As an attorney and lobbyist at Keating, Muething & Klekamp (KMK), mayoral candidate John Cranley helped payroll company Paycor finalize plans to move its headquarters — and 450 to 500 jobs with it — from Queensgate in Cincinnati to Norwood, Ohio.
Specifically, KMK helped Paycor and Norwood set up a tax credit deal to incentivize the company’s relocation. Throughout the
process, the law firm called on several of its employees, including
Cranley, to help with the negotiations.
For Paycor, the move comes after more than two decades in Cincinnati. The company originally looked in Cincinnati for bigger headquarters with better parking options, but ultimately couldn’t find a location to its liking, according to a May 2012 memo from the city manager. So when Paycor found a location outside city limits and worked out a tax incentive package with Norwood and Ohio, it decided to move.
Cities and states often deploy incentive packages, ranging from property tax abatements to deductions on income taxes, to attract and retain companies. Pure Romance, a $100-million-plus “relationship enhancement” company, recently agreed to move from Loveland, Ohio, to downtown Cincinnati after securing such a tax deal with the city.
Paycor broke ground on its new headquarters in December and plans to move there next spring. The transition will pull 450 to 500 employees out of Cincinnati, and the company plans to add another 250 to 300 employees over time at its new facilities.
Cranley campaign manager Jay Kincaid says Cranley and KMK won’t comment on the details of their work with Paycor or other clients for ethical reasons. But Kincaid says Cranley was just doing his job after Paycor went to KMK, not the other way around.
“In the legal profession you’re asked to represent clients, and you do it to the best of your ability,” Kincaid says. “At the time I don’t think (Cranley) was even running for office. The firm came to him and said, ‘Hey, we have a job that we need you to work on.’ And he did the work, just like anyone else would at their job.”
Norwood City Council approved the deal with Paycor on Oct. 23, 2012. Cranley announced his mayoral campaign three weeks later, on Nov. 14.
Cranley’s critics argue that a mayoral candidate shouldn’t be helping companies leave the city he wants to lead.
“It is disappointing that John (Cranley) helped Paycor leave the city with its over 450 tax-paying jobs. His efforts undercut the city’s efforts to retain jobs and businesses,” said Vice Mayor Roxanne Qualls, who is running against Cranley, in an emailed statement.
The move comes despite Cincinnati’s various attempts to hang on to Paycor, including previous tax deals. In 2001, then-Councilman Cranley and the rest of City Council approved tax incentives to keep the company in Cincinnati, retain its 142 jobs at the time and create another 25. The city administration estimated the deal would cost the city $225,750 and generate $546,000 in net tax revenue over five years.
In 2006, Cranley and seven council members approved another incentive package to further secure Paycor’s stay in Cincinnati.
But the deals also required Paycor to remain in Cincinnati through 2015. Since Paycor’s move violates the agreement, the city administration says it plans to claw back some of the tax benefits given to the company.
In other words, Cranley in 2001 and 2006 approved tax deals with Paycor that the company, with his help, is now set to break.
City spokesperson Meg Olberding says the clawback process will begin after Paycor moves to Norwood in 2014. So if Cranley is elected by voters on Nov. 5, he would be mayor as the city is taking back some of the money it gave away.
Although the city is taking a hit, Cranley’s relations with the payroll company appear unscathed. Paycor CEO Bob Coughlin contributed $1,100 to Cranley’s campaign on Aug. 20, according to campaign finance reports.
Updated with more details about the tax deals between Cincinnati and Paycor.
Cincinnati’s streetcar project lost big on Tuesday as voters ushered in ex-Councilman John Cranley over Vice Mayor Roxanne Qualls in the mayoral race and three non-incumbents who oppose the project to City Council, according to unofficial election results from the Hamilton County Board of Elections.
With all precincts reporting, Cranley handily defeated Qualls 58-42 percent. Cranley ran largely on his opposition to the $133 million streetcar, while Qualls promised to expand the project.
Voters also elected three non-incumbents to City Council: Democrat David Mann, Charterite Kevin Flynn and Republican Amy Murray. The three non-incumbents oppose the streetcar project, which means re-elected Democrat P.G. Sittenfeld, Republican Charlie Winburn and Independent Chris Smitherman are now part of a 6-3 majority on council that opposes the project.Democrats Chris Seelbach, Yvette Simpson and Wendell Young — all supporters of the streetcar project — also won re-election. Incumbent Democrats Laure Quinlivan and Pam Thomas lost.
It’s unclear if the newly elected council and mayor will stop current construction on the streetcar once they take power in December, given concerns about contractual obligations and sunk costs that could make canceling the project costly in terms of dollars and Cincinnati’s business reputation.
But Cranley and the six anti-streetcar elects on City Council vested much of their campaigns on their opposition to the project, which they claim is too costly and the wrong priority for Cincinnati.
Supporters argue the project will produce a three-to-one return on investment — an estimate derived from a 2007 study from consulting firm HDR and a follow-up assessment to the HDR study from the University of Cincinnati.
City Council’s new make-up will be five Democrats, two Republicans, one Charterite and one Independent. That’s a shift from the current make-up of seven Democrats, one Republican and one Independent.
The new council slate will be the first to take up four-year terms following a city charter amendment voters approved in 2012.
Sittenfeld also landed a huge win and easily topped the City Council race with 10,000 more votes than Winburn, who, at 27,000 votes, got the second most ballots cast in his favor out of the nine council victors. Sittenfeld netted nearly 5,000 more votes than Cranley did in the mayoral race, although Cranley ran in a head-to-head race with Qualls while Sittenfeld was one of nine candidates voters could pick out of a pool of 21.
Citywide voter turnout ended up at roughly 28 percent.
Other election results:
Cincinnati voters rejected Issue 4, which would have privatized Cincinnati’s pension system for city employees, in a 78-22 percent vote.
In the Cincinnati Public Schools board election, Melanie Bates, Ericka Copeland-Dansby, Elisa Hoffman and Daniel Minera won the four seats up for grabs.
Hamilton County voters overwhelmingly approved property tax levies for the Cincinnati Zoo and Public Library of Cincinnati and Hamilton County in 80-20 percent votes.
This story was updated with the final reported results.
For better or worse, Cincinnati will have to deal with another major election cycle for City Council and the mayor’s office in 2013. With four-year terms for City Council recently approved by voters, the 2013 election could play one of the most pivotal, long-term roles in Cincinnati’s electoral history.
But what most people know about the candidates and issues
is typically given through small fragments of information provided by
media outlets. At CityBeat, we do our best to give the full context of
every story, but just once, we decided to give the candidates a chance
to speak for themselves through a question-and-answer format. (Update: Since this article was published, CityBeat interviewed Democratic mayoral candidate Roxanne Qualls for another Q&A here.)
