Lessons for Atlanta in Denver's transportation tax

If Atlanta taxpayers vote next year for a new transportation buildout, will they get the investment of a lifetime?

Or do they risk driving their dollars off a cliff?

The debate over how careful to be is suddenly raging here, among the very officials tasked with putting the plan together. And the answer may lie 1,400 miles away — in Denver.

If voters in the 10-county metro Atlanta region approve a penny sales tax next year to raise $7 billion over 10 years for transportation — likely the biggest single infrastructure investment in the region’s history — they will be treading new ground. But Denver has done it before, with a 122-mile “FasTracks” rail transit expansion, plus 18 miles of rapid bus service, approved in 2004.

The first passengers should step on FasTracks-funded trains in about two years. While the promise of FasTracks has some big fans in Denver among commuters and employers, its failings regarding cost and timetable also offer harsh lessons, which Georgia officials are trying to heed.

Controversy about the issue has just moved front and center here in the effort to draw up metro Atlanta’s $6.1 billion regional project list for the 2012 vote, a draft of which is to be submitted in three weeks. Georgia oversight officials are repeatedly holding up the specter of Denver’s missteps, and this week regional officials are trying to balance fiscal caution — building in unexpected costs — with a list that holds enough projects to have impact for commuters.

In Denver, FasTracks now has a $2 billion deficit, and some projects may be 25 years behind schedule. Cost estimates approved by voters in 2004 stood at $4.7 billion, but rose to $6.8 billion. On the revenue side, estimates over 30 years went from $13.7 billion in 2004 to $8 billion.

“You’ve got a situation where you have winners and losers,” said Erik Hansen, former mayor of Thornton, Colo., a small town in the northern Denver suburbs where voters are furious that they won’t get the train service they were promised in the 2004 vote for FasTracks. Rather than the promised 2017, without new funding his service will be finished in 2042, a date so far away as to be almost meaningless, Hansen said.

The trouble has spurred some innovative thinking at the Regional Transportation District, the agency in charge of FasTracks. The RTD has found private investors to help deliver a big chunk of the system. And the federal government has just chipped in $1 billion for that project, which includes a line to the airport. But for other pieces of FasTracks, the picture is not so rosy.

FasTracks advocates want to ask voters for an additional 0.4 percent sales tax (an extra 4 cents on every $10 purchase) to finish the whole system earlier, but they fear the election result in this economy. A future tax hike is built into the RTD’s financial plans all the same. The 2042 scenario is an “alternate universe,” said Phil Washington, the RTD’s current general manager, “that is not allowed to be opened.”

In Denver, problems snowballed.

Current and former RTD leaders say the agency was blindsided by unforeseeable events: a historic economic bubble that tanked revenue when it popped, unprecedented construction cost increases sparked by increasing demand for building materials in China, and a nationwide shift in expensive railway requirements, all taking place after the 2004 vote. “We got caught in the middle of it,” said Cal Marsella, the RTD’s former general manager.

Critics maintain that the RTD made it worse.

Revenue predictions were optimistic even aside from the boom, they say, as were schedule estimates.

“After FasTracks, for a couple of years there was simply no desire on the part of RTD to say anything other than things were wonderful,” said Steve Rudy, transportation planning and operations director of the Denver Regional Council of Governments, the metropolitan planning organization — which had approved the RTD’s original predictions. When they finally did, Rudy said, “some of that had to do with our board’s basically saying, look, you guys, you’re not telling us the truth.”

RTD’s leaders don’t concede the charges, and they don’t like to dwell on past troubles. But they have overhauled their forecasting process and produced a “lessons learned” report, which advises doing a range of things differently next time.

In metro Atlanta, state leaders have taken note. They are convinced that they have arrived at conservative revenue, cost and schedule estimates that will help the region avoid such a mess.

Even project advocates concede that’s important. “We have a 10-year window,” Atlanta Mayor Kasim Reed, who is on the “roundtable” that is forming the Atlanta project list, said to a group of visitors from Denver and other cities that came to give advice this month. “If we have projects that are on our list that go beyond the budget, we won’t have another 10 years.” Not to mention, Reed added, “a lot of elected officials who won’t be sitting around this table.”

But officials such as Reed who are trying to get the most for their areas fear those state efforts have swung the pendulum the other way. Including a 30 percent buffer for unforeseen costs in mass transit projects, as the state has done, could leave huge chunks of money on the table, Reed fears, forfeiting part of the chance to transform Atlanta transportation.

“We want to be fiscally conservative, but that basically removes almost a third of the overall dollars,” Reed said.

Johns Creek Mayor Mike Bodker questioned why the state suggested setting aside 20 years of operating costs from the regional tax, when there are or should be other sources of funding for operating projects. MARTA CEO Beverly Scott added, “I can just tell you right off the bat I’m counting over a billion dollars worth of, candidly I would tell you, unnecessary [operating and maintenance costs built in].”

Georgia Regional Transportation Authority officials said it was up to the roundtable what to include on their list.

In Denver, the consequences of missteps go beyond embarrassment. For the third year in a row, the RTD has postponed holding the referendum for an extra tax: Polling showed the risk of failure was too great.

Count Jim Banich, a Denver-area high school math teacher, among those who’d vote it down.

Banich proudly supported FasTracks in the 2004 election, as well as an earlier 1999 highway and rail construction initiative. He wanted to show “we’re no longer a cow town,” to relieve general congestion on the freeway, and to alleviate pollution.

He doesn’t regret it, but he’s done.

“They’ve already asked for and received, and they’ve mismanaged it,” said Banich. “I take offense to the suggestion of, oh well, we’ll just tax you again.”

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Lessons from Denver

Denver’s transit agency reported on FasTracks’ “lessons learned,” as did other officials. This is Atlanta’s take.

Predicting tax revenue

• Even putting the later recession aside, FasTracks' forecasting method was simplistic and gave an aggressive result, according to Patty Silverstein, an economist who led a postmortem of the problems. She noted that hindsight is 20-20 and FasTracks' method had been used before.
• For the Atlanta region's forecasts of $7.2 billion over 10 years ($6.1 billion of that goes to the list of significant regional projects), state economist Kenneth Heaghney tried to factor in fluctuations that Denver originally missed, according to Silverstein, like how people's spending changes over time.