An Update on Transportation at the CoreNet Education Forum

At the CoreNet Education Forum on August 20, three speakers – State Senator Brandon Beach (R-21); Keith Parker, General Manager/CEO of MARTA; and Chris Tomlinson, Executive Director of the Georgia State Road and Toll Authority (GRTA) – discussed Georgia’s transportation funding, MARTA’s financial turnaround, and the GRTA’s plans for reversible toll lanes.

Georgia’s Transportation Funding

The state of Georgia has the tenth largest road system in the U.S. Much of the funding for that system comes from motor fuel taxes. These taxes—which include federal, state excise, and prepaid sales taxes—add up to 34.7 cents per gallon in total effective transportation taxes.

According to Sen. Beach, Georgia receives less funding per gallon for transportation improvements than other states. In fact, Georgia has the lowest transportation motor fuel tax among surrounding southeastern states. Florida takes in 54.42 cents per gallon for transportation, for example, while North Carolina takes in 55.15 cents.

Moreover, many of these states have additional sources of revenue and do not have to depend on federal funds for new projects like Georgia does. Georgia will receive 55 percent ($1.2 billion) of its transportation funding from the U.S. government in 2015. Sen. Beach suggested that this dependency makes it difficult to start and complete new projects because so many federal requirements must be met and procedures followed before and during the entire effort.

Fortunately, the Transportation Funding Act of 2015 has alleviated the GDOT’s funding woes somewhat. The act raises the state sales tax on motor fuels from 19.3 cents to 26 cents per gallon of gasoline and 29 cents per gallon of diesel. The act also imposes a new, annual user fee on electric vehicles; eliminates the $5,000 tax credit for electric cars; repeals the sales tax exemption on purchases of jet fuel; imposes a $5-per-night, statewide hotel-motel tax; and levies a “heavy impact” road-user fee on trucks. These changes will raise approximately $830 million for the GDOT in 2016 and as much as $1 billion in 2019.

MARTA’s Turnaround

As the economy recovers, MARTA’s future has brightened. Historically, MARTA has not enjoyed the strong public support that some other cities have for their transit systems, Parker noted. Many Atlantans believe MARTA to be unsafe, yet the transit system is actually among the safest and most secure large transit systems in the country.

The Great Recession took a toll on MARTA, forcing the agency to raise fares and cut service, contributing to a decline in ridership. MARTA was operating on a deficit—one that eventually ballooned to $33 million.

When Parker joined the beleaguered agency in 2012, he went to work on improving employee morale and balancing MARTA’s budget. Under his stewardship, MARTA’s deficit has turned into a $9 million surplus, thanks to new policies and a reorganization of processes. In the current fiscal year, MARTA is on track to add $17 million to its reserves.

MARTA has a tremendous impact on Georgia’s economy and generates more than $2 billion a year in economic activity, Parker reported. Now, thanks to its financial turnaround, MARTA can increase that impact. Last May, MARTA undertook its first major expansion in a decade by adding more rail service and bus service. Ridership has increased for 12 of the last 16 months. The agency has also recouped $2 million through a new program designed to prevent fare evasion.

Now MARTA plans to expand further. Clayton County has added MARTA service, with the first phase launched in March. Four more routes were added in August, and more will be added in December.

MARTA also plans to modernize the airport station and to undertake at least three more transit expansions:

1. I-20 East connecting Atlanta and South DeKalb
2. On the Clifton Corridor, connecting Lindbergh to the CDC and Emory
3. On Georgia 400, extending service northward to Windward Parkway.

Combined, these expansions will require at least $8 billion in transit investment. MARTA’s Board Chair Robbie Ashe is pushing for a half-penny sales tax to raise the local match needed for these expansion projects.

MARTA is advocating for more transit-oriented development in metro-Atlanta. “Transit access is an important amenity,” Parker noted. “MARTA and the real estate community must work together to incentivize transit over the car as a tool to reduce the traffic congestion that will come with new developments.”

The Reversible Toll Lane Trend

The GRTA is doing its part to improve Georgia’s notoriously congested roads by building express toll lanes on some of our busiest highways. The 15.5-mile express lane on I-85 accommodates approximately 24,000 daily trips by drivers with a Peach Pass. More than 320,000 Peach Passes have been issued to commuters who load the pass with a prepaid balance—starting at a minimum of $20—and pay for passage along the lane at a dynamically priced rate based on current congestion levels.

Thanks to the success of the I-85 lane, the GRTA is building three more toll lanes:

1. Along I-75 in south metro-Atlanta, the GRTA is building 12 miles of newly constructed roadway in Henry County, between SR 155/ McDonough Road and SR 138/ Stockbridge Highway. Traffic flow will be adjusted to support special events such as NASCAR races and spring break travel. The lane is slated to open in winter 2017.
2. In the northwest corridor of Atlanta, the GRTA is building 29.7 miles of newly constructed roadway beginning at Akers Mill Road and ending at Hickory Grove Road on I-75 and Sixes Road on I-575. This project will include two barrier-separated lanes along the west side of I-75 from I-285 to the 75-575 split, and one barrier-separated express lane in the median on both I-75 and I-575  from  the  75-575 split. This project is expected to be complete in the spring or summer of 2018.
3. In an extension of the I-85 managed toll lane, the GRTA is constructing 10 miles of new “HOT” (high-occupancy toll) managed lanes. These lanes will start at the end of the existing I-85 express lanes and stretch from Old Peachtree Road to Hamilton Mill Road. A park-and-ride at Hamilton Mill will provide 1,200 parking spaces to commuters. This project is scheduled to open in late 2018.

In the future, the GRTA hopes for increased regional coordination in the efforts to alleviate Georgia’s traffic woes. The agency would like to expand its Xpress bus service for commuters, to expand its park-and-ride facilities for Xpress users, to add Xpress airport service, and to add more managed lanes to metro-Atlanta’s highways.

Will all of these efforts pay off in the form of easier travel in the metro area? Only time will tell. But Georgia’s legislature, MARTA, and the GRTA are hard at work to make that dream a reality.

Blog contributed by Cloteen Jasmin. Cloteen has over 18 years of experience in commercial real estate.  As a former CPA and corporate executive, she developed significant expertise negotiating and closing a broad range of complex office and industrial leases, multi-layered purchase and sale transactions, and big-box build-to-suits.  As a member of Cresa’s Corporate Solutions team, Cloteen represents clients with multiple locations and complex real estate portfolios. She is a licensed attorney and is an active member of the Atlanta chapters of CoreNet Global and CREW.  For more information, she can be reached at 404.446.1562, via email at cjasmin@cresa.com or on Twitter @LeaseAcctgLady.