First up, mayoral candidate John Cranley, a former Democratic council member, has been one of the most outspoken critics of the recently announced parking plan (“City Manager Proposes Parking, Economic Development Plan,” issue of Feb. 20) and the Cincinnati streetcar (“Back on the Ballot,” issue of Jan. 23) in his mayoral campaign against fellow Democrat Vice Mayor Roxanne Qualls. CityBeat talked with Cranley about these issues and how they relate to the campaign to get his full take, all in his own words. The conversation (with some edits for readability) is below.
CityBeat: I know your campaign kick-off was last night. How did that go? Did it have good turnout?
John Cranley: It was awesome. We had over 300 people there. Very diverse crowd. It was just great.
CB: How do you feel about the campaign in general? It’s pretty early, but how do you feel about the local support you’ve been getting?
JC: It’s been overwhelming. People are rallying behind my progressive vision, and trying to stop privatization of parking meters to Wall Street. And trying to get focus back on neighborhoods, balance, equity, basic services for everyone, special attention to those in need and broad opportunities for the working poor. I think people are very excited for that message, and I’m finding support in every neighborhood of town.
CB: I noticed that a theme of your campaign is helping out neighborhoods by spreading the funding not just to downtown, but neighborhoods as well. Are you hoping to build support from those areas?
JC: I’m for fairness. I think that right now you have a disproportionate amount of money — $26 million over budget on the streetcar, yet they’re still proceeding with it — and the neighborhoods are forgotten about. But I want to see downtown flourish too, so it’s not like I’m one or the other. I want the whole city to do better. But I think there needs to be equity and balance.
CB: You just think the playing field isn’t leveled right now?
JC: Absolutely not. Right now they’re trying to raise parking meters in neighborhoods to build luxury apartments in downtown. If that doesn’t show you their values are out of whack, I don’t know what does.
CB: Speaking on that, the latest news is the city manager’s parking proposal, which he calls a “public-public partnership” that will boost economic development. What are your thoughts on it?
JC: The PR campaign that they’ve been putting out
is very deceptive and willfully so. This is not a public plan; this is
privatization to a Wall Street company. The only elements that matter to
city control are control over rates and control over enforcement. The
city has said repeatedly, dishonestly, that the city will maintain
control over rates and enforcement, but neither one of those statements
The rates are guaranteed to go up 3 percent a year for 30
years on a compounded basis. Prior to the recent increases in parking
rates, the city hadn’t raised rates in 10 or 15 years. Right now, the
elected officials — we live in a democracy, for now. Right now, City
Council decides to raise rates, lower rates, maintain rates. If there’s a
recession in the future, City Council can choose to reduce parking
rates. There might be certain neighborhoods where you want to charge
different rates over others depending on economic demographics of those
areas. Right now, we have complete flexibility to change those rates.
This plan gives Wall Street the right to raise rates by 3 percent every
single year for 30 years.
Not to mention due process concerns. What happens if you
don’t believe you were late back to your meter? Who do you appeal to?
You appeal to this company from Wall Street, who has a financial
incentive to make you pay.
[Editor's Note: Meg Olberding, city spokesperson, told CityBeat the rate
increase cap could be circumvented, but the decision would have to be unanimously
approved by a board with four members appointed by the Port of Greater Cincinnati Development Authority
and one selected by the city manager, then affirmed by the city manager, then get a final nod from the Port Authority. The 3-percent rate increase is
also not automatic, and the Port Authority could decide to not
take it up every year.
On that point, how is it that there are public hearings next week and they haven’t released any of the contracts or documents for this transaction? They are going on a Power Point presentation, which is their talking points. Everyone is writing it as if it’s fact, yet the contract and the details haven’t even been released.
Roxanne is calling public hearings and expecting people to weigh in on a 30-year decision before the details are released to the public. How cynical is that?
CB: We might not know the details right now, but you think that shows a lack of transparency?
JC: Of course. I hope you guys will editorialize about that and stand up against privatizing and outsourcing the city to Wall Street.
CB: In the past, you and I talked about the next phase of the Smale Riverfront Park not having funding, which you pinned on the streetcar taking tax revenue that could be used for it. I couldn’t help but notice that it’s one of the things funded in the city manager’s parking proposal. Do you see that as evidence to your claim?
JC: Well, of course. They don’t have funding for the Riverfront Park. That’s why they’re selling the city’s parking meters.
The bigger issue is it’s just fundamentally wrong to take an asset that is a recurring revenue stream for 30 years and try to monetize it today at the expense of the future generations. It’s giving Roxanne the ability to try to buy votes by playing Santa Claus before the election at the expense of the next generation.
CB: Another part of the plan is it’s expanding hours. Do you think that might hurt nightlife in Downtown?
JC: Of course it’s going to hurt restaurants, nightlife and the Cincinnati Reds, not to mention the neighborhoods — Hyde Park, Mount Lookout, Clifton. They’re going to pay higher meters so they can pay off their friends to build luxury apartments in downtown. The equity of this is awful.
CB: Would you be willing to bring up a referendum on this deal?
JC: Absolutely. It’s such a selling-out of the city on a long-term basis, but I think the people should have the final say.
CB: I want to move onto the streetcar. Even for supporters of the streetcar, the delays are unnerving. The latest news is these construction requests came way over budget and they might cause more delays. How do you feel about it?
JC: It’s what we’ve been saying for a long time. A lot of people’s reputations have been attacked for having said that this thing would be over budget. I think a lot of people, including Roxanne, need to fess up that they’ve been misleading the public about this deal for years.
But the real issue is it’s $26 million over budget, it’s the tip of the iceberg, and it’s going to get worse. And Roxanne is continuing to spend money on the streetcar. She’s continuing to move forward. She still says she wants to get it done by the (2015 Major League Baseball) All-Star Game. She still says that she wants to pay for future phases. So it doesn’t really matter, from Roxanne’s standpoint, if it’s $26 million over budget. I think it’s too expensive, we can’t afford it, we shouldn’t be raising property taxes, etc. We should stop now and we should try to get our money back.
CB: One of the issues you’ve told me you have with the streetcar before is a lack of transparency. Do you think that’s catching up to the city in these budget surprises?
JC: Of course the lack of transparency is catching up to them. Not only is it the right thing to do what you’re doing with their money and government; it’s always the right way to manage money. When you hide problems, it always leads to greater expense later.
CB: We’ve thoroughly covered what you’re against. What positive visions do you have for the city and neighborhoods?
