‘Gulch’ terminal cost pegged at $1.5 billion

Local/ 47 percent/ $714.2 million

Private/ 12 percent/ $186.2 million

Total: $1.5 billion

*Source: Prepared by Stifel and FIC on behalf of the Georgia Department of Transportation.

MyAJC.com:

Follow the AJC’s recent coverage of the up-and-down fortunes of the downtown “Gulch” project, only on MyAJC.com.

MyAJC.com:

Follow the AJC’s recent coverage of the up-and-down fortunes of the downtown “Gulch” project, only on MyAJC.com.

MyAJC.com:

Follow the AJC’s recent coverage of the up-and-down fortunes of the downtown “Gulch” project, only on MyAJC.com.

A new study projects the cost to build a multi-modal transit hub in a derelict part of downtown Atlanta at $1.5 billion — 88 percent of which would be financed with public money.

The study, obtained exclusively by The Atlanta Journal-Constitution this week, is the most specific so far in terms of how to pay for the mammoth Multi-Modal Passenger Terminal that has long been envisioned on a site known as the “Gulch.” The area is currently a yawning substreet gap used for parking, criss-crossed with freight rail lines and sandwiched between the MARTA Five Points Station and Phillips Arena.

That $1.5 billion price tag includes costs to buy right-of-way, build the terminal and adjacent roads, and pay developers who would oversee the work. Backers say if all the financing pieces fell into place, construction could begin in 2017 and be completed by 2020. Operation and maintenance costs after that were pegged at $3 million to $5 million per year.

The study recommends that a public authority comprised of appointed stakeholders from entities such as GDOT, MARTA, the city of Atlanta, other transit providers and investors be created to guide the project and run the terminal.

But state officials caution this is a “grand vision,” and not one they necessarily endorse. No concrete financial or political steps have been taken to start the project. Russell McMurry, the chief engineer for the Georgia Department of Transportation said the best strategy may be to look for smaller chunks that can be accomplished.

“What we have to look at now is what’s stageable,” McMurry said. “What can you do in increments?”

GDOT paid a private development team of Forest City Enterprises, The Integral Group and Cousins Properties $12.2 million to do the study, which they started in 2011. The aim was determine how the terminal and the redevelopment of the 119-acre area surrounding it could be financed and governed in partnership with private investors.

All four financing models in the study rely on winning competitive government grants and imposing controversial local taxing strategies.

The team recommended that only about 12 percent, or $200 million of the overall funding, would come from land sales to private investors. Ten sites surrounding or jutting over the footprint of the station could be made available for sale to high-rise commercial and residential developers, the study said.

Fulton County Chairman John Eaves said the Multi-Modal Passenger Terminal is important to the region, but he believes that the private sector has to contribute more if there’s any hope of transforming the Gulch.

“I am not sure the public can stomach any more taxes,” Eaves said.

The proposed transit hub would bring together commuter rail, freight rail and MARTA, as well as commuter buses and longer-haul passenger buses such as Greyhound or Megabus. Passengers headed to events at Phillips Arena and Georgia World Congress Center would be able to disembark at the terminal and walk under the cover of a shelter, according to McMurry.

Each of the four financing plans relies on $128 million coming from federal and state grants.

One-third of the funding — as much as $534 million — is proposed to come from issuing bonds backed by a mix of locally generated revenue sources. These could include asking Fulton County voters to approve a one-cent or fraction-of-a-penny sales tax, using a Tax Allocation District or Community Improvement District to capture the value of new real estate development in that vicinity, or imposing new taxes on hotel/motel stays, parking and car rentals.

Some of these funding sources are already being used for other development projects.

Hotel/motel taxes, for instance, are the primary source of public funding for the new Atlanta Falcons stadium. And much of the area around the Gulch falls within the existing Westside Tax Allocation District, a portion of the property taxes for which are already used for redevelopment projects within its boundaries.

Melissa Mullinax, a spokeswoman for the city of Atlanta, said it’s way too premature to weigh in on any of the options.”

The terminal wasn’t on the city’s wish list for the failed 2012 transportation sales tax referendum. Mullinax said the MMPT remains one of the city’s long term goals. But she added that the city’s more immediate goals are the completion of the Atlanta Streetcar possible expansion of the streetcar to the Atlanta Beltline.

It’s still unclear if a key component of the multi-modal passenger terminal — the blending of freight and commuter rail service through the Gulch — will ever happen. Railroad companies that own the lines have expressed doubt about whether there is enough capacity for both.

Norfolk Southern, which owns tracks where a proposed commuter rail line from southern counties would run, earlier this year and voiced concern about sharing its freight tracks. A spokesperson for CSX, which owns other tracks that snake through the Gulch, said the state needs to conduct a regional rail study to determine capacity for commuter rail in Atlanta, adding: "Our capacity constraints are such that it would make it very difficult for passenger trains to fit."

Earlier this month, GDOT launched an update of the State Rail Plan, but it will take about two years to complete. As part of the update, the state will look at bottlenecks on the rail lines and how those issues could be addressed to maintain the flow of freight.

McMurry said the initial designs for the terminal call for there to be spur tracks, and three platforms where passenger rail cars could load and unload passengers without resting on the main tracks and blocking freight.

Even if that design doesn’t satisfy the railroad companies, McMurry said the MMPT could go forward initially as a hub for MARTA and Xpress buses operated by GRTA, Cobb County Transit and Gwinnett County Transit.

GDOT consultants are currently performing environmental studies and will begin gathering public input on the project in the spring. By this time next year, state transportation officials expect to use that information to make a decision about plans for the terminal.