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Cincinnati - December 2013

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Cincinnati — Streetcar Survives Serious Challenge

December 2013

Cincinnati's streetcar project has had a tortuous journey from conception to construction. Two referendum votes defeated efforts to kill the project and it survived withdrawal of state funding by Governor John Kasich.

Through all of this project supporters persevered, with the active support and participation by mayor Mark Mallory. However, when term limits prevented Mallory from seeking re-election in 2013, the most serious threat in the history of the project emerged. Elected as mayor was John Cranley, who ran on a platform of canceling the streetcar project. Several city councillors ran on the same platform and also were elected, apparently giving opponents a majority on the council.

Cranley interpreted his election as a mandate to terminate the streetcar project, even though low voter turnout meant that he received fewer votes than the number of pro-streetcar votes in each referendum.

Upon taking office in early December, Cranley asked a special council meeting to pause the project to enable a financial review of the cost of completing the line vs. cancelling it, including all of the costs of breaking active contracts. The council voted 5-4 to suspend the project, despite the fact that virtually every member of the public who testified at the meeting spoke in favor of the project.

A key component of funding for the project came from the Federal Transit Administration. The FTA, upon hearing of the vote to pause, announced that $45 million in Federal funding would be withdrawn if the city did not commit to complete construction by December 19.

Streetcar project officials estimated the cost of cancelling the project to be roughly equal to the $70 million required to complete the $133 million project. The council hired KPMG to develop an independent estimate within a matter of days. The firm essentially confirmed the project team's estimate, saying that it would cost between $50 and $80 million to stop the project.

Another concern was annual operating costs which could total $3.5 million per year and would not be covered by fares or other revenue. Mayor Cranley had indicated when the vote to pause was taken that if a way were found to cover the operating costs without depending on city or transit authority funding, he would drop his opposition.

With only a matter of days before the December 19 deadline, Eric Avner, vice president of the Haile/US Bank Foundation led efforts to solicit commitments for funds which could backstop the operating costs. By the time of the deadline vote, he had arranged commitments of $900,000 annually for 10 years, totalling $9 million. This achievement tipped the balance in favor of the project. Two councillors switched sides, ensuring a veto-proof 6 to 3 vote in favor of restarting and completing the project. The mayor refused to sign the ordinance, meaning that work could not begin for four more days until Christmas Eve.

Supporters of the project were overjoyed and do not anticipate any further obstacles hindering completion of the initial line.



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