The down-and-out men wait for the streetcars on Atlanta’s Edgewood Avenue, especially when the weather turns bad. The blue, blocky, two-car trains, installed at a cost of $98 million to revive downtown, have become a de facto rolling homeless shelter.

The 2.7 mile (4 kilometer) Atlanta loop, which turns one this month, is among more than a dozen streetcar projects rolled out in American cities since 2009 and four in the past year. They are the product of cities’ desire for hipper downtowns and a resurgent U.S. streetcar industry, and are paid for with $1.2 billion from President Barack Obama’s economic stimulus program, other federal sources and matching state and local dollars.

While streetcars in Portland, Oregon and Seattle have succeeded -- measured by high ridership and nearby investment -- others have struggled with cost overruns, construction delays, traffic snarls and accidents as drivers adjust to the giant machines gliding down the middle of roads. Seen as starter legs of more expansive systems, the nascent lines fuel criticism that the money should have been spent on existing public transit rather than going to carry people short distances slowly.

“You now have a big hulking transportation technology in the road that can only move backward and forward, can’t get around obstacles and is slower than bus routes streetcars often replace,” said Marc Scribner, a fellow at the free-market Competitive Enterprise Institute in Washington. “It’s transportation mission creep.”

Oregon politicians led the proselytizing. The Portland streetcar had become the nation’s model and a Portland-area company, Oregon Iron Works, was forming a subsidiary specifically to build them. Officials such as U.S. Representative Earl Blumenauer of Portland and Charlie Hales, now mayor of the city, argued that benefits such as “livability” weren’t captured by the strict transit cost-benefit measures the George W. Bush administration used to determine transportation spending.

LaHood’s Portlandia

With the nation in the grips of recession and stimulus money seeking an outlet, former Transportation Secretary Ray LaHood broadened the criteria after meeting with Blumenauer shortly after taking office in January 2009.

“It allowed the innovators and creators, namely the mayors, to do innovative approaches to transportation,” LaHood said in an interview last week. “The Obama administration, through our department, pretty much just said, ‘Go for it.’”

Soon, experienced rail building companies like Siemens AG of Germany; Inekon Group of Czechoslovakia; Construcciones y Auxiliar de Ferrocarriles of Spain were vying for the new federal revenue stream with Oregon Iron Works and a new division of a Pennsylvania mining company, Brookville Equipment Corp.

As projects moved forward, they attracted strong opposition from Tea Party groups, and generated a spate of embarrassments.

In Washington, a $200 million project is nine years late. In Detroit, even the official unveiling of the streetcar’s name had to be delayed. In Charlotte, North Carolina, a runaway streetcar rear-ended a Chevrolet days after its debut. Tampa’s 2.4 mile system ran so short of cash that it doesn’t start operating until almost noon.

“It hasn’t been successful as a transit system,” said Tampa City Councilman Mike Suarez.

Safety Scolding

Atlanta’s four streetcars began running almost a year late, in December 2014, connecting two tourist areas severed by a highway years ago.

It’s been beset by troubles. Electrical maintenance problems forced the city to cut its power during a July rush hour. All four trains were vandalized one night in September, while a guard -- who had forgotten his badge -- sat outside the maintenance yard gate. The system racked up 11 accidents by July and got a safety scolding in September from the Federal Transit Administration. It lost key managers to other jobs and has suffered high turnover in staff.

“There has been a very steep learning curve,” said Wilma Sothern, marketing director for Central Atlanta Progress, a business group backing the streetcar. “The city has never run a transit program before. As we like to say, innovation is messy.”

Sothern and other boosters point to $671 million in investment along the route as proof that it can succeed. However, several projects would have happened regardless, like new dormitories at a nearby university and a mixed-income housing development under way since 2004.

The streetcar has exceeded ridership projections in its first year, attracting almost 700,000 riders by November, in part because it’s free. That’s what made it a magnet for the homeless, which has caused its latest round of bad publicity. On a November weekday afternoon, it carried three French tourists, some college students and seven homeless men sprawled across the seats with their belongings.

Fare Treatment

Homeless ridership could drop when the city starts charging in January, using the honor system and spot enforcement. Melissa Mullinax, a senior adviser to Mayor Kasim Reed said they’ll be welcome if they pay.

The streetcar needs time to mature and about $60 million in new funding to extend it to a popular bike and pedestrian path called the Beltline, Reed said in a November interview.

“The streetcar, which was really a project by my predecessor, was never meant to be a stand-alone line,” he said. “Once we have it running smoothly, and have the right checks and balances with our federal partners, I think the story around the streetcar will turn.”

The Atlanta City Council approved an unfunded plan for 47 more miles of lines last week. The federal government rejected the city’s funding plan for a Beltline extension in October.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE