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Charlotte had easier time reaching deal with Duke for streetcars

Quick deal in N.C. court battle looms here

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CINCINNATI - A project similar to Cincinnati's streetcar system is being built in North Carolina, but city officials there are paying Duke Energy one-sixth the amount to move utility lines than the company wants in the Queen City.

Although Charlotte officials and Duke quickly reached a deal on utility relocation costs, the situation here is starkly different.

Local officials and Duke are going to court to resolve their lengthy dispute on the same issue.

Cincinnati is willing to pay $6 million to relocate Duke's utility lines, but Duke insists it will cost at least $18.7 million and possibly more.

In Charlotte, it cost the city just $3.1 million to do the same task.

Cincinnati officials call Duke's local estimate inflated because they relied on the same formula used by Charlotte to calculate relocation costs here.

Duke counters that conditions are different in Cincinnati, with more compact development and smaller streets.

"Each project is unique in size and scope, and therefore a one-size-fits-all approach to the streetcar projects in Cincinnati and Charlotte wouldn't be just irresponsible, but also unsafe for our employees and passengers of the streetcar," said Blair Schroeder, a Duke spokesman.

In fact, the two projects are different in scope.

The Charlotte streetcar project is a 1.5-mile segment between Presbyterian Hospital and the city's transportation center, where bus lines and light rail are available.

The initial segment, envisioned as the first part of a 10-mile system connecting the city's east and west sides, has a cost of $37 million. It will be completed in March 2015.

It is funded by a $25 million federal Urban Circulator Grant and $12 million in city funds.

Cincinnati's project is a 3.6-mile looped route that would extend from the riverfront through downtown and north to Over-the-Rhine, ending near Findlay Market.

The first phase is scheduled to cost $110 million, although bids recently came in above estimates.

It includes $39.92 million in various federal grants; $6.5 million from the sale of city streetlights to Duke, as well as $64 million in construction bonds issued by the city.

Cincinnati's system later would be expanded to the uptown area near the University of Cincinnati and several hospitals.

Local officials want to have the route open in time for the All Star Game in July 2015 – four months after Charlotte's opening.

In Charlotte, however, the project began construction Dec. 31.  The contractor has been performing preliminary tasks including ordering construction materials, doing surveying, removing existing traction power substations for renovations, installing traffic warning devices and completing tree removal.

John Mrzygod, Charlotte's streetcar project manager, said there have been political battles about the streetcar but the project had no problems with Duke.

In part the difference stems from how laws vary in each city. Charlotte has an ordinance that affirms the city's right to require removal or relocation of utilities located in the right-of-way when necessitated by a public need.

"During the design phase of the project, the city and Duke worked together to minimize impacts and costs between streetcar infrastructure and Duke Energy infrastructure," Mrzygod said.

"In cases where impacts were unavoidable, the city and Duke have a cost-sharing agreement in place that defines who pays for what on city capital projects," he added.

Charlotte pays for moving overhead power lines and installing new street lighting.

In preparation for construction, some private utilities chose to voluntarily relocate or upgrade their existing facilities in order to make future maintenance easier.

Other utilities that conflicted with the project were ordered to relocate, under the city's ordinance, Mrzygod said.

In Cincinnati, Duke is arguing the streetcar system qualifies as a utility. Under Ohio law, one utility has no legal obligation to reimburse another utility for work.

"It is important to note that every city is different, and the laws and regulations for the public utilities are difference in each state, depending on where they operate," Schroeder said.

Duke allowed just a three-foot clearance between manholes and streetcar tracks in Charlotte, but originally insisted on an eight-foot clearance in Cincinnati. Such a distance is necessary for the safety of Duke workers making repairs, Duke had said. After months of negotiations, Duke relented and allowed the same standard here.

"The electric and gas systems in Charlotte are different than what you have here in downtown Cincinnati, therefore the underground infrastructure in each city is different," Schroeder said.

"For example, you have different routes in each city," he added. "In some cases, the roads have different widths. In Cincinnati, both primary and secondary electric distribution lines are in manholes."

City officials are skeptical of the explanation. Some have grumbled privately that Duke's estimate includes improvements not related to the project.

Earlier this month,

Duke and the city reached a deal to move forward with the project while a court decides the dispute.

The two sides agreed to seek a declaratory judgment in Hamilton County Common Pleas Court, and will abide by the ruling after appeals are exhausted.

Some streetcar supporters question whether Duke was more agreeable in Charlