A review of the fine print in Ohio law could spell trouble for Duke Energy in its dispute with Cincinnati about who must pay to move utility lines to accommodate the city’s streetcar project.
Readers of CityBeat’s March 6 cover story know that one of the legal arguments made by Duke Energy is that it said the system qualifies as a utility itself under Ohio law. And one utility has no legal obligation to reimburse another utility, Duke added.
City officials disagree with Duke’s interpretation, and the two sides currently are trying to negotiate a compromise to the impasse.
The city is willing to pay $6 million to relocate Duke’s natural gas, chilled water, fiber and electrical infrastructure along the streetcar route, but the firm insists it will cost at least $18.7 million and possibly more.
A close reading of the Ohio Revised Code (ORC), however, reveals it is unlikely that a streetcar system qualifies as a “public utility.”
Under Ohio law, the following items are defined as public utilities:
“A motor transportation company, when engaged in the business of carrying and transporting persons or property or the business of providing or furnishing such transportation service, for hire, in or by motor-propelled vehicles of any kind, including trailers, for the public in general, over any public street, road, or highway in this state.” ORC §4905.03
But motor-propelled vehicles aren’t defined under Ohio law. The ORC does, however, define “motor vehicle” as:
“(B) “Motor vehicle” means any vehicle, including mobile homes and recreational vehicles, that is propelled or drawn by power other
than muscular power or power collected from overhead electric trolley wires.
“Motor vehicle” does not include utility vehicles as defined in division (VV)
of this section, motorized bicycles, road rollers, traction engines, power
shovels, power cranes, and other equipment used in construction work and not
designed for or employed in general highway transportation, well-drilling
machinery, ditch-digging machinery, farm machinery, and trailers that are
designed and used exclusively to transport a boat between a place of storage
and a marina, or in and around a marina, when drawn or towed on a public road
or highway for a distance of no more than ten miles and at a speed of
twenty-five miles per hour or less.” ORC
“(B) “Motor vehicle” means any vehicle, including mobile homes and recreational vehicles, that is propelled or drawn by power other than muscular power or power collected from overhead electric trolley wires. “Motor vehicle” does not include utility vehicles as defined in division (VV) of this section, motorized bicycles, road rollers, traction engines, power shovels, power cranes, and other equipment used in construction work and not designed for or employed in general highway transportation, well-drilling machinery, ditch-digging machinery, farm machinery, and trailers that are designed and used exclusively to transport a boat between a place of storage and a marina, or in and around a marina, when drawn or towed on a public road or highway for a distance of no more than ten miles and at a speed of twenty-five miles per hour or less.” ORC §4501.01(B)
Streetcars operate using overhead trolley wires, thus they aren’t considered motor vehicles under Ohio law. But do they even qualify as vehicles? The ORC defines vehicles as:
“(A) “Vehicles” means everything on wheels or runners, including motorized bicycles, but does not mean electric personal assistive mobility devices, vehicles that are operated exclusively on rails or tracks or from overhead electric trolley wires, and vehicles that belong to any police department, municipal fire department, or volunteer fire department, or that are used by such a department in the discharge of its functions.” ORC §4501.01(A)
Of course, streetcars run on rails and use power from electric
trolley wires. So, they aren’t vehicles either. The conclusion: Either “motor-propelled vehicles” mean the same as “motor
vehicles” (in which case it doesn’t apply to streetcars) or “motor-propelled”
is an adjective to “vehicle” (which also doesn’t apply, as streetcars aren’t
vehicles). In each instance, a streetcar system doesn’t fall into the legal realm of a “motor transportation company” and therefore isn’t a “public utility.”
Of course, streetcars run on rails and use power from electric trolley wires. So, they aren’t vehicles either.
The conclusion: Either “motor-propelled vehicles” mean the same as “motor vehicles” (in which case it doesn’t apply to streetcars) or “motor-propelled” is an adjective to “vehicle” (which also doesn’t apply, as streetcars aren’t vehicles).
In each instance, a streetcar system doesn’t fall into the legal realm of a “motor transportation company” and therefore isn’t a “public utility.”
Although it has already been explicitly stated in two letters from the federal government, Federal Transit Administration (FTA) Chief Counsel Dorval Carter on Monday reiterated that if Cincinnati were to unravel the $132.8 million streetcar project, the city would lose $40.9 million in federal grants and another $4 million in federal funds would be transferred to the state government, which could appropriate the money to any project in Ohio.
