Streetcar advocates convinced Atlanta to build a streetcar based on the supposed ability of streetcars to stimulate economic development. This is, in fact, a giant hoax perpetrated on taxpayers by engineering firms eager to get contracts to design and build rail lines.
The streetcar hoax began in my former hometown of Portland, Ore. Portland opened its first light‐rail line for business in 1986 and immediately rezoned all the areas near light‐rail stations for redevelopment.
Ten years later, planners sadly reported to the City Council that “we have not seen any of the kind of development that we would’ve liked to have seen” along the rail route. City Commissioner Charles Hales noted, “We are in the hottest real‐estate market in the country,” yet planning maps revealed that “most of the sites” along the light‐rail line “are still vacant.”
Hales persuaded the City Council to give hundreds of millions of dollars of subsidies to developers who built along the light‐rail line. Those developers, in turn, happily financed Hales’ next re‐election campaign.
In 1998, Hales proposed a downtown streetcar line and hundreds of millions of dollars of subsidies to development along that line as well. Subsidies included construction of parking garages to attract businesses such as Whole Foods.
After the streetcar line opened in 2001, the city gave tours to planners and elected officials from other cities around the country, bragging that the streetcar stimulated all the new development — and never mentioning the subsidies or the parking garages.
Hales himself quit his City Council seat mid‐term so he could take a high‐paying job with a consulting firm telling other cities that if they built streetcars they would get economic development. He and other consultants persuaded Atlanta, Cincinnati, Dallas, Tucson and many other cities to waste money on streetcars.
The reality is that streetcars don’t generate economic development. At best, they give cities an excuse to subsidize the development after they have subsidized the streetcar. No subsidies, no development.
It may be too late to stop construction of the Atlanta streetcar. But taxpayers should beware that the city is likely to throw good money after bad by subsidizing developers along the streetcar route.
This would then lead to calls to extend the streetcar line based on the imaginary development benefits, calls that should be resisted as a complete waste.