JC: I have lots. On my website, JohnCranley.com,
I have my 10-point plan, which goes in great deal over my positive plan
for the city. We need to focus on jobs and opportunities for the
future. We need to partner with the venture capital and university
entrepreneurship efforts in the city, and I’ll do everything in my power
to help that. We need to work to improve our schools; what we need to
do is get communities involved to adopt under-performing inner-city
schools to improve the standards and opportunities. Third, we need to
adopt my plan to reprogram existing federal dollars into job training
and job opportunities to put people to work in building city’s
infrastructure projects now. Those are probably the three major ones.
The good thing about Cincinnati is we have momentum, which is great. But we’re not getting better fast enough.
Update: This story was updated with comment from the city manager’s office to clarify how the parking plan’s rate cap will work and Guggenheim's role.
City Solicitor John Curp and Ohio Ethics Commission Executive Director Paul Nick said in an Oct. 22 email exchange that it was OK for Vice Mayor Roxanne Qualls to retain her job as a realtor and vote in support of the streetcar project, even though the project could indirectly benefit Qualls by increasing property values — and therefore her compensation as a realtor — along the route.
The email exchange was provided to CityBeat and other media outlets after mayoral candidate John Cranley criticized Qualls, who is also running for mayor, for the alleged conflict of interest at an Oct. 22 press conference.
Curp stated in an email to Nick that Qualls’ potential gains from the streetcar project are too speculative and indirect to present a conflict of interest or ethical violation because the real estate sales are “arms-length transactions between private parties” with a flat 1 to 2 percent fee.
Nick’s emailed response cited two previous Ohio Ethics Commission opinions to support Curp’s analysis.
“It would be unreasonable to hold that lawyers, accountants, insurance agents, and other professionals have an interest in the contracts of their business clients. In general, such professionals are not deemed to be interested in the business dealings of a client, merely because they receive fees for professional services,” according to a February 1986 opinion.
The opinion then clarifies that ethics violations must be directly tied to a project. For example, an insurance agent on City Council would violate ethics law if he or she voted on a construction contract in which his or her insurance agency is charged with handling bond sales for the contract in some way.
Curp also noted that Qualls had asked about the potential conflict of interest on “a minimum of two prior occasions.”
Nick told CityBeat in a phone interview that it’s normal for city officials to go through city solicitors before going to the Ohio Ethics Commission with an ethical question. If the city solicitor and commission agree a formal analysis isn’t necessary, the situation is resolved with brief guidance.
For Cranley, the concerns suggest a contradiction to his previously touted beliefs about the streetcar.
Supporters of the streetcar project, including Qualls,
often tout potential property value increases and the economic gains
they would bring to Cincinnati as a reason to back the project. The economic gains were supported by studies from consulting firm HDR and the University of Cincinnati, which found the streetcar would produce a three-to-one return on investment in Over-the-Rhine and downtown.
Critics, including Cranley, say such property value increases are overblown to falsely justify what they call a “pet project.”
But if the property values never materialize, Qualls isn’t financially benefiting in the way Cranley’s campaign described.
Independent mayoral candidate Sandra “Queen” Noble sent an F-bomb-laden email to mayoral debate organizers and Libertarian Jim Berns quit the race in protest of news that two mayoral debates hosted by The Cincinnati Enquirer and WCPO will take place after the primary election.
Under the current primary system, multiple mayoral candidates are allowed to run. But come Sept. 10, voters will select the top two contenders in a primary. Those frontrunners will then face off in a final election on Nov. 5 to pick who will take over City Hall on Dec. 1.
Noble, who’s known for being eccentric and running for public office multiple times but never being elected, began the chain of events with an explicit email.
“Fuck you man. The two motherfuckers burn,” Noble wrote in a July 30 email to mayoral debate organizers. “Queen Noble is being robbed of the elections thanks to motherfucker such as yourself seeing the future and shit. The fuck you mean debate after the election robbing primary. It's a rip off for the incumbents in it self (sic). Dirty motherfuckers are backed by dirty motherfuckers cheating the public out the best candidates so fuck you and the primary election. Queen Noble will debate now asshole.”
Berns replied in his own July 30 email, “Queen Noble is right. The September 10th Top Two Primary's only purpose is to cheat the public out of the best candidates for Mayor of Cincinnati.”
Today, Berns announced he’s withdrawing from the race in protest of the primary.
The criticism isn’t new to local politics. Berns has been vocally critical of the primary process ever since the mayoral campaigns, media outlets and other interested parties began meeting early in the year to set up the debates.
Supporters of the primary system say it helps narrow down the field so voters can better evaluate and scrutinize the frontrunners. Some also claim it positively extends the electoral process, so voters are forced to think about their choice for mayor from the primary in September to the election in November.
Berns argues the primary system favors establishment candidates, especially when media outlets fail to cover campaign events and debates prior to the primary vote. He also says the $350,000 to $400,000 it costs the city to hold the primary is a waste of money, and voters should instead choose from a full pool of candidates in November.
The criticisms are further accentuated by how media outlets cover the election, which affects how the public and organizations that endorse candidates learn about them. It’s rare a media outlet or local organization wants to
host a debate, especially a televised debate, before the primary, and
it’s even rarer the debate involves more than the two expected
But that gives the most publicity to those who lead the race from the start. Not only do the top two contenders get to participate in a televised debate, but media outlets also tend to give much more coverage to the candidates they know are going to appear on television.
This year, the expected contenders are Vice Mayor Roxanne Qualls and ex-Councilman John Cranley, two Democrats. Both have said they support the primary system, although Cranley has stated he supports moving the date so it coincides with countywide or statewide elections earlier in the year.
Cincinnati has directly elected its mayors since 2001. Since then, the primary system has been necessary twice. The other mayoral elections involved only two candidates.
Until 2001, the mayor was the City Council candidate who got the most votes.
Former Democratic city council member John Cranley is kicking off his 2013 mayoral campaign by getting involved in budget talks. In a public hearing at City Hall last week, Cranley tried to provide an alternative to privatizing the city’s parking assets, which City Manager Milton Dohoney has suggested to pay for $21 million of the city’s $34 million deficit.
“It’s not the citizen’s job to balance the budget, but let me make it very easy for you,” Cranley said. “You have $12 million in casino money that can be used but is currently being used on pet projects, like street sculptures. The parking meters themselves produce $7 million a year. That’s $19 million. And $5 million for garbage cans. That’s $24 million. You only need ($21 million) to cancel the parking privatization plan, so I got you $3 extra million to spare.”
In short, Cranley's alternative to parking privatization is using $12 million from casino revenue, $7 million from keeping parking meters under city ownership and $5 million saved from not purchasing trash carts.
So how viable are Cranley’s ideas? In a memo, Dohoney’s
office responded. The memo points out that casino revenue is currently
estimated at $7.2 million, not $12 million, and $1.3 million is already
included in the budget for Focus 52, a neighborhood redevelopment project. That leaves casino revenues $6.1 million short of what Cranley proposed.