The clarification is necessary because Mayor-elect John Cranley and a majority of the incoming City Council are looking into pausing and potentially canceling the streetcar project once they take office in December. Cranley says he will lobby the federal government to reallocate the federal funds, even though the federal government has repeatedly insisted it’s not going to happen.
Carter joined City Council’s Budget and Finance Committee on the phone on Monday to walk council members through the legal technicalities involved in cancellation and how the federal government would react to such circumstances.
According to Carter, merely delaying the project at this point would break the city’s agreement with the federal government and lead the federal government to restrict the federal funds, ask the city to repay the money it already spent or terminate the deal altogether.
Still, Carter said cancellation might not hurt the city’s chances, at least from a legal perspective, of obtaining federal funds for other projects.
“It will not preclude you from pursuing other projects,” he said. “You would just have to pursue those on their own merits.”
But Carter agreed with Vice Mayor Roxanne Qualls that the city’s credibility could be weakened if the streetcar project were canceled.
President Barack Obama’s administration has prioritized light rail projects like the streetcar, according to Carter, so the reclaimed federal money would likely go to other cities pursuing similarly ambitious transit projects.
At a press conference following the council meeting, Cranley appeared unfazed by the news.
“If we have to, we’ll give the money back,” he said.
Although much noise was made about the council meeting, there wasn’t much news in the way of substance. The federal government already outlined the cancellation costs in separate letters sent to Mayor Mark Mallory in June and earlier in November.
In the past few days, local media outlets have reported heavily on a supposed conflict between Southwest Ohio Regional Transit Authority (SORTA) and the city of Cincinnati. Essentially, SORTA wants the transit fund limited, while the city government says it doesn’t want to “undermine the city charter” with limitations.
At its heart, the argument is a political back-and-forth with little consequence. It’s two government agencies at a small divide over legalese in an intergovernmental agreement about how the streetcar will operate and how it will be funded.
The specific issue is SORTA, which runs the Metro bus
system and will operate the streetcar, wants to include phrasing in its
agreement with the city that makes it so the transit fund can’t be used
for the streetcar. In a 7-6 vote Tuesday, SORTA's board pushed its preferred wording along with an application for an $11 million federal grant that will help fund the streetcar.
But the city government claims the limitation would go against the spirit of the city charter, which says the transit fund can be used for “public transit purposes generally and without limitation.”
UPDATE: City Council on Wednesday passed a resolution promising not to use Metro bus money on the streetcar, although it has no legal standing preventing council from later coming back and using transit funds for the streetcar.
Still, Mayor Mark Mallory’s office has insisted time and time again that funding for the streetcar’s construction and operation is already allocated, so taking any money from the transit fund will be unnecessary. Specifically, the city will tap into casino revenue to operate the streetcar, on top of the $11 million federal grant.
In an op-ed for The Cincinnati Enquirer Monday, Mallory said the real issue goes back to an ongoing lawsuit between SORTA and the city. In 2010, the city diverted money from the transit fund to pay for street lights. That prompted a lawsuit from SORTA, asking the courts to define the limits of the transit fund.
The mayor’s office sees the wording from SORTA as an attempt from the transit agency to score a minor victory in the legal battle. If the city government accepted the wording, it would be agreeing to a limited transit fund, which is essentially what SORTA wants.
SORTA’s wording also makes it so all transit fund money will continue going to the Metro bus system, which is the agency’s sole service today.
But even SORTA says the disagreement is getting blown out of proportion by media outlets and public officials. Sallie Hilvers, spokesperson for SORTA, says the wording in the approved agreement was the board’s attempt to ensure the transit fund isn’t used for the streetcar, but, for the most part, it’s “really just procedures.”
Hilvers insisted the disagreement over wording has plenty
of time to be worked out, and it will not hinder collaboration between
the city of Cincinnati and SORTA.
The agreement will need to be worked out before summer 2013 for the streetcar to stay on track.
By now anyone who's interested in Cincinnati politics probably has heard about the insensitive and over-the-top comment posted Sept. 11 on Twitter by a leader of an anti-streetcar group.
Mark Miller, treasurer for the Coalition Opposed to Additional Spending and Taxes (COAST), posted the following:
3% of FDNY died 10 yrs ago by terrorism. Today Cincinnati lost 17.5% of fire companies by brownout to pay for a streetcar. Which is worse?
