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December 2nd, 2013 By German Lopez | News | Posted In: News, City Council, Mayor, Streetcar

Federal Government Restricts Streetcar Grants

Money put on hold pending City Council decision on project

election_streetcaressay_juliehillIllustration: Julie Hill

Federal grants for the $132.8 million streetcar project are on hold until City Council votes to continue the project, according to a Dec. 2 email from the Federal Transit Administration (FTA) to Cincinnati officials.

The decision means Cincinnati can no longer tap into $44.9 million in federal grants until Mayor John Cranley and a majority of the newly sworn-in City Council, both of which have shown opposition to the streetcar project, agree to continue with ongoing construction.

“As per our telephone conversation, early last week, the Administrator decided to restrict further access to the Federal project funds until the FTA received an affirmative signal from the city’s newly elected officials that the city intends to proceed with the project on the agreed-upon schedule,” wrote Marisol Simon, FTA regional administrator in Chicago. “This measure was taken to protect the taxpayer funds not yet drawn down by the city from being subject to a potential debt collection action.”

The FTA’s decision shows Cranley and other streetcar opponents were in the wrong when they insisted they could lobby the federal government to reallocate the money to other projects, such as the interchange at Interstate 71 and Martin Luther King Drive.

But the consequence should come as little surprise to elected officials.

In two letters to former Mayor Mark Mallory and a phone conference with City Council, federal officials warned the city they would pull the funding if the streetcar project were canceled.

The news comes on the same day City Council plans to vote to pause the streetcar project as the costs of cancellation are weighed against the costs of continuing.

It also comes two days after streetcar builder CAF USA warned the city of substantial costs that would be incurred if the streetcar project were canceled.

Even if council only pauses the project, Streetcar Project Executive John Deatrick says the path forward is unknown because it’s unclear how the city will fund costs associated with a pause.

The costs would presumably come out of the projects contingency fund, according to Deatrick, but pulling money out of the contingency fund for a delay or pause changes the scope of the project and could face federal resistance.

On Nov. 21, Deatrick said the costs of canceling the $132.8 million 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.

 
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