Convening in packed City Council chambers on April 29, Cincinnati officials discussed the costs and benefits of the streetcar project in light of a $17.4 million budget gap revealed by the city administration on April 16. City Manager Milton Dohoney Jr. said the project could and should be saved, but a minority of public speakers and some City Council members did not seem convinced.
The City Council meeting included a presentation from Dohoney, comments from public speakers and City Council questions to Dohoney. Despite expectations prior to the meeting, it did not produce specifics for closing the budget gap.
The city planned to release funding options on April 30, but nothing was officially released as of CityBeat’s print deadline, although various local media outlets reported on two different versions of a letter written by Dohoney suggesting several options. (Visit CityBeat’s Politics/Issues blog here for the latest update.)
City spokesperson Meg Olberding told CityBeat she doesn’t know where other media outlets were getting their information.
During the meeting, Dohoney did reveal the price tag for halting the streetcar project: $72 million. According to Dohoney, the project has already cost the city $19.7 million, and the city would have to spend another $14.2 million in close-out costs. Another $38.1 million in federal grants would have to be returned to the federal government.
He added that killing the project would reduce faith in Cincinnati’s competitiveness and ability to take on big development projects.
The budget gap was originally $22.7 million, but the city administration identified $5.3 million in potential cuts.
Dohoney said further cuts would “alter the scope” of the project and push it into a “danger zone.”
The budget gap is a result of construction bids coming in $26 million to $43 million over budget. The lowest bid from Messer Construction, which came in $26 million over budget, has already expired, but Dohoney said the company is still willing to work on the streetcar project.
The city could rework the request for proposal for construction bids, but Dohoney said city officials and third-party experts agreed it’s unlikely that would effectively lower costs.
Throughout the meeting, streetcar opponents argued that the cost of the project is too high and the budget shortfall is proof the program is unsustainable.
Most of Dohoney’s presentation focused on the streetcar’s purpose. He said the streetcar would help drive economic and population growth, generating more tax revenue to help balance the city’s operating budget. That would represent a turnaround for Cincinnati, which has been losing population since the 1950s.
Dohoney’s argument was previously supported by consulting firm HDR, which the city hired to do an economic impact study in 2007. HDR found major benefits to connecting Over-the-Rhine and the Central Business District, including travel cost savings, increased mobility for low-income individuals and economic development that would spur rising property values. The HDR study was entirely supported and echoed by a follow-up assessment from the University of Cincinnati.
Some critics have argued that the study is outdated because it was conducted before Over-the-Rhine’s recent revitalization, but Dohoney said there are still several hundred vacant buildings in the area, particularly north of Liberty Street.
The streetcar project was originally supposed to receive $52 million in federal funds through the state government, but Republican Gov. John Kasich pulled the funds after he unseated Democratic Gov. Ted Strickland.
Beyond the financial cost, Dohoney pointed out Kasich’s decision raised concerns about the project’s feasibility among previous supporters, leading to more hurdles and delays. He said Duke Energy in particular began stalling efforts to move utility lines to accommodate for streetcar tracks because the company grew weary of the project’s prospects.
Duke’s reluctance led to a conflict with the city over who has to pay to move utility lines — a conflict Duke and the city agreed to resolve in court. While the court battles play out, the city set aside $15 million from the Blue Ash Airport deal to move utility lines, but city officials say they’ll get that money back if the courts side with the city.
The city originally expected $31 million in private funding for the streetcar project, but those expectations were dampened as a result of the Great Recession, which forced local companies to scale back private donations.
Opponents of the streetcar have so far put the project on the ballot twice, but Cincinnati voters rejected the referendum efforts. ©