Mayor John Cranley and a majority of City Council appear ready to halt Cincinnati’s $132.8 million streetcar project on Dec. 4 — and voters might not get a final say if council ends up canceling the project after further reviewing the costs to do so.
In front of council are 11 ordinances totaling $1.25 million that would stop contracts tied to the streetcar project while the city hires expert consultants to review the costs of continuing or suspending the project.
“I think cancellation is what we should do,” Cranley said at the Dec. 2 council meeting. “But a majority of council wants to pause and ask questions.”
One immediate concern for supporters of the project: Because the ordinances appropriate funds, they are not susceptible to referendum.
Cranley repeatedly touted the “people’s sacred right of referendum” in opposition to the parking privatization plan while on the campaign trail, but he now argues the city shouldn’t be forced to continue spending on the streetcar project until voters make a final decision in November 2014, as would be required under a traditional referendum.
Cranley encouraged streetcar supporters to instead push a ballot initiative that doesn’t require the city to continue funding the project.
Councilman P.G. Sittenfeld, who supported a referendum on the parking plan, argued Cranley’s position was hypocritical.
“I don’t want to have the voters’ voice suppressed,” he said.
Sittenfeld on Nov. 26 announced that he’s voting to continue the streetcar project. He asked, “Are we going to have tens of millions of dollars of wasted money or something to show for it?”
In response to the concerns, Councilwoman Yvette Simpson, a streetcar supporter, said she will have her staff draw up a motion to place the streetcar project on the ballot.
But Councilman Chris Seelbach, who also supports the streetcar, countered that the ballot initiative would not matter if the project is paused and the federal government decides to effectively kill the streetcar by taking back $44.9 million in federal grants that are funding one-third of the project’s costs.
The project already suffered from the loss of $52 million in federal funding cut by Gov. John Kasich in 2011.
Simpson questioned whether the ordinances allocated enough money to pause the project. Messer Construction, Prus Construction and Delta Railroad (MPD) estimate they’ll need $590,000 to suspend work for a month. The ordinance halting MPD’s contract allocates only $100,000.
On top of the $1.25 million — or $1.74 million, if MPD’s estimate is counted — allocated to pause the project, the suspension would also force the city to pay for unemployment insurance as construction companies lay off 200 workers involved in the project. Streetcar Project Executive John Deatrick estimates that will cost $419,000 if workers are kept unemployed for a month.
So the city could pay nearly $2.16 million to pause the project for a month. In comparison, Deatrick says one month of construction would cost the city $3 million.
The pause costs would also come from the contingency fund for the streetcar project, according to Deatrick. The $7.4 million contingency fund is already counted as part of the $132.8 million project, but it could go unspent if the project continues without complications.
Deatrick on Nov. 21 warned the costs of canceling the streetcar project could nearly reach the costs of completion after accounting for $32.8 million in estimated sunk costs through November, a potential range of $30.6-$47.6 million in close-out costs and up to $44.9 million in federal grant money that would be lost if the project were terminated.
Supporters of the streetcar project argue it’s necessary to spur economic development along the planned 3.6-mile loop in Over-the-Rhine and downtown. A 2007 study from consulting firm HDR, which was later validated by the University of Cincinnati, found the project would generate a 2.7-to-1 return on investment over 35 years.
Opponents argue the project is far too expensive and the wrong priority for Cincinnati.
“I believe the progress of Cincinnati is going to continue,” Cranley said. “Our future is bullish and bright in downtown and Over-the-Rhine with or without the streetcar.”
A majority of City Council expects to vote in favor of the ordinances at its Dec. 4 meeting. Council members who oppose the project plan to use the time-out to weigh the costs of cancellation versus the costs of completion.
Other streetcar news:
• Just like it warned on three previous occasions in the past six months, the Federal Transit Administration froze $44.9 million in federal grants for the streetcar project until the city decides to continue the project. The decision shows Cranley and other streetcar opponents were clearly in the wrong when they claimed they could lobby the federal government to re-appropriate the federal funds.
• In an email to city officials, the Haile U.S. Bank Foundation plainly stated that the streetcar project’s cancellation “will definitely cause us to pause and reconsider whether the City can be a trusted partner” and endanger contributions to the carousel in Smale Riverfront Park, the shared-use kitchen at Findlay Market and the renovations of the Globe Building and Music Hall. The email also offered to pay for a study that would evaluate the costs of the streetcar project going forward, but Cranley and a majority of council showed resistance to the idea. ©