The city would save just $7.8-$52.6 million in capital costs if it takes on tens of millions in additional expenditures to cancel the $132.8 million streetcar project, an independent audit revealed yesterday. The news appeared to throw another potential lifeline for the streetcar, which can now claim a five-member majority of supporters on City Council. But with Mayor John Cranley's veto threat, council will likely need six votes to continue the project. Council expects to make a decision today, prior to a Friday deadline for federal grants funding roughly one-third of the project.
Some city leaders are trying to ensure all of Cincinnati's 3- and 4-year-olds attend quality preschool programs through Cincinnati’s Preschool Promise. Citing swaths of studies and data, Greg Landsman, executive director of the education-focused Strive Partnership, says the policy could reach all corners of the city and hugely benefit the city’s economy in the long term. But supporters of the proposal first must find a means to fund it, which Landsman says will likely require some sort of voter-approved tax hike in 2014. Before the Preschool Promise campaign gets there, Landsman vows supporters will heavily engage the community to gather feedback and determine the scope of the proposal.
City Council yesterday unanimously approved $20 million in capital funding for the $106 million uptown interchange project, which will allow the project to move forward with the state and Ohio-Kentucky-Indiana Regional Council of Governments filling the rest of the funding gap. The capital allocation means property taxes will remain higher than they would without the project, as revealed at Monday's Budget and Finance Committee. Mayor Cranley and council members argue the cost is worth it because, as a study from the University of Cincinnati's Economics Center previously found, the project will generate thousands of jobs and other economic gains in the uptown area.
Commentary: "Anti-Streetcar Logic Should Stop Uptown Interchange Project."
The Democratic majority on City Council yesterday dismissed legislation that would have repealed controversial bidding requirements for Metropolitan Sewer District (MSD) projects. Council's decision could put Cincinnati and Hamilton County on a collision course over rules governing a federally mandated revamp of the city's inadequate sewer system. A majority of council members support the bidding requirements as a way to foster local jobs and local job training, while opposing county officials say the rules favor unions and impose a huge burden on MSD contractors. Councilman Chris Seelbach says he's working with Hamilton County Commissioner Greg Hartmann to get both parties in mediation talks and end a county-enforced hold on sewer projects before the federal government begins enforcing its mandate.
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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.
More than a dozen business and philanthropic entities support the Southwest Ohio Regional Transit Authority’s (SORTA) plan to develop a private-public partnership to pay for the streetcar’s operating costs, according to Eric Avner, vice president of the philanthropic Haile Foundation. If the people cited by Avner put money behind their support, they could get streetcar operating costs off the city’s books and pave the clearest path forward for the $132.8 million streetcar project since the new mayor and City Council took office earlier this month. Although Cranley called SORTA’s offer “woefully insufficient” earlier in the day, Councilman Kevin Flynn, one of two swing votes on council, said the idea could turn into a viable option if the business and philanthropic community provided more assurances.
Other streetcar news:
• City Council will hold public hearings on the streetcar today at 1:30 p.m., with a vote to decide the project’s fate expected tomorrow.
• Speaking about the streetcar project, Vice Mayor David Mann told The Business Courier, “I’m awfully close to saying let’s go for it.”
• The Federal Transit Administration might prefer to deal with SORTA over Mayor Cranley if the streetcar is completed.
Cincinnati’s projected operating budget gap for fiscal year 2015 is $16 million, which means City Council will need to find new revenue or cuts to balance the budget by July. Although a majority of council members promise to structurally balance the budget in the next few years, a minority say it will be more difficult than most expect without hiking taxes or cutting police and firefighters.
The 2014 gubernatorial race between Republican Gov. John Kasich and Democratic challenger Ed FitzGerald is within the margin of error, according to a poll released Monday by Public Policy Polling (PPP). “Although there’s been a fair amount of movement toward Republicans nationally since (November), the state of this particular race has seen very little movement and Democrats continue to have an excellent chance at a pick up next year,” wrote Tom Jensen, director of PPP.
Meanwhile, Hamilton County Commissioner Todd Portune could challenge FitzGerald for the Democratic nomination.
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More than a dozen business and philanthropic entities support the Southwest Ohio Regional Transit Authority’s (SORTA) offer to develop a private-public partnership to fund the streetcar’s operating costs, Eric Avner, vice president of the Haile Foundation, told CityBeat on Tuesday.
If enough private contributors agree to finance the streetcar’s operating costs, they could address a major concern raised by streetcar opponents and provide the clearest path forward for the $132.8 million streetcar project since the new mayor and City Council took office early this month.
The Haile Foundation already contributed $1 million to an operating reserve fund for the streetcar, but Avner cautions that his organization’s donation is only the beginning, given all the other entities interested in moving the streetcar forward.
Avner says 14 other business and philanthropic leaders supported the SORTA concept in person or through writing in time for SORTA’s board of trustees meeting on Tuesday. Among other community leaders, Avner cites Otto Budig, Cathy Crain of Cincinnati State, William Portman of the University of Cincinnati, Jeannie Golliher of the Cincinnati Development Fund, Rick Greiwe of Greiwe Development and Jack and Peg Wyant of Grandin Properties.
In a letter to SORTA, the Haile Foundation offers to recruit and financially establish a commission of community leaders that will work with the agency to create an operating and revenue plan that will require no funds from the city of Cincinnati. The letter also promises to leverage the initial $1 million investment to secure additional contributors and build a fund that would pay for a full year of operating costs.
Mayor John Cranley called SORTA’s offer “woefully
insufficient” in a press conference on Tuesday. Cranley said the city will need financial assurances far above the Haile
Foundation’s $1 million to cover $3.4-$4.5 million in annual operating costs for the streetcar over 30 years.
Councilman Kevin Flynn, one of two potential swing votes
on City Council, agreed with Cranley’s assessment, but he said the proposal could become a viable option if the city receives more
assurances from SORTA and private entities that show the groups are serious in their offer.
SORTA already agreed to help operate the streetcar if the
project is completed, but its decision to take up the operating costs shows
an additional commitment to the project.
The agency claims bus services will not be impacted by its increased commitment to the streetcar.
City Council expects to vote on Thursday on whether to restart the streetcar project. Council paused the project on Dec. 4 while the city audits the project’s completion, cancellation and operating costs.
Read the Haile Foundation’s full letter below:
The announcement could provide an avenue for business and philanthropic leaders to help fund streetcar operations through SORTA in an attempt to meet demands from the mayor and some council members.
“SORTA’s willingness is based upon assurances from the Cincinnati business and philanthropic communities that they will work with SORTA in public-private partnership to secure the funds required to cover the short and long-term operating costs of the streetcar to the extent other sources of streetcar revenue, such as fares, advertising, sponsorships, etc., are inadequate,” the agency said in a press release.
But in a press conference following the announcement, Mayor John Cranley called SORTA’s offer “woefully insufficient.” He argued SORTA’s assurances aren’t enough to pull streetcar operating costs completely off the city’s books.
Councilman Kevin Flynn, one of two potential swing votes on City Council, agreed with Cranley’s assessment. But he cautioned the commitment could become a viable path forward for the streetcar project if SORTA provides more assurances in the next couple days, before a council vote on the streetcar.
SORTA’s commitment comes less than one week after Mayor John Cranley said he’d allow the $132.8 million streetcar project to move forward if private contributors agree to cover the streetcar’s operating costs for 30 years. Flynn and Vice Mayor David Mann, the two swing votes on City Council, approved of Cranley’s proposed compromise.
In support of the announcement, the Haile Foundation also announced a $1 million commitment in seed money to spur further contributions to an operating reserve fund for the streetcar.
“We are committed to seeing the streetcar through to completion and beyond. SORTA has stepped up and is more than qualified to serve in this role. This is another great example of community collaboration helping move to region forward,” said Eric Avner, vice president of the Haile Foundation, in a statement.
Avner told CityBeat on Dec. 12 that private-sector leaders are working to meet the mayor’s demand with some financial assurances for the streetcar’s operating costs. SORTA’s announcement could act as that assurance.
If the streetcar project is completed, SORTA already agreed to help operate the 3.6-mile loop in Over-the-Rhine and downtown. But the public-private partnership would increase the agency’s commitment to the streetcar.
SORTA cautioned that bus service will not be affected in any way by the commitment.
It’s unclear whether SORTA’s assurances will be enough to
sway Cranley, Mann and Flynn. If Cranley threatens to veto a
continuation of the streetcar project, both Mann and Flynn would likely
need to vote in favor of the streetcar to overcome a veto and restart the project.
The streetcar project is currently on “pause” while KPMG, an auditing firm, reviews completion, cancellation and operating costs. City officials expect to receive the audit late Tuesday or early Wednesday, with a council vote scheduled for Thursday.
Updated at 3:23 p.m. with details from Mayor John Cranley’s press conference.
Major events for Cincinnati’s streetcar project this week:
Today, supporters will turn in petitions to get the issue on the
ballot; late today or early tomorrow, KPMG will turn in audit of the
project’s completion, cancellation and operating costs; tomorrow,
council will take public comment on the project at 1:30 p.m.; and on
Thursday, council will debate and make the final decision on the streetcar.
Other streetcar news:
• Mayor John Cranley is asking streetcar opponents to speak up during the public comments section of Wednesday’s council meeting.
• Supporters collected more than 9,000 signatures to get the streetcar project on the ballot. Nearly 6,000 signatures need to be verified to allow a vote in the coming months.
City Council’s budget committee yesterday advanced funding for the $106 million uptown interchange project at Martin Luther King Drive and Interstate 71. The capital funding set by council will be backed through property taxes, which, according to the city administration, will prevent the city from reducing property taxes in the future as originally planned. Still, proponents of the project, including a unanimous body of council, say the project is worth the investment; the University of Cincinnati’s Economics Center found in a May 2012 study that the interchange will generate 5,900 to 7,300 permanent jobs, $133 million in economic development during construction and another $750 million once the interchange opens.
Congress appears ready to pass a bipartisan budget deal that will not extend emergency benefits for the long-term unemployed through 2014, which could leave more than 36,000 unemployed Ohioans behind in December and 128,600 Ohioans without aid through 2014. The emergency benefits were originally adopted by Congress to provide a safety net for those worst affected by the Great Recession. Conservatives, touting the $25.2 billion annual cost, say the economy has improved enough to let the costly benefits expire, but liberals, pointing to the high numbers of long-term unemployed, say the benefits are still needed and would help keep the economy on a stable recovery.
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grants from the “Straight A” fund on Wednesday in an attempt to reward
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The Federal Transit Administration told Mayor John Cranley and streetcar supporters that it won’t extend its Dec. 20 deadline for federal grants funding roughly one-third of the $132.8 million street project. Without the federal grants, the project would likely die because local officials say they are not willing to make up the loss with local funds. That means the city has until Friday to decide whether to continue the project — a decision that could come down to City Council’s swing votes, Kevin Flynn and David Mann, and whether private contributors agree to pay for the streetcar’s annual operating costs over the next three decades.
Meanwhile, streetcar supporters say they have enough
signatures to get the streetcar on the ballot. But without the federal
funds, a public vote might not be enough to save the project since the charter amendment only calls for using funds allocated as of Nov. 30, 2013.
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Despite previously criticizing tax breaks for Cincinnati
businesses, Chris Finney of the Coalition Opposed to Additional Spending
and Taxes (COAST) will receive tax credits to open his own law firm in
Clermont County on Jan. 1.
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In what could be another chance of survival for the $132.8 million streetcar project, Mayor John Cranley on Thursday announced he's willing to continue the project if private contributors cover annual operating expenses that would hit an already-strained operating budget. Although Cranley gave private-sector leaders and streetcar supporters only one week to get a legally binding plan together, Eric Avner of the Haile Foundation said he is quite confident that private contributors could pull together some assurances for the 30 years in operating expenses in the short time span. The potential operating costs have long been a concern for opponents of the streetcar project, even though supporters insist that they would be more than made up by the economic development spurred by the streetcar.
A constitutional review panel seems to agree on a few key points regarding redistricting reform, which could fix a system that's long been abused by politicians on all sides of the aisle to give their political parties an advantage during elections. The panel agreed to create a seven-member board that would redraw Ohio's congressional and legislative districts after the next census is taken in 2020, but it's undecided how much power the minority party should hold on the board. In the last round of redistricting, Republican leaders redrew Ohio's political maps to deemphasize demographics that typically support Democrats and provide stronger spreads for demographics that typically support Republicans. CityBeat covered the issue and its potential impacts in greater detail here.
House Speaker John Boehner, a Republican, was the only federal legislator from the Cincinnati area to approve a budget deal that will avoid the threat of future government shutdowns. The deal replaces some of the controversial, blunt budget cuts known as "sequestration" with revenue from hiked fees and savings from cuts elsewhere. Reps. Steve Chabot and Brad Wenstrup, both Republicans from Cincinnati, voted against the deal because it makes cuts over a long period of time. But many economists agree long-term cuts are necessary to avoid the negative effects of budget cuts on today's already-weak economy. The Washington Post ran through the budget deal in further detail here.
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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.
Mayor John Cranley, Councilman Kevin Flynn and four union representatives from the Fraternal Order of Police, Firefighters Local 48, AFSCME and CODE will make a “major announcement” regarding the streetcar project today at 9 a.m., according to the mayor’s office. Local 12 reported last night that the announcement will be an offer from a private contributor to underwrite the streetcar’s operating costs for 30 years, but Councilman Chris Seelbach tweeted that the rumor is “not true.” If the report checks out, it could significantly increase the streetcar project’s chances of survival by alleviating a major budget concern. (Update: The announcement wasn’t as expansive as stated by Local 12, but Cranley said he’s open to private contributions. Read more here.)
Flynn and Vice Mayor David Mann could decide the fate of the streetcar project by Dec. 20, a deadline set by the federal government for up to $44.9 million in grants funding roughly one-third of the project. It’s a precarious position for Flynn, who in 2009 and 2011 campaigned in support of the project but completely changed his position during his 2013 campaign. Both Flynn and Mann say they will only support the project if the costs of cancellation are close to the costs of completion, but Flynn says he’s also concerned about the costs to operate the streetcar. Read more about the two council members and their pivotal roles here.
City Council yesterday appointed Scott Stiles as interim city manager, but only after heated debate over Stiles’ compensation package left three council members voting “no.” The package gives Stiles a raise if he isn’t appointed as permanent city manager and returns to his previous position as one of two assistant city managers, which some council members called unfair to other city workers, including the other assistant city manager, who wouldn’t get comparable pay increases. Council members estimated the search for another city manager will take six months.
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Miami University and Cincinnati will host the 2016 NCAA hockey tournament.The coldest place on Earth — in Antarctica, obviously — can reach -135.8 degrees Farenheit.
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