Grand plans for ‘Gulch’ hub a transit gamble

Exclusive: Idea has big unknowns

This week, Georgia’s largest transportation agency will meet with some of the world’s major developers to discuss prospects for a grand central station in a forlorn section of downtown.

The hopes themselves are grand: A transportation hub downtown that could encourage a thriving commercial area — something like Atlantic Station — becoming a magnet for city dwellers, professional offices, shops and restaurants and even helping pull in future transportation projects such as light rail. On one level, people live or shop or work; on another they transfer between buses, streetcars, commuter trains and inter-city rail, easing short trips and long-haul journeys.

Developers, the Georgia Department of Transportation hopes, will bring their expertise, financing and fresh ideas to the nearly two decades-old vision of such a “multi-modal passenger terminal.”

Starting with $60 million in federal seed money for planning and land purchases, the agency hopes a public-private partnership will jump-start work on the long-stalled hub. How? Developers would bring their own money to build commercial development atop the hub as DOT looks for public money to build new transit systems to link in.

One of the most-watched projects by Atlanta’s commercial real estate and transit communities, the hub also is one of the most risky and complicated. Georgia’s recent track record on getting transit money is spotty at best. And nothing indicates the state will fare better after the recent political changes in Washington and under the Gold Dome. Before it gets developers’ plans, DOT also can’t say how much such a hub will cost.

Still, the hub may signal that DOT is more open to working with metro Atlanta leaders who want more transit projects, not just more roads, to address Atlanta’s suffocating traffic congestion. Experts, many of them skeptical, have a lot of questions. Among the biggest: how much will a hub cost? Even a guess, DOT says, is impossible until it hears developers’ ideas. Beyond that, will funding materialize to build the rail systems that would link to the hub? Will the hub create demand for more real estate in an area that now has an excess of empty and decaying buildings? And will Atlantans decide to get out of their cars to adopt alternative transportation?

John Sherman, president of the Fulton County Taxpayers Association, is a watchdog for tax spending.

“I think it would be important to know the full cost of this,” Sherman said. “That’s critical before we begin.”

Why now?

The idea for a downtown transit hub, studied for years, never went anywhere. The Atlanta Regional Commission picked the downtown site in 1992, and in 2004, specific designs were drawn for the station.

DOT leaders in the past have favored roads over transit. The enmity played out notably over the state’s unwillingness to use more than $80 million in earmarks that congressmen including John Lewis, D-Atlanta, helped secure more than a decade ago for commuter rail and the downtown hub. About $60 million of that money is now being used for the hub, DOT spokeswoman Vicki Gavalas said.

Tuesday’s elections putting Republicans back on top in the U.S. House may have made transit funding harder to get under the weight of $13 trillion in national debt.

“One of the things in the mix is that the House will have a no-earmark policy,” said U.S. Rep. Jack Kingston, a Savannah Republican.

Even so, U.S. Rep. Lynn Westmoreland of Coweta County said he expects a highway bill next year “that will be able to authorize funds to beneficial projects, like this one, and I encourage GDOT to work to secure funding for this project in this bill.”

State law also has hamstrung transit development. The state constitution mandates that the state’s gas tax be spent only on roads and bridges, not rail projects. That leaves transit funding in the Legislature’s lap — where it has not met with much success. A legislative committee is meeting to consider new funding, but Gov.-elect Nathan Deal said through a spokesman this summer that he opposed state funding for daily operations of mass transit.

Former Mayor Andrew Young said such a project will take political change.

“As long as the state Legislature sees itself as antagonistic to the city, it won’t happen,” Young said Thursday.

Yet new regulations and a new crop of transit-oriented local and national politicians could begin a shift.

Previous transit critics also have come around, including DOT board member David Doss, who chairs the committee overseeing the hub’s development.

Though he still calls commuter trains “choo-choos,” he likes buses and high-speed rail for their potential to transform Georgia, and a transit hub would be a central location for those.

“Remember, like it or not, Atlanta is the economic engine of the state,” said Doss, who lives in Rome. “If Atlanta is successful and continues to grow, the state of Georgia’s going to be successful and continue to grow.”

Gavalas, a DOT spokeswoman, is even more blunt: “All the stars have aligned.”

She points to a pro-transit Obama administration that favors projects like the hub.

And a recent federal grant of $47 million for the streetcar project brightened prospects for the hub. “Any element that gets a push forward pushes the whole terminal forward,” Gavalas said.

While the U.S. House of Representatives willingly funded Obama’s transit priorities while in Democratic hands, it’s unclear how they will fare after Tuesday’s elections that put Republicans back in the majority.

Planning and placement

After meeting with developers, the transportation department will issue a request for proposals in December, and in May it will choose a master developer whose tasks will include figuring out exactly where to place the hub and how to fund it.

DOT documents strongly suggest putting a hub in the Gulch, now a 120-acre tangle of railroads, viaducts and parking lots near Philips Arena and CNN Center, Five Points MARTA Station and federal buildings.

The site includes the former Atlanta offices of rail company Norfolk Southern. For 11 years, its four buildings and about 15 acres of developable land have been for sale. Multi-family home developer Wood Partners had the buildings under contract at one time, but the recession hit and the deal never closed.

So far, locating the hub downtown hasn’t been an issue.

Neither Sandy Springs Mayor Eva Galambos nor Roswell Mayor Jere Wood questioned that decision made long ago, though Galambos wants to be sure suburban transportation links are considered.

The hub also was agreed to recently as part of “Concept 3,” the wish-list for a $50 billion transit network approved in 2008 by officials from across the Atlanta region. In addition to a major hub in the Gulch, it calls for minor hubs at the airport, at Lindbergh Station and in Norcross or possibly Doraville.