At first glance, it might seem like a rail line between downtown Cincinnati and the city of Milford would earn support from the same people who back the $132.8 million streetcar project, but streetcar supporters, including advocacy group Cincinnatians for Progress, say they oppose the idea and its execution.
Critics of the overall project, called the Eastern Corridor, recently pointed to a November study from HDR. Despite flowery language promising a maximized investment, HDR found seven of 10 stations on the $230-$322 million Oasis rail line would result in low economic development, five of 10 stations would provide low access to buses and bikes, and the intercity line would achieve only 3,440 daily riders by 2030.
HDR’s findings for the Oasis line stand in sharp contrast to its study of Cincinnati’s streetcar project. The firm found the streetcar line in Over-the-Rhine and downtown would generate major economic development and a 2.7-to-1 return on investment over 35 years.
Given the poor results for the Oasis line, streetcar
supporters say local officials should ditch the Oasis concept and
instead pursue the 2002 MetroMoves plan and an expansion of the
streetcar system through a piecemeal approach that would create a central transit spine through the region.
“To have (the Oasis line) be our first commuter rail piece in Cincinnati … just doesn’t make sense to me,” says Derek Bauman, co-chair of Cincinnatians for Progress.
MetroMoves spans across the entire city and region, with the rail line along I-71 from Cincinnati/Northern Kentucky International Airport to downtown Cincinnati to King’s Island fostering particularly high interest.
Voters rejected the MetroMoves plan and the sales tax hike it involved in 2002, but streetcar supporters say public opinion will shift once the streetcar becomes reality in Cincinnati.
“That’s been proven in other cities, especially ones that have not historically been transit-oriented,” Bauman says, pointing to Houston and Miami as examples of cities that built spines that are now being expanded.
Opposition to the Oasis line is also more deeply rooted in a general movement against the Eastern Corridor project. The unfunded billion-dollar project involves a few parts: relocating Ohio 32 through the East Side, the Oasis rail line and several road improvements from Cincinnati to Milford.
Supporters of the Eastern Corridor claim it would ease congestion, at least in the short term, and provide a cohesiveness in transportation options that’s severely lacking in the East Side.
Opponents argue the few benefits, some of which both sides agree are rooted in legitimate concerns, just aren’t worth the high costs and various risks tied to the project.
“When it comes to widening roads and highways, it’s kind of like loosening your belt at Thanksgiving. Somehow traffic always fills to fit,” Bauman says. “Highway expansion, especially in urban areas, is not the future. It’s not even the present in some areas.”
The big concern is that the relocation of Ohio 32 might do to the East Side and eastern Hamilton County what I-75 did to the West Side, which was partly obliterated and divided by the massive freeway.
“It hurts the cohesiveness of our communities when you create these big divides,” Bauman argues. “You would see that repeat itself.”
Officials are taking feedback for the Eastern Corridor and Oasis rail line at EasternCorridor.org.
This article was updated to use more up-to-date figures for the cost of the Oasis rail line.
Traffic can be awful — not just for drivers, but economies
and the environment as well. A study released Tuesday by the Texas A&M Institute
of Transportation found Cincinnati lost about $947 million in 2011 to delays on the road, coming in at No. 27 nationwide.
The Annual Urban Mobility Report also ranked Cincinnati No. 37 nationwide for extra time stuck in traffic, with the average Cincinnati commuter spending an extra 37 hours on the road in 2011. In comparison, the average Columbus commuter spent 40 extra hours in traffic in 2011, and the typical Cleveland commuter spent 31 extra hours. For all three cities, estimates were unchanged from 2010.
Traffic jams also have a major impact on climate change. According to the report, congestion caused cars to produce an extra
56 billion pounds of carbon dioxide nationwide, with Cincinnati commuters producing 421
The report shows why it’s important for governments to reduce traffic congestion with transit projects like the Cincinnati streetcar. In general, public transportation leads to less congestion by taking cars off the road as people use buses, streetcars and trains instead. But some cities have taken it even further. By adopting exclusive lanes for buses and streetcars, cities like San Francisco have made public transportation more attractive, which makes people more likely to forsake their own cars in favor of public alternatives.
A local conservative group is making a lot of use of member and lawyer Chris Finney. The Coalition Opposed to Additional Spending and Taxes (COAST) was involved in two lawsuits filed this week: one regarding the Blue Ash Airport deal and another regarding Cincinnati Public Schools (CPS).
