The fund resulting from the sale of the Cincinnati Southern Railway continues to grow, but the city is struggling to spend the money quickly.
The Cincinnati Southern Railway Trust is at about $1.89 billion as of Feb. 9, with an annualized growth of 10.88% per year since the fund was first invested in March 2024. That far exceeds the goal of 5.5% annual growth.
"Having almost an 11% return, which is twice what we projected, is great," CSRT Board Chair Paul Muething told WVXU. "Coming up on our two-year anniversary of the closing, I think it's tremendous."
The city had $56 million to spend in fiscal year 2026, which wraps up at the end of June. City Council approved a budget to spend all of that money, but only about 12% has been spent, with another 24% under contract.
With another $58 million headed to the city for fiscal year 2027, Muething says he'd like to see the city speed things up, but he understands the challenges.
"As a citizen, I'm frustrated that all the city's [capital] dollars are not being spent more quickly, but that's not isolated to the [railway money]," he said. "I think they're doing what they should be doing in terms of committing the CSR dollars to infrastructure. We're all frustrated that things move too slowly."
How is the city spending the money?
Per state law, the city can only spend the money to maintain or replace existing city-owned infrastructure like streets, police and fire stations, and city parks.
City Manager Sheryl Long has dubbed the plan for spending the money "Cincy on Track." She says 51.4% of the funds is slated for spending in neighborhoods with a median income below $50,000.
A dashboard on the city website keeps track of how Cincy on Track money is spent, as well as the status of each project. The dashboard only includes projects that have been awarded contracts.
See an infographic summary of Cincy on Track approved spending below (article continues after):
Why is it taking so long to spend?
Assistant City Manager Billy Weber and other city officials answered questions at the CSRT Board's quarterly meeting Tuesday.
Weber says, in short, city departments are not used to spending this much money.
"The administrative structures were really set up for small capital allocations," Weber told the Board. "Departments would [often] actually have to cobble together multiple years of capital allocations from the budget to do one big project. So that obviously is not a recipe for getting big things done quickly."
He says some departments don't have the staffing to handle project management on this scale, so the City Manager's Office has adjusted to address that. For example, the Health Department was "receiving such little funding" that they had no capital deployment staff at all.
"So we've actually folded their capital projects into the Department of Public Services, which has a more robust team for handling facilities projects," Weber said.
Budgeting also looks different with a lot more money on the table. For example, large projects often take more than a year to design, so departments may no longer get the full project funding up front.
"We're going to sequence the funding over maybe two fiscal years so that they don't get a lump sum that they're going to have to not use for 18 months," Weber said.
Another challenge is finding contractors to actually complete the work. Weber says city procurement is highly regulated, making it challenging to do business with the city. Plus, City Council has set certain policy goals like working with minority- and women-owned businesses. Weber says the city's new procurement officer Laura Castillo is working align all these goals.
"Figuring out how we can both balance the policy goals that crop up in public procurement, with the need to move projects and not getting departments stuck in a year long procurement process, perhaps even to just get a designer on board," Weber said. "I feel great about the progress we've made over the last even 12 months, but that's work that continues and will continue."
What is the Cincinnati Southern Railway Trust?
The city built the Cincinnati Southern Railway in the 1870s; it begins in the city and run south about 337 miles to Chattanooga, Tennessee. Cincinnati has never owned rail cars nor operated rail traffic for either passengers or freight. The railway has always been leased by a separate entity; a subsidiary of Norfolk Southern has held the lease since 1881.
The city used revenue from the lease, about $26 million a year, to maintain or replace existing city-owned infrastructure. With the latest lease set to expire in 2026, the Board of Trustees that managed the CSR negotiated a $1.6 billion sale agreement with Norfolk Southern. That sale was subject to approval of Cincinnati voters. It was on the ballot in Nov. 2023 and voters narrowly approved the sale with 51.66% support.
The sale revenue was invested in a trust fund, with the goal of spending only a portion of earned interest on city infrastructure, while growing the fund at the same time. So far, earned interest payments to the city have been more than double what the city was getting in lease payments.
The Board of Trustees that previously managed the city's ownership of the railway transitioned to manage the trust fund instead. The Board is made up of appointed members who serve without compensation. They hired the investment firm that actively manages the fund, set the investment strategy, and decide how much money to send the city each year.
The CSRT Board website includes information about its meetings, as well as financial reports about the investment fund.
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