Regarding parking meters, Dohoney’s office says revenue
from parking meters is restricted to fund “operations and maintenance in
the right-of-way.” The memo says City Council could authorize using the money to plug the deficit, but it would then have to find
alternatives for funding operations and maintenance.
Even the trash cart proposal doesn’t work. Not buying trash carts would only save $4.7 million, not $5 million. And the plan, which is part of the city’s effort to semi-automate trash collection, is in the general capital budget, not the general fund operating budget that’s being debated. The memo concludes, “If the trash carts are not purchased, the funds would not be available to close the gap because this is a capital budget expenditure and resources supporting the capital budget cannot be used in the operating budget.”
In other words, Cranley’s “very easy” budget plan isn’t just difficult; it’s a mix of inadequate and impossible. If CityBeat was PolitiFact, Cranley’s suggestions would probably get him a “Pants on Fire” label.
For better or worse, Cincinnati will have
to deal with
another major election cycle in 2013. With a few hot-button issues
already grabbing the public spotlight, a lot could be at stake when
voters pull the lever on Nov. 5 — making a proper understanding of the
candidates all the more important.
Most people get to know candidates through fragments of information spread out in multiple stories and media outlets, but a comprehensive question-and-answer format provides candidates with a chance to speak on their own terms. CityBeat already did a one-on-one with Democratic mayoral candidate John Cranley, which can be read here.
Next up, CityBeat sat down with Vice Mayor Roxanne Qualls, another Democrat who is running for mayor, to discuss her campaign and what ideas she’s bringing to the table. Qualls has been a strong advocate of the streetcar (“Back on the Ballot,” issue of Jan. 23) and parking plan (“Parking Stimulus,” issue of Feb. 27), and she says she wants to continue development in Downtown and Cincinnati’s neighborhoods to create sustainable growth. We asked her about those issues and more, and the extensive conversation (with some edits for clarity and brevity) can be read below.
CityBeat: How do you feel about the campaign in general so far?
Roxanne Qualls: I’m very excited about the campaign. You know, a mayor’s race is very different than a council race. A mayor’s race has many more components to it: higher fundraising goals and more intensive outreach. I’ve been very encouraged by the folks who are volunteering and those who are stepping up and making contributions. It’s still early, but I’ve been excited.
CB: What kind of support have you seen so far?
RQ: Support is good. A lot of neighborhood folks are coming forward, partly because of the work I’ve been doing with them on council to help them achieve their own visions for their communities and neighborhoods. And I’m also getting support from different groups of people who I’ve been working for a number of years on major projects that help move the city and also the neighborhoods forward.
CB: Before we get into parking and the streetcar, one of the resolutions passed by City Council yesterday asked Congress to pass comprehensive immigration reform. Do you think there’s anything the city could do to be more inviting to immigrants?
RQ: Even though it was a resolution and is therefore a symbolic act of the council, that symbolic act was very, very important to the members of the immigrant community in Cincinnati because many other communities are unwilling to say they even want immigrants.
My own personal and professional belief is that if we’re actually going to grow as a city and really thrive in the future in a sustainable way, we have to encourage immigrants to come into the city of Cincinnati. If you look around the country at cities that have increased their population significantly, they don’t do it relying on baby boomers moving back to the city and Gen Y-ers — those folks are important, but they’re not sufficient. You have to have immigrants come into your community, buy up homes, buy up stores and regenerate and rejuvenate the neighborhoods.
As a city that went from over 500,000 people to now under 300,000, we have to fill that gap. When I’m mayor, I will set a goal that by 2025 we will increase our population by 100,000 people. We’re only going to do that with immigrants.
CB: So what kind of programs do you think would help in that area?
RQ: A couple things, but there are things already happening that many people are unaware of. For example, if you were to go to Roberts Paideia at Price Hill, you would find 30 percent of the children there were not speaking English in their households before attending school. So a very strong Spanish-speaking community is growing up in Price Hill. First and foremost, having an educational system that recognizes and responds is very important.
The other thing is to be a very welcoming community, particularly when it comes to issues of safety and security. We’re very fortunate that District 3 has become very responsive, as is District 4, to immigrants. The entire police department is sensitive, but we have a very high concentration of folks who are Latinos in District 3 — that’s why I focused on District 3 as very critical in terms of the response.
The third thing that we need to do is work with organizations like the Hispanic Chamber of Commerce and Chinese Chamber of Commerce to really strengthen business relations and the support that’s necessary for many of the small businesses that provide opportunities and employment within those communities. As the city develops its small business program, we need to pay attention to the fact that very small businesses — under $100,000, let’s say, in terms of annual volume — are those businesses that really are neighborhood-serving. They’re businesses we should be encouraging within the immigrant community.
CB: One of the surprising statistics with public safety is that a very small amount of the police force — 2 out of 981 — speaks Spanish. Do you think there’s anything we could do to encourage more Spanish speakers?
RQ: There’s an increasing recognition that it’s important for people who provide services to speak more than one language, so the police department can encourage its members to speak more than English.
But there are other things we can do in general, not just that would impact the police. I’ve been trying to do something as simple as multilingual signage.
The city could also aggressively promote simultaneous translation via its own website and the information it puts out. On my own personal website, one of the things that we use is the Google Translator. So anyone who wants to read anything on the website, all they have to do is press the Google Translator and have it translate to any language.
CB: The other thing that was covered in City Council yesterday was the parking plan. You supported it. What do you think it will do for the city?
RQ: There are a couple things it’s going to do. Simply on the level of parking, it’s going to provide the resources to modernize the system. For the garages, that means all the capital improvements that are necessary. For the meters, that’s everything everybody has heard about in terms of putting in electronic meters, allowing the use of smartphone apps, making it much more convenient for people and giving us the ability as technology evolves over time to adapt. For example, we shouldn’t assume that 30 years from now there will be such things as meters in existence. We need to be able to adapt in that environment. Already in other countries, you don’t have meters, but you do have sensors and you do have means of paying, but it doesn’t involve a physical object to do it with. It’s all oriented toward customer service and staying up with the times.
The second thing is it gives us the resources to invest in things like the MLK/I-71 Interchange, which everybody, I believe, at this point agrees is a major economic development investment and will pay off in significant job growth in the medical-university area of uptown.
It also allows us to invest in some critical pieces of downtown development that involve garages and residential development that will help us capture the market. I think if you read all the papers, everybody should realize that there’s no available product to meet the demand for downtown housing. Any time something comes into the market, it is either rented out or sold out. So we need to bring residential online at a much faster pace in Downtown.
And we get to increase our reserves, so that the rating agencies will be encouraged that we’re taking steps to ensure that we can responsibly manage our budget. And for the moment, for fiscal year 2014, it will help us reduce the deficit.
