Cincinnati mayoral race: Can the streetcar be canceled, and at what price?

Also needs council's OK; entails fees

CINCINNATI -- If you’ve ever heard the two leading candidates for Cincinnati’s mayor speak together publicly, you know it’s the one topic that cannot be avoided.

In fact, it’s the subject that usually is discussed more than any other when Roxanne Qualls and John Cranley are in the same room: the city’s streetcar project.

At one recent mayoral debate, Cranley mentioned the streetcar 23 times in just more than 60 minutes.

That’s because the long-planned project stirs more passion than probably any other city issue, and has a legion of ardent supporters and detractors.

First discussed in 2007, the streetcar project has faced numerous hurdles in becoming a reality.

Although City Council approved the project in April 2008, it wasn’t until February 2012 when officials held a splashy but largely symbolic groundbreaking ceremony in front of Memorial Hall in Over-the-Rhine.

And it took another 18 months – until August of this year – for construction to begin on installing tracks after extra money was allocated.

The project’s first phase involves a 3.6-mile looped route through downtown and Over-the-Rhine. Five streetcars will operate up to 18 hours a day, 365 days a year, when completed.

Ultimately, city officials want to extend the route into the uptown area, near the University of Cincinnati and several hospitals.

Qualls is an outspoken streetcar supporter, but Cranley has vowed to cancel the project if elected mayor. That difference has become the central issue in the race about who will lead the city for the next four years.

Qualls and Cranley are both Democrats. She currently is vice mayor, while he served on City Council from 2001-09.

Amid all the TV sound bites, campaign ads and debate rhetoric, two questions remain: Can the project actually be canceled? And, if so, what fallout would occur?

Boondoggle Or Redevelopment Generator?

“This project has become an enormous boondoggle,” Cranley said. “That money would be better spent on more important projects.”

Originally slated to cost $110 million and scheduled to open in late 2013, the project’s cost has risen to $132.8 million. A partial opening is set for mid-2015, with a full opening scheduled a year later.

“That’s virtually 10 years to do Phase 1A,” Cranley said. “Are they going to spend the next 10 years robbing Peter to pay Paul, and stealing from neighborhoods again and again and again to pay for the Clifton piece? When does it end? It never ends.”

Qualls rejects the argument. The streetcar’s primary purpose is to spark redevelopment along its route as similar projects have done in Portland, Ore., Seattle and Tacoma, Wash.

“This is the first step in what will be a connection between the two biggest employment centers in Cincinnati,” Qualls said.

“It will open up five neighborhoods in the uptown area to (more development),” she added. “It will increase the tax base and give us more revenue to invest in all the neighborhoods.”

Of the project's cost, $44.9 million comes from federal grants, while $87.9 million is derived from local funding

A city report issued last week states $22.1 million already has been spent on the project through August. Additionally, another $95.1 million has been encumbered against open contractual obligations.

Most of the latter amount -- $71.4 million – is for installing tracks, building shelters and buying ticket machines. That is the work begun in August by a contractor, Messer/Prus/Delta (MPD).

This week, for example, crews from MPD, the Metropolitan Sewer District, Duke Energy and Cincinnati Bell are working in at least 10 locations around downtown and Over-the-Rhine. They are moving utility lines, installing new sewers and digging to prepare for track installation.

Because MPD bills the city after each segment of work is completed, there is lag time involved with expenses, said Jason Barron, the mayor’s spokesman. The total incurred so far by the city isn’t accounted for in the latest report.

If the city breaks any contract for reasons other than performance problems, it still must pay for work done to date, along with the costs to wind down and close a project.

“If the city terminates for convenience, we lose all controls over cost because it’s up to the contractors to determine what costs they have incurred,” Barron said.

And that’s not the only cost the city would face if the project is scuttled.

Canceling Contracts Has Expense

In December, City Council approved a $20.5 million contract with a subsidiary of Spain-based CAF to manufacture five streetcars and provide related spare parts.

Design work for the cars is ongoing, although none have been manufactured or assembled so far.

Under the city’s contract, it may cancel the order with 30 days notice. But the deal includes a provision that entitles CAF to be paid for work done so far, along with a “reasonable profit,” Barron said.

He declined to estimate what the amount could be for WCPO.

Also, the city has received three transportation grants from the federal government, totaling $44.9 million. Through August, $1.9 million had been spent.

The amount “will accelerate as construction activities ramp up and vehicle contract milestones are reached,” the city report stated.

