by German Lopez
105 days ago
Only $7.5-$24.5 million left after fully shutting down project, paying back feds
Streetcar Project Executive John Deatrick on Thursday
revealed that the city might only keep $7.5-$24.5 million if it cancels
the $132.8 million streetcar project.
That means the city could potentially spend more than 94
percent of the project’s total costs before it manages to fully close
down the streetcar project, which is currently undergoing construction
and tied up to various federal grants and business contracts.
The presentation was given in advance of Mayor-elect John
Cranley and the newly elected City Council taking office in December.
Cranley is an ardent opponent of the streetcar project, and a majority
of the City Council says it wants to pause the project and consider
Cranley’s proposed alternative to the streetcar — a trolley bus system
— would cost $10-$15 million in capital funds, according to supporters of the rubber-tire trolley alternative. If streetcar cancellation costs were to reach the high end of the city’s estimate and the trolley bus is paid for, the city could end up spending $140.3 million to cancel the streetcar project and build a
considerably less ambitious trolley bus line — about $7.5 million more
than it would cost to simply complete the streetcar project. If it’s completed, Cincinnati Budget Director Lea Eriksen says operating the streetcar would cost between $3.4-$4.5 million each year, which city officials say could come from various potential sources, including a special improvement district that would raise property taxes within three blocks of the streetcar route.But the operating budget cost would be a wash if Cranley pursues the trolley bus system, which, according to advocates, will cost slightly more to operate than the streetcar. Cranley says the operating cost for the trolley bus is concerning if it holds true.Following Deatrick’s presentation, Cranley held a press conference in which he flatly denied the current city administration’s estimates. He says he will tap new experts to run over the numbers while the project is put on pause.“We’re going to bring in new, objective leadership, not the current leadership that is clearly biased toward the project and intent on defying the will of the voters, which was clearly expressed a couple weeks ago in this election,” Cranley says.
Deatrick’s cancellation projections account for $32.8 million in estimated sunk costs through November and a potential range of $30.6-$47.6 million in close-out costs, which include
construction to close the project — such as
repaving torn-up roads — and orders on vehicles and other
supplies that are already placed but not officially billed.The federal government has also allocated $44.9 million in
federal grants to the streetcar project. In a letter released by the
city administration on Nov. 14, the Federal Transit Administration (FTA)
explicitly stated that $40.9 million would be taken back if the project
didn’t adequately progress; the remaining $4 million would be left
under the supervision of Gov. John Kasich, who could shift the money to
other parts of the state.
But Deatrick’s estimates don’t consider the unknown cost
of litigation, which would need to come out of a city operating budget that is already structurally imbalanced,
according to Meg Olberding, the city’s spokesperson.
The estimates also don’t consider that the city could
potentially forgo spending $7.4 million in contingency funds on the
project if it goes through completion and remains within budget, which
would lower the project’s effective cost to $125.4 million.
If the city cancels the project, Deatrick says it’s also
more likely that the city would lose in its legal battle against Duke
Energy, which could add up to $15 million in costs. That money is
tentatively allocated from the sale of the Blue Ash Airport as the city
and Duke argue in court as to who has to pay for moving utility lines to
accommodate for the streetcar tracks.
Those are the potential financial costs, but city
officials also warn that canceling the project could have a detrimental
impact on the city’s image.
“That’s what the city would be known for forever,” says
Councilwoman Laure Quinlivan. “To throw this away would be
City officials also warn that canceling would be pulling
back on a light rail project that President Barack Obama’s
administration has clearly prioritized.
“The city-federal relationship is excellent right now,” Deatrick says. “There would be immediate damage to that.”
The 200-plus workers currently involved the project would
also be displaced. Councilwoman Yvette Simpson points out pausing or
canceling the project in December would leave those workers jobless for
the holiday season.
Another concern is the impact of cancellation on the
relationship between the federal government and Southwest Ohio Regional
Transit Authority (SORTA), which operates the Metro bus system and will
operate the streetcar if it’s completed. If the city is unable to pay back
the grants to the federal government within 30 days, Deatrick says
the FTA could cut SORTA grants for bus service and potentially halt some
local bus services.
One concern raised by Councilman Chris Seelbach and
Councilman-elect Kevin Flynn, one of the three potential swing votes in
the incoming council of nine, is whether the project’s estimated return on
investment is still 2.7-to-1 over 35 years. That number is derived from a
2007 study conducted by consulting firm HDR, which was later evaluated
and affirmed by the University of Cincinnati.
Deatrick points out the numbers were re-evaluated by HDR
in 2011, and they still seem to hold true. He says there are still
plenty of vacant buildings along the 3.6-mile streetcar line that could use the encouraged investment, despite
some of the revitalization seen in the Over-the-Rhine and downtown areas
that the streetcar route would cover.
The 2.7-to-1 return on investment is also “a very, very
conservative estimate,” says Deatrick. He claims HDR could have relied
on numbers from other cities, such as Portland, Ore., that saw
considerably better returns on their streetcar systems.
Still, Flynn and Councilman-elect David Mann, another
potential swing vote, say they want to scrutinize the cancellation
estimates before making a final decision on the project.
Vice Mayor Roxanne Qualls, a long-time streetcar supporter
who lost to Cranley in her mayoral bid, encourages a re-examination of
the numbers. But she cautions, “If what has been presented today stands up to scrutiny,
there’s absolutely no reason to cancel the project.”
Flynn won’t say whether he would reconsider his past
opposition to the project if the numbers hold up. But Mann says, “If
they do hold up, that’s fairly persuasive.”Both Flynn and Mann also say that they would be willing to pause the project while clearer estimates are crunched.
But that could present a short time window. If the project
doesn’t adequately progress, the federal government could take back its
grant money. Based on city officials’ estimates, that provides a 30-day
window to re-calculate cancellation costs and the potential return on investment.
Pausing the project would also impose its own set of costs as some workers and equipment are retained.
Councilman P.G. Sittenfeld, who’s also seen as a swing
vote, could not be reached for comment. He’s currently in Washington,
D.C., to meet with White House officials for an issue unrelated to the
streetcar.Three elected council members already support the streetcar project, so only two of the three potential swing votes would need to vote in favor of it to keep it going.Updated with Mayor-elect John Cranley’s comments and clearer, corrected numbers.
0 Comments · Wednesday, November 20, 2013
City Council on Nov. 14 accepted City
Manager Milton Dohoney’s resignation.
0 Comments · Wednesday, November 20, 2013
Streetcar supporters packed Mercantile
Library and Fountain Square on Nov. 14 to start a two-week campaign that
seeks to prevent the incoming mayor and City Council from canceling the
by German Lopez
111 days ago
Money would put shelter closer to $75,000 minimum goal
City Council’s Budget and Finance Committee on Thursday
called for the city administration to locate $30,000 to help fund the
winter shelter, which would push the shelter closer to the $75,000 it
needs to remain open from mid-to-late December through February.
The shelter currently estimates it’s at approximately
$32,000 in contributions, according to Josh Spring, executive director
of the Greater Cincinnati Homeless Coalition.
The city administration now needs to locate the money and
turn the transaction into an ordinance, which will officially allocate
the funds. Spring says that should go in front of the Budget and Finance
Committee in the next couple weeks.
Although the $75,000 is often cited as the shelter’s goal,
Spring emphasizes that it’s only the minimum. If early March turns out
to be a particularly cold, the shelter would prefer to stay open for
some extra time, which would require money above the $75,000 minimum.
But without the city’s contribution, the shelter won’t have enough money to stay open beyond even 30 days.
Spring says the program is necessary to keep Cincinnati’s
homeless population from freezing to death. Councilman P.G. Sittenfeld
echoed the sentiment at Thursday’s committee meeting, saying it would be
shameful if the city allowed people to die due to winter conditions.
The winter shelter aims to house 91 people each night and
kept roughly 600 people from the cold throughout the 2012-2013 season,
according to Spring.
“It’s a relatively cheap program to run,” Spring previously told CityBeat. “To serve about 600 people with $75,000 is pretty good.”
Still, Spring says money has been more difficult to
collect this year. He attributes that to reduced enthusiasm as the
concept becomes more commonplace.
“When we started doing this three years ago, it was sort
of a new thing,” Spring explained. “It’s not so new anymore, which makes
bringing in dollars more difficult. But the need hasn’t changed.”