Criticism of the Blue Ash Airport deal is not new for COAST. The group has repeatedly criticized the deal, largely because as much as $26 million from the deal will be used to fund Cincinnati’s $110 million streetcar. In the past, COAST has repeatedly characterized the streetcar as a “boondoggle.”
The deal between Blue Ash and Cincinnati is not new, but it did get reworked earlier this year. In 2006, the $37.5 million deal had Cincinnati selling Blue Ash some land on the Blue Ash Airport property, which Blue Ash would then use to build a park. Blue Ash voters approved the deal, which contained a 0.25 percent earnings tax hike, in a two-to-one margin.
When Cincinnati couldn’t get a $10 million grant from the Federal Aviation Administration (FAA), the city stopped working on the airport as it became too costly. The city then tried to shift the proceeds from the deal to the Cincinnati streetcar, but the FAA said funding must be used for airports since the property is classified as an airport.
Eventually, Cincinnati asked Blue Ash to rework the deal. The plan was Blue Ash would rescind the deal, and then Cincinnati would officially close down the airport and resell the land to Blue Ash while it’s no longer classified as an airport.
At first, city officials said $11 million of the opened-up money would go to the streetcar and $26 million would go to municipal projects. Since then, the city has shifted $15 million of that municipal project funding — supposedly temporarily — to help Duke Energy move underground utility lines from the path of the proposed streetcar route, at least until the city and energy company can work out an ongoing feud.
The reworked deal, which was approved by Blue Ash City Council in a 6-1 vote on Aug. 9, seemed like a win-win for both sides. Cincinnati would get more funding for ongoing projects, and Blue Ash netted $2.25 million from the deal — $250,000 to cover fees for Blue Ash’s new park and $2 million was subtracted from the deal since Blue Ash would no longer have to match the FAA grant.
But COAST does not approve. The organization doesn’t want any funding redirected to the streetcar, and it claims the reworked deal is not allowed. The lawsuit filed by Blue Ash resident Jeffrey Capell and Finney cites a section of the Blue Ash City Charter that disallows some contracts: “No contract shall be made for a term longer than five years, except that franchises for public utility services and contracts with other governmental units for service to be received or given may be made for any period no longer than twenty years.”
Mark Vander Laan, Blue Ash’s city solicitor, says the city charter section the lawsuit is referencing is irrelevant. He argues the deal is not a contract as the city charter defines it; instead, it’s a mortgage and debt instrument. In the Blue Ash City Charter, there’s another section that deals with debt instruments, and that’s what the rescinded deal falls under, according to Vander Laan. He says the city would not function as it does today if the lawsuit’s claim was correct: “If that were the case, all the bonds we’ve ever issued would have been incorrect.”
Vander Laan says the real issue here is disapproval of the streetcar, not any legal technicalities: “They may have a complaint about the streetcar, but that’s not the city of Blue Ash’s issue at all. We don’t think it’s even an appropriate basis to challenge this.”
He added, “Frankly, if somebody had an issue with (the deal), they should have taken that issue back in 2006 and 2007.” That’s when Blue Ash voters first approved the airport deal, but back then, the money wasn’t going to the streetcar, which didn’t even exist at the time.
In another legal battle, COAST filed a lawsuit against CPS over staff allegedly campaigning for Issue 42, a ballot initiative that will renew a CPS levy voters approved in 2008. The case goes back to 2002, when Tom Brinkman, chairman of COAST, sued CPS for “illegal and unconstitutional use of school property for campaign purposes,” according to the lawsuit. That case ended in a settlement, which forced CPS to enter into a “COAST Agreement” that says, “CPS will strictly enforce a policy of preventing … Other Political Advertisements on CPS Property.”
But COAST now says that agreement has been broken, and the
lawsuit cites emails as evidence. The emails show staff promoting voter
registration drives, which aren’t directly linked to Issue 42, and
staff offering to contribute and volunteer to the campaign. In the
emails, there are a few instances of Jens Sutmoller, Issue 42’s campaign
coordinator, asking CPS staff to give him personal emails, which shows
he was trying to avoid breaking any rules.
In CityBeat’s experience, CPS officials have been pretty strict with following the settlement with COAST. In a Sept. 20 email, Janet Walsh, spokesperson for CPS, told CityBeat she could not provide some levy-related information during work hours: “Yes, but due to constraints about doing levy-related work on work time (we can't), it may have to wait until I can get on my home computer.”