So there’s, one, modernization itself and, two, the ability to invest in opportunities over the long term that will grow our revenues and help us become more sustainable as a city.
CB: With the modernization part, do you think it’s necessary to make this deal because the city can’t otherwise afford to make improvements?
RQ: If you look at the money that comes into the current parking system and look at the needs of the parking system, the current parking system can’t support the level of investment required for modernization. By doing this lease agreement, those upgrades can occur.
CB: On the deficit-reduction side, how do you think the city will solve its structural deficit once the one-time money does run out?
RQ: In fiscal year 2014, obviously a portion of the money is there to help balance the budget. Other members of council and I feel very strongly that this, starting now, is the opportunity to bring the structural deficit under control. Between June 2013 and July 2014, we need to put in place a deficit reduction plan.
Now, the city manager has begun to talk about some of that, but that needs to be accelerated. Among the things that we need to do to make it a realistic possibility is we need to bring certain players to the table: the folks who represent our collective bargaining units, fire, police and AFSCME (American Federation of State, County and Municipal Employees). They have as much of an interest in figuring out how to deal with this issue as I do as an elected official, as the city manager does, as anybody does. So they really need to be at the table, talking — not in negotiations, but just talking — about how we’re going to begin to approach this in a way that ensures what we all want, which is a safe community that provides good quality jobs, great quality service and great quality of life.
The other people that can come to the table is the business community because they can bring their expertise, help and resources, but also the civic community and neighborhoods who are the ones who live and breathe the effects of anything that we do.
The other thing is that we already can begin to identify certain areas that we should be exploring. Something very simple, for example, is one of the major expense items is gas. We are buying new vehicles for the police department that are better for gas mileage, but we’re not doing that fast enough.
CB: Do you think any of the deficit reduction could involve attrition?
RQ: The bottom line for either police and fire is there are minimal service levels. For police, how many of the officers are actually available for the street? For the fire department, how do you make sure that the response time is within acceptable parameters and that the consequence of falling below a certain level isn’t such extensive brownouts that you end up endangering people’s lives?
My own personal feeling is there’s a lot of professional judgment that needs to be involved in this discussion and decision. I would be incredibly hesitant to fall below the minimum staffing levels without the support of Police Chief James Craig or Fire Chief Richard Braun.
CB: How do you feel about the controversy surrounding the emergency clause?
RQ: I think it’s nothing but a political controversy that’s generated for political gain and for political purposes. Council passes many of its ordinances with emergency clauses. In fact, the other candidate for mayor himself consistently voted for emergency clauses.
The emergency clause is necessary so that we can proceed to construct the budget for fiscal year 2014 by July.
CB: So you don’t think the referendum part of the emergency clause could be separated from the part that expedites the process?
RQ: No, because it is going to take until at least June to get everything in place. We would like to move as quickly as possible, so before we actually approve the budget by July 1, we actually have the money to balance it. If that doesn’t happen, the city manager will have to start sending out layoff notices. By law, we would be required to do that because we would not have that money in place.
CB: So not having the money would force Plan B or something like it?
RQ: Yes, a referendum would result in Plan B or something similar. Regardless of whether you want to call it Plan B or Plan Z, people should not be foolish enough to think that there would not be layoffs. You cannot balance a budget deficit of $25 million without personnel reductions.
CB: The other big item in the mayor’s race is the streetcar. I’ve talked to you about this in the past, and you said you will push through the next phase during your mayor’s term. How exactly do you envision that?
RQ: Currently, there are studies that are being undertaken that are looking for alternatives in streetcar circulation in the uptown area.
If we can connect the streetcar into uptown and have it circulate up there, you have it benefiting these institutions and immediately adjoining neighborhoods. One of the greatest pressures in very dense neighborhoods is that we want to take the pressure off of both the streets in terms of the volume of traffic and parking because parking garages are very expensive and consume a lot of land. We can create an environment in the uptown area that would have a great synergy that would result in the redevelopment of these neighborhoods. Once people get that as the vision, I think the streetcar, even for folks who will never use it, becomes more understandable.
CB: One of the recurring problems with the streetcar project has been delays. What would you do as mayor to have the streetcar ready in time for the 2015 Major League Baseball All-Star Game, which you previously said you would like?
RQ: I have said I want it ready in time for the 2015 All-Star Game, but that was before the three construction bids came in much higher than expected. The big issue immediately is how to get those costs under control. We have yet to hear from the administration; they’re still reviewing the bids and approaches to handling the cost issues.
As mayor, my approach to it would be to insist that the administration value engineer this project to ensure that for what is being invested, we are actually getting results that we want.
I am a firm supporter of the streetcar, but I also want people to be very clear that this is not an open checkbook. I don’t think anyone — supporter or opponent — has ever believed it’s an open checkbook. Within the budget that we have given, we should be able to build this system.
CB: What do you mean by value engineering?
RQ: Look at what the actual proposed design is. This is kind of standard in all major projects. You have all the designers and engineers who have put together the original designs for the system. Then what you do is have other eyes who are also experts sit down and start looking at it to ask if there are other things we can do to start saving money.
CB: Do you think the framework of the original bid process was off?
RQ: I think very strongly that it was probably off. We saw that reflected when over 80 contractors downloaded the bid documents and only three bids were received. That says something about those bid documents.
CB: A lot of the mayor’s race has focused on the streetcar and parking deal, but can you give a rundown of some other ideas you have for the city?
RQ: Absolutely. Well, we already talked about one (increasing the population of the city by 100,000). There are a variety of ways to do it — one of which is to be an opening, welcoming city to everybody, but particularly opening and welcoming to immigrants.
The second thing we need to do is look at the tax structure. Currently, there is a commission, which I helped establish, called Investing in the Future Commission, which is examining that and will be making recommendations on specific things that we can do to reward people for making the choice to live and work in the city. That’s very critical.
When looking at job creation, we know that we are very fortunate to have Children’s Hospital, the University of Cincinnati and all of the research coming out of the uptown area. We are very competitive as a region when it comes to patents, but we are laggards when it comes to commercialization of research. Given the institutions we’re blessed to have within city limits, we need to financially support the environments where commercialization can actually occur to make sure we are retaining startup businesses so that they don’t just start here, they stay here. Again, looking at the tax structure would encourage those startups to stay in a way we’re not doing right now.
When you’re looking at neighborhoods, redevelopment of neighborhoods is a critical piece of anybody’s agenda. The good news is we have a lot of good things happening, but neighborhoods need financial support. Part of the $92 million from the parking deal is to provide financial support to some neighborhoods. More importantly, there’s using the casino revenue to actually support transformative developments in neighborhoods. We’ve started to do that, but we have to expand.
Another area is a stronger partnership with the Cincinnati Public Schools (CPS) system. There are many people who like to criticize CPS, but the reality is they have some great-performing schools. We need to make sure that we capitalize on that relationship by working in partnership with CPS to ensure that community learning centers are in enough schools so that any young family with kids has access. Right now, there are about 600 families on the waiting list because there’s not enough room. That’s a specific thing we could be doing right now that would really encourage young families with children to stay in the city.
CB: That covers everything I had to ask. Is there anything you would like to add?
RQ: This election for mayor is about vision, leadership and results. It’s also about looking to the future and saying yes to the future. Lots of decisions will have to be made by the next mayor that will be tough decisions, will require resources and will require investment. Cincinnati needs a mayor that is willing to say yes and work with people and organizations to move the community forward.
Just one month before voters pick nine council members at the ballot box on Nov. 5, 18 of 21 City Council candidates on Oct. 5 participated at a candidate forum that covered issues ranging from better supporting low-income Cincinnatians to expanding downtown's growth to all 52 neighborhoods.
During the event, the candidates agreed Cincinnati is moving forward, but they generally agreed that the city needs to carry its current economic growth from downtown and Over-the-Rhine to all 52 neighborhoods. Participating candidates particularly emphasized public safety and government transparency, while a majority also focused on education partnerships and human services for the poor and homeless, which have been funded below council's goals since 2004.
The three City Council candidates not in attendance were Republican Councilman Charlie Winburn, Independent Councilman Chris Smitherman and Independent challenger Tim Dornbusch. The absences prompted forum moderator Kathy Wilson, who's also a columnist at CityBeat, to remind the audience that "a vote is a precious thing" and candidates should work to earn support by engaging the public.
Councilman Chris Seelbach and challenger David Mann, both Democrats, had surrogates stand in for them. Seelbach was attending a wedding, and Mann was celebrating his 50th wedding anniversary with his family.
Here are the highlights from the 18 participating candidates, in order of their appearance:
Wendell Young (Democrat, incumbent): Young said Cincinnati should put basic services and public safety first, but he added that the city should also help address "quality of life issues" such as providing "world-class parks." He also said Cincinnati needs to structurally balance its budget, which has relied on one-time funding sources since at least 2001, and make further adjustments to the underfunded pension system. Young also explained that the city needs to strengthen its partnerships with local organizations to help combat homelessness, affordable housing, child poverty and infant mortality.
Laure Quinlivan (Democrat, incumbent): Quinlivan proudly pointed out she's the "only elected mom" on City Council. She said her goal is to make Cincinnati "cleaner, greener and smarter" by focusing on population and job growth and thriving neighborhoods. To spur such growth, Quinlivan claimed the city needs the streetcar project and more bike and hike trails, both of which she argued will attract more young adults to Cincinnati. Unlike other candidates, Quinlivan publicly supported potentially "rightsizing" — or cutting — Cincinnati's police and fire departments to structurally balance the budget. She also said the city should provide more options for health insurance to city employees so they don't all get a so-called "Cadillac plan" that's expensive for the city.
P.G. Sittenfeld (Democrat, incumbent): Sittenfeld touted downtown and Over-the-Rhine's turnaround as a model for economic growth that Cincinnati should expand to all neighborhoods. He argued the model is what attracts companies like Pure Romance to Cincinnati, as the company mentioned the city's recent urban growth as one reason it decided to stay here. (Of course, the nearly $699,000 in tax incentives over 10 years probably help as well.) When asked about his opposition to the current streetcar project, Sittenfeld said the current project is fiscally irresponsible because of its previous budget problems, which City Council fixed in June, and reduction in funding from the state government, which forced the city to pick up more of the funding share. Sittenfeld said his past two years on council were a success, but he added, "I'm not done yet."
Amy Murray (Republican and Charterite, challenger): Murray said her campaign is focused on creating a fiscally sound city by structurally balancing the budget and fixing the underfunded pension system. But she said she would do both without increasing taxes, which could force the city to cut services and retirement benefits. When asked about her opposition in 2011 to extending city employee benefits to LGBT spouses, Murray said she never had a problem with extending the benefits to LGBT individuals — which City Council did in 2012 — but was simply acknowledging that providing the extra benefits requires making cuts elsewhere to balance the budget. (Opponents previously said the issue should be about equality and fairness, not costs.)
Vanessa White (Charterite, challenger): White said her main goals are reducing poverty in Cincinnati, providing more education opportunities to residents and expanding citizen access to city officials. When specifying her goals for education, White said Cincinnati needs to do a better job incentivizing internships for youth at local businesses and touted the Cincinnati Preschool Promise, which seeks to expand preschool education opportunities in Cincinnati. To increase transparency and outreach, White said she would assign City Hall staffers to answer citizens' questions after council meetings.
Michelle Dillingham (Democrat, challenger): Dillingham said the role of local government is to spur growth in abandoned areas that have been failed by the private sector. But to successfully do this, she said the city needs to engage and reach out to its citizens more often. As an example, she cited the development of an affordable housing complex in Avondale, which has been snared by sudden public outcry from a neighborhood group. Dillingham said supporting affordable housing is also more than just providing expanded services; she explained that she supports creating more jobs that would provide a living wage, which would then let more locals own or rent a home without exceeding 30 percent of their gross income on housing costs. At the end, Dillingham touted her 10-point plan to give more Cincinnatians "a seat at the table" and make the city government more inclusive.
Mike Moroski (Independent, challenger): Moroski said he intends to focus on growing Cincinnati's population, reducing re-entry into the criminal justice system and lowering child poverty. He also touted support for development projects and infrastructure, including the streetcar project. At the same time, Moroski argued some development in Over-the-Rhine and downtown is pricing low-income people out of the city's booming areas — an issue he would like to address. Moroski also said he backs efforts to increase Cincinnati's human services funding to 1 percent of the operating budget over the next few years. When asked about his lack of government experience, Moroski said he sees it as a "gift" and "blessing" that's given him a fresh, outside perspective. "I will be the voice for the voiceless," he said.
Melissa Wegman (Republican, challenger): Wegman opened by showing off her business credentials and neighborhood advocacy. When asked what she means when she says she'll bring a "business perspective" to council, she said she would like to see the city put more support toward small businesses. In particular, Wegman said underserved neighborhoods need more city help and funding. She also told panelists that she opposes Issue 4, which will appear on the Nov. 5 ballot and would semi-privatize Cincinnati's pension system.
Kevin Flynn (Charterite, challenger): Flynn said Cincinnati's budget problems are by far the most important issues facing the city, but he also trumpeted the local government's lack of transparency and engagement as major issues. He explained he's particularly opposed to the mayor's pocket veto, which allows the mayor to entirely dictate what legislation is voted on by council and potentially block any legislation he or she disagrees with. Flynn said he would like to see more citizen engagement on budget issues and more open debate between council members during public meetings.
Greg Landsman (Democrat and Charterite, challenger): Landsman stated his focus is on population, job and revenue growth, which could help him achieve his goal of a structurally balanced budget. He said the city needs to do more to attract and retain young people. Although Landsman acknowledges the city's progress, he said Cincinnati is undergoing a "tale of two cities" in which some neighborhoods prosper and others flounder. Landsman also suggested increasing human services to 1 percent of the operating budget over the next few years and improving city management in other areas, including the budget, pension system and roads.
Kevin Johnson (Independent, challenger): Johnson said the role of government should be to balance out the private sector and provide a safety net for those who fall through the system. He said the city needs to do more to tackle income inequality by "investing in people." Johnson said he supports recent efforts to create a land bank system for struggling neighborhoods, which aim to increase homeownership by making it more affordable and accessible. Johnson also claimed that people are tired of party politics and would like to see more transparency in government.
David Mann (Democrat and Charterite, challenger), represented by campaign manager John Juech: Speaking for Mann, Juech said his candidate got into the campaign to address Cincinnati's budget problems. Juech explained Mann will leave "all options on the table," whether it's revenue increases or service cuts, to structurally balance the budget. When asked whether Mann, who previously served 18 years on council, really deserves more time in the local government, Juech explained that Mann's experience makes him a "walking Cincinnati historian." He also argued that Mann has great relationships with county officials, particularly Hamilton County Auditor Dusty Rhodes, that could make it easier to jointly manage some city services in a way that would drive down costs.
Yvette Simpson (Democrat and Charterite, incumbent): Simpson said she measures progress in Cincinnati by "how well the least of us do," which drove her to start the Cincinnati Youth Commission and other partnerships that help connect the city's youth to jobs. Although Simpson said she supports boosting funding to human services and building better relationships with human services agencies, she said providing more funding is hindered by a "simple math problem" and the city needs to balance its budget before it can provide more and better services. Simpson also said the city could and should do a better job engaging the public with big ideas.
Chris Seelbach (Democrat, incumbent), represented by legislative director Jon Harmon: Reading a statement from Seelbach, Harmon said Cincinnati is on the rise but still needs to improve in various areas. In particular, he said the city needs to do a better job funding all 52 neighborhoods, providing more opportunities for low-income Cincinnatians and eventually increasing human services funding to 1 percent of the operating budget. Harmon also touted City Council's progress with infrastructure issues, including increased road paving and bridge funding. By addressing these issues and occasionally making "tough choices," Harmon said Seelbach hopes to continue growing the city.
Pam Thomas (Democrat, incumbent): Thomas claimed she wants local government to be open, honest and transparent. She said the city's progress should be gauged through education metrics, particularly local graduation rates and, starting next year, the city's success in meeting state-mandated third-grade reading proficiency standards. Thomas replaced her husband on council after she was appointed by him and other council members earlier in 2013, but Thomas said that, unlike him, she opposes the current streetcar project and parking plan, which would lease the city's parking meters, lots and garages to the Greater Cincinnati Port Authority to fund development projects and help balance the budget.
Shawn Butler (Democrat, challenger): To Butler, progress means reducing income inequality, creating jobs and growing the city's population. Although Butler, who is Mayor Mark Mallory's director of community affairs, said he's generally supportive of the mayor's policies, he said the city could do a better job selling itself and reaching out to the business community. Butler also touted his experience, particularly how he's gone through eight budget cycles during his time with the mayor. To structurally balance the budget, Butler said he wouldn't increase the earnings tax and would instead pursue other options, such as tapping into money from the parking plan and cutting services.
Angela Beamon (Independent, challenger): Beamon said she would ensure city services are spread out to all citizens and neighborhoods. She suggested struggling neighborhoods are underserved — not "underperforming," a term she doesn't adhere to — and the city should do more to reach out to them. Beamon also stood firm on her opposition to the streetcar project. Instead of funding the streetcar, she said city resources should go toward promoting business ownership and services that help the underprivileged.
Sam Malone (Republican, challenger): Malone said his goal is to make all of Cincinnati's neighborhoods thrive with more businesses. He said since he lost his re-election to City Council in 2005, he's managed a small business and learned how it feels to be on the other side of the government-business relationship. Malone said his campaign slogan ("I love everybody, I come in peace") best exemplifies how he's led his life. When asked about a 2005 incident in which he disciplined his son with a belt, Malone claimed he's "running on issues" and his parenting tactics were deemed lawful by a court.
In response to the March 28 announcement that City Manager Milton Dohoney Jr. has begun implementing a plan that will lay off cops and firefighters, mayoral candidate John Cranley released his own budget plan that claims to avoid layoffs and the implementation of the city’s parking plan. But critics say Cranley’s budget is unworkable.
Cranley’s budget uses casino revenue, parking meter revenue and various cuts to raise nearly $33.8 million — more than the $25.8 million necessary to balance the budget without a parking plan.
Cranley’s critics have taken to social media to claim Cranley’s revenue projections are “fantasy.” They also claim the across-the-board budget cuts ignore the city’s priority-driven budgeting process, and there’s no certainty that such broad cuts can be carried out without laying off city employees.
Whether avoiding layoffs is possible through Cranley’s proposal remains unclear, even according to Cranley’s two-page budget plan, which reads, “We need to identify only roughly $26 million to cover the 2014 deficit and will reduce some of these cuts to ensure that there are no layoffs.”
Cranley says there is no certainty that the cuts could be carried out without any layoffs, but he says he would do everything he can to prevent personnel cuts: “I believe that people should take pay cuts. … If I cut the office of the council members’ staff, I can’t force an individual council member not to lay someone off, but I would certainly encourage them to reduce salaries as opposed to layoffs.”
In government budget terms, a 10-percent cut to any department is fairly large — particularly for Cincinnati’s operating budget, which uses 90 percent of its funds on personnel. In comparison, the cuts from the 2013 sequester, the across-the-board federal spending cuts that President Barack Obama and fellow Democrats say will lead to furloughs and layoffs around the nation, ranged between 2 percent and 7.9 percent, depending on the department.
The cuts make up one-third of Cranley’s proposal, while the rest of the money comes from casino and parking meter revenue. For his casino revenue numbers, Cranley cites Horseshoe
Casino General Manager Kevin Kline, who told City Council he
expects the casino to raise $21 million each year, but city officials
have said they only expect $10 million a year.
Cranley insists the extra $11 million will come to fruition. He says, “I would put my track record of being the chairman of the budget committee for eight years, which balanced budgets without layoffs, ahead of the people at the city that estimated the costs of the streetcar.”
Just in case, Cranley says his plan purposely overshoots the $25.8 million deficit to leave some leeway in carrying out cuts. But without the extra $11 million, Cranley’s plan would only raise about $22.8 million — $3 million short of filling the budget gap.
Jon Harmon, legislative director for Councilman Chris Seelbach’s office, says the city and state were originally expecting a lot more revenue from the state’s new casinos, but the legalization of racinos, which enabled racetrack gambling, has pushed revenue projections down.
In February, Ohio’s Office of Budget Management estimated the Horseshoe Casino will raise $75 million in tax revenue for the city, state and schools, down from a 2009 estimate of $111 million, after seeing disappointing returns from Ohio’s already-opened casinos. The local numbers reflect a statewide revision downward: In 2009, the state government estimated Ohio’s casinos would take in $1.9 billion a year, but that projection was changed to $957.7 million a year in February.
Even if Cincinnati’s Horseshoe Casino does much better than the state’s other casinos, the way casino revenue is collected and distributed by the state makes a $21 million windfall unlikely, according to Harmon. Before the state distributes casino revenue to cities, counties and schools based on preset proportions, the money is pooled together, which means all the casinos would have to hit original estimates for Cincinnati to get $21 million — an unlikely scenario, according to Harmon.
The other major revenue source in Cranley’s budget is $5.2 million in parking meter revenue, which the city manager’s office told CityBeat in February is usable for the general fund after months of insisting otherwise. Some of that money is already used in the general fund under current law, but the parking plan would remove that revenue altogether and replace it with new revenue. Cranley says his plan would forgo the parking plan and secure the $5.2 million in the general fund.
Among other cuts, Cranley’s proposal would eliminate some of the money that goes to software licensing. With the way the cut is outlined in Cranley’s two-paged budget proposal, it’s unclear whether it would hit all software licensing or just some of it, but Cranley says his plan is only reducing $531,554 of about $2.6 million, which he says still leaves a $1 million increase over 2012’s software licensing budget.
“I’m telling people what my priorities are: police, fire, parks, recreation, garbage collection, health department (and) human services,” he says. “I believe that elected officials should not be paying consultants from Denver to tell people in Cincinnati what their priorities are. I believe that elected officials should tell the voters what their priorities are.”
Cranley’s comments are critical of the the city’s priority-driven budgeting process, which ranked city programs based on feedback gathered through local surveys and meetings with Cincinnati residents.
With or without the parking plan, Cranley says the city is facing structural deficit problems. He says his plan permanently fixes those issues, while the parking plan would only eliminate the deficit for the next two fiscal years.
Cranley and Libertarian mayoral candidate Jim Berns oppose the city’s parking plan, while Vice Mayor Roxanne Qualls, another Democratic mayoral candidate, supports it.
The parking plan, which was approved by City Council on March 6, would lease the city’s parking assets to the Port of Greater Cincinnati Development Authority to help balance the deficit for the next two fiscal years and fund development projects, including a downtown grocery store (“Parking Stimulus,” issue of Feb. 27).
But the semi-privatization plan is being held up in court. Most recently, Hamilton County Judge Robert Winkler ordered a permanent restraining order on the plan pending a referendum effort. The extended injunction sparked criticism from city officials, who say delays will lead to fiscal and procedural problems.
Voters on Tuesday elected John Cranley to the mayor’s office and six council members — out of nine total — who oppose the streetcar project, giving streetcar opponents enough votes to cancel the project once the new government takes power on Dec. 1.
But, as first reported by CityBeat on Oct. 9, cancellation could carry all sorts of costs with $94 million tied to contractual obligations, including supply orders and other expenses from contractors and subcontractors, and $23 million already sunk on the project.
If the city were to cancel, it would also need to return nearly $41 million in grants to the federal government, according to a June 19 letter from the U.S. Department of Transportation.
Canceling the project would cost jobs as well. About 150 laborers are currently working on the project, according to Deatrick. He says there’s also management positions involved, but he couldn’t offer an estimate for those jobs and whether they’re working on the project full- or part-time.
Deatrick says that it’s difficult to pin down how much cancellation would ultimately cost because the issue would likely be worked through litigation 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.
Another concern, according to Olberding, is cancellation’s impact on the operating budget. She says the roughly $2 million in federal grant money already spent on the project would have to come out of the operating budget, and litigation costs would come from the operating budget as well.
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 and jobs or raise taxes.
There are also concerns about how the federal government and Cincinnati’s business partners would react to the cancellation of such a major project. Vice Mayor Roxanne Qualls, Cranley’s opponent in the mayoral race, previously told CityBeat that pulling back on a commitment could break the faith developers and the feds placed in Cincinnati when they agreed to take on the streetcar project.
Cranley and other anti-streetcar elects argue the long-term costs — the $88 million in the capital budget for the current phase of the project, the cost of future expansion and $3-4 million that it would cost to operate the streetcar annually — outweigh even the costs of cancellation.
Cranley previously told CityBeat that he would help developers involved in the project find other work in the city to recoup the revenue lost from the project’s cancellation. He says Messer and Prus in particular are based in and already work heavily in Cincinnati, so it’s unlikely they would try to cut ties with the city.
Streetcar supporters aren’t convinced. If the city pulls out of such a big commitment, officials argue both the federal government and developers could be compelled to look for a more reliable source for future work.
Meanwhile, Deatrick says current construction work is progressing on time and within budget. He expects the track on Elm Street to be laid down between 12th and Henry streets by the end of the year.
As for the next phase of the project, Deatrick says there’s still no estimated cost. He attributes much of the project’s current political problems to construction bids coming in over budget earlier in the year — a turn of events that led City Council to put another $17.5 million to the streetcar project — so he says the city needs to be really careful with future estimates if it decides to expand the streetcar system.
Despite the fresh political threats, the city still intends to conduct meetings with businesses on Nov. 14 and 18 about the benefits of the streetcar. Deatrick says those meetings should show the economic benefits of the rail line that go beyond the streetcar’s use as a transit network.
Supporters of the streetcar often point to those benefits as their reasoning for backing the project. Citing a 2007 study from consulting firm HDR that was later evaluated and supported by the University of Cincinnati, supporters say the streetcar project would produce a three-to-one return on investment.
Deatrick acknowledges those projections are now outdated, given all the changes the project has gone through since 2007. He says the city has people working on updating the numbers and looking at other economic effects the HDR study may have missed.
But opponents of the streetcar project say it’s simply too expensive and the wrong priority for Cincinnati. Still, the potentially high cost of cancellation could prove a bigger fiscal concern.
Either way, Cincinnati should find out the full consequences to the project in December.