City Council’s Budget and Finance Committee moved forward with two controversial measures in two 5-4 votes today that will allow the city to rehire retirees while still paying their pensions and create an executive project director position for the streetcar project.
One of the measures repeals the city’s ban on “double dipping,” which means rehired retirees will be able to simultaneously cash in a salary and pension payments. The measures will allow the city to hire John Deatrick, the current project manager for The Banks, to head the streetcar project. The city could not previously hire Deatrick because he formally retired from the city and is currently receiving pension payments.
The city says Deatrick has the experience and expertise necessary to help bring the streetcar project’s costs in line, but critics say the city should not be hiring someone for the streetcar project when the city is considering laying off 344 employees, including 189 cops and 80 firefighters, to balance the budget.
Deatrick says the layoffs are unfortunate, but he
emphasizes that they are occurring through the general fund. If he was
hired, Deatrick’s salary would be paid through the capital budget, a
completely separate fund that the city uses for major development
projects. Because of legal and traditional constraints, capital budget funds generally can’t be used to balance the general fund.
“The capital budget generates projects that bring money into the general fund,” Deatrick says.
Deatrick’s point is similar to an argument often touted by City Manager Milton Dohoney Jr., who says the city needs to economically grow out of structural budget deficits. Dohoney and other city officials say the true cause of Cincinnati’s structural budget imbalance has been the city’s dwindling population in the past decade, and bringing people back to Cincinnati through economic development projects, including the streetcar, is a better approach than austerity that would cause more layoffs and economic pain.
Others, particularly Democratic mayoral candidate John Cranley, aren’t convinced. In a press statement that used vocabulary that often comes from streetcar opponent COAST (Coalition Opposed to Additional Spending and Taxes), Cranley said, “Since day one the streetcar has been a poorly conceived, poorly managed boondoggle that is now costing the city even more money. The fact that this being done while police officers and firefighters are facing layoffs is a slap in the face of those who risk so much to make sure that our city is safe.”
But the city says Deatrick’s involvement could help bring
the streetcar project’s costs down, and Deatrick seems to agree.
“That’s been my whole ‘shtick,’ ” Deatrick says, before citing numerous aspects of the streetcar project he would be interested in looking at to bring costs in line.
Opponents have pointed to the streetcar’s multiple problems, including unexpected costs and delays, as proof the project has been doomed from the start. But Deatrick says it’s normal for big projects to deal with hurdles, and he cautions he would expect to deal with more rising problems if he takes the job.
“Any time you try to build something — even out in the middle of a corn field — you’re going to have unexpected, unanticipated issues,” he says. “These things happen, and that’s what project management is all about.”
Deatrick says he has long supported the streetcar, and he plans to expand the project up to the University of Cincinnati and the rest of the uptown area if he’s put in charge.
While Deatrick has discussed heading the streetcar project with city officials, no formal offers have been made yet. Still, City Council members and Dohoney repeatedly named Deatrick as a potential candidate in the special session of City Council today.
Some council members said they were concerned the double-dipping measure will be used for more similar hires in the future, which could raise hiring costs as the city pays for multiple employees’ salaries and pensions at the same time.
Democratic council members Roxanne Qualls, Laure
Quinlivan, Yvette Simpson, Cecil Thomas and Wendell Young supported the
measures. Democrats Chris Seelbach and P.G. Sittenfeld, Republican
Charlie Winburn and Independent Chris Smitherman voted in opposition.
Deatrick’s resume shows experience going back decades. Since June 2008, Deatrick has headed The Banks project, which recently won the American Planning Association’s 2013 National Planning Excellence Award for Implementation (“Bank On It,” issue of Jan. 16).
Before that, he worked as deputy director and chief engineer at the District of Columbia Department of Transportation from May 2002 to August 2007, where he says he helped manage parts of the D.C. streetcar, among other projects.
Prior to his work at D.C., Deatrick started his career as an urban development
technician at Cincinnati’s Department of Transportation and Engineering on September 1973. He helped with many projects around the city before eventually rising to the director position in
November 1999, where he remained until May 2002.
The streetcar is one of the few issues dividing Democratic mayoral candidates Cranley and Qualls, making the 2013 mayoral race another important election for the future of the project (“Back on the Ballot,” issue of Jan. 23).
As part of its slate of endorsements announced today, the Cincinnati U.S.A. Regional Chamber of Commerce stated it's opposed to Issue 48, the proposed charter amendment that would block construction of Cincinnati's planned streetcar system.
The Chamber announced its positions on six local issues that will appear on the Nov. 8 ballot.
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.
Convening in packed City Council chambers today, Cincinnati officials discussed the costs and benefits of the streetcar project in light of a $17.4 million budget gap revealed by the city administration on April 16. City Manager Milton Dohoney Jr. said the project could and should be saved, but a minority of public speakers and some City Council members did not seem convinced.
To balance the budget
gap, Dohoney said the city would have to pull funds
from multiple sources. He said he will offer specifics in writing
tomorrow, which invoked verbal disappointment from officials who were expecting details at the meeting.
“I'm disappointed in this presentation,” said Councilman Chris Smitherman. “We're here today to hear how we're going to pay for it.”
The meeting, which was
called by Democratic Vice Mayor Roxanne Qualls shortly
after the budget shortfall was announced, covered a presentation from Dohoney, comments from public speakers and City Council
questions to Dohoney. Despite expectations prior to the meeting, no specifics were given for closing the budget gap even after extensive questioning.
Dohoney did reveal the price tag for halting the streetcar project: $72 million. According to Dohoney, the project has already cost the city $19.7 million, and the city would have to spend another $14.2 million in close-out costs. Another $38.1 million in federal grants would have to be returned to the federal government.
Dohoney added that terminating the project would also reduce faith in Cincinnati’s competitiveness and ability to take on big development projects.
The budget gap was originally $22.7 million, but the city administration identified $5.3 million in potential cuts. Dohoney said further cuts would “alter the scope” of the project and push it into a “danger zone.”
The budget gap is a result of construction bids coming in $26 million to $43 million over budget. The lowest bid from Messer Construction, which came in $26 million over budget, has already expired, but Dohoney said the company is still willing to work on the streetcar project.
The city could rework the request for proposal for construction bids, but Dohoney said city officials and third-party experts agreed it’s unlikely that would effectively lower costs.
Throughout the meeting, streetcar opponents argued that the cost of the project is too high and the budget shortfall is proof the program is unsustainable.
Most of Dohoney’s presentation focused on the streetcar’s purpose. He said the streetcar would help drive
economic and population growth, which would then bring in more tax revenue to
help balance the city’s operating budget. That would represent a turnaround for Cincinnati, which has been steadily losing population since the 1950s during a period that has
coincided with disinvestment, urban flight and the dissolution of
the city’s old streetcar system.
Throughout his presentation, Dohoney cited multiple examples and studies that found streetcars can help grow local economies. He said the city has not pursued the streetcar because “it’s a cool thing to do,” but because it follows the expert advice given to city officials about what’s necessary to compete with other cities.
Dohoney’s argument was previously supported by HDR, which the city hired to do an economic impact study in 2007. HDR found major benefits to connecting Over-the-Rhine and the Central Business District, including travel cost savings, increased mobility for low-income individuals and economic development that would spur rising property values. The HDR study was entirely supported and echoed by a follow-up assessment from the University of Cincinnati.
Some critics have argued that the study is outdated because it was conducted before Over-the-Rhine’s recent revitalization, but Dohoney said there are still several hundred vacant buildings in the area, particularly north of Liberty Street.
The project has faced continued opposition from Democratic mayoral candidate John Cranley, Republicans and the conservative Coalition Opposed to Additional Spending and Taxes (COAST). They say the project is too expensive and they’re skeptical of the economic growth being promised by city officials.
Opponents of the
streetcar have so far put the project on the ballot twice, but Cincinnati voters rejected the referendum efforts. Still, the streetcar may be on the ballot
again this year through the 2013 mayoral race between Democrats Cranley and Qualls (“Back
on the Ballot,”
issue of Jan. 23). Cranley opposes the streetcar, while Qualls supports it.
The streetcar project was originally supposed to receive $52 million in federal funds through the state government, but Republican Gov. John Kasich pulled the funds after he unseated Democratic Gov. Ted Strickland.
Beyond the financial cost, Dohoney pointed out Kasich’s decision raised concerns about the project’s feasibility among previous supporters, leading to more hurdles and delays. He said Duke Energy in particular began stalling efforts to move utility lines to accommodate for streetcar tracks because the company grew weary of the project’s prospects.
Duke’s reluctance led to a conflict with the city over who has to pay to move utility lines — a conflict Duke and the city agreed to resolve in court. While the court battles play out, the city set aside $15 million from the Blue Ash Airport deal to move utility lines, but city officials say they will get that money back if the courts side with the city.
