An anti-tax group has made opposing Cincinnati’s planned streetcar project its primary cause in recent years, so it might be surprising to now find one of its leaders teaming up with a major streetcar advocate.
But that’s exactly what is happening later this month as Chris Finney, of the Coalition Opposed to Additional Spending and Taxes (COAST), co-hosts a political fundraiser with Chris Bortz, an ex-Cincinnati city councilman.
Cincinnati's streetcar project is getting another $5 million in federal funding. But before the money is handed over, the city must first eliminate cost overruns that have recently put the project in danger.
U.S. Secretary of Transportation Ray LaHood unveiled the news in a letter to Mayor Mark Mallory dated June 19. The letter acknowledges the project's recent cost overruns, but goes on to claim the federal government still backs the project.
"The DOT (Department of Transportation) continues to support your bold vision for economic development and enhanced transportation choices for the city of Cincinnati, and we believe that this project is a significant component of that vision. With that in mind, I want to provide up to $5 million in additional assistance from DOT," LaHood wrote.
But the money comes with two conditions: The city must first fix the streetcar project's cost overruns and restore certain aspects of the project, including a passenger information system and a screen or wall that would block power substations from public view.
The $5 million will be on top of the nearly $40 million the federal government has already contributed to the project through various grants and programs.
The funding bump comes just in time for City Council's Monday vote on the streetcar project's cost overruns.
In February, the city received construction bids that were $26 million to $43 million over budget, effectively leading to a $17.4 million budget gap and a $133 million overall cost for the project.
Since then, City Manager Milton Dohoney proposed a few fixes to City Council, including pulling funding from various capital projects and issuing more debt.
At the same time, Dohoney told City Council the city administration was working with federal officials to find opportunities for more federal funding. The new commitment is presumably the result of those discussions.
City Council is expected to vote on the budget fixes Monday. So far, council members Roxanne Qualls, Yvette Simpson, Wendell Young and Laure Quinlivan have vowed support, but Council will need a fifth vote — perhaps from Chris Seelbach or Pam Thomas — to pass the changes.
Read the full letter below:
“Americans drive fewer total miles today than we did eight years ago, and fewer per person than we did at the end of Bill Clinton’s first term,” the report reads. “The unique combination of conditions that fueled the Driving Boom — from cheap gas prices to the rapid expansion of the workforce during the Baby Boom generation — no longer exists. Meanwhile, a new generation — the Millennials — is demanding a new American Dream less dependent on driving.”
The report also says U.S. transportation policy “remains stuck in the past” and needs to “hit the ‘reset’ button.”
The report, which uses U.S. Department of Transportation data from 2012, found Americans were driving about 9,000 miles a year per person in 2012, down from a peak of nearly 10,000 in 2004. Until the peak, Americans had been driving more miles each year since the end of World War II.
The report finds the driving trend at odds with other means of transportation: “On the other hand, Americans took nearly 10 percent more trips via public transportation in 2011 than we did in 2005. The nation also saw increases in commuting by bike and on foot.”
The report attributes much of the shift to millennials, members of the generation born between 1983 and 2000, which the report says are more likely to demand public transportation and urban and walkable neighborhoods. The new expectations are largely driven by Internet-connected technologies, which are “rapidly spawning new transportation options and shifting the way young Americans relate to one another, creating new avenues for living connected, vibrant lives that are less reliant on driving,” according to the report.
PIRG finds the trend will likely stick as gas prices continue to rise, fewer Americans participate in the labor force and Americans demands less time spent in travel.
Even if millennials begin driving more in the future, the report’s findings show Americans are going to be driving much less in 2040 than federal agencies currently assume. “This raises the question of whether changing trends in driving are being adequately factored into public policy,” the report reads.
The report concludes local, state and federal governments should react to the new trend by planning for uncertainty, accommodating millennials’ demands, reviewing the need for more highway projects, adapting federal priorities, using transportation funds based on cost-benefit analyses and conducting more transportation research.
For Cincinnati, the trend could have implications for two major transportation projects: the MLK/I-71 Interchange and the streetcar.
The streetcar project uses capital funding sources — some uniquely tied to mass transit projects — that some opponents argue should be reallocated to support the MLK/I-71 Interchange project.
But the report’s findings seem to support the city’s current plans to push forward with mass transit projects like the streetcar, even while local funding for the MLK/I-71 Interchange project remains uncertain.
After making changes based on feedback from public meetings, the Ohio Department of Transportation priced the interchange project at $80 million to $102 million, or $10 million to $32 million higher than the previous estimate of $70 million.
The higher price didn’t lead to the same outcry that resulted from the streetcar project’s $17.4 million cost overrun, likely because of the interchange project’s broader support, secure state funding and feedback-driven circumstances.
Still, the city could share some of the higher cost burden for the MLK/I-71 Interchange project. Previously, the city planned to use funds raised by leasing its parking assets to the Port Authority for the interchange, but that plan is currently being held up in court.
In 2012, the city adopted Plan Cincinnati, the city’s first master plan since 1980. The plan advocates for more alternative methods of public transportation, particularly light rail and bike lanes. But the master plan does not establish means of funding, so City Council will have to approve funding over time to implement the plan.
After nearly two months of ups and downs, city leaders on Thursday announced Cincinnati will get a streetcar after all.
Speaking prior to a council vote, Mayor John Cranley and Councilman Kevin Flynn announced City Council has the six votes to overcome the mayor's veto and restart construction on the $132.8 million streetcar project.
Flynn was the final holdout in what some council members now call the "streetcar six." He was asking for a commitment from private contributors to cover the annual operating costs for the streetcar, which consulting firm KPMG estimated at $1.88-$2.44 million a year after fares and sponsorships.
The philanthropic Haile Foundation lived up to part
of the commitment by signing onto $900,000 a year for 10 years, Flynn
announced. That was enough of a commitment to move forward as the city
makes a broader effort to get all the operating costs off the city's
books, he said.
"That is a huge commitment, folks," Flynn added.
Flynn also acknowledged that the streetcar could foster new revenues in the city's operating budget and actually allow the city to take on bigger responsibilities.
Previous studies from consulting firm HDR and the
University of Cincinnati found the streetcar project will generate a
2.7-to-1 return on investment over 35 years.
Flynn, a Charterite, joined Democrats David Mann, Chris Seelbach, Yvette Simpson, P.G. Sittenfeld and Wendell Young in support of restarting the project. Republicans Amy Murray and Charlie Winburn and Independent Christopher Smitherman voted against it.Still, Cranley said he will continue opposing the streetcar project. He repeatedly stated council is making the wrong decision.
"I'm disappointed in the outcome," said Cranley, who ran in opposition to the streetcar.
Flynn reiterated his respect for Cranley, despite effectively dealing a major blow to Cranley's agenda.
Cranley "helped me get elected to this position, and I take that trust seriously," Flynn said.
Others were glad the city can now take on different issues without getting mired down in a contentious streetcar debate.
"I am so glad that this issue is done and over with," said Vice Mayor Mann, who voted in favor of the project.
officially changed his stance on the project after KPMG's audit found
canceling the project could cost nearly as much as completing it.
The final decision came at a cost to Cincinnati: The two-week pause of the project, which allowed KPMG to conduct its review, added $1.7-$2.8 million in costs, according to KPMG's audit. The city also allocated $250,000 to pay KPMG for its work.
Once it's completed, the streetcar line will run as a 3.6-mile loop in Over-the-Rhine and downtown.
Updated with results of City Council's vote and additional information.
City Council today approved funding and accountability measures for the Cincinnati streetcar project, allowing the project to move forward.
On Monday, the Budget and Finance Committee approved the measures, which CityBeat covered in further detail here. The funding ordinance closes the streetcar project's $17.4 million budget gap by issuing more debt and pulling funding from various capital projects, including infrastructure improvements around the Horseshoe Casino.
The accountability motion will require the city manager to update City Council with a timeline of key milestones, performance measures, an operating plan, staffing assessments and monthly progress reports.
Council members Roxanne Qualls, Laure Quinlivan, Chris
Seelbach, Yvette Simpson and Wendell Young voted for the measures.
Council members P.G. Sittenfeld, Chris Smitherman and Charlie Winburn
voted against both. Councilwoman Pam Thomas voted against the funding
ordinance, but she voted for the accountability motion.
City Council also unanimously approved funding for a development project on Fourth and Race streets, which includes a downtown grocery store, luxury apartment tower and parking garage to replace Pogue's Garage. CityBeat covered that project in further detail here.
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.
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.
Cincinnati would save just $7.8-$52.6 million in capital costs if it incurs tens of millions in additional expenditures to cancel the $132.8 million streetcar project, according to an audit from consulting firm KPMG released Wednesday.
By showing the potentially high costs of cancellation, the numbers could throw a lifeline to the streetcar project just one day before City Council decides whether to restart construction or permanently halt the project.
But Mayor John Cranley appears undeterred in his commitment to cancel the streetcar project. By accounting for the annual costs to operate the streetcar, Cranley estimates the city will actually save $102 million if it cancels the project.
The city already spent roughly $34 million on the project, according to the audit. Cancellation would add $16.3-$46.1 million in close-out costs, bringing the total costs of cancellation and money spent so far to $50.3-$80.1 million.
Completing the project would add $68.9 million in costs, after deducting $40.9 million in remaining federal grants, the audit found.
But the completion estimate assumes the city will need to pay $15 million in utility work — a cost that is currently being debated in court. If the city wins its case against Duke Energy, the utility company would be required to pay the $15 million and bring down the total completion costs to $53.9 million.
The audit also put the costs of operating the streetcar at $3.13-$3.54 million a year, lower than the previous $3.4-$4.5 million estimate. After revenues from fares, sponsorships and other sources, the city would need to pay $1.88-$2.44 million to operate the streetcar, according to the audit.
The reduced estimate for operating costs could become particularly important in deciding the project's fate as private contributors attempt to get the cost off the city's operating budget.
Delaying the streetcar project while KPMG conducted its audit also added $1.7-$2.8 million in costs, according to the audit. The city allocated another $250,000 to pay KPMG for its work.
The audit did not account for the potential costs of litigation if contractors and investors along the planned streetcar line sue the city to recoup costs.
City Council paused the streetcar project on Dec. 4 to obtain the cost estimates of completion, cancellation and annual operations. The full body of council will decide whether to restart the project on Thursday, before a Friday deadline set by the Federal Transit Administration for federal grants.
Read the full audit:
This post was updated at 12:59 p.m. with more information and details.
Councilman P.G. Sittenfeld on Monday announced he will vote to continue the $132.8 million streetcar project.
Sittenfeld’s support for the project means the incoming City Council might not have the six votes required for an emergency clause that would immediately halt the project and make a cancellation vote insusceptible to referendum.
If streetcar supporters successfully put a cancellation vote to referendum, the project would be forced to continue until the streetcar once again appears on the ballot in November 2014. The continuation would sink more costs into the project as construction is forced to progress for nearly a year.
Sittenfeld’s announcement preceded a vote from the outgoing City Council to officially write the streetcar project into law, which means Mayor-elect John Cranley, a streetcar opponent, won’t be able to take administrative action to halt the project and instead must bring the project to a City Council vote after he and other newly elected officials take office on Sunday.
The two remaining swing votes in the incoming council — David Mann, who Cranley on Monday named as his choice for vice mayor, and Kevin Flynn — previously discussed delaying the project as council analyzes whether it should permanently cancel or continue with currently ongoing construction.
But Sittenfeld equated a delay to total cancellation after warnings from the federal government made it clear that the city could lose federal funds for the project even if it only delayed progress.
If either Flynn or Mann move to support the streetcar project, streetcar proponents would gain a five-vote majority on the nine-member council to continue the project and preclude a referendum.
Sittenfeld characterized his decision as the better of “two bad choices.”
“We can pursue a project that has never earned broad public consensus and that has yet to offer a viable and sustainable budget,” he said at a press conference, “or we can scrub the project and throw away tens of millions of dollars in taxpayer money, forgo a massive federal investment and have nothing to show for the enormous effort and expense.”
To explain his decision, Sittenfeld cited concerns about how much money has been dedicated to the project at this point, including $32.8 million in sunk costs through November and a potential range of $30.6-$47.6 million in close-out costs, according to estimates from the city. Sittenfeld noted that, at the very least, half of the city’s $87.9 million share of the project will be spent even if the city pulls the plug now.
Sittenfeld also voiced concerns that pulling back from the project and effectively forfeiting $44.9 million in allocated federal funds would damage Cincinnati’s reputation with the federal government. That could hamper projects he sees as much more important, such as the $2.5 billion Brent Spence Bridge project.
“I did my part to avoid getting us into this reality, but it cannot be wished away,” Sittenfeld said.
There was one major caveat to Sittenfeld’s decision: the operating costs for the streetcar, which the city estimates at $3.4-$4.5 million a year.
Sittenfeld said the cost must not hit Cincinnati’s already-strained operating budget and instead must be paid through fares, sponsorships, private contributions and a special improvement district that would raise property taxes near the streetcar line.
A special improvement district would require a petitioning process in which property owners holding at least 60 percent of property frontage near the streetcar line would have to sign in favor of taking on higher property taxes to pay for the streetcar.
“Ultimately, that’s a decision for the citizens,” Sittenfeld said.
If the special improvement district doesn’t come to fruition, Sittenfeld cautioned that the streetcar project would be more difficult to support going forward.
Asked whether Sittenfeld thinks some of the people who voted for him will see his decision as a betrayal, he responded that his conclusion shows the “thoughtfulness and carefulness” people expect of him when it comes to taxpayer dollars, given the costs of cancellation.