Beltline Rail II: Funding Public Transit and the Beltline

_{This is Part II of IV of the Georgia State Law Review’s series analyzing the legal, political, and social debates surrounding Beltline rail in Atlanta, Georgia. To read the first part, Setting the Scene—Nimbys and Yimbys Take on Atlanta, click here.}

Part II

A.   Beltline Funding

Before we discuss Beltline rail, we must first look at how Atlanta mass transit and the Beltline itself are funded. The Beltline has three major sources of funding: state and federal grants, private philanthropic dollars, and taxing districts like the Beltline Tax Allocation District (Beltline TAD) and Beltline Special Service District (Beltline SSD).^[1] The Beltline TAD is the oldest and largest individual funding source for the Beltline; it was formed after a 2005 deal between the City of Atlanta, Fulton County, and Atlanta Public Schools.^[2]

To start a TAD, a government entity (such as the City of Atlanta or Fulton County) agrees to forgo increased property tax revenues in a particular area to pool the funds for infrastructure projects in the area.^[3] The main advantage of a TAD is that its controlling entity can issue bonds to fund capital projects, dedicating the expected increase in property tax revenue to pay off said bonds.^[4] In recent years, the Beltline TAD, affecting all property surrounding the Beltline, has contributed roughly 40% of the Beltline’s budget—about $61.4 million annually.^[5] In the 2024 fiscal year, the Beltline operated with a $153.5 million budget, its largest ever.^[6]

Another parallel tax district, the Beltline SSD, levies a slightly higher property tax on commercial and multi-family building owners on the Beltline to further fund the actual completion of the trail.^[7] The Atlanta City Council created the Beltline SSD in March 2021, and it is projected to raise $100 million by 2030.^[8] It specifically funds land acquisition, trail infrastructure design, and trail construction.^[9] In contrast, TAD funding contributes to almost every Beltline project.^[10]

B.   Light Rail Funding

Now that we have introduced the Beltline and the funding mechanisms that helped build the landscaped walking path to its current state, we can turn our attention to how the Beltline and the City of Atlanta plan to fund the proposed light-rail system.

Although local funds can help jumpstart public transit projects, federal money can push them to fruition. For example, the Federal Transit Administration (FTA) is the primary funding sources for MARTA’s Bus Rapid Transit (BRT) initiatives—the only project from the 2016 More MARTA referendum that has broken ground.^[11] The FTA has borne the primary financial burden of local transit projects since the 1960s, investing more than $20 billion across the county annually to build and enhance public transportation projects.^[12] The Atlanta region alone expects close to $44 billion in federal transportation funding between 2024 and 2050.^[13] Congress authorizes FTA spending with both short-term and long-term transportation legislation such as the 2021 Infrastructure Investment and Jobs Act (IIJA).^[14] Currently, the FTA has several funding opportunities to infuse federal dollars into More MARTA projects, including three under the Capital Investment Grants (CIG) banner, and others under the Reconnecting Communities and Neighborhoods Grant Program.^[15]

One such CIG program, Small Starts, is designed primarily for BRT and is limited to projects expected to cost less than $400 million in total, with a maximum of $150 million in federal funds available.^[16] BRT projects have rapidly gained popularity in the United States, Atlanta included.^[17] MARTA is currently constructing the Summerhill BRT line and is finishing design and engineering work for the Campbellton Corridor BRT in South Atlanta and South Lake BRT in Clayton County with hopes of increasing ridership.^[18] The FTA’s New Starts program, another CIG program, is available for projects if the cost is equal to or over $400 million or that are seeking at least $150 million in CIG funds.^[19] The IIJA also includes other grants such as the Reconnecting Communities and Neighborhoods program, designed to reconnect disadvantaged communities divided by infrastructure projects—primarily interstate highways—built during the 20th century.^[20] In fact, the Reconnecting Communities and Neighborhoods program has already provided two grants to the City of Atlanta since its creation: almost $158 million to construct “the Stitch”—the aforementioned highway‑capping project over the Downtown Connecter between Pine Street and Ivan Allen Jr. Boulevard—and $50 million for the Beltline expansion in South Atlanta.^[21]

