, the School Board seems unlikely to approve an extension when the TAD expires in 2030. Until then, the TAD should provide about $80 million a year or $400 million before it terminates.  If most of that ($250 million) goes to Beltline rail, it’s unclear how ABI could achieve its goals to complete the Beltline trail and to provide 5,600 units of affordable housing by the end of the decade.

Another $500 million for the rail loop would come from two new taxes on Beltline area commercial and multifamily property owners. Because BRN proposes to expedite the project with debt, however, the total needed from the new property taxes would rise to $755 million.

Commercial and multifamily property owners near the Beltline already pay an extra property tax that isn’t levied on the rest of the city.  In 2021, they approved a Special Services District tax, which is designed to fund completion of the Beltline trail, as well as other non-transit priorities.  The Blueprint proposes significantly larger special property taxes tied to a new “Beltline Transportation Improvement District” and a “Station Area Land Value Assessment District.”  Those taxes would require property owners to vote again to levy extra taxes on themselves.

Finally, the Blueprint assumes that the U.S. Department of Transportation would pitch $1 billion toward Beltline rail. That’s quite an optimistic take considering that the initial leg of the streetcar has qualified for zero federal money.  MARTA itself had at one point hoped to supplement local money for the Beltline rail with $750 million in federal funds. But even that seemed like wishful thinking, especially given the Federal Transit Administration’s preference for more economical bus rapid transit over rail.  And now, the incoming Trump administration’ outright hostility toward transit makes it even less likely.

The Beltline Tax Allocation District and Special Service District have similar boundaries. An additional “Beltline Transportation Improvement District” tax would hit most of the same commercial and multifamily owners.

Currently, MARTA seems less than confident about federal funds for Beltline rail.  “We may choose to federalize later segments” was all a spokeswoman would say when we asked her about the prospect.

The financial demands of Beltline rail won’t end with construction.  We haven’t even gotten into the yearly buckets of red ink that are certain to blot MARTA’s operating budgets.  The transit agency already must come up with around $5 million a year to subsidize the moribund Atlanta Streetcar, even as MARTA faces difficult questions about its long-term financial viability.  Because Beltline rail ridership projections remain extraordinarily low for a 23-mile rail line, that operating subsidy will grow if MARTA’s sole light-rail line is extended to 10 times its current length.

We should acknowledge that various details make applying BRN’s 2021 Blueprint to the current capital funding situation tricky.  For one thing, the Blueprint assumed that Beltline rail itself would require only $1.5 billion.  The other $1 billion would have paid for four MARTA infill stations at Beltline crossings – an idea that BRN at the time seemed to put on equal footing with the rail line. (Mayor Andre Dickens revived the proposed infill stations last spring, although funding for them remains uncertain.)

Another dynamic is inflation.  At this point, $2.5 billion is well below the amount needed for the rail loop alone.  Construction costs skyrocketed as the global economy emerged from the Covid pandemic.  In general, the spending side of the ledger has increased more than the available money.  As our analysis of comparable rail projects shows, the rail loop comes in at more than $2.8 billion plus additional expenses for financing, real estate, site preparation and rolling stock.

Regardless of those variables, BRN’s 2021 roadmap makes the tradeoffs involved in funding Beltline rail a bit clearer.  Given the reality that the streetcar would have to grab so much money from pedestrians, bikes, affordable housing and other public goods, we think it’s just not going to happen.

The greater risk at this point is that the first 1.3 miles of Beltline rail, currently included in the Streetcar Extension East, would go forward.  And that stub – funded entirely with $230 million (and possibly more) in local sales tax revenue – will do little to advance rail’s purported goal of connecting neighborhoods and nothing to advance equity.