Cincinnati would save just $7.8-$52.6 million in capital costs if it incurs tens of millions in additional expenditures to cancel the $132.8 million streetcar project, according to an audit from consulting firm KPMG released Wednesday.
By showing the potentially high costs of cancellation, the numbers could throw a lifeline to the streetcar project just one day before City Council decides whether to restart construction or permanently halt the project.
But Mayor John Cranley appears undeterred in his commitment to cancel the streetcar project. By accounting for the annual costs to operate the streetcar, Cranley estimates the city will actually save $102 million if it cancels the project.
The city already spent roughly $34 million on the project, according to the audit. Cancellation would add $16.3-$46.1 million in close-out costs, bringing the total costs of cancellation and money spent so far to $50.3-$80.1 million.
Completing the project would add $68.9 million in costs, after deducting $40.9 million in remaining federal grants, the audit found.
But the completion estimate assumes the city will need to pay $15 million in utility work — a cost that is currently being debated in court. If the city wins its case against Duke Energy, the utility company would be required to pay the $15 million and bring down the total completion costs to $53.9 million.
The audit also put the costs of operating the streetcar at $3.13-$3.54 million a year, lower than the previous $3.4-$4.5 million estimate. After revenues from fares, sponsorships and other sources, the city would need to pay $1.88-$2.44 million to operate the streetcar, according to the audit.
The reduced estimate for operating costs could become particularly important in deciding the project's fate as private contributors attempt to get the cost off the city's operating budget.
Delaying the streetcar project while KPMG conducted its audit also added $1.7-$2.8 million in costs, according to the audit. The city allocated another $250,000 to pay KPMG for its work.
The audit did not account for the potential costs of litigation if contractors and investors along the planned streetcar line sue the city to recoup costs.
City Council paused the streetcar project on Dec. 4 to obtain the cost estimates of completion, cancellation and annual operations. The full body of council will decide whether to restart the project on Thursday, before a Friday deadline set by the Federal Transit Administration for federal grants.
Read the full audit:
This post was updated at 12:59 p.m. with more information and details.
The three measures set up $15 million to front to Duke Energy to move utility lines out of the proposed path; changes the source of funding to repay some $25 million in bonds used to pay for the streetcar; sells $14 million in bonds for streetcar improvements; and changes the municipal code to clarify that it is the responsibility of a utility to relocate its structures.
The $15 million comes from the $37 million sale of city-owned land near the former Blue Ash Airport.
Council voted 6-3 to approve the front money, improvement bonds and bond repayment, a vote that largely mirrored a Monday Budget and Finance Committee vote. Councilman Chris Smitherman was the sole “no” vote on the ordinance to change the municipal code.
Councilmembers Cecil Thomas, Wendell Young, Roxanne Qualls, Laure Quinlivan, Chris Seelbach and Yvette Simpson voted to pass funding, while Councilmembers Smitherman, P.G. Sittenfeld and Charles Winburn voted against.
“My concern with all of these votes … in particular the Blue Ash Airport dollars, these were promises that you made to the neighborhoods and I don’t have the confidence that the legal battle against Duke Energy is going to yield a 100 percent win for the city of Cincinnati, so there’s no assurance that these dollars are going to come back,” said Councilman Chris Smitherman, one of the most vocal opponents of the streetcar.
“I want to be clear that it’s something that I don’t support.”
The $15 million would be fronted to Duke to move its lines while the city and utility work out who is responsible for funding the move.
Duke estimates the full cost at $18 million and argues
that the lines would not have to be moved if the streetcar wasn’t being
built. The city maintains that it has always been the responsibility of
utilities to move or upgrade their structures — which the third measure
clarified in the municipal code. If the city loses a legal battle against Duke, it will not
recoup the $15 million.
The second proposal switches the source of funding for
streetcar bonds from money coming into city coffers from southern
downtown and the riverfront area to a 1995 fund set up to collect
service payments from the Westin/Star, Hyatt and Saks. The measure wouldn't use any additional new money for the streetcar.
That downtown area wasn’t bringing in as much cash as
expected but the city hopes to repay the other fund once the downtown
district — which includes the Banks and the casino — rebounds.
Organizers of a local anti-gang and violence reduction program will hold an open house Thursday so the community can become reacquainted with its street advocate team.
The Cincinnati Initiative to Reduce Violence (CIRV) is holding the open house and resource fair from 10 a.m. to 5 p.m. at its offices. The location is 19 W. Elder St. in Over-the-Rhine.
As CityBeat did in the 2007 and 2009 election cycles, we’ve once again sent a questionnaire to the non-incumbent Cincinnati City Council candidates to get their reactions on a broad range of issues.
Nine of the 14 non-incumbents chose to answer our questions. Others either didn’t respond or couldn’t meet the deadline.
During the next few weeks, we will print the responses from the non-incumbents to a different topic each time.
Today’s question is, “With the city facing a potential $33 million deficit next year, what specific cuts and/or revenue enhancements would you propose or support to eliminate the shortfall?”