Those grants are specifically earmarked for the streetcar system, Barron said. If the project is canceled, it will have to be repaid in a lump sum.

“Backing out of this project and giving back the federal grant money would have a dramatic effect on the city’s relationship with the federal government and the Obama administration,” he said.

Citing other grants that have been used for items like hiring police and firefighters, and cleaning up contaminated sites, Barron said, “We rely on that relationship for much more than the streetcar.”

Cranley is skeptical about the city’s warnings, adding the cost to end the contracts won’t be as high as publicized.

Even if the cost is accurate, however, ending the project now still is a fraction of spending the remaining $110.7 million on the project, Cranley said.

More importantly, the streetcar system will cost about $4 million annually to operate, once completed. That’s a recurring cost the city will have to find in its own budget, he added.

Politically Charged Issue

Planning and building the streetcar system is viewed by Mayor Mark Mallory as his signature accomplishment during his eight years in office, which ends Dec. 1.

Cranley thinks the quickened construction recently is an attempt to commit the next mayor into completing the project.

The city’s contract with CAF allows it to call for a 90-day suspension of work for any reason, he said.

“For them to be spending money on tracks and cars right now is, in my opinion, a political attempt to try and subvert whatever comes out of this election,” Cranley said.

“Every dollar they spend between now and the election is wasted money that’s on their hands,” he added. “That’s their responsibility, and I think it’s contemptuous of the taxpayer.”

Qualls blames streetcar opponents for the current flurry of activity.

Opponents – which include the Coalition Opposed to Additional Spending and Taxes and the local NAACP -- mounted two unsuccessful voter referendums to block the project.

In November 2009, voters rejected a charter amendment that would’ve required a public vote before taxpayer money was used for any rail-related project within Cincinnati. It was rejected 56-44 percent.

In November 2011, voters rejected a charter amendment that would’ve prohibited city officials from spending money on anything related to preparing any type of passenger rail transit through Dec. 31, 2020. It was rejected 52-48 percent.

“The only reason this project has taken so long is there have been two ballot referendums, and the state of Ohio pulled the rug out from under us by taking money away from the project,” Qualls said.

She is referring to one of Gov. John Kasich’s first major actions upon taking office in 2011. He pushed to rescind $52 million in promised state funding.

A few months later, the Obama administration awarded a grant that restored $10.92 million of the amount but the system’s design had to be tweaked, causing more delays.

Cranley believes voter rejection of the referendums was about preserving rail options, not an endorsement of the streetcar.

“The charter amendments were to ban all (passenger) rail in the city, which is too extreme,” he said. “That’s a radically different thing.

“The (pro-rail) campaign explicitly told voters that voting ‘no’ on the amendment was not voting ‘yes’ for the streetcar, it was voting ‘no’ to mucking up our charter and banning all rail in our city,” Cranley added.

 

Crews continue streetcar-related construction on Elm Street on Tuesday, Oct. 1, 2013, in front of Music Hall in Over-the-Rhine. Kareem Elgazzar | WCPO

Waste Of Money And Relationships?

Greater Cincinnati’s congressional delegation – composed of all Republicans – opposes the streetcar project.

If elected, Cranley said he would work with members to lobby the Obama administration to shift the grants to other transportation projects such as building an interchange at Martin Luther King Drive and Interstate 71.

“Unlike today, when you have a mayor at odds with the congressional delegation, I believe a united congressional delegation provides us the opportunity to move that money to MLK or some other local project,” he said.

Still, Cranley concedes, “There’s no guarantee that it will work.”

Qualls is certain it won’t: “That’s an empty promise. These funds … are specific to rail and very competitive. This administration would reprogram them to other cities.”

Canceling the project would be disastrous for Cincinnati, Qualls said.

“It is a very expensive claim,” she said. “The consequences of actually doing it would not be just wasting $22 million already spent, but we’d be tied up in litigation with contractors and suppliers for a number of years.

“It does create uncertainty about when the city says it will do something and whether it will keep its word,” Qualls added.

Aside from those issues, however, Cranley would face a more immediate hurdle to mothball the project: Persuading five City Council members to agree.

Under Cincinnati’s form of government, the mayor cannot unilaterally cancel previously approved legislation.

Cranley said that’s an issue that could be faced once in office. As chairman of City Council’s finance committee for several years, he is accustomed to tough negotiations.

For now, Cranley’s plan is clear. “They should stop spending all money until the election,” he said, “and see what happens.”

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