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Halting Progress

Over-the-Rhine businesses and residents fight back as newly elected city government threatens to cancel streetcar project

By German Lopez · November 13th, 2013 · News
news1_streetcar_jf2Photo: Jesse Fox

Over-the-Rhine businesses and residents are organizing with supporters of the $133 million streetcar project in a last-stand effort to stop the newly elected city government from halting construction on the project, which would link Over-the-Rhine and downtown in a 3.6-mile loop.

Within days of voters ushering John Cranley and an anti-streetcar supermajority into City Council, advocates began organizing to consider three possible avenues for keeping the project alive: a campaign to convince newly elected council members and Cranley to support the project before they take office; a referendum, should council pass an ordinance halting the project; and the threat of litigation from local residents and businesses that invested along the streetcar route.

Cranley says voters gave him and council a clear mandate to cancel the project. Speaking to reporters at his home the day after the election, he called for the current city administration and council to halt the project.

“Seriously, look at who got elected yesterday. At some point, this is a democracy. We shouldn’t be agitating voters like this,” Cranley said. “Let’s not keep spending money when it looks like the clear majority and the clear mandate of yesterday’s election was going in a different direction.”

Supporters of the streetcar argue Cranley didn’t receive a mandate because voter turnout was so low at just 28.8 percent. They point out that Cranley’s vote count — 32,716, according to unofficial results from the Hamilton County Board of Elections — was lower than the amount of votes rejecting two previous ballot initiatives that many saw as referendums on the streetcar project. The initiatives in 2009 and 2011 were rejected by voters with 40,288 and 37,462 votes, with voter turnout at 33.1 percent and 37.7 percent, respectively, according to the board of elections.

Now, supporters of the streetcar are preparing to protest the project’s cancellation by any means. Some of the supporters actually live and work along the streetcar route, and they argue their lives and work in the area are evidence of the economic impact that will come if the project is completed.

Jean-Francois Flechet, owner of the restaurant Taste of Belgium, is among Over-the-Rhine business owners and residents speaking out against Cranley’s so-called mandate. Flechet says he would be hit at least three times if the project were canceled: He owns a home at 15th and Race streets and businesses in Findlay Market and the corner of 12th and Vine streets. 

Flechet’s new location on Short Vine, near the University of Cincinnati, will also be affected if the second phase of the project, which would build a line from Over-the-Rhine and downtown to the University of Cincinnati, never comes to fruition. That line was a part of the streetcar’s first phase until Gov. John Kasich pulled $52 million in state-distributed federal funding in 2011. 

For Flechet, the sudden talk of cancellation feels like a broken promise. He says he signed the lease for his location at 12th and Vine streets — virtually on top of the streetcar line — in March 2011, after he was reassured by Mayor Mark Mallory that the project was pushing forward. He also moved his family to 15th and Race streets — also along the planned streetcar route — in June, long after the two anti-streetcar ballot initiatives.

While the streetcar project could personally benefit Flechet, he says it could also have a unique economic impact around the city by establishing a permanent, reliable route — a concept backed by economic studies and other cities’ experiences.

“Once you get the track on the ground, that really means there’s a commitment to the neighborhood,” Flechet says. “You can no longer change route, like a bus can be rerouted. A streetcar, you cannot change it.”

Vik Silberberg, owner of the restaurant Zula, describes a similar position. Silberberg says he signed the lease for his restaurant at the corner of Race and 14th streets in the summer of 2012 — after voters rejected both the ballot initiatives aimed against the streetcar project — with the assumption that the streetcar line would be built at his restaurant’s doorstep.

“The city of Cincinnati for many years has been known to be a very conservative, slow moving and slowly developed city over cities that try to do away with the status quo. In the last decade, we saw that momentum shift,” Silberberg says. “But if we stop (the streetcar project), what’s going to be the next news? What’s going to be the next high point of attraction and growth in downtown and Over-the-Rhine? Nothing. It’s going to stop everything. And it’s going to discourage the next generation of young professionals and students.”

Silberberg isn’t the only one who’s concerned about Over-the-Rhine losing momentum. CityBeat contacted six real estate agents involved in Over-the-Rhine and downtown — David Dawson with Sibcy Cline Realtors, Shawn Baker and Michael Teggart with Comey & Shepherd Realtors and Pamela Thomas, Bill Draznik and Doug Spitz with Coldwell Banker West Shell — to discuss any potential trends involving the streetcar project. All but one shared stories about the streetcar playing an influence in customers’ purchasing decisions, and Dawson, Baker, Teggart and Draznik — all self-described supporters of the project — spoke of sudden skepticism and reduced or canceled commitments since the Nov.

5 election.

“I’m very concerned that this week’s events have put a real cloud on the excitement of purchasing a home … in OTR and downtown. The streetcar project has been part of the fabric of these areas, just as have finished projects such as Washington Park and The Banks,” wrote Dawson, who’s also a co-chair of the pro-streetcar group Cincinnatians for Progress, in an email.

Thomas says there’s still too much uncertainty surrounding the project’s cancellation for it to play a major influence. But she says it has previously played a role in customers’ property decisions in Over-the-Rhine and downtown, along with other aspects of the area’s urban revitalization and improved public safety.

Spitz offers a different take: He says the streetcar is “a bonus,” but it’s never been a deal-breaker for his customers. Instead, he claims people tend to move to Over-the-Rhine and downtown for all the other developments in the area.

Supporters of the streetcar, including some of the businesses and residents who purchased or leased property with the project in mind, plan to meet in a town hall-style setting to discuss the project and its future on Nov. 14 at the Mercantile Library. The goal is to launch a meaningful campaign before December, when Cranley and the new council take office, and show enough solidarity to convince incoming council members to reconsider their positions.

“The organization is definitely happening and coalescing right now. It’s not just (Cincinnatians for Progress). It’s essentially bringing any and all stakeholders to the table,” says Derek Bauman, co-chair of Cincinnatians for Progress and a long-time supporter of the streetcar project.

If the concerted lobbying effort doesn’t work, one back-up plan is a referendum on any ordinance that halts work on the streetcar project. Mike Moroski, who lost in his bid for City Council on Nov. 5, was the first to announce he’s preparing to gather petition signatures for a referendum should it become necessary.

Some individuals are also considering legal action against the city should the project be canceled. Ryan Messer lives by Washington Park, near the planned streetcar route, with his husband and 5-year-old son. He bought and renovated the property shortly after the 2011 elections with the expectation that the property’s value would grow and at least break even after the streetcar project was completed.

“Anyone in my position would protect their investment. Unfortunately, it comes down to protecting my family,” Messer says.

Local attorney Paul DeMarco says Messer has a case. “There’s absolutely no basis for arguing legally that people who suffer injury in this way have no legal recourse,” he says.

But opponents of the streetcar project say any loss on the investment is part of the risk Messer and others took on when they put money into property along the planned streetcar route.

“Amazed by real estate speculators who complain when it doesn’t pan out exactly as they thought it would,” wrote Cranley spokesperson Jay Kincaid on Nov. 7 on Twitter.

But for Messer, it didn’t feel like total speculation at the time. Messer bought the property on Nov. 28, 2011 — nearly three weeks after voters rejected the second anti-streetcar ballot initiative. After two ballot initiatives upheld the streetcar project, he says it seemed like a sure thing.

“It’s a bait and switch,” Messer says.

Over-the-Rhine residents and businesses aren’t the only ones who could take legal action. Streetcar project executive John Deatrick says the contractors involved in the project would likely sue following cancellation as the city tries to minimize cancellation costs and developers — such as Messer Construction, Prus Construction, Delta Railroad and CAF USA — attempt to maximize what they recoup from the project.

City spokesperson Meg Olberding says the threat of litigation is particularly concerning because legal costs would go to the operating budget, instead of the capital budget currently financing the project. The $2 million in federal grants the city already spent on the project would also need to be repaid through the operating budget, according to Olberding.

The capital budget, which is financed through bonds and other forms of debt, pays for capital projects like the streetcar. The operating budget typically goes toward day-to-day operations, including police, firefighters and human services.

The operating budget has been structurally imbalanced since 2001. If millions in litigation costs and repayments to the federal government are added to it, the city could be forced to cut services or raise taxes.

For their part, three newly elected council members who previously spoke out against the streetcar project are now adding caveats to their opposition. Before making a decision, Councilman P.G. Sittenfeld and incoming council members David Mann and Kevin Flynn told CityBeat they want a full accounting of the costs it would take to cancel the project and its return on investment versus what it would take to keep it on track.

“For me, there are a huge number of unanswered questions, so I think the only thoughtful, fair, cool-headed thing to do is get all the information on the table. Spell out exactly what it would look like to unravel the project,” Sittenfeld says. “It’s not just about the balance sheet; it’s also about what is the return of investment. I will take that into consideration as well.”

As of September, the city spent $23 million on the project and contractually obligated $94 million to developers. Deatrick says developers will officially bill about $1.5 million a month as the project moves forward.

But it remains unclear how much of the $94 million in contractual obligations the city will actually owe if it cancels the project. In many cases, the obligations reflect supply orders and other expenses contractors and subcontractors already took on but haven’t officially billed to the city. If the project were canceled, city officials say the already-spent money would need to be paid back, along with extra costs to close the project — to repave torn-up streets, for example.

Canceling could also involve giving up nearly $45 million in federal funding. Although Cranley says he will work with federal officials to re-appropriate the money, a June 19 letter from the U.S. Department of Transportation stated that the city would need to give back nearly $41 million of the overall funding if the project were canceled.

For streetcar supporters, the cancellation costs pose a crucial question: How much would the city be willing to take on in dollar terms to cancel the project, given that it will get nothing out of cancellation but at least produce a streetcar line, with a potential return on investment, if it completes the project?

For Cranley and other opponents of the streetcar, the problem isn’t just how much it will cost to complete the project; the issue is also how much it will cost to operate the streetcar — previously estimated at $3-$4 million a year — once it’s completed.

Supporters of the streetcar have some empirical evidence to argue the operating cost and initial investment are worth it. They point to a 2007 study from consulting firm HDR, which was evaluated and supported by the University of Cincinnati, that found the streetcar would generate a 2.7-to-1 return on investment over 35 years.

As project executive, Deatrick acknowledges the study is outdated and the city is working to update the numbers after six years of obstacles and changes. But he says the goal of the streetcar project, beyond providing another transit option, is to spur economic development.

Cranley previously stated the study is also outdated because Over-the-Rhine went through its own revitalization — without the streetcar — since 2007. That, he says, is proof the project wasn’t necessary in the first place.

But the HDR study actually found most of the property value growth would occur downtown, not in Over-the-Rhine, particularly for residential spaces.

Bauman says Cranley and council also need to consider the intangible costs, particularly to Cincinnati’s reputation and image, if the project were canceled.

“I don’t know if you can really put a number on it. Whatever the number is, it’s big,” Bauman says.

Bauman points to some of the recent attention Cincinnati received following the election, including a Wall Street Journal article that highlighted the incoming city administration’s intent to cancel the streetcar project and a national urban development blog that categorized Cincinnati’s culture as one of “self-sabotage.” Bauman says this kind of negative press is exactly what Cincinnati doesn’t need right now.

Sittenfeld argues that Cincinnati’s momentum is self-sustainable — to the point that canceling the streetcar project wouldn’t stop the nationally recognized trend.

“I’m pretty bullish about the city’s national image and about a renaissance continuing to unfold no matter what,” he says. “The streetcar figures into the conversation, but it’s not the whole conversation.”

Whether that’s true remains to be seen. For now, it’s clear the battle for the streetcar has reached its latest twist — and some supporters are taking it personally as their investments are threatened.

 “We are making huge progress, but we have got to finish the work,” Messer says. “We’re on the tipping point. This is what can set us back.” ©

CONTACT GERMAN LOPEZ: glopez@citybeat.com or @germanrlopez



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