If City Council does not agree to lease Cincinnati’s parking system, the city manager’s office says the city will be forced to lay off 344 employees, including 80 firefighter and 189 police positions, but critics argue there are better alternatives.
In a memo dated to Feb. 26, City Manager Milton Dohoney Jr. wrote that the city will also have to close three community centers and six pools; eliminate Human Services Funding, which aids the city’s homeless and poor; and reduce funding for local business groups, parks, nature education for Cincinnati Public Schools and environmental regulations, among other changes. In total, the cuts would add up to $25.8 million — just enough to balance the deficit that would be left in place without the parking plan.
In addition to the cuts, failing to approve the parking plan, which leases the city’s parking meters for 30 years and lots and garages for 50 years to the Port of Greater Cincinnati Development Authority, would displace plans to convert Tower Place Mall, construct a 30-floor tower with a grocery store downtown, accelerate the the I-71/MLK Interchange project, acquire the Wasson Line right-of-way for a bike trail and add $4 million to the next phase of Smale Riverfront Park (“Parking Stimulus,” issue of Feb. 27).
Democratic Vice Mayor Roxanne Qualls, who’s running for mayor, has come out in favor of the parking plan, but John Cranley, another Democrat running for mayor, says he opposes the deal because it will hurt downtown businesses.
“It’s the boy who cried wolf,” Cranley says. “In 2009, 2010, 2011 and 2012 … they threatened to lay off police and firefighters, and it never happened.”
Cranley says he would rather take $10 million from projected casino revenue and $7 million from current parking revenues to help clear the deficit. For the remaining $8.8 million, he would cut non-essential programs, which would exclude police, fire, garbage collection, health, parks and recreation, street pavement and Human Services Funding, across the board by 10 to 15 percent. If that wasn’t enough, he would then move to the essential programs, which he says make up about $300 million in the $368.9 million budget, with a 1-percent across-the-board cut.
He says his solution would have the upside of fixing structural deficit problems in Cincinnati’s General Fund, whereas the one-time lease of the city’s parking assets will only take care of the deficit for the next two years.
Meg Olberding, city spokesperson, says City Council could use the casino revenue to pay for the deficit, but $4 million of it is already set for the Focus 52 program, which funds neighborhood development projects.
“Council can use whatever revenue sources they want,” Olberding says. “That’s why the memo … says we can either use this plan or another plan.”
Cranley says he would not do away with the Focus 52 program, but he would instead find funding for it in the Capital Budget, which is separate from the General Fund.
Olberding says City Council could approve the use of about $3 million in parking meter revenue for the General Fund, but the rest of the parking money, which comes from lots and garages, is tied to an enterprise fund, which, by state law, means the city would have to sell its parking lots and garages before it could obtain money for the General Fund.
Cranley, who also opposes the streetcar project (“Back on the Ballot,” issue of Jan. 23), says it
would be possible to pay for the I-71/MLK Interchange and other projects
if the streetcar wasn’t taking up funds. If it was up to him, he says
he would remove streetcar funding and use it on other development
projects “without batting an eye.”
In the Feb. 27 City Council meeting, Vice Mayor Roxanne Qualls said the Budget and Finance Committee will likely vote on the city manager’s parking plan on March 4 or March 11.
The company in charge of building Cincinnati's streetcars says the city would incur substantial costs if it cancels the streetcar project after it's already gone through some construction and design work.
The Nov. 30 letter from CAF USA Vice President Virginia Verdeja to former Mayor Mark Mallory arrived just one day before Mayor John Cranley, who opposes the streetcar project, and an anti-streetcar majority were sworn in.
"CAF will have to recover all the incurred expenses as well as all the additional cost of cancelling the contract, which would be substantial too," Verdeja writes in the letter.
The letter explains that, on top of the sunk expenses on design work, cancellation would require CAF to pull back on various established deals with subcontractors, which would spur further costs.
For streetcar supporters, the letter renews fears of litigation that could crop up if the project were canceled and contractors decided to pursue their full payday. Those legal costs would fall on the already-strained operating budget that pays for day-to-day services like police and firefighters instead of the capital budget that finances big capital projects like the streetcar, according to city spokesperson Meg Olberding.
On Nov. 21, Streetcar Project Executive John Deatrick warned the costs of canceling the $132.8 million streetcar project could nearly reach the costs of completion after accounting for $32.8 million in estimated sunk costs through November, a potential range of $30.6-$47.6 million in close-out costs and up to $44.9 million in federal grant money that would be lost if the project were terminated.
Earlier on Sunday, hundreds of streetcar supporters rallied in Washington Park and walked the planned streetcar route in support of the project. They're threatening a referendum if the new City Council moves to pause or cancel the project.
City Council plans to vote on pausing the project on Monday. Because of threats from the federal government that a mere delay could lead to the loss of federal grants, streetcar supporters claim a pause would equate to cancellation.
Read the full letter below:
Updated at 6:13 p.m. with the PDF of the letter.
Cincinnati 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:
Dozens of residents and business owners gathered in Over-the-Rhine on Tuesday to launch a campaign that seeks to persuade Mayor-elect John Cranley and the newly elected City Council to support the $133 million streetcar project.
Attendees included Ryan Messer, who used his life savings to renovate his home in Over-the-Rhine; Derek Bauman, co-chair of Cincinnatians for Progress; Jean-Francois Flechet, owner of the Taste of Belgium; and Derek dos Anjos, owner of The Anchor.
“We’re here today to keep the conversation going outside of political rhetoric and partisan politics,” Messer said. “Simply put, the streetcar is a component of Cincinnati economic development, and it’s a project that grows the whole city — not just an urban core, which, by the way, is an important part of developing this region.”
The group intends to lobby Cranley and the newly elected council, which appear poised to cancel the project when they take office in December.
At least three of nine elected council members — P.G. Sittenfeld, David Mann and Kevin Flynn — have told media outlets that they want a full accounting of the project before making a final decision. Another three — Chris Seelbach, Yvette Simpson and Wendell Young — are on the record as supporting the project. The final three — Christopher Smitherman, Charlie Winburn and Amy Murray — adamantly opposed the project in the past.
Members of the pro-streetcar 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 referendum if council passes an ordinance undoing the streetcar project and possible legal action.
As CityBeat first uncovered, the costs of canceling the project are currently unknown, and some of the costs could actually fall on the operating budget that pays for police, firefighters and human services instead of the capital budget that is currently financing the streetcar project.
Much of the uncertainty falls on ongoing construction for the streetcar, which has continued despite the newly elected city government’s intent to stop the project. As of September, the city spent $23 million on the project and contractually obligated $94 million, some of which city officials say will need to be paid back even if the project were canceled.
The U.S. Department of Transportation also told city officials in a June 19 letter that nearly $41 million of nearly $45 million in federal grants would need to be returned if the project were terminated.
Supporters also claim Cincinnati would be giving up a 2.7-to-1 return on investment over 35 years if the city abandoned the streetcar now. That estimate is derived from a 2007 study conducted by consulting firm HDR, which was evaluated and supported by the University of Cincinnati.
Project executive John Deatrick says the HDR study is now outdated and the city is working on updating the numbers. Still, Deatrick says the project is intended to spur economic development, not just provide another form of public transportation.
The Nov. 13 issue of CityBeat will give a more in-depth look at the campaign to save the streetcar and some of the people involved in the movement.
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.
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.
The three measures set up $15 million to front to Duke Energy to move utility lines out of the proposed path; changes the source of funding to repay some $25 million in bonds used to pay for the streetcar; sells $14 million in bonds for streetcar improvements; and changes the municipal code to clarify that it is the responsibility of a utility to relocate its structures.
The $15 million comes from the $37 million sale of city-owned land near the former Blue Ash Airport.
Council voted 6-3 to approve the front money, improvement bonds and bond repayment, a vote that largely mirrored a Monday Budget and Finance Committee vote. Councilman Chris Smitherman was the sole “no” vote on the ordinance to change the municipal code.
Councilmembers Cecil Thomas, Wendell Young, Roxanne Qualls, Laure Quinlivan, Chris Seelbach and Yvette Simpson voted to pass funding, while Councilmembers Smitherman, P.G. Sittenfeld and Charles Winburn voted against.
“My concern with all of these votes … in particular the Blue Ash Airport dollars, these were promises that you made to the neighborhoods and I don’t have the confidence that the legal battle against Duke Energy is going to yield a 100 percent win for the city of Cincinnati, so there’s no assurance that these dollars are going to come back,” said Councilman Chris Smitherman, one of the most vocal opponents of the streetcar.
“I want to be clear that it’s something that I don’t support.”
The $15 million would be fronted to Duke to move its lines while the city and utility work out who is responsible for funding the move.
Duke estimates the full cost at $18 million and argues
that the lines would not have to be moved if the streetcar wasn’t being
built. The city maintains that it has always been the responsibility of
utilities to move or upgrade their structures — which the third measure
clarified in the municipal code. If the city loses a legal battle against Duke, it will not
recoup the $15 million.
The second proposal switches the source of funding for
streetcar bonds from money coming into city coffers from southern
downtown and the riverfront area to a 1995 fund set up to collect
service payments from the Westin/Star, Hyatt and Saks. The measure wouldn't use any additional new money for the streetcar.
That downtown area wasn’t bringing in as much cash as
expected but the city hopes to repay the other fund once the downtown
district — which includes the Banks and the casino — rebounds.
There’s a catch — municipal employees only get the raises and job security if the city’s parking meters, garages and surface lots are leased to a private company for 30 years.
City Manager Milton Dohoney wants to lease the facilities for at least $40 million upfront and a share of parking profits for the next 30 years. He’d use $21 million of the upfront payment to patch a $34 million deficit in the city’s budget.
During recent budget hearings before City Council, Dohoney said extra revenue was needed to avoid the layoff of 344 city employees.
In a memo to the mayor and city council members, Dohoney outlined the agreement between the city and the American Federation of State, County and Municipal Employees (AFSCME).
Any municipal employees who will lose their jobs because of the deal would be placed in other city jobs with no loss of wages. No city employees covered by the union would be laid off between 2013 and 2016. City employees will receive a 1.5 percent cost of living raise for the 2013-2014 contract year and another 1 percent raise for the next contract year. AFSCME members will continue city vehicle maintenance work from 2013-2016.
However, if City Council doesn’t approve of the plan to privatize parking, city employees get nothing.
Public employees in Cincinnati have not been given raises in almost four years. Meanwhile, council voted last month to give Dohoney a 10 percent raise and a $35,000 bonus. Dohoney had not received a merit raise since 2007, but had collected cost of living adjustments and bonuses over the years.