The shelter is put together by the Greater Cincinnati
Homeless Coalition, Drop Inn Center, Strategies to End Homelessness,
Society of St. Vincent De Paul and Metropolitan Area Religious Coalition
of Cincinnati. It’s supported largely by private contributions.
Anyone can donate to the winter shelter — and Drop Inn Center — at tinyurl.com/WinterShelterCincinnati. To contribute specifically to the winter shelter, type in “winter shelter” in the text box below “Designation (Optional).”
by German Lopez
111 days ago
Streetcar supporters pack event, federal funds threatened, Dohoney to get severance pay
Supporters of the $133 million streetcar project packed Mercantile Library and Fountain Square
last night to start a two-week campaign to prevent Mayor-elect John
Cranley and the newly elected City Council from halting the ongoing
project. The goal is to convince at least five of the nine newly elected
council members to support the project. So far, streetcar supporters
have at least three pro-streetcar votes: Chris Seelbach, Yvette Simpson
and Wendell Young. Now, they’re trying to convince another three — Kevin
Flynn, David Mann and P.G. Sittenfeld — to support continuing the
project; all three spoke against the streetcar on the campaign trail,
but they’ve recently said they want a full accounting of the project’s
completion costs, cancellation costs and potential return of investment
before making a final decision. CityBeat covered the campaign and the people involved in greater detail here.
Hours before the event began, Mayor Mark Mallory released a letter from the Federal Transit Administration that explicitly stated
canceling the project would cost Cincinnati nearly $41 million in
federal funds and another $4 million would be left under the discretion
of Gov. John Kasich, who could shift the money to other parts of Ohio.
Cranley previously stated he could lobby the federal government to
re-appropriate the money to other city projects, but the letter makes it
quite clear that’s not in the plans right now. On the elevator ride up
to the Mercantile Library event, Sittenfeld commented on the letter to CityBeat, “I will say that today's news is a big gain in the pro-streetcar column.”
City Council yesterday accepted the resignation of City Manager Milton Dohoney,
just one day after Cranley announced Dohoney’s leave and his support
for it. Although council members acknowledged they had to accept the
resignation in lieu of the Nov. 5 election results, they said they were
unhappy with the behind-the-scenes approach that was taken by Cranley throughout the process. For the year following his resignation,
Dohoney will receive $255,000 in severance pay and health benefits
through the city, which will cost an already-strained operating budget
that’s been structurally imbalanced since 2001.
Flaherty & Collins, the Indianapolis-based developer that’s building a downtown apartment tower at Fourth and Race streets, said it’s interested in the retail space being left vacant by Saks Fifth Avenue.
Northern Kentucky residents last night got a look at a regional strategy to fight the growing heroin problem in the area.
The report, put together by substance abuse and medical experts, law
enforcement officials, governmental leaders and business
representatives, calls for more physicians and long-term treatment
options to address the issue. “We cannot arrest or incarcerate our way
out of the problem,” said Dr. Lynne Saddler, director of the Northern Kentucky
Independent District Health Department. “The success of this
plan really hinges on having sufficient treatment options and resources
available so that everyone seeking and wanting treatment can easily
Union Township Rep. John Becker introduced a bill
in the Ohio House this week that would ban most public and private
health insurers from providing abortion coverage. The bill has yet to be
assigned to a committee. Becker describes himself as one of the most
conservative members of the Ohio legislature. He’s also supported the
Heartbeat Bill, which would ban abortion once a heartbeat is detected; called needle-exchange efforts part of the “liberal media
agenda”; and lobbied for the impeachment of a judge who allowed the
state to recognize the same-sex marriage of Jim Obergefell and John Arthur, who recently passed away from Lou Gehrig’s disease.
Ohio Secretary of State Jon Husted urged the Ohio Constitutional Modernization Commission
to address politicized redistricting. Under the current system, the
political party in charge — the last time around, Republicans — can use
demographic trends to redraw congressional district boundaries to
maximize the votes of supporters and split and dilute the votes of
opponents. Although Husted is now calling for reform to make
redistricting more representative of the state’s actual political make-up, he opposed a ballot initiative in 2012 that would have placed
an independent committee in charge of redistricting.
Speaking at a Cleveland steel mill, President Barack Obama talked up U.S. manufacturing and its potential for economic growth.
The Christmas holiday tree arrives at Fountain Square tomorrow.
Tomorrow is also the day of the One Stop Drop recycling event,
where anyone can drop off electronic and other waste — TVs, computers,
cellphones and chargers, No. 5 plastics such as butter tubs and yogurt
containers, single-use grocery bags and used writing instruments like
pencils and pens — from 10 a.m. to 2 p.m. at the Whole Foods Market in
Rookwood Commons, 2693 Edmondson Road.
Five crashes in Covington, Ohio, left six horses dead and one injured.
More Ohioans also died on the road in 2012 than the year before.
The world’s oldest animal — a mollusk — missed Christopher Columbus landing in the Americas by 14 years.Follow CityBeat on Twitter:• Main: @CityBeatCincy• News: @CityBeat_News• Music: @CityBeatMusic• German Lopez: @germanrlopez
by German Lopez
112 days ago
Supporters hold town hall-style meeting in effort to stop cancellation of project
Supporters of the $133 million streetcar project on Thursday night packed Mercantile Library and Fountain Square to start a two-week campaign that seeks to prevent the incoming mayor and City Council from canceling the ongoing project.Turnout was particularly strong as supporters reached the 200-person capacity at Mercantile Library before the event started. Another 200 watched the event from the Jumbotron screen at Fountain Square, according to the event's organizers.In attendance were several Over-the-Rhine business owners and residents; council members P.G. Sittenfeld, Chris Seelbach and Wendell Young; and several supporters of the project from around the city.The goal of the event was to organize supporters and begin a lobbying campaign to convince the three perceived swing votes in the incoming council — Sittenfeld, David Mann and Kevin Flynn — to support continuing the project. All three have spoken against the streetcar in the past, but they told CityBeat they want to fully account for the project's cancellation costs, completion costs and potential return on investment before making a final decision.Speakers urged supporters to contact the nine newly elected council members and raise awareness about the streetcar's benefits before Mayor-elect John Cranley, who opposes the streetcar project, and the new City Council take office in December.Ryan Messer, a lead organizer of the effort to save the streetcar, spoke about the advantages of the streetcar project for much of the event. "This is a good economic tool that helps all of Cincinnati," he repeatedly stated.Supporters have some empirical evidence to base their claims on. A 2007 study from consulting firm HDR found the streetcar project would generate a 2.7-to-1 return on investment over 35 years. The HDR study was later evaluated and supported by the University of Cincinnati.Project executive John Deatrick acknowledges the 2007 study is now outdated and the city is working on updating the numbers. But he says the streetcar project is supposed to be viewed as an economic development vehicle, not just another transit option.Supporters also warned of the potential costs of canceling the streetcar project. Hours before the gathering, Mayor Mark Mallory released a letter from the Federal Transit Administration that explicitly stated the city would lose nearly $41 million in federal grant dollars if the project were canceled, and another $4 million would be placed in the hands of Gov. John Kasich to do as he sees fit.City spokesperson Meg Olberding previously told CityBeat that the city already spent about $2 million of the federal funds. If the project were canceled, she says the money would have to be repaid through the operating budget that funds police, firefighters and human services instead of the capital budget currently financing the streetcar project.The operating budget has been structurally imbalanced since 2001, so adding millions in costs to it could force the city to cut services or raise taxes.The FTA letter might already be playing an influence for at least one of the swing votes on City Council. On the elevator ride up to Mercantile Library, Sittenfeld told Seelbach and CityBeat, "I will say that today's news is a big gain in the pro-streetcar column."Another threat for the city is potential litigation from contractors, subcontractors, taxpayers and Over-the-Rhine residents and businesses who invested in the project or along the streetcar line with the expectation that the project would be completed. Litigation costs would also come out of the operating budget, according to Olberding."As a trial lawyer, this is actually appealing," said Democratic attorney Don Mooney. "For the city, not so much."Supporters also outlined the potential damage that pulling from the project could do to the city's image, given that developers, businesses and the federal government have put their support and dollars toward the streetcar."Is Cincinnati that city that will dine you and wine you and leave you alone at the altar?" Young asked.But if the lobbying effort, cancellation costs and threat of litigation aren't enough, supporters also presented one more option to save the streetcar: a ballot initiative. Mayor-elect John Cranley on Thursday told The Cincinnati Enquirer that he would be open to allowing some sort of streetcar referendum on the ballot.The ultimate goal for supporters of the streetcar, beyond ensuring sustainable growth in the urban core, is to connect all of Cincinnati through a vast transit network, much like the streetcar lines that ran through Cincinnati before the city government dismantled the old system in the 1950s.That provides little assurance to opponents of the streetcar project. Cranley and at least three hard-liners in the incoming City Council — Amy Murray, Charlie Winburn and Christopher Smitherman — claim the project is too expensive and the wrong priority for Cincinnati. Discussing more phases makes the project appear even costlier to opponents who are already concerned with costs.In its comprehensive plan for 2040, the Ohio-Kentucky-Indiana Regional Council of Governments put the cost of various extensions — to the University of Cincinnati and surrounding hospitals, the Cincinnati Zoo, the Cincinnati Museum Center and the Broadway Commons area near the Horseshoe Casino — at more than $191 million, or $58 million more than the estimated cost for the current phase.But if Cincinnati never completes the first phase of the streetcar project, supporters say it could be decades before other light rail options are considered.
by German Lopez
112 days ago
Dohoney to get one year of severance pay following mayor-elect’s request
City Council on Thursday accepted City Manager Milton
Dohoney’s resignation, setting the stage for the end of more than seven
years of service that fostered Cincinnati’s nationally recognized economic turnaround, the $133 million streetcar project and
the controversial parking plan.
The request comes just one day after Mayor-elect John
Cranley announced Dohoney’s resignation. Cranley says he will appoint an
interim city manager once Dohoney officially steps down on Dec. 1 and
then begin a nationwide search for a permanent replacement.
For the year following his resignation, Dohoney will
receive $255,000 in severance pay — the same as his current annual
salary — and health benefits through the city. The extra costs will go
to an already-strained operating budget, which has been structurally
imbalanced since 2001.
Although council members acknowledged that they had to
accept the resignation in the aftermath of the Nov. 5 election, some
said they were unhappy with the behind-the-scenes approach Cranley took
to finalize Dohoney’s leave.
“It’s certainly not the process I would have liked,” said Councilman Chris Seelbach.
Others praised Dohoney’s work for the city, which lasted
through both the Great Recession and the beginnings of Over-the-Rhine and Cincinnati’s economic revitalization.
“He has served the city very well. He has been a leader in
terms of economic development across the city,” said Vice Mayor Roxanne
Qualls, who lost in her bid against Cranley for the mayorship.
Cranley and Dohoney differ on both the streetcar project
and parking plan, which would have outsourced the city’s parking meters,
lots and garages to the Greater Cincinnati Port Authority and private operators. Cranley opposes and plans to do away with both policies, while Dohoney helped establish both.
Cranley announced on Tuesday
that he, newly elected council members and the Port Authority agreed to
call off the parking plan once the new city government takes office on
Dec. 1, but it remains unclear how much it will cost the city to break
from the plan and its numerous contractual obligations.
Similarly, Cranley told The Cincinnati Enquirer in a
livestreamed interview on Thursday that he will try to put an estimated
30-to-90-day time-out on the streetcar project as the city conducts a
full accounting of how much it would take to cancel the project versus
continuing with ongoing construction and the potential return on
investment of completion.
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.
If the streetcar goes the way of the parking plan, Cranley
will effectively unravel two major milestones of Dohoney’s seven years
by German Lopez
112 days ago
Streetcar supporters to meet today, Dohoney to resign, city continues with retail plans
Supporters of the streetcar project are rallying in a last-stand effort to save the streetcar
from an incoming city government that’s threatening to cancel the
project. Supporters plan to meet today in a town hall-style meeting at 7
p.m. at the Mercantile Library, 414 Walnut St. #1100, downtown
Cincinnati. Some of the supporters of the movement are residents,
business owners and realtors in Over-the-Rhine who told CityBeat
that canceling the project will set the city’s economic momentum back.
Mayor-elect John Cranley disagrees, but the decision is ultimately up to
the newly elected City Council to cancel the project, and at least
three of nine newly elected council members previously seen as streetcar opponents —
P.G. Sittenfeld, David Mann and Kevin Flynn — told CityBeat
they’d like to evaluate the costs of canceling the project and the
potential return of investment versus the cost of completing
City Manager Milton Dohoney will resign on Dec. 1
and receive one year of severance pay, Cranley announced yesterday. To
political watchers, the news comes as very little surprise. Cranley and
Dohoney disagreed on two key issues — the streetcar project and parking plan,
both of which Cranley opposes and Dohoney supported and helped get off
the ground. Once the new mayor and City Council take over in December,
Cranley says he will appoint a yet-to-be-named interim city manager and
begin looking for a permanent replacement.
Despite Saks Fifth Avenue’s departure, the city intends to move forward
with its plans to build a retail corridor downtown, and others have
approached the city about taking Saks’ space, according to Kathleen
Norris, managing principal of Urban Fast Forward and the city’s retail
leasing consultant. Saks announced yesterday that it’s closing down its
downtown store and moving to Kenwood Collection. Although the move is a
blow to the city, a few city officials were quick to point to other
growth in downtown Cincinnati as an example of what will attract new
retail outlets in the future.
A deal is nearly set
to fund the $107 million interchange project at Interstate 71 and
Martin Luther King Drive. As part of the deal, the Ohio Department of
Transportation will pay for $52 million, and Cincinnati and the
Ohio-Kentucky-Indiana Regional Council of Governments (OKI) will take a
loan from the state infrastructure bank to pay for their share. OKI says
it will pay for its portion of the loan through $25 million in federal
funding, but it’s so far unclear how the city will pay for its share of
the project. The outgoing city administration intended to pay for the project through the
now-canceled parking plan, which would outsource the city’s parking
meters, lots and garages.
Cranley says the city can get out of the parking plan
without defaulting on the lease agreement with the Greater Cincinnati
Port Authority, but Cranley’s position is at odds with the stated
opinion of officials in the outgoing city administration and Port
Authority. Cranley announced on Tuesday that the parking plan will be called off
once he and the new council take office in December, but it’s unclear
how much it will cost to break out of the plan and its various
The Ohio House held a hearing
yesterday for two bills that would increase safeguards for victims of
domestic violence, including new housing and employment protections. CityBeat previously covered the story of Andrea Metil, a domestic violence victim who is calling for greater protections.
Only 1,150 Ohioans signed up for Obamacare through the troubled HealthCare.gov
portal, the U.S. Department of Health and Human Services announced
yesterday. Both the Ohio-wide measure and nationwide number — 106,185 — fell far
short of the federal government’s expectations for the first month of
enrollment. But many of the troubles are caused by technical problems
that have made HealthCare.gov largely unworkable for most Americans. The
federal government is working to correct the errors by December, but The Washington Post reports that the website likely won’t be fully functional by then.
Meanwhile, Ohioans will be able to enroll in the now-expanded Medicaid program on Dec. 9. Republican Gov. John Kasich got the federally funded Medicaid expansion for two years through the Controlling Board, a seven-member legislative panel, despite the Republican-controlled legislature’s opposition.
The Ohio House yesterday approved a bill that reforms municipal taxes,
which businesses support but cities oppose. Supporters argue it will
simplify the tax code so businesses can more easily work around the
state and from county to county, but opponents claim it will reduce how
much revenue cities receive.
Kasich temporarily delayed convicted child killer Ronald Phillips’s execution so Phillips can donate his non-vital organs to his mother and possibly others.
Cincinnati-based Procter & Gamble is shuffling some of its top positions.
Here is how Mars might have looked 4 billion years ago.Follow CityBeat on Twitter:• Main: @CityBeatCincy• News: @CityBeat_News• Music: @CityBeatMusic• German Lopez: @germanrlopez
by German Lopez
120 days ago
New anti-streetcar majority faces unknown costs, hit to operating budget with cancellation
City officials on Wednesday reasserted that it remains
unknown how much it would cost to cancel the $133 million streetcar
project, and city spokesperson Meg Olberding and project
executive John Deatrick agreed the unknown costs are a big concern.
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
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
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
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.
Over-the-Rhine businesses and residents fight back as newly elected city government threatens to cancel streetcar project
1 Comment · Wednesday, November 13, 2013
Over-the-Rhine businesses and residents
are organizing with supporters of the $133 million streetcar project in a
last-stand effort to keep the project on track.