The White House announced today that Councilman Chris Seelbach has won the Harvey Milk Champion of Change award, which recognizes 10 community leaders around the nation each year for a commitment to equality and public service.
Seelbach, Cincinnati's first openly gay council member, won the award after he was nominated by the the Gay, Lesbian and Straight Education Network (GLSEN). He will officially receive the award at a ceremony at the White House on Wednesday.
"I am humbled and proud to be recognized by the White House for my efforts on City Council and extremely grateful to the people of Cincinnati for giving me the opportunity to effect positive change in our community. In order to create a city where more people want to live, work and raise a family, we must continue fighting to make sure all people feel welcomed, valued and respected," Seelbach said in a statement.
The award recognizes Seelbach's accomplishments, but it also shows Cincinnati's progress in the past few years.
During Seelbach's time in office, the city's police and fire departments created a LGBT liaison.
Most recently, Seelbach co-sponsored a motion that will help avert police and fire layoffs in the fiscal year 2014 budget plan. He also spearheaded "responsible bidder" changes that require bidders on most Metropolitan Sewer District projects to offer apprenticeship programs.
The Harvey Milk Champion of Change award is named after Harvey Milk, who became California's first openly gay elected official when he was elected to the San Francisco Board of Supervisors in 1977. He was assassinated on Nov. 10, 1978 — only 10 months after he was sworn into office.
Just a few months after the city avoided laying off cops, firefighters and other city employees, City Manager Milton Dohoney on Sept. 15 proposed restoring $26,640 in vehicle allowances that would subsidize car use for the city manager, the mayor and other director-level positions in the city administration.
City spokesperson Meg Olberding told CityBeat that restoring the allowances is a matter of basic fairness and keeping both the city’s word and competitiveness.
Olberding says car allowances are typically part of compensation packages offered in other cities that compete with Cincinnati for recruitment. The allowances, she explains, were also promised to city directors as part of their pay packages when they were first hired for the job.
“Cutting it reneges on their original offer and part of the pretense under which they took the job,” Olberding says, adding that failing to restore the compensation promises could make future potential hires reluctant to work in Cincinnati.
But given Cincinnati’s ongoing budget problems, some council members say the proposal is out of touch.
“Are you kidding me?” asked Councilman Chris Seelbach at the Sept. 16 Budget and Finance Committee meeting. “I just question the judgment of an administration that would make that kind of recommendation given our current financial situation. I’m offended that it would be even recommended.”
Even though City Council managed to avoid layoffs in this year’s budget, Cincinnati’s operating budget remains structurally unbalanced, which means the city will have to come up with new revenue or cuts to balance the budget in upcoming years.
Seelbach told CityBeat he doesn’t agree with the competitiveness arguments.
“I’m more concerned with the garbage worker who’s making barely enough to get by and would love to get a quarter-on-the-hour raise, much less a $5,000 car allowance,” he says. “If someone wants to leave their position when they’re making $100,000-plus because we’re not going to give them a $5,000 car allowance, I’m convinced we can find someone just as capable, if not more capable, that would be thrilled with a $100,000-plus salary with no car allowance.”
Still, Olberding points out that city directors often need to drive more than the typical worker, whether it’s to get to public meetings, in case of an emergency or as a natural consequence of being on call 24/7. She says that justifies what she sees as a small cost.
The restoration was tucked into a proposal from the city manager that restores more than $6.7 million in previous cuts by using revenue left over from the previous budget cycle. The car allowance portion is about 0.3 percent of the total proposal and less than one-hundredth of a percent of the city’s overall operating budget.
For some city officials, the issue gets to what they perceive as a disconnect between private individuals and the government: Although thousands of dollars might seem like a lot of money to the typical person, the sum is usually worth much less than a penny on the dollar in city budget terms.
But Seelbach says garbage collectors and other city workers who haven’t received a raise in years would be thrilled to split $22,000, even if the sum doesn’t mean much in total budget terms.
“It shows a lack of respect for the people who make this city work,” Seelbach says.
The proposal also comes shortly after a tense budget showdown and in the middle of an election year for City Council and the mayor’s office.
Dohoney repeatedly said throughout the past year that the city would have to lay off 344 employees, including 189 cops and 80 firefighters, if it didn’t lease its parking meters to the Greater Cincinnati Port Authority. The city ultimately avoided the layoffs without the parking lease by making cuts in various areas, including the city’s parks, and tapping into higher-than-expected revenues, but the city is still pursuing the lease to pay for economic development projects.
City Council will take up the restoration measures at a Budget and Finance Committee meeting on Sept. 24.
Updated at 4:09 p.m. with comments from Councilman Chris Seelbach.
The 1st Ohio District Court of Appeals released its decision this morning, just a few hours after one of the three judges who ruled against the retirees was reelected. Judge Pat Fischer, a Republican, was on the ballot Tuesday — and now there is no way to know whether the ruling could have had any adverse impact on his reelection bid.
