SORTA: we'll assist with streetcar operating costs

Dec 17, 2013

Update 12/17/13 @ 6:20 PM:  Council members Young, Simpson and Seelbach released a statement on SORTA's offer to take responsibility for streetcar operating cost.  A portion reads:

"We wholly disagree that SORTA's offer is a "non-starter."  It is, without question, a very good start to a sustainable funding solution for the continued operation of the Cincinnati Streetcar."

The Southwest Ohio Regional Transit Authority announced Tuesday it's willing to assume responsibility for the operating costs of the Cincinnati Streetcar.  

The SORTA Board voted in favor of such a proposal.  The board reviewed four different funding scenarios to cover those operating costs.  

SORTA’s willingness is “based on assurances from the Cincinnati business and philanthropic communities that they will work with SORTA in public-private partnership to secure the funds required to cover the short and long-term operating costs of the Streetcar.”  The plan would also take into account fares, advertising and sponsorships.

“For Greater Cincinnati to successfully develop a truly regional approach to public transportation it is imperative that the Cincinnati Streetcar project proceeds,” SORTA Board Vice Chair Karl Schultz said in a statement.  “SORTA is willing to explore assuming responsibility for the Streetcar’s future operating costs and we ask the City get the project moving again and work with us and the business and philanthropic communities to quickly move to a viable solution.”

Officials also said the Federal Transit Administration has agreed to assist with helping SORTA and the private sector to come up with a viable model for funding the streetcar operation.

However Mayor John Cranley and other streetcar opponents at City Hall are not impressed with the proposal.

The essential elements of the SORTA plan include:

  • SORTA will not permit operation of the Streetcar to adversely impact the existing METRO bus system;
  • The City will resume construction of the Streetcar and will remain responsible for completion of the construction project as required under existing grants, plans and contracts; SORTA’s role in the construction phase will not change from the current status;
  • At a yet-to-be-identified trigger point (likely substantial completion of construction), SORTA will assume all responsibility for providing operating funds necessary to operate the Streetcar; the City will not be responsible for any Streetcar operating costs;
  • All Streetcar assets will be conveyed to SORTA upon completion of construction or some other mutually-agreed upon date;
  • The City will remain a party to all utility relocation agreements and will remain liable for any related litigation;
  • The Cincinnati business and philanthropic  communities will work with SORTA and the City to provide adequate and firm financial assurances and guarantees to fund operation of the Streetcar to the extent other sources of Streetcar revenue, such as fares, advertising, sponsorships, etc., are inadequate; and,
  • The Cincinnati business and philanthropic communities will work with SORTA to establish a “Streetcar Advisory Committee” or similar oversight group to assist SORTA in the implementation and operation of the Streetcar.

SORTA officials said the concept requires additional refinement and collaboration between the city, business and philanthropic leaders.

The Carol Ann and Ralph V. Haile, Jr. US Bank Foundation announced a $1 million gift to serve as seed money for an operating reserve fund.

“We are committed to seeing the Streetcar through to completion and beyond,” said Eric Avner, vice president of the Haile Foundation.  “SORTA has stepped up and is more than qualified to serve in this role. This is another great example of community collaboration helping move to region forward.”

The SORTA proposal drew immediate praise from streetcar supporters and at least one city council member.

“We believe this is a positive step forward in finding a fiscally responsible way to manage streetcar operations going forward,” said Ryan Messer in a Facebook post.  “This clearly addresses the concerns about the annual operating costs - which should pave the way for a fast resolution allowing for a restart of construction before the holidays."

Believe in Cincinnati has been circulating petitions to let city voters decide whether the project should continue.
“A scenario where the City finishes construction, SORTA handles operations, the federal government sustains its financial commitment, and the private sector puts real skin in the game represents everything a productive partnership should be,” Council Member P.G. Sittenfeld said in an e-mailed statement.  “It's a win-win-win that prevents the waste of tens of millions of dollars, prevents real harm to our national reputation, delivers a positive return on our investment, and mitigates the long-term operating burden on the city.”

But the SORTA offer did nothing to change Mayor John Cranley’s position on the streetcar.  He has said the only way construction should continue is if operating funds come from a source other than the city.

“Metro has no financial wherewithal to cover the financial shortfall except for cutting into bus service,” Cranley said at a city hall press conference Tuesday.  “And that is not something I will support.

Council Members Kevin Flynn, Amy Murray and Christopher Smitherman joined Cranley at the press conference.  Flynn is considered a crucial swing vote on whether the streetcar project continues.

City Council faces a midnight Thursday deadline to restart streetcar construction or face the possibility that federal money pledged for the project will be halted.  The FTA has said if that doesn’t happen it will freeze federal money and start debt collection to recover dollars already spent on the project.

A Council voted on December 4th to “pause” streetcar construction while an independent audit was conducted to determine the costs of stopping the project versus continuing it.  That review is expected to be completed and presented to a Council committee Thursday morning.  The full Council will meet that afternoon to likely decide the streetcar’s fate.