New Orleans — The Loyola Avenue streetcar line began operation Monday in traditional New Orleans style, with the St. Augustine Marching 100 leading two candy-apple-red cars through the Central Business District and onto Canal Street.

U.S. Secretary of Transportation Ray LaHood said the $53 million project, partially funded by a Transportation Investment Generating Economic Recovery grant, has fulfilled its goal by helping to encourage economic development along the Loyola corridor.

“This is a good use of taxpayer dollars,” LaHood said during a ceremony minutes before the first ride on the line.

TIGER grants are designed to fund projects that will result in economic development for areas that surround projects. The Loyola Avenue line received $45 million in federal funds, with $5 million local dollars and about $3 million in bond funds.

“It did precisely what President Obama wanted it to do,” U.S. Rep. Cedric Richmond, D-New Orleans, said of the federal stimulus money.

Some have criticized the location since it runs an eight-block stretch of Loyola Avenue between the Union Passenger Terminal and Canal Street. But officials said that they predict the line will help spur construction on Loyola Avenue, including the South Market District, a residential and retail development planned for the corridor.

“This streetcar line is not just a red box on a rail going to nowhere,” Mayor Mitch Landrieu said. “This line is a pathway to prosperity.”

Until the South Mark project breaks ground, though, there are still those who question just exactly how much use it will get.

Jack Stewart, a street car historian and urban planner, said that the line right now doesn’t provide any logical connections. “It’s not for the person that wants to get to their home from downtown,” he said, noting that right now there is little activity on Loyola Avenue beyond two hotels and a few office buildings.

He also has concerns about the ridership that will use the line since it starts at the UPT, which sees some activity with the Amtrak train and Greyhound bus service arriving there but little more than that.

The project ended several months late and with a price tag that was about $2 million more than anticipated. Patrice Bell Mercadel, a Regional Transit Authority spokeswoman, said weather and some underground obstacles they encountered during work were to blame for the delay and extra cost.

Despite that, RTA officials said they are resolute in their support for the project and future expansions.

The agency is in the design phase of an expansion that will extend the line down North Rampart Street and St. Claude Avenue, ending at Elysian Fields Avenue. That project is expected to break ground in early 2014.

“This is the beginning of a brand-new era of streetcar expansion that will continue the revitalization of a once-dormant corridor,” said Justin Augustine, RTA’s general manager.