If they build it ...

A chief issue is demand — or lack of it — for the commercial real estate DOT hopes will fund the project.

Ben Raney, a commercial broker and president of Raney Real Estate, doesn’t understand how development in the Gulch could produce enough revenue to build a transit hub.

“Unless they are going to get free money to develop it, the numbers don’t work,” he said. “There are no people there to drive any kind of retail growth. There are no jobs being created.”

Current construction costs for hotels, condos and office buildings outweigh projected revenues, Raney said.

He also points to towers of empty office space. The vacancy rate downtown was 14 percent in the third quarter, according to real estate services firm CoStar Group. Metro-wide, the rate was 17.6 percent, among the highest Atlanta has ever seen.

Untangling the Gulch’s complicated web of public and private landowners also could be daunting, though DOT says it can use eminent domain if it must.

The DOT doesn’t own any land there, the agency said, but the state, Atlanta and the federal government do. There also are private holdings, including the former headquarters of The Atlanta Journal-Constitution, still owned by this newspaper, and the headquarters of the Georgia Bar Association next door on Marietta Street.

To be sure, the DOT says the hub won’t come out of the ground overnight.

Central Atlanta Progress president A.J. Robinson said it will take time to design and build a development, so the current economic climate isn’t the guide for whether the hub and its commercial development will work.

“It will take — even in the best of all worlds —  five to 10 years for planning, design and development.”

By then, federal government offices will probably need to expand and DOT could move its own headquarters to the hub, he said. MARTA and Georgia State University are other possible tenants, “and we haven’t even gotten to the private sector,” Robinson said. “If you look out five years, there is a heck of a lot of potential for this if you build a big public infrastructure project right there. So have faith.”

Developers’ interests

Eight development and construction firms have signed up for the meetings with DOT starting Monday.

The firms include local heavy hitters Jacoby Development, one of the developers of Atlantic Station; Cousins Properties, which developed Terminus in Buckhead; and Portman Holdings and John Portman & Associates, which built more than a dozen downtown Atlanta buildings. Chicago titans The John Buck Co. and Jones Lang LaSalle also will meet with DOT.

Several international firms will be there too, like Macquarie Capital, an Australian-based investment and management firm that with Spanish Cintra leased a Chicago toll bridge for $1.8 billion. ACS Infrastructure Development, a branch of the Spanish company Grupo ACS, already has qualified to bid on Georgia toll lanes planned for I-75, I-285 and I-575 with Georgia’s largest road contractor, C.W. Matthews. And Hochtief Construction is a large German construction manager.

Still, many names are missing from the list, like construction management firm Skanska and Atlanta-based Carter.

Jennifer Murray, of Sweden-based Skanska’s Atlanta office, said the company would only pursue the construction phase, so it didn’t ask for a meeting.

Scott Taylor, president of Carter, which built the “transportation oriented development” at Lindbergh Center for MARTA and BellSouth, said while he “enthusiastically supports” transportation improvements, his firm has “not made a final decision as to whether or not this opportunity fits our near-term business objectives.”

What Atlantans want

Real estate aside, even as a transportation project, the hub is something of a gamble.

While Greyhound and Amtrak are already running, other forms of transit are in blueprints. And whether the state or region would ever fund them remains uncertain.

But a hub could make the idea of public transit more appealing to more riders, planners say.

Alan Pisarski, a Virginia-based expert on commuting, said a hub could encourage transit ridership. “If you can make this transfer more seamless and not force people to either wait or traverse some distance to get from one mode to the other it can have some positive effect,” Pisarski said. “The question is, what percent of my problems am I solving with what percent of my resources?”

MARTA CEO Beverly Scott said planning for the Five Points station called for a way to link commuter rail and Amtrak “with an easy walk.” Now, the Amtrak station is on Peachtree Street near 25th Street just north of Midtown, and the Greyhound station is near the Garnett Station east of Five Points.

Greyhound’s average daily metro Atlanta ridership (including Norcross, Marietta and Conyers and downtown stops) is slightly down from 2009 when it was 574 outbound passengers and 627 inbound. In Amtrak’s fiscal year that just ended, about 306 people got on or off an Amtrak train in Atlanta each day. And even MARTA buses have trouble navigating around Five Points.

Atlanta is “atypical,” said Steven Polzin, director of mobility policy at the Center for Urban Transportation Research at the University of South Florida in Tampa, Fla. Atlanta began building MARTA in the 1960s and continued until quitting ten years ago. “And you’ve been talking about [expanding] it ever since. Usually urban rail systems, once they get started, are well received by the community [and development continues]. Frankly, Atlanta is an outlier in that sense,” he said.

Building a transit hub for a system that doesn’t exist is risky, he said, but it could create momentum for new transit.

“Transit is often aspirational,” Polzin said. “The community is investing to address the demand in 30 to 50 years.”

Adie Tomer, a senior research analyst at the Brookings Metropolitan Policy Program in Washington, said there’s no one-size-fits-all solution to transit.

“A huge part of that is the people who live there and what they want their city to be like,” Tomer said.

His institute supports “smart growth” in cities, but not transit for transit sake. “I can’t stress enough, as crazy as it sounds, that while a transit project in Charlotte could be a great idea, it may not work in Atlanta.”

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‘Multi-modal’ transit center

The Georgia Department of Transportation will discuss with developers a downtown transit hub, an idea talked about for years. The area called “the Gulch” has long been considered a prime location for the hub, which would link rail lines and bus service. Since 1999, Norfolk Southern has been trying to sell about 33 acres and several office buildings in that area.

Source: Georgia Department of Transportation

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