The retirees, a group that included former City Clerk Sandy Sherman, contended their benefits could be increased, but that they were not subject to reduction. The appeals court scuttled the argument:
“At issue in this case is an ordinance enacted by the city council in 2009. The ordinance amended sections of the code pertaining to the retirement system. … After the 2009 ordinance, the plaintiff-appellants would have a deductible to $200 and out-of-pocket caps for healthcare and prescriptions of $2,000. The ordinance provided that the revisions to the retirement system would become effective on January 1, 2010.”
The appeals court said hospital and medical benefits were in addition to retirement pension payments and were not subject to vesting, which meant they could be changed by ordinance.
“The distinction between the retirement allowances and the healthcare benefits has been maintained throughout the existence of the retirement system. The distinction is significant,” the appeals court ruled.
The case could still be taken to the Ohio Supreme Court.
The following table shows the fund's assets, and the funding ratio, through 2010:
A City Council committee on Tuesday voted to rescind council’s support for state tax credits going to a 99-unit supportive housing facility in Avondale that would aid chronically homeless, disabled and low-income individuals.
But since National Church Residences already obtained tax credits for the project from the Ohio Housing Finance Agency in June, it’s possible the project could continue even if council stands in opposition, according to Kevin Finn, executive director of Strategies to End Homelessness.
Still, the decision from the Economic Growth and Infrastructure Committee comes in the middle of a months-long controversy that has placed neighborhood activists and homeless advocates in a heated dispute. (CityBeat first covered the issue in greater detail here.)
Independent Christopher Smitherman and Republican Amy Murray, the two present members of the committee, both voted to pull support from the project. The issue will now go to a nine-member City Council, which consists of five Democrats, and Democratic Mayor John Cranley.
Smitherman, chair of the committee, claimed the project’s issues spawned from a lack of community engagement.
“I want everybody to take a pause,” Smitherman said. “Respecting our city, in my opinion, means that you do the community engagement at the level that reflects the magnitude of what you want to do.”
Smitherman’s comments followed testimony from neighborhood activists who oppose the facility and homeless advocates who support it.
Opponents insist they support policies addressing homelessness. But they argue the “massive” facility would alter the neighborhood, worsen Avondale’s problems with poverty and damage revitalization efforts.
Supporters claim the dispute stems from a not-in-my-backyard attitude that predominates so many supportive housing facilities.
“In our society, we have a tendency to say we don't want ‘those people’ in our neighborhoods. And history dictates to us that conversations that start with ‘we don't want those people here’ don't typically end well,” said Josh Spring, executive director of the Greater Cincinnati Homeless Coalition.
Finn of Strategies to End Homelessness
said the facility is part of his organization’s Homeless to Homes plan, which council
previously approved to address Cincinnati’s struggles with homelessness.
Finn’s organization aims to reduce homelessness in Hamilton County from more than 7,000 in 2012 to roughly 3,500 in 2017.
The Avondale facility could also help reduce Cincinnati’s high levels of poverty. More than half of Cincinnati’s children and more than one-third of the city’s general population live in poverty, according to the U.S. Census Bureau’s 2012 American Community Survey.
The full body of City Council could take up the issue as early as Wednesday. Smitherman advised both sides to attend the council meeting and state their cases.
Updated with additional information from Kevin Finn, executive director of Strategies to End Homelessness.
A group of Greenpeace protesters face burglary and vandalism charges after a stunt yesterday on the Procter & Gamble buildings. Protesters apparently teamed up with a helicopter to climb outside the P&G buildings to hang up a large sign criticizing the company for allegedly enabling the destruction of rainforests in Indonesia by working with an irresponsible palm oil supplier. P&G officials say they are looking into the protesters’ claims, but they already committed to changing how they obtain palm oil by 2015.
Cincinnati Center City Development Corp. (3CDC) will step in to resolve the status of a downtown grocery and apartment tower project. The previous city administration pushed the project as a means to bring more residential space downtown, but Mayor John Cranley refuses to pay to move a tenant in the parking garage that needs to be torn down as part of the project. Following Cranley and Councilman Chris Seelbach’s request for 3CDC’s help, the development agency will recommend a path forward and outline costs to the city should it not complete the project.
Meanwhile, the tenants in the dispute announced today that they will sue the city to force action and stop the uncertainty surrounding their salon business.
Cranley insists politics were not involved in an appointment to the Cincinnati Board of Health, contrary to complaints from the board official the mayor opted to replace. Cranley will replace Joyce Kinley, whose term expired at the end of the month, with Herschel Chalk. “Herschel Chalk, who(m) I’m appointing, has been a long-time advocate against prostate cancer, who's somebody I’ve gotten to know,” Cranley told WVXU. “I was impressed by him because of his advocacy on behalf of fighting cancer. I committed to appoint him a long time ago.”
The costs for pausing the streetcar project back in December remain unknown, but city officials are already looking into what the next phase of the project would cost.
Troubled restaurant Mahogany’s must fully pay for rent and fees by March 10 or face eviction.
Through his new project, one scientist intends to “make 100 years old the next 60.”email@example.com.