The wide-ranging availability of federal funding sources raises an important question: Why has MARTA not applied for federal funding for the Eastside Streetcar extension to Ponce De Leon? While visiting Atlanta to promote the not yet passed IIJA in 2021, U.S. Secretary of Transportation Pete Buttigieg toured the Beltline to learn about its progress and the proposed light-rail loop around the trail.^[22] However, this was not Buttigieg’s first time hearing about the Beltline. In fact, Georgia Senator Jon Ossoff had recently pressed him to provide more federal funding for transit improvements on the Beltline and in Atlanta’s core counties.^[23] Senator Ossoff asked Secretary Buttigieg if he would commit to supporting a “comprehensive plan to strengthen and expand MARTA service.”^[24] Secretary Buttigieg told Senator Ossoff that he “absolutely would.”^[25] Moreover, all of this occurred after Buttigieg specifically mentioned Beltline rail as the “kind of project that could benefit from Biden’s plan.”^[26]

Given Secretary Buttigieg’s apparent belief that the Beltline should leverage federal funds, MARTA’s resistance raises even more questions when considering its requests for the FTA funds on other projects. MARTA has been active—and successful—in recent applications for Small Start CIG Grants for both the Campbellton Road and Clayton-Southlake BRTs—projected to cost $319.5 million and $355.6 million, respectively.^[27] For the latter, CIG awarded the maximum $150 million in federal funds.^[28] The Eastside Streetcar extension is projected to cost $230 million in total—less than both projects—and would have been eligible for the Small Starts program had MARTA chosen to apply.^[29]

One possibility for why MARTA opted not to apply stands out. With only 13.2% of all Small Starts grants going to non-BRT projects, the FTA has become increasingly uncomfortable funding smaller-scale fixed-rail projects instead of more agile and affordable BRT systems.^[30] If MARTA has reason to suspect the FTA does not believe the Eastside Streetcar extension is worth federal investment and might face possible rejection, then a bigger question must be raised: Is rail on the Beltline even an effective use of More MARTA sales tax funding?^[31]

Granted, MARTA may have logical reasons for not applying for FTA grants to help fund the Eastside Streetcar. Although federal dollars can infuse momentum into a state or local project, the application process itself takes years and is costly.^[32] Small Starts and New Starts also present somewhat onerous federal oversight and a laundry list of reporting conditions, which can add to the time needed to complete a project.^[33] Although its exact motivations remain unclear, MARTA could simply want complete local control over a project as sensitive as Beltline rail, and in exchange, is willing to fully fund it with local tax dollars to achieve that objective at the cost of delayed public transit progress for its citizens.

With that choice, MARTA is purposefully forgoing a monumental amount of potential federal funding which could allow the construction of Beltline rail to move faster. Foundationally, the FTA is allowed to fund up to 80% of the federal capital costs, including expenditures for services such as planning, engineering, and construction of a transit expansion project.^[34] The FTA rarely meets this funding ceiling; most CIG programs only receiving around 50% of total capital costs.^[35] Nonetheless, MARTA is leaving money on the table.

Finally, with the $230 million in Eastside Streetcar funding coming from MARTA’s own account, it should be inquired whether it would be a better investment for MARTA to reorient from Beltline transit to projects elsewhere in the city that may receive more federal funding.^[36] Assuming the FTA awards these other projects a 50% funding share, MARTA could build two projects of the same total cost of the Streetcar or a single $460 million project. For example, MARTA could use the funding currently earmarked for the Eastside Streetcar on accelerating Northside Drive BRT and North Avenue BRT, two cancelled projects from the original More MARTA proposal.^[37]

Further imagining an unlikely scenario where the FTA awarded these projects the theoretical maximum of an 80% funding share, MARTA could even apply through the New Starts program to turn the $230 million already budgeted into a total planning and construction budget of $1.15 billion. Similarly, MARTA could apply for multiple smaller projects under the Small Starts program, which would still multiply MARTA’s available funding immensely. Financial questions like this, among other factors, have created a factional wedge between Atlanta’s transit advocates and city leaders on how transit on the Beltline should move forward.^[38]

