Pioneering a New Way to Pay for Trail Building in Rural America

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Athens, Ohio, has ambitious plans to build 88 miles of singletrack in three years. To make it happen, they’re eyeing a new funding model that could make it easier to bring recreation to rural America. 

Athens County in Southeastern Ohio could very well become Appalachia’s next mountain biking hub. At the heart of that potential lies the Baileys Mountain Bike Trail System, a proposed 88-mile network of singletrack that will weave through 9,000 acres of the Wayne National Forest. Few public roads bisect the Baileys tract, so for trail builders, it’s essentially a blank slate of forest. Athens (population 24,688), a college town and the county seat, is only six miles from the village of Chauncey, where the main trailhead will be located. Approximately 35 million potential trail users live within a 250-mile radius of the trail’s planned location. The Athens Bicycle Club has a strong local following and stewardship history. And the U.S. Forest Service is one of the trail system’s biggest advocates and supporters. 

Athens has already received grant funding to build the first 14 miles of the Baileys, which are nearly completed. But trail construction for the entire 88 miles is expected to cost $5.2 million.

That’s a lot of money for any community to spend on recreation, especially for a county like Athens that has historically relied on resource extraction to fuel its economy. Salt, clay, coal, timber, oil, and gas have all been harvested from its hills and hollers since the early 19th century, and more than 1,200 wells remain active in the forest for oil and natural gas extraction. To find the money for the trails, Athens city council members and county commissioners are exploring a new funding model that could set a precedent for how trail projects are financed nationwide. 

The model is called Pay for Success. It’s similar to a loan, except that repayment is tied directly to the success or failure of the project the loan is funding. And the financial risk falls not on the borrower but on the lender, who is only repaid if the project results in certain measurable outcomes. Once a project has been completed, an evaluator assesses its impact. In the best-case scenario, a successful project allows an investor to recover their investment and even make a small profit. The model originated in the United Kingdom as a funding solution for a new program that strives to reduce reoffending rates among recently incarcerated men. Pay for Success crossed the pond to the United States in 2012, and has since helped jump-start a number of social programs, including the Obama Administration’s My Brother’s Keeper initiative, which expands opportunities for at-risk youth and young men of color. But it is a new concept when it comes to building infrastructure for outdoor recreation.

In the case of the Baileys, the Pay for Success financing would funnel money provided by investors, likely foundations or corporations committed to social causes, to the Outdoor Recreation Council of Appalachia (ORCA) to build all 88 miles of trail. Once the trail system is completed and its economic impact assessed, ORCA will repay that investment through contributions from the city and county. As more mountain bikers visit Athens and stay overnight, both the city’s and county’s transient guest tax and sales tax are projected to increase, which will help both governments offset their repayment. If the trails don’t bring more tourist dollars to Athens, the investors will bear the cost. 

On December 9th, Athens City Council unanimously voted to commit to repaying potential investors anywhere from $1.2 to $1.8 million over the next 20 years. The final amount will be determined by how successful the trail network is in attracting bikers and boosting economic growth.  

Meanwhile, Athens County Commissioners are still discussing the concept and are expected to vote on a similar ordinance soon that would commit them to repaying the same amount as the city. Grants and matching partner dollars will underwrite the remaining construction costs. 

This idea of paying outright for large scale trail systems is a relatively new concept to the industry. Some communities have gotten lucky with funding major trail projects. Philanthropic contributions from the Walton Family Foundation put Bentonville, Arkansas, on the mountain biking map in just a few short years. Minnesota’s Iron Range Resources and Rehabilitation Board (IRRRB) has invested millions into building mountain bike trails on abandoned iron ore mines. In Minnesota, the hefty upfront investment allowed 15 crews to construct 42 miles of trail this summer alone, says Jeremy Wimpey, principal and lead project manager of Applied Trails Research. Wimpey currently oversees the construction of the trails in Minnesota and at the Baileys. 

But generally speaking, most larger trail systems are built one grant and a few miles at a time. That can make it hard for communities to realize the tangible economic benefits that trails can bring, says Seth Brown, director of capital firm Quantified Ventures, which specializes in outcomes-based funding like Pay for Success, and lead financing advisor for the Baileys. For outdoor recreation, the Pay for Success model hinges on a theory that an 88-mile trail system built in three years will see earlier and more impactful economic returns than the same network built over a longer time period. 

“You don’t build a highway two miles at a time,” says Peter Kotses, an at-large city council member and owner of the bike shop Athens Bicycle.  “We need to start thinking about our recreation assets in the same manner.”

The Baileys could bring more than 181,000 visitors a year to Athens, according to market research conducted by Quantified Ventures. In 10 years, that could equate to $7.3 million in increased tax revenue and $20.1 million in increased tourist spending. That’s just the tip of the iceberg when it comes to potential economic impact, says Danny Twilley, assistant professor of Parks, Recreation and Leisure Studies at Ohio University. Twilley says trail systems like the Baileys also have the power to attract new families and businesses looking to relocate and generate small businesses locally. While that all sounds promising, those are projections, not guarantees—and that’s exactly the concern some people in Athens have with Pay for Success funding.

“I think it’s a very specialized interest project that doesn’t necessarily benefit all of the citizens of Athens,” said Patrick McGee, an at-large city council member. 

McGee was not alone in his skepticism. Before the December 9 vote, other members of Athens City Council expressed concern about the trail’s realistic ability to generate local revenue, spending taxpayer dollars on recreation, and the potential gentrification of communities like the village of Chauncey. Yet the collective voice of those advocating for the Baileys was impossible to ignore. City council received more than 100 letters of support for the project, Kotses says.

“Some people want a clear path, a straight arrow in this, and there’s not one,” Twilley says. Pay for Success funding “is new, it’s different, and it’s a pilot. Is there some risk? Sure. Are you taking a chance? Yeah. But what else is going to work? What else is coming down the pike? If it’s not [Pay for Success], then what else?” 

Now, Athens County Commissioners will need to vote on whether or not to join Athens City Council in committing the same $1.8 million to the construction of the trails. If county commissioners approve Pay for Success funding, the search to find the Baileys’ investors begins. Goldman Sachs and the Rockefeller Foundation have backed other Pay for Success projects elsewhere in the country, but no official investor has been announced for the Athens trails. Once investors are in place, phase two of trail construction can begin as early as spring 2020, with the goal of completing the Baileys by the end of 2021. 

“We’re not going to solve everything with this series of trails, but this is the best, most cost-effective way to basically inject a new sense of community and a new sense of pride into a region that has kinda given up,” Kostes says. “It’s big, it’s impactful, but it’s creating these ripples. It’s like a big rock we’ve just thrown into the water. We don’t know if this can be replicated. To be continued.”

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