Cincinnati Council to decide streetcar's fate Thursday

Dec 18, 2013

Update 12/18/13 @ 9:30 PM: 

Cincinnati Council will likely vote Thursday on whether the city's controversial streetcar project will continue. 

Construction has been on hold since December 4th.  Now the group will decide whether to let work resume or finally pull the plug on the plan. 

So far the city has spent $34 million on the streetcar project.  An independent audit firm reported Wednesday it will cost anywhere from $16 to $46 million to cancel the streetcar or about $69 million to complete it. 

Council listened to more than three hours of public testimony on the project yesterday.  The majority of the speakers were in favor of the streetcar.  But there were also opponents who spoke against the plan. 

Right now it appears five of the nine Council members will vote to let the project continue.  But Mayor John Cranley is expected to veto any measure that passes which lets construction continue.  So six members will need to vote yes if Cranley's threatened veto is to be overridden. 

A veto could threaten federal funding for the project.  The Federal Transit Administration has given the city until midnight Thursday to restart construction.  The earliest Council could meet to override a veto would likely be January 2nd.  By then the federal money could be gone. 

A committee discusses the plan Thursday at 9 a.m. and the full Council meets at 2 p.m.

Original Post:

An independent audit of Cincinnati's streetcar project released this morning showed the cost of cancelling the project could be nearly as much as it would cost to finish it.

KPMG, a national auditing firm with offices in Cincinnati, gave Mayor John Cranley and city council a 39-page analysis showing that it would cost anywhere from $50.3 to $80.1 million to cancel the project.

The report said that the costs to complete the project would be $68.9 million, plus an additional $1.7 to $2.8 million in delay costs. 

The report said the costs of closing out contracts on the streetcar could range from $16.3 million to $46.1 million. KPMG said $34 million has already been spent.

The report also said that the total costs of completing the 3.6 mile streetcar loop would be  somewhere between $104.6 million to $105.7 million.  That includes the $34 million already spent, additional spending of $ 68.9 million to complete it and delay costs ranging from $1.7 million to $2.8 million. 

KPMG said it could cost as much as $13.6 million to cancel contracts with CAF USA Inc., the company hired to build the streetcars.

Mayor John Cranley put out a statement saying he does not believe CAF "will succeed in obtaining anywhere near $13 million."

Cranley said his reading of the report is that the city would have a net savings of $102 million by cancelling the project.

"I do not believe it is financially prudent to proceed,'' Cranley said in his statement.

Council would have to act by midnight Thursday on legislation to continue the project or lose $45 million in Federal Transit Administration funding. Up until now, a five-member majority of council has supported stopping the project.

KPMG said the annual cost to operate the streetcar, if finished, would be $3.13 million to $3.54 million annually, with an estimated revenue from the streetcar of $1.1 million to $1.25 million.

That would mean a net annual cost of $1.88 million to $2.44 million to operate and maintain the system.

On Tuesday, Cranley and streetcar opponents on city council rejected an offer by the Southwest Ohio Regional Transit Authority (SORTA) to cover streetcar operating costs, thus taking them off the city’s operating budget.

But council member David Mann, who voted to pause construction earlier this month, said the report - particularly the part about the costs of operating the system, might make him change his mind.

"I want to look into it further, but I think (the report) is very positive in terms of going forward,'' Mann said.

The KPMG audit does not include any potential costs of litigation by contractors or others for shutting down the project; or give any estimates on the economic benefits to the city that might come from streetcar construction.

In a Facebook post, council member Yvette Simpson said that not including the costs of possible litigation in the report is a problem.

"To assume that no one will sue is unreasonable,'' Simpson said.

This story will be updated during the day.

Read the full report here: