I’m on record as not being a fan of the very popular TIGER grant program. TIGER is beloved, particularly by transit advocates, for its flexibility; it’s been used to fund a lot of transit projects that weren’t competitive in the standard process. It’s promoted as a “competitive” program by people who don’t really understand how competitive markets work (advancement through failure).
My biggest complaint with TIGER is that the competition it facilitates is a competition among local governments to see who is willing to borrow the most money. The most competitive applications are the ones where multiple partners are willing to borrow significant matching funds, money they generally don’t have.
A timely example of this is the Atlanta streetcar, a TIGER project in the heart of the city that just hosted the Super Bowl. The grant application for this project requested $56 million in federal money—78% of the anticipated project cost—with a local contribution of $16 million of debt split between two partners.
Here’s how the submission described Atlanta’s contribution:
The City of Atlanta has obligated $10 million in local capital funds to support the project through legislation that authorizes issuance of Recovery Zone Economic Development Bonds to provide the required local match.
And here’s how the Downtown Improvement District’s contribution was presented:
ADID has also committed to the issuance of $6 million in capital bonds to provide local match for the streetcar.
For those of you not familiar with municipal finance language, bonds are the way governments borrow money. The entire local contribution is debt.
Of course, the big problem with borrowing money for a major project is that, statistically, the larger the project, the greater the cost overrun. Atlanta was awarded $47 million—$9 million less than requested (which is just good politics at the federal level), but the project ultimately ended up costing just under $100 million. Where did the rest of the money come from? If you guessed a shell game of additional debt, you would be right. Dig a hole deep enough and taxpayers have no choice but to fill it in.
If it ended there, the Atlanta streetcar would be one of countless similar projects. Only it didn’t end there. The streetcar has been so poorly run, and the city so non-responsive to deficiencies, that the state of Georgia has threatened to shut it down. Ridership was projected to be 2,000 passengers per day; it has stalled around 700. The economic development gains public officials stretched to attribute to the streetcar were found to largely be unrelated.
A year ago, the streetcar had a chance to be an integral part of Atlanta’s transportation system when the College Football National Championship was held at Mercedes-Benz stadium in downtown Atlanta. In an embarrassment one would hope would never be repeated, none of the 100,000 visitors to Atlanta were able to use the streetcar because it was shut down, allegedly for security reasons.
“Atlanta’s hoping a lot of these people come back for other reasons after this game. They really want to showcase their city. Well, I mean if you’re proud of your streetcar don’t you want to showcase that, too, since you’re positioning it as an important part of your downtown?” [transportation expert Jeff] Brown asked.
With more than a year between the college championship and the Super Bowl, certainly there would be a different approach to security that wouldn’t impair the city’s transit system in this way. The city committed to running the streetcar for the big game, despite shutting down a $27 million pedestrian bridge—for security reasons—that was built for accessing the stadium. (Note: The pedestrian bridge was open to “VIP” attendees, which is nice.)
So, in a kind of fool-me-twice-shame-on-me sort of way, I was a bit surprised when this announcement went out on Super Bowl weekend:
Due to heavy vehicle & pedestrian traffic, Streetcar service is suspended until further notice.— MARTA (@MARTASERVICE) February 3, 2019
I also learned today that the Atlanta City Council—in what I’m sure many consider a bold commitment to transit—approved a $5 billion expansion plan for the streetcar system. The council formally adopted a Streetcar System Plan back in 2015. Let’s be clear what that means:
Having the SSP means the city can now pursue funding from the Federal Transit Administration's New Starts Program, a competitive grant initiative that provides close to $2 billion per year for transit projects nationwide.
When cities change who they are to respond to federal grant programs, they do a disservice to their people. When they orient themselves to respond to federal and state incentives instead of orienting themselves to respond to the needs of their own residents, they miss countless opportunities to make high-returning investments, the kind that improve people’s lives. When this is the advice of professionals, particularly those compensated to work on these projects, it flirts with the unethical.
I’m not going to definitively say that Atlanta’s streetcar is an irredeemable undertaking. I’m not even going to argue that expanding the system is guaranteed to be a boondoggle. What I am going to say is that the city of Atlanta is not serious about their transit investments. It’s a skin-in-the-game problem, a byproduct of how the projects were funded.
We all need to stop taking our cues from federal and state incentive programs and start focusing on the urgent needs of the people struggling in our communities. Last year, I explained what that approach looks like.
Humbly observe where people in the community struggle.
Ask the question: What is the next smallest thing we can do right now to address that struggle?
Do that thing. Do it right now.
Where our urgent local needs align with a federal or state initiative, then go after that money. A simple test to know something is urgent: you’ll spend your own money on it if the grant money doesn’t come through. If you don’t meet that test, you’re just robbing time and resources from things that urgently need your attention.
And Atlanta, like most North American cities, has a near endless number of things that need urgent attention.