The city originally expected $31 million in private funding for the streetcar project, but those expectations were dampened as a result of the Great Recession, which forced local companies to scale back private donations.
John Deatrick, the current project manager for The Banks, previously told CityBeat that it’s normal for large projects to deal with multiple hurdles. Deatrick, who the city wants to hire to manage the streetcar project, said, “Any time you try to build something — even out in the middle of a corn field — you’re going to have unexpected, unanticipated issues. ... These things happen, and that’s what project management is all about.”
Dohoney said the current phase of the streetcar project is only a starter line between Over-the-Rhine and Cincinnati’s business district, but city officials are already planning for a second line that would run up to the University of Cincinnati and hospitals in uptown. If Dohoney’s vision for the project were completed, streetcars would run on multiple lines all around the city, ranging from the Cincinnati Zoo to The Banks.
The streetcar budget debate comes amid another debate regarding a $35 million deficit in the city’s operating budget. Some streetcar opponents have tried to link the two issues, but the streetcar is funded through the capital budget, which cannot be used to balance the operating budget because of legal and traditional constraints.
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.
City Manager Milton Dohoney Jr. defended the streetcar project at a special four-hour session of City Council yesterday, but the city manager did not reveal any specifics over how the project’s $17.4 million budget gap could be closed. Dohoney revealed the price of halting the project would be $72 million: the project has already cost the city $19.7 million, the city would have to spend another $14.2 million in close-out costs and another $38.1 million in federal grants would have to be returned to the federal government. Most of Dohoney’s presentation focused on the streetcar’s economic benefits, but opponents say the budget gap proves the streetcar project is unsustainable and its costs are too high.
The Cincinnati Enquirer identified the 17-year-old honors student at LaSalle High School who tried to commit suicide
in front of a classroom of 22 other students yesterday, even though parents asked press to provide privacy. The student remains
alive and in critical condition this morning. No other students were physically hurt, and classes are
resuming as normal. (Update: The student’s name was removed from this post upon the family’s request.)
The city is moving to sell Tower Place Mall for $1 to Brook Lane Holdings, an affiliate of JDL Warm Construction, so the construction company can pour $5 million into the defunct mall and convert it into a garage with street-level retail space. Financing the project at Pogue’s Garage, which is across the street from Tower Place Mall, is still being worked out now that the parking plan has been delayed by court battles and a referendum effort.
Cincinnati’s police and firefighter unions are filing a lawsuit over the city’s health care dependent audit. The city is asking employees to verify whether spouses and children are legitimately eligible for health care benefits by turning over documents such as marriage licenses, birth certificates and tax returns. The unions’ attorney told WVXU the unions are willing to provide the necessary documents, but he said they’re concerned the process is too intrusive and difficult.
Two firms are getting tax credits for creating jobs in the Greater Cincinnati area: 5Me, which creates manufacturing software, and Festo Americas, which specializes in factory and process automation. Altogether, the credits could create 312 jobs in the region.
A Democratic state senator hinted yesterday at letting voters decide whether Internet sweepstakes cafes should be allowed in Ohio. State officials, particularly Attorney General Mike DeWine, claim Internet cafes are hubs for criminal activity. The Ohio House already passed a measure that would effectively ban the cafes, but some are cautious of the ban as the Ohio Senate prepares to vote.
An intelligent headlight makes raindrops disappear.
Some people may prefer death to being saved by this terrifying robot snake.
Mayor-elect John Cranley and the newly elected City Council announced on Tuesday that, upon taking office in December, they will terminate the city’s plan to lease its parking meters, lots and garages to the Greater Cincinnati Port Authority, following an agreement with the Port Authority to hold off on a bond sale that would have financed — and effectively sealed — the deal. But it remains unclear how much it will cost to terminate the plan, default on the lease agreement with the Port Authority and allow the Port to break its contracts with private companies that would have operated the assets under the deal. The current city administration argues the parking plan is necessary to help balance the budget over the next two years, pay for economic development projects around the city and modernize the city’s parking assets so, for example, parking meters can accept credit card payments. Opponents argue the plan gives up too much control over the city’s parking assets by outsourcing their operations to private companies based around the country.
But some business leaders are upset with the death of the parking plan because it leaves no visible alternative for funding major development projects like the interchange at Interstate 71 and Martin Luther King Drive.