C.   Politics at Play

Issues of financial transparency, particularly, stand out following the 2016 More MARTA referendum.^[39] When almost three out of four Atlanta voters agreed to a half-penny sales tax for the ambitious More MARTA expansion that year,^[40] then MARTA CEO, Jeffery Parker, wrote that this plan was “a signal moment that promises to fundamentally redefine how people move around Atlanta—and beyond.”^[41] Despite good-minded intention to provide Atlantans with more transportation options, these plans have not come to fruition. According to a schedule released at the March 2023 Atlanta City Council Transportation Committee meeting, MARTA plans to complete just nine projects by 2028.^[42] The Streetcar extension is the only upcoming MARTA project involving rail.^[43] While these nine remaining projects are nonetheless progress, it is not what Atlantans championed at the ballots in 2016; the original More MARTA referendum promised to deliver seventy transit expansion projects as opposed to less than ten currently planned.^[44] Unfortunately for Atlanta transit riders, this cut made financial sense: MARTA projected the half-penny sales tax would raise $2.7 billion over the next forty years^[45] but predicted the seventy original projects would cost $12 billion.^[46]

Moreover, as of 2023, MARTA has spent over 45% of the $394.8 million ($180.7 million) collected thus far from the More MARTA sales tax on bus operations and enhancements, leaving less tax-payer money for the promised transit expansion projects.^[47] This amount is quickly approaching the $238 million (or 10%) cap that MARTA previously projected would be spent on bus enhancements over the entire life of the tax that sunsets in 2032, which is still eight years away.^[48] In the previously mentioned March 2023 Transportation Committee meeting, several City Council members questioned MARTA on how it was spending this transit-expansion money and whether the scaled back plans would cause the public to lose trust after almost a decade since the funding referendum.^[49] Current MARTA CEO, Collie Greenwood, said it was time to “rip the band-aid off” in clarifying that the scaled back plans were inevitable and that the Mayor’s Office was on board with the change in plans.^[50] Challenging the agency leader for more clarity, District Two Councilperson Amir Farokhi countered straight to the point: Under this reduced project list, is the current transit expansion plan compelling enough to meet voter’s expectations?^[51]

More chaos ensued when city officials began criticizing the disruption caused by MARTA for choosing to use millions of dollars to rehabilitate Five Points Station in Downtown Atlanta.^[52] MARTA CEO Greenwood and Mayor Andre Dickens spent the summer of 2024 publicly at odds with each other as Mayor Dickens continued to question MARTA’s stewardship of More MARTA funds.^[53] In June, Greenwood openly rejected the Mayor’s call to halt construction on Five Points Station in wake of an ongoing audit of the More MARTA sales tax funds.^[54] In public statements accompanying a June 6th open letter to MARTA, Mayor Dickens stated that “calculation errors found in the audit could force MARTA to repay tens of millions of dollars” to the More MARTA expansion program.^[55] Choosing to act independently of the mayor’s wishes, Greenwood responded in his own June 10th letter that the agency believed in the current plan, appreciated Mayor Dicken’s concerns, but was still moving forward amidst the audit of More MARTA funds.^[56]

The release of the August audit was damning. Third-party auditing firm Mauldin & Jenkins, hired by the Atlanta City Council, found MARTA owed “Atlanta taxpayers as much as $70 million after overcharging” the More MARTA program.^[57] MARTA responded by saying the “calculations are wrong.”^[58]

The Atlanta City Council took issue with the audit as well. The Atlanta City Council President, Doug Shipman, found MARTA’s lack of “documentation and institutional knowledge” on the issue “extremely troubling.”^[59] Tempers flared into September, as Greenwood “snub[bed]” the Atlanta City Council and did not attend the council’s Finance Executive Committee to answer questions about More MARTA.^[60] In a rather cold letter to Shipman the night before the meeting, Greenwood made his stance plain: MARTA’s governing agreement with the city identifies the mayor as their negotiating counterpart—not the council.^[61]

As things stand, this is the current state of funding for public transit in Atlanta. The Atlanta City Council, the mayor, and MARTA have yet to find common ground on how More MARTA funds should be spent and how much of Atlantans’ tax dollars are actually available. Federal funding is also available, and MARTA should leverage it regardless of the project. But how Atlanta moves forward will depend on the leadership of local officials in response to these ongoing, behind-the-scenes issues.