The decades-old dream of a transit hub downtown that would bring together commuter and freight rail, MARTA and longer-haul passenger buses appears to have suffered a significant blow.

The state’s plan for a central passenger terminal counts on negotiating with private freight companies to share their tracks through the “Gulch” area with commuter rail cars. But Norfolk Southern, the railway company that owns the tracks where a proposed commuter rail line from southern counties would run, has written to the state Department of Transportation saying it does not have the space.

Advocates for the project say the potential loss of commuter rail would not kill the project.

The terminal project is a long-held dream of downtown Atlanta boosters, meant not just to aid transit but to recreate the living and working space in the area. One study last year projected the massive development could bring more than 15,000 new jobs to downtown over 30 years and produce billions of dollars in annual benefits for the state economy.

Space for a terminal was identified decades ago, but funding was not. The head-turning step came in 2011, when the state Department of Transportation hired a developer for an ongoing, $12.2 million study on whether the transit and real-estate development plan could work.

But perhaps the most significant part of that plan —a long-desired end point for commuter rail to Atlanta — now seems deeply undermined.

DOT released a statement acknowledging the importance of freight rail in addition to passenger rail, and cautioning against a rush to conclusions before the state studies the issue of freight logjams in depth. And even if commuter trains never touch the terminal, they added, the terminal has other purposes.

“We are currently working through this part of the planning process and the shared rail option remains on the table,” said the statement from DOT spokeswoman Natalie Dale. Furthermore, the terminal joins many modes of transportation, “not just the shared use of freight and passenger rail tracks.” She pointed to a terminal in San Francisco which is initially opening with just bus service.

Whether light rail, high speed rail or commuter rail, the question is how to fund new rail lines: both their ongoing operations and the potentially enormous expense of acquiring new land for tracks through a dense urban area.

For rail within the Gulch, the state’s plans call for avoiding the land problem by getting Norfolk Southern and CSX, the two railway companies that control the tracks through the Gulch, to share their freight tracks with passenger trains.

But Norfolk-Southern has told the state DOT that it forecast too much business in the future for freight to afford to share space with passenger rail inside the Perimeter. Company officials said they had been trying to get the message across to the private developers and had now written DOT a letter.

“There is insufficient available Norfolk Southern right of way in and about the City of Atlanta (generally inside the Interstate 285 Perimeter) to add passenger service,” the company wrote.

CSX leases the other set of tracks through the Gulch, some of which head northward to Cobb County. As to CSX’s own position, a lobbyist for CSX, Craig Camuso, said it couldn’t be sure until a study was done. But, at the moment, “We don’t disagree with Norfolk Southern’s statement.”

Norfolk Southern and CSX suggest that DOT study the freight rail traffic to see just how congested it is becoming, considering Atlanta’s point as a regional and national rail hub. DOT said it was studying the issue.

The Norfolk-Southern officials stress they’re willing to work with passenger rail plans around and outside the Perimeter, and perhaps they could help commuter rail connect to the tip of a MARTA line. Gordon Kenna, CEO of Georgians for Passenger Rail, has heard Norfolk Southern’s concerns, and suggests that the commuter rail could end at MARTA’s East Point Station. That would, however, require those passengers to go through all the MARTA stops.

“While we’ve been able to invest in all forms of infrastructure - roads, airports and ports - over the last half century, the state has not really invested in the rail infrastructure,” Kenna said. “And I think we need to figure out a strategy for doing so.”

Advocates for the terminal say the freight companies’ position may be a setback, but it is not a fatal blow — if only the state will come around to funding new rail, or just fix some snarls. Others suggested it was just negotiating tactics by the companies.

But the state has long been reluctant to fund a passenger rail expansion.

“Again, where is the money coming from for that?” said Benita Dodd of the Georgia Public Policy Foundation, which opposes commuter rail into Atlanta.

Asked if Norfolk Southern’s position could change, Joel Harrell, vice president for government relations, and Rick Harris, a company spokesman, said anything was possible, but said that was unlikely. Harrell did not see that happening “unless trains can fly.” Other phrases they used were “levitate” and “beam me up, Scotty.”

In the mean time, the site has competition elsewhere in Atlanta.

A potential rail station project that could include Amtrak and Greyhound bus has been proposed for land belonging to the State Road and Tollway Authority near Atlantic Station. Amtrak confirmed the selection of the site in February, and Greyhound said at the time it was weighing “several options,” though its “ultimate goal” would be for a station at the Gulch.

Doug Firstenberg, a principal of Washington, D.C.-area Stonebridge, does transit-oriented developments and has not studied the Atlanta project. He said whether trains are do-or-die for a development all depends on the area.

“In the case where you’re going to create a huge amount of new access to an area that might not have had that access before, then transit can be transformational,” he said.