COAST has endorsed a “No” vote on Issue 42. In CityBeat’s
in-depth look into CPS and Issue 42 (“Battered But Not Broken,” issue
of Oct. 3), Brinkman defended COAST’s position by saying they’re not
necessarily against the school getting funding. COAST is more
interested in holding the school accountable: “It’s a five-year levy.
The reason we have five-year levies is so the public can gauge after
four or four and a half years how the entity where the taxes are going
to is doing with the money.” In that sense, for COAST, it’s important to
bring the levy renewal to voters as late in the game as possible —
November 2013 in this case. CityBeat this week endorsed a "Yes" vote on Issue 42 here.
Criticism of CPS levies is also not new for COAST. The group campaigned against last year’s new, permanent $49.5 million levy, which CPS said it needed to meet new technology needs and keep some buildings open.
Mayor Mark Mallory last
night announced during his State of the City address that the city
has chosen the model and vendor for the first batch of streetcars.
The mayor's office today released details about the vendor, along with renderings of the streetcars Cincinnatians can expect to see traversing the 4-mile
loop that will cover 18 stops connecting The Banks, Government Square, Fountain
Square, Broadway Commons, the Gateway Quarter and Music Hall.
According to the release,
the vendor, CAF USA, has produced light rail vehicles for Pittsburgh,
Sacramento and Houston and streetcar vehicles for the international
cities such as Besançon and Nantes, France; Belgrade, Serbia;
Antalya, Turkey; Stockholm, Sweden; Edinburgh, Scotland; and Spanish
cities Zaragoza, Granada, Sevilla, Bilbao and Vitoria.
Officials in February broke ground the Cincinnati Streetcar system, and the city hopes to add additional phases connecting the Uptown area near the University of Cincinnati once funding is secured.
The following are renderings released by the city:
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.
Despite promising to
move on after he failed to cancel the $132.8 million streetcar
project, Mayor John Cranley continues criticizing the
project in interviews and social media.
Most recently, Cranley appeared on Local 12’s Newsmakers program and threatened
to eventually replace the Southwest Ohio Regional Transit Authority (SORTA)
board, which manages local Metro bus services, in response to board members’
defunct offer to take up streetcar operating costs. (City Council sets SORTA
appointments, not the mayor.)
“The fact is they were
willing to cannibalize bus service,” Cranley said,
contrary to SORTA’s insistence that their offer would not have affected bus
services. “I just felt that was a huge violation of what SORTA is supposed to
be about and what Metro is supposed to be about and what public transportation
is supposed to be about.”
Throughout the 24-minute
interview, Cranley referenced the
streetcar project when discussing the city’s parking meters and other subjects
— a continuation of repetitive anti-streetcar tactics Cranley
deployed on the campaign trail and in mayoral debates against former Vice Mayor
“I think the project is
wasteful and not worth the investment,” Cranley said
when asked about the project. “I think we would have been better off making the
hard decision to cut bait.”
Still, Cranley later added, “Obviously, since the supermajority of
council went against my wishes, I have to respect the process. So I’m not going
to try to sabotage the streetcar.”
The interview also
follows comments on social media. After the former head of the Cincinnati Art
Museum criticized the streetcar, Cranley tweeted on Dec. 27, “(N)ow some Orwellian commentators
will say art director not ‘progressive.’”
The continued anti-streetcar rhetoric comes despite promises to move on that Cranley made after Councilman Kevin Flynn announced he would provide the final vote needed to veto-proof City Council’s decision to continue the streetcar project.
“As I tell my son when he doesn’t get his way, it’s time to move on,” Cranley
said on Dec. 19.
heated rhetoric is nothing new in his campaign against the streetcar project.
After the Nov. 5
election, Cranley told The Cincinnati Enquirer
the streetcar debate “is over.” Cranley’s comments
marked a high level of confidence after voters elected a mayor and council
supermajority that seemingly opposed the streetcar project, but his statement
to The Enquirer proved to be wrong after Council Members Flynn, David
Mann and P.G. Sittenfeld decided to continue the
Cranley also called city officials “incompetent” after
they projected that canceling the streetcar project would cost nearly as much as
completing it. Once again, Cranley’s comments proved
to be wrong — an independent audit found city officials were largely correct in
their assessment — but still showed the level of confident, heated rhetoric
that follows the mayor’s campaign against the streetcar project.
At the very least, Cranley’s rhetoric proves that while the policy debate over the streetcar is over for now, the public discussion is not. The question is whether the messaging will work as the project moves forward and the streetcar becomes a reality of Cincinnati.