Cranley now says he will not allow a referendum on any ordinance undoing the streetcar project and will instead try to work with supporters of the project to find another way to put it on the ballot if they can gather enough petition signatures. Cranley says blocking a referendum is necessary to avoid spending money during a referendum campaign that could last months. But for supporters of the streetcar, Cranley’s decision seems highly hypocritical following his repeated praise for the “people’s sacred right of referendum” on the campaign trail after City Council blocked a referendum on the parking plan. If the project is placed on the ballot, it will essentially be the third time it’s brought to a public vote; opponents of the project in 2009 and 2011 pursued two ballot initiatives that many saw as referendums on the streetcar.
Meanwhile, Over-the-Rhine businesses and residents yesterday officially launched a campaign to save the streetcar project from Cranley and a newly elected City Council that appears poised to cancel the project. Touting the project’s potential return on investment and cancellation costs, the group plans to lobby newly elected officials to vote in favor of keeping the project going. The group invited Cranley and all elected council members to join them at a town hall-style meeting on Nov. 14 at the Mercantile Library, where supporters will discuss their path forward. So far, supporters have publicly discussed a concerted lobbying effort, a ballot initiative if council passes an ordinance undoing the streetcar project and possible legal action against the city.
The Cincinnati Enquirer’s editorial board is apparently unpleasantly surprised that Cranley undid the parking plan, even though the board endorsed Cranley for mayor after he ran in opposition to the parking plan for nearly a year.
An Ohio Senate bill caps the spending ability of the Controlling Board, a seven-member legislative board that previously approved the federally funded Medicaid expansion despite the Ohio legislature’s opposition. Gov. John Kasich angered many Republican legislators when he decided to go through the Controlling Board to get the Medicaid expansion, which is a major part of Obamacare.
Meanwhile, the Ohio legislature is working on changes to Medicaid that would cap future cost increases and employ professional staff for a Joint Medicaid Oversight Committee that would have the ability to review Medicaid programs and agencies. The bill also includes a portion that clarifies its passage “shall not be construed with endorsing, validating or otherwise approving the (Medicaid) expansion.”
Despite attempts from city officials and local business leaders, Saks Fifth Avenue is leaving downtown to open a store at Kenwood Collection.
Kentucky’s state auditor will look at the Cincinnati/Northern Kentucky International Airport board’s spending policies and expenses, following reports from The Enquirer that the board spent exorbitant amounts on travel, dining and counseling.
The Sixth Circuit Court of Appeals denied the Milford-Miami Advertiser’s request to appeal a 2012 ruling that charged the Gannett-owned suburban weekly with defamation and ordered the paper to pay the defamed plaintiff $100,000 in damages. In a story titled “Cop's suspension called best move for city,” the newspaper wrongly implicated a Miami Township police officer who was previously accused but later exonerated of sexual assault.
Attorney General Mike DeWine warns that some typhoon relief requests could be scams.
Not satisfied with the mere wonder of beginning to exist, some stars explode in a rainbow of colors when they’re born.
The Coalition Opposed to Additional Spending and Taxes (COAST) has threatened to block a move that would allow Cincinnati to use $37.5 million from the 2007 sale of the Blue Ash Airport for projects other than aviation, $11 million of which would go to the Cincinnati streetcar.
The Blue Ash City Council voted Thursday to re-do the sale of 130 acres at the Blue Ash Airport to the City of Cincinnati. COAST says it wants to put the matter before voters in a 2013 referendum, which would halt the sale and re-instate the original agreement made in 2007 when Cincinnati made the sale.
The two cities decided to re-work the $37.5 million sale because a federal rule requires proceeds from the sale of an operating airport to be used for other aviation projects. The money would be returned, airport shut down and then the property re-sold to Blue Ash for the original amount.
“When they originally sold it they were stupid, which is typical of the City of Cincinnati, and did not realize that the proceeds on the sale of the airport have to go to other aviation-type things,” says COAST Chairman Tom Brinkman. “Now that they want to get the streetcar, they want to crack that money.”
Brinkman openly admits he doesn’t want the money to go to the streetcar (“We’re doing everything we can to make sure that boondoggle doesn’t occur”) but says COAST is working with a group of local pilots who want money from the sale to go to Cincinnati’s Lunken Airport.
Blue Ash is confident that the ordinance they passed approving the re-sale isn’t subject to referendum.
“Blue Ash believes everything enacted was lawful and would survive any challenge,” says City Solicitor Brian Pachenco. He declined to discuss specifics
The city wants the airport land to build a park.
Pachenco said the ordinance wasn’t written specifically to exempt it from referendum attempts, but nevertheless it falls under a section of the city’s charter that makes voters unable to recall it.
COAST isn’t so sure.
Chris Finney, legal counsel for COAST, said the buying and selling of land under the Blue Ash charter is subject to referendum. He said the ordinance was written to avoid using that language, but what was happening was in reality a sale.
For its part, Cincinnati doesn’t seem too concerned with the threatened referendum.
“We’re not going to talk 'what ifs' at this point,” city spokeswoman Meg Olberding said. “The streetcar has had two previous referendums that have been shot down.”
She pointed out that only $11 million of the sale was going toward the streetcar, and the remaining money would be available for other projects.
Cincinnati City Councilman Chris Seelbach was also unconcerned.
“COAST and groups like COAST have tried to put up every obstacle possible to prevent the streetcar from happening and we have overcome all of them,” Seelbach said. “I am 100 percent positive if this comes to a vote we will overcome it again and the streetcar will be built.”
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.
Cincinnati could lose up to $45 million in federal funds if it cancels the $133 million streetcar project, according to a new letter from the Federal Transit Administration released on Thursday by Mayor Mark Mallory.
The letter confirms much of what was stated in a previous June 19 letter to Mallory, and it presumably acts as a warning to Mayor-elect John Cranley, who intends to permanently cancel ongoing construction on the streetcar project once he takes office in December.
Cranley previously said he could lobby the federal government to re-appropriate the money to other projects, but the FTA letter unequivocally states the money is only for the streetcar project.
“FTA’s oversight contractor for the Project informs me that the City’s expenditures plus committed costs on the Project as of this date exceed $116 million, which is approximately 88 percent of the total project cost,” wrote FTA administrator Peter Rogoff. “These commitments include many construction activities that cannot be easily reversed — the City has relocated utilities, embedded rail in City streets, and purchased streetcars. Should the City choose to prematurely terminate the Project, all cost associated with closing down the project, including any claims from the contractors, will not be eligible for any federal reimbursement.”
The letter confirms that, as CityBeat originally reported, canceling the streetcar project carries its own costs.
Should the city cancel the project, it would first need to return nearly $41 million in federal grant money. The remaining $4 million in federal funds would fall under the discretion of Gov. John Kasich, who could shift the money to other parts of Ohio.
City spokesperson Meg Olberding previously told CityBeat
the city already spent $2 million of the federal funds. Olberding said the $2 million in repayments would need to come out of the operating budget
that pays for cops, firefighters and human services instead of the
capital budget that’s currently financing the streetcar project.
Since the operating budget has been structurally imbalanced since 2001, adding millions in costs could force the city to cut additional services or raise taxes.
Upon cancellation, the city would also need to pay back some of the $94 million in standing contractual obligations for the streetcar project. In many cases, the obligations reflect supply orders and other expenses contractors and subcontractors already took on but haven’t officially billed to the city. If the project were canceled, city officials say the already-spent money would need to be paid back, along with extra costs to close the project — to repave torn-up streets, for example.
Project executive John Deatrick previously told CityBeat that paying back the contractual obligations could involve litigation, which would also be paid for through the operating budget, as the city tries to minimize cancellation costs and private contractors try to recoup as much as they can from the project.
All of that is on top of the $23 million that’s already been billed to the project as of September, which should grow by $1.5 million each month as contractual obligations are turned into official bills, according to Deatrick.
The final decision on the streetcar project rests on City Council. Cranley told The Cincinnati Enquirer on Thursday that he’ll pursue a 30-to-90-day time-out on the project as the city conducts a full accounting of cancellation costs, completion costs and the potential return on investment of the project, following requests from Councilman P.G. Sittenfeld and incoming council members David Mann and Kevin Flynn — three crucial swing votes in the newly elected council of nine — for more information before placing a final vote on the project.
The talk of cancellation already spurred some Over-the-Rhine residents and businesses to launch a campaign to save the streetcar. Cranley insists it’s too expensive and the wrong priority for the city, but supporters tout independent studies and their own experiences to argue it would spur economic development. The pro-streetcar group will meet on Thursday at 7 p.m. at the Mercantile Library, 414 Walnut St. #1100, downtown Cincinnati.
The full letter: