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.
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.
Somewhat of an agreement, anyway. Mallory said that the city and Duke will go before a judge in Common Pleas court, who will make the final decision as to who should pay for the utility relocation. According to the agreement, Duke Energy will begin moving its utilities in the next few weeks, and the court decision will determine cost responsibility later. The city and Duke are expected to file in Common Pleas court within the next few weeks, although the court decision could take years to finalize.
Roxanne Qualls, city council member and Democratic mayoral candidate, has long been a supporter of the streetcar project, which she values as an indispensable economic investment for the city of Cincinnati. Yesterday, Qualls announced her request for the city to ramp up the streetcar construction timeline in order to have the project completed in time for the All-Star Games, which will take place in Cincinnati July 2015. Her announcement came just weeks after the city revised its timetable to delay project completion until April 2016.
In a letter from Qualls to Mallory and Dohoney, she explains: “This may present a
challenge, but it is one I am sure the administration is capable of
meeting. The streetcar will serve a critical role in efficiently and
effectively moving visitors to and from Great American Ballpark and
allowing them to conveniently visit other venues such as Fountain
Square, Horseshoe Casino, Over-the-Rhine, Washington Park, etc.”
At the meeting, Mallory announced that the city would shoot for construction to be completed prior to the games, but there were no guarantees. The streetcar builder will ultimately set the timeline for the project, according to Jason Barron, Mallory's director of public affairs.
CityBeat recently covered the streetcar project's delays and how the 2013 mayoral race could affect its progress here.
For both the candidates, the issues are about where they want to see the city going. Cranley says the city government lacks transparency and openness as it prioritizes controversial ideas to support downtown over Cincinnati’s neighborhoods. Qualls says the investments are continuing Cincinnati’s nationally recognized momentum and bringing growth to both downtown and the neighborhoods.
Whether the subject was the Metro bus system or bringing more flights to Cincinnati/Northern Kentucky International Airport, Cranley repeatedly referenced his opposition to the streetcar project and his belief that it is siphoning city funds away from more important projects and forcing the city to raise property taxes to pay for debt.
“Money doesn’t grow on trees,” Cranley said. “We have to re-prioritize.”
Qualls argued the streetcar project will produce economic growth and grow the city’s tax base, which the city could then leverage for more development projects. That claim has been backed by studies from consulting firm HDR and the University of Cincinnati, which put the streetcar’s return on investment at three-to-one.
Cranley argued Hop On Cincinnati,
a trackless trolley system, is a better option. He said the project would cost considerably less
and come with more flexibility since it wouldn’t run on set tracks.
But in a 2007 letter citing swathes of data from cities around the nation, Charlie Hales, now mayor of Portland, Ore., found trackless trolleys consistently underperformed rail projects in terms of economic development and ridership.
At this point, cancelling the streetcar project would also carry its own costs. As of May, city officials estimated they had already spent $20 million on the project and cancelling it would cost another $45 million in federal funding and $14 million in close-out costs.
But expanding the streetcar project into a second phase, as Qualls advocated, would also carry its own set of unknown costs.
On other issues, Qualls touted the city’s plans to lease its parking assets to the Greater Cincinnati Port Authority as a potential avenue for economic development.
Qualls and the current city administration originally supported leveraging the city’s parking meters, lots and garages through the lease to pay for budget gaps and economic development projects. But as the city managed to balance its budget without the lease, the focus has moved toward using the lump-sum and annual payments from the lease to only pay for more development projects.
Cranley claimed, as he long has, that the deal will have a negative impact on a generation by shifting control of the city’s parking assets from the local government to the unelected Port Authority and private companies. He also criticized Qualls and the city administration for withholding a memo that criticized the lease’s financial details and hastily pursuing the lease with limited public input.
Cranley also implied that the deal will actually lower long-term revenues by capping the city’s parking revenues at $3 million a year.
“It’s almost hard to respond to such misinformation, quite frankly,” Qualls responded.
On top of an estimated $92 million lump sum, the city projects that annual payments will start at $3 million a year but eventually grow much larger. Qualls claimed the yearly installments would reach $20 million by the end of the 30-year lease.
Qualls also took issue with Cranley’s assertion that the Port Authority is withholding contract documents for the private companies it will hire to operate Cincinnati’s parking assets. She reminded Cranley that Port board members explicitly told him at a public meeting that those documents will be made public two weeks before they’re signed.
The candidates also sparred on a number of issues typical of political campaigns: government transparency, negative campaign ads and rhetoric vs. facts.
But the debate also highlighted the large amount of agreement between Qualls and Cranley. Both agree the city shouldn’t increase the earnings tax. Both claim Cincinnati needs to structurally balance its budget and stop using one-time sources for budget fixes. Both echoed the need to leverage federal support for the Brent Spence Bridge project. Both criticized the state for refusing to grant tax credits to Pure Romance, a local company that is now considering moving to Covington, Ky., because of the state’s refusal.
Cranley and Qualls got the most votes in the Sept. 10 mayoral primary,
allowing both to advance to the general election. Cranley received 55.9
percent of the vote, while Qualls obtained 37.2 percent. Their opponents each failed to break 5 percent.
Voter turnout for the mayoral primary was only 5.68 percent. That was lower than the 15-percent turnout for the mayoral primary held on Sept. 11, 2001, the day of the terrorist attacks on the World Trade Center and Pentagon, and the 21-percent turnout for the 2005 mayoral primary.
In the past two mayoral races with primaries, the primary winner went on to lose the general election.
Voters will get to decide between Qualls and Cranley, along with City Council candidates and other ballot issues, on Nov. 5.
Cincinnati City Council on Friday approved a budget that relies on parking privatization as a means to plug a $34 million budget deficit while also raising property taxes in 2014.
Mayor Mark Mallory opened up the council meeting with a moment of silent prayer for the 27 students and adults killed at an elementary school in Connecticut.
“I want us all to take a moment and put into perspective what we’re doing today,” he said.
Council voted to increase the property tax by about 24 percent, from 4.6 mills (a mill is equal to one-tenth of a cent) to 5.71 mills. That means Cincinnatians would pay an additional $34 for every $100,000 of their home’s value.
The vote reverses a move made last year by conservatives on council, who reduced property taxes.
Council also passed a budget that relies on $21 million from a proposed lease of the city’s parking facilities — a deal that is expected to be voted on in March. Of the proposals submitted to the city so far, Cincinnati stands to gain $100 million to $150 million in an upfront payment and a share of the profits over the 30-year lease.
“My concern about balancing this budget with a onetime revenue source by selling our parking system seems to be ill advised,” said Independent Councilman Chris Smitherman. “We don’t know how council will vote in March … but we have tied not only the budget to this one time revenue source, but we have also tied reciprocity.”
Council nixed a plan to eliminate tax reciprocity for people who lived in Cincinnati but worked elsewhere and paid income tax in both cities.
Though the budget doesn’t mention parking privatization, council hasn’t mentioned other options to close the budget deficit.
If opponents of parking privatization want to keep facilities under city control, they would have to come up with $21 million in revenue elsewhere or make $21 million in cuts.
Councilman P.G. Sittenfeld suggested using casino revenue, cutting travel expenses, downsizing the ratio of managers to workers, sharing services with nearby jurisdictions and downsizing the city’s fleet as ways to cut down the budget.
Councilwoman Laure Quinlivan, long an advocate of downsizing the police and fire departments, voted against the property tax increase in protest of what she said was bloated spending on departments that were outpacing population growth.
The budget also requires Cincinnati to accept police and fire recruit classes in 2014, regardless of whether the city gets a federal grant to fund the classes.
The budget also restores the Cincinnati Police Department’s mounted patrol, which patrols downtown on horseback. The city will use $105,000 from off-duty detail fees from businesses that hire off-duty officers. Council also voted to start charging those businesses an extra $1.64 on top of the off-duty pay.
Council also voted to shift $50,000 for repairs and upgrades to the Contemporary Arts Center to pay for maintenance and beautification at Washington Park, which is operated by 3CDC.
Mallory puts the issue in perspective on the proposal's page on The Huffington Post: "In Cincinnati, we have had more infant deaths in recent years than victims of homicide. Our community, justifiably, invests millions of dollars, immense political capital, and large amounts of media attention in reducing our homicide rate. It's time to start doing the same for our infant mortality rate."
Mallory's proposal would create an Infant Vitality Surveillance Network, which, according to a press release sent out by Mallory's office, has already been launched via a pilot version with significant success. Here's how it works: When a woman finds out she's pregnant, she's enrolled in First Steps, a care program that maintains a secure database of new mothers and monitors pregnancies.
The competition garnered applications from 305 cities, and Cincinnati was one of 20 finalists selected. If recognized, Cincinnati could win a $5 million prize or one of four $1 million prizes to help implement and sustain the Infant Mortality Network.
"City after city deals with this issue, but in Cincinnati, we are dealing with an infant mortality rate that is twice the national average. And half of those deaths occur in just five zip codes. So we know exactly where the problem is, we know exactly what community is having the issue. ... We're really trying to create a program in Cincinnati that can be replicated all across the country. So that in city after city, they can see the same type of success that we are seeing — continuing to drive that infant mortality rate down so that we are saving babies' lives," Mallory says in the Mayors Challenge finalist video below.
According to data from 2007-09 from the Cincinnati Health Department, the five zip codes experiencing the highest infant mortality rates are: 45219 (30.4), 45202 (24.2), 45246 (20.7), 45203 (20.1) and 45214 (19.2). For more detailed information from the Cincinnati Health Department, click here.
Watch the full finalist video:
The mayor, Cincinnati Public Schools (CPS) and The Strive Partnership announced today a new joint initiative that won a $40,000 grant. The grant, which is funded by Target through the Cities of Service and Service Nation, will help tutors teach kids how to read by the third grade.
Mayor Mark Mallory made the announcement in a joint press statement with CPS Superintendent Mary Ronan and The Strive Partnership Executive Director Greg Landsman.
With the money, 50 tutors will help 100 students in first, second and third grade in five schools to meet the state’s new Third Grade Reading Guarantee, which requires third-grade students to be proficient in reading in state tests before advancing to the fourth grade.
“It all starts with reading,” Mallory said in a statement. “And there is no better way to help our kids learn to read than with one-on-one tutors who they can get to know and trust. A committed adult can make learning to read fun. This grant is going to have a huge impact on the lives of a lot of kids.”
The tutors will focus on five CPS schools: Roberts Paideia Academy in East Price Hill, Rockdale Academy in Avondale, Mt. Airy School, Pleasant Hill Academy in College Hill and Pleasant Ridge Montessori School.
Cincinnati was one of eight cities to win the grant. The other winners are Atlanta, Ga.; Baltimore, Md.; Charleston, S.C.; Chula Vista, Calif.; Kansas City, Mo.; Orlando, Fla.; and Vicksburg, Miss.
The new state reading requirement, which was pushed by Republican Gov. John Kasich, has received criticism from some Democrats and education experts. Research shows holding kids back hurts more
than helps. After reviewing decades of research, the National Association of
School Psychologists found grade retention has “deleterious long-term
effects,” both academically and socially.
In a replay of the Republican kerfuffle after President Obama’s State of the Nation address last year, there will be dueling GOP responses tonight to Mayor Mark Mallory’s State of the City address.
The Hamilton County Republican Party sent a press release this afternoon announcing that Amy Murray, an ex-Cincinnati City Council member, would provide the GOP’s formal response to Mallory’s speech.
A Democrat, Mallory will give his seventh State of the City address at 6:30 p.m. It will be presented in the Jarson-Kaplan Theater at the Aronoff Center for the Arts, located at 650 Walnut St., downtown.
After the press release about Murray’s response arrived at 2:55 p.m., however, current City Councilman Charlie Winburn sent a notice from his council office at 3:39 p.m. In the notice, Winburn announced he “will be available to give the Republican response” immediately after the mayor’s speech.
Winburn’s release helpfully noted that he is “the only Republican on Cincinnati City Council,” in case anyone wasn’t sure.
The concurrent responses are similar to what occurred after Obama’s speech in January 2011. At that time, U.S. Rep. Paul Ryan (R-Wis.) was selected to give the GOP’s official response to the address. But U.S. Rep. Michele Bachmann (R-Minn.), then a rising star in the Tea Party movement, decided to give her own response.
At the time, House Speaker John Boehner (R-West Chester) called the move "a little unusual."
Bachmann’s performance was widely lambasted, as she didn’t look directly at the camera but off to the side, and appeared disconnected and halting during her remarks. Bachmann later sought the GOP’s presidential nomination but dropped out of the race early after several disappointing primary finishes.
Murray is a former Procter & Gamble employee who now owns a consulting firm that tries to attract Japanese companies to Cincinnati. The party’s release stated she would give her response immediately following Mallory’s address in the Fifth Third Bank Theater’s lobby at the Aronoff Center.
A Hyde Park resident, Murray ran unsuccessfully for Cincinnati City Council in 2009, finishing in 12th place out of 19 candidates. She then was appointed by party leaders in January 2011 to fill the remainder of Councilman Chris Monzel’s term, but lost election in her own right the following November. In that election, Murray again finished 12th, this time out of 22 candidates.