Atlanta Streetcar to start later, cost more

Fares: $289,800

Advertising/charter/sponsorship: $83,261

Congestion Mitigation & Air Quality grant: $4,066,667

Total: $5,689,728

Funds for streetcar construction

TIGER II Federal Transit Administration grant: $47.6 million

City of Atlanta: $32.6*

Atlanta Downtown Improvement District: $6 million

Atlanta Regional Commission: $6.45 million**

* Recovery Zone Bond funds and Department of Watershed Management Clean Water program

** Livable Centers Initiative Program

SOURCE: Atlanta Streetcar

Atlanta's first streetcar system in more than half a century, a $100 million venture aimed at revitalizing downtown, will launch later and cost significantly more to operate  than city officials anticipated.

The cars are arriving. The tracks are nearly all laid. But the most basic question — who will manage the day-to-day operations — is still unsettled.

Emails obtained exclusively by The Atlanta Journal-Constitution show that Atlanta city officials are still weighing options for who will operate and maintain the 2.7-mile system — MARTA, a third-party vendor, or even the city itself.

Each of those operators comes with a different price tag. And just how soon that the chosen entity can take the helm is unclear.

The projected annual operations cost was around $1.7 million when federal funding was announced in 2010. The latest estimates released by the city Friday show costs likely will be nearly double in one case and more than double in two scenarios:

What’s more, streetcar planners have long said service will begin in late April or early May. But with such important decisions still in flux, the start-up likely will be pushed to sometime this summer, Atlanta’s deputy chief operating officer Tom Weyandt said Friday.

“I am not at all embarrassed to say that we are taking a little longer on getting this thing up and running,” Weyandt said, adding officials will announce an operator within weeks. “Because, at the end of the day, it means we will have done a much better job at evaluating all of our options.”

City officials, who are working closely with MARTA and the Atlanta Downtown Improvement District on the project, list a number of reasons for the opening delay: weather events, including recent winter storms that pushed back construction time-lines, and the inevitable lags involved with federal and state oversight.

But part of the last-minute scramble is a result of the city’s own success. Atlanta was named a Federal Transit Administration grant designee last fall, a distinction that allows the city to apply directly for federal dollars instead of relying on Georgia Department of Transportation or MARTA as a pass-through for the funds.

The designation also meant that Atlanta officials have greater authority to operate the system, another critical milestone in the city's quest to become its own transit powerhouse. Officials from both Atlanta and MARTA anticipate a city-run street system would be the least expensive and provide the most flexibility.

MARTA, which operates independent of the city, will provide oversight regardless of who operates the streetcar.

The project, which loops from Centennial Olympic Park to the King Center, has been dogged by cost overruns and schedule delays since it broke ground last June.

Construction costs initially estimated at $69 million have ballooned to nearly $100 million, primarily because of the complication of having to relocate utility lines in some of the oldest parts of the city.

A.J. Robinson, president of the Atlanta Downtown Improvement District, said the original operating estimates were off because the city was entering uncharted territory.

“Nobody has built a streetcar in Atlanta since 19-whatever it was,” Robinson said, adding “innovation is messy.”

The initial projections were made “in good faith” by a team of consultants that were operating under MARTA, Robinson said. He believes that, once the streetcar is in operation the actual costs will be lower than the most recent estimates.

The delay means little to the bottom line, given that fares are going to be so low, Robinson said. The fare will be free for the first three months and $1 thereafter.

If the city of Atlanta does decide to run the streetcar system, which would include hiring and managing staff and day-to-day operations, it could be setting a precedent. City officials and even national transit experts contacted by The AJC could not think of another municipality that directly handles streetcar operations.

Typically, those responsibilities are ceded either to a third-party vendor or to an transit authority that have experience and expertise in the field, said Art Guzzetti, vice president of policy for the American Public Transportation Association in Washington, D.C.

That’s what the city initially sought to do. MARTA, which provides oversight of the streetcar since it was the Federal Transit Administration grant applicant on behalf of the city, in May solicited bids from companies who wanted to operate the system.

Three companies submitted proposals. Emails between top officials at MARTA, the city’s streetcar division and ADID show that negotiations continued with one vendor, RATP Dev McDonald Transit, well into the fall.

MARTA’s board approved a $22 million contract with the company in January, but with an important caveat: the city and Atlanta Downtown Improvement District would have to sign off on the deal.

But they haven’t. Instead, the city is pondering cheaper operating models.

David Emory, president of Citizens for Progressive Transit, said he would like to see streetcar service be delivered on time and on budget. He is concerned that may not happen if the city takes charge.

“Having to create all that infrastructure within the city is going to take some time,” Emory said. “Maybe it works out better in the long-run. But, in terms of this initial start up period, the concern is we could see it take longer or there could be more unforeseen glitches.”

The city says it wouldn’t be going in blindly. The city’s streetcar director, Tim Borchers, has 30 years of experience in streetcar systems. His staff of 11, including procured consultants, gives the city equivalent expertise to what a third-party vendor could provide, according to a city memo obtained by the AJC.

“We’re not suggesting we are capable of immediately operating the system,” Weyandt said. “Our expectation is we will learn in this process.”