The streetcar project’s chances of survival grew on Thursday after Mayor John Cranley announced he’s willing to allow the $132.8 million project move forward if the annual operating costs for the streetcar are underwritten by private contributors.
But streetcar supporters might have as little as one week to provide assurances to Cranley that the operating costs can be underwritten by the private sector, given the federal government’s Dec. 20 deadline for up to $44.9 million in grants financing roughly one-third of the project.
Still, a representative of the Haile Foundation, a major private contributor to city projects, said private-sector leaders are already working on meeting Cranley’s offer and solving the issue.
The concern for Cranley — and even some streetcar supporters — is that annual operating expenses for the streetcar would hit the city’s already-strained operating budget, especially if the annual operating expenses are higher than the previous estimate of $3.4-$4.5 million.
Although the city wouldn’t need to pay for the full operating costs until the streetcar opens for service in 2016, Cranley and some council members are concerned finishing the project now would force the city to make payments it won't be able to afford in the future.
“We know the streetcar is a very expensive project,” Cranley said. “This community cannot afford a new, ongoing liability that goes on forever.”
Streetcar supporters argue Cranley’s view misses the streetcar’s potential for economic development, which could bring in more city revenues as more people move and work in the city.
The streetcar project would produce a 2.7-to-1 return on investment, according to a 2007 study from consulting firm HDR that was later verified by the University of Cincinnati.
Councilman Kevin Flynn, one of the two potential swing votes on council, said Cranley’s offer could provide “a way forward.” He previously told CityBeat that the operating costs remain a prominent concern for him because they could translate to cuts in the city’s budget, particularly to police and firefighters.
Eric Avner, vice president and senior program manager of community development at the Haile Foundation, called the deal “an olive branch” to streetcar supporters. He said he’s “very, very confident” the private sector will be able to find a solution.
“I don’t think we can solve it in a week. What I heard is he needs assurances,” Avner said.
Cranley said he doesn’t expect someone to come to city leaders next Wednesday with a check paying for 30 years of operating costs, but he said the commitment has to be serious and long lasting for the city to move forward with the streetcar.
Avner discussed bringing together a commission of private-sector leaders with some long-term assurances.
In what he described as an “organic” movement, Avner said he’s heard from various private-sector leaders that they want to keep the project going, but he claimed most of them don’t want to engage in a public “food fight” that could hurt their relations with the mayor and other city officials.
For Avner, it’s a matter of sticking to a project that’s already well into development and construction.
“We don’t have the luxury to waste that kind of money in this town,” he said.
Streetcar Project Executive John Deatrick on Nov. 21 told council members that canceling the streetcar project could save only $7.5-$24.5 million in capital costs after accounting for $32.8 million in estimated sunk costs through November, $30.6-$47.6 million in close-out costs and up to $44.9 million in federal grants that would be lost if the project were stopped.
After Cranley’s announcement, Councilwoman Yvette Simpson questioned Cranley’s motives and said the solicitation might be very difficult to meet in just one week.
Cranley said he’ll reach out to the Federal Transit Administration to try to get an extension, perhaps until the end of the year, on the deadline for federal grants.
“It’s obviously a huge, huge hurdle to try to pull this together in seven days,” Cranley said.
Cranley cautioned he wouldn’t be upset if his offer fell through. Flanked by union representatives for police, firefighters and other city workers, Cranley reiterated that his priorities still lie in basic city services.
Councilman P.G. Sittenfeld previously proposed setting up a special improvement district to pay for the operating costs. But Cranley called the approach unworkable because it would require property owners to opt in — an effort that would presumably take much longer than one week.
Cranley’s announcement came as streetcar supporters move to place a city charter amendment in support of the streetcar project on the ballot. The campaign vowed to gather 12,000 signatures by the end of the week.
After years of dithering and months of debate, Cincinnati City Council narrowly approved a plan Wednesday to make changes to the cash-strapped pension plan for municipal workers. But a local GOP leader is confused about who voted for what.
The company in charge of building Cincinnati's streetcars says the city would incur substantial costs if it cancels the streetcar project after it's already gone through some construction and design work.
The Nov. 30 letter from CAF USA Vice President Virginia Verdeja to former Mayor Mark Mallory arrived just one day before Mayor John Cranley, who opposes the streetcar project, and an anti-streetcar majority were sworn in.
"CAF will have to recover all the incurred expenses as well as all the additional cost of cancelling the contract, which would be substantial too," Verdeja writes in the letter.
The letter explains that, on top of the sunk expenses on design work, cancellation would require CAF to pull back on various established deals with subcontractors, which would spur further costs.
For streetcar supporters, the letter renews fears of litigation that could crop up if the project were canceled and contractors decided to pursue their full payday. Those legal costs would fall on the already-strained operating budget that pays for day-to-day services like police and firefighters instead of the capital budget that finances big capital projects like the streetcar, according to city spokesperson Meg Olberding.
On Nov. 21, Streetcar Project Executive John Deatrick warned 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.
Earlier on Sunday, hundreds of streetcar supporters rallied in Washington Park and walked the planned streetcar route in support of the project. They're threatening a referendum if the new City Council moves to pause or cancel the project.
City Council plans to vote on pausing the project on Monday. Because of threats from the federal government that a mere delay could lead to the loss of federal grants, streetcar supporters claim a pause would equate to cancellation.
Read the full letter below:
Updated at 6:13 p.m. with the PDF of the letter.
Cincinnati City Council on Friday approved a budget that relies on parking privatization as a means to plug a $34 million budget deficit while also raising property taxes in 2014.
Mayor Mark Mallory opened up the council meeting with a moment of silent prayer for the 27 students and adults killed at an elementary school in Connecticut.
“I want us all to take a moment and put into perspective what we’re doing today,” he said.
Council voted to increase the property tax by about 24 percent, from 4.6 mills (a mill is equal to one-tenth of a cent) to 5.71 mills. That means Cincinnatians would pay an additional $34 for every $100,000 of their home’s value.
The vote reverses a move made last year by conservatives on council, who reduced property taxes.
Council also passed a budget that relies on $21 million from a proposed lease of the city’s parking facilities — a deal that is expected to be voted on in March. Of the proposals submitted to the city so far, Cincinnati stands to gain $100 million to $150 million in an upfront payment and a share of the profits over the 30-year lease.
“My concern about balancing this budget with a onetime revenue source by selling our parking system seems to be ill advised,” said Independent Councilman Chris Smitherman. “We don’t know how council will vote in March … but we have tied not only the budget to this one time revenue source, but we have also tied reciprocity.”
Council nixed a plan to eliminate tax reciprocity for people who lived in Cincinnati but worked elsewhere and paid income tax in both cities.
Though the budget doesn’t mention parking privatization, council hasn’t mentioned other options to close the budget deficit.
If opponents of parking privatization want to keep facilities under city control, they would have to come up with $21 million in revenue elsewhere or make $21 million in cuts.
Councilman P.G. Sittenfeld suggested using casino revenue, cutting travel expenses, downsizing the ratio of managers to workers, sharing services with nearby jurisdictions and downsizing the city’s fleet as ways to cut down the budget.
Councilwoman Laure Quinlivan, long an advocate of downsizing the police and fire departments, voted against the property tax increase in protest of what she said was bloated spending on departments that were outpacing population growth.
The budget also requires Cincinnati to accept police and fire recruit classes in 2014, regardless of whether the city gets a federal grant to fund the classes.
The budget also restores the Cincinnati Police Department’s mounted patrol, which patrols downtown on horseback. The city will use $105,000 from off-duty detail fees from businesses that hire off-duty officers. Council also voted to start charging those businesses an extra $1.64 on top of the off-duty pay.
Council also voted to shift $50,000 for repairs and upgrades to the Contemporary Arts Center to pay for maintenance and beautification at Washington Park, which is operated by 3CDC.
CityBeat’s ongoing coverage of the non-incumbent candidates for Cincinnati City Council continues with a question on council’s recent budget dispute, about where reductions should be made and whether police officers should face possible layoffs.
In the first part of a two-part question, we ask, “During the recent budget showdown on City Council, what — if anything — could’ve been done differently?”
Federal, state and local officials will meet with a neighborhood group later this month to discuss efforts to improve safety and promote economic development in Price Hill.
The group, Price Hill Will, is hosting a town hall meeting Feb. 18 that will feature a panel of politicians. Those scheduled to attend are U.S. Rep. Steve Driehaus, State Rep. Denise Driehaus, Hamilton County Commissioner Greg Hartmann and Cincinnati City Councilman Greg Harris.
In light of the Newtown, Conn., massacre, a City Council member wants metal detectors put back in City Hall.
Democratic Councilman Cecil Thomas says he’s always been concerned about security, and he hopes recent bouts of gun violence will make it clear more protective steps are necessary.
Thomas argues City Hall should not be an exception to a practice that’s carried out in other government buildings. He points to federal and county buildings and other city halls around the nation, which tend to use metal detectors.
Thomas, who was a police officer until 2000, acknowledges metal detectors are a “little bit of an inconvenience” to visitors, but he adds, “These are times when a little bit more inconvenience can go a long way to possibly save a lot of lives.”
So City Hall could get more security, but what about the city as a whole? Earlier today, Vice Mayor Roxanne Qualls announced City Council will work on a resolution to encourage Congress to pass new gun regulations at a federal level. Beyond that, Thomas says not much is likely.
The problem is state law trumps local law when it comes to gun regulations, so City Council’s hands are tied on the issue. “I would like to see us be able to control our own destiny as it relates to gun laws, but, obviously, I have no control over that,” Thomas says.
Metal detectors were in place at City Hall until 2006, when Mayor Mark Mallory had them taken down to make City Hall more open to the public.
A tri-partisan mix of Cincinnati City Council members are once again reaching across party lines to hold a joint fundraiser — and bragging quite a bit while doing it.
Democrat Jeff Berding, Republican Leslie Ghiz and Charterite Chris Bortz are holding a campaign fundraiser together on Oct. 7. The trio also held a joint fundraiser in 2007 and often receives campaigning advice from Jeff Cramerding, executive director of the Charter Committee, Cincinnati’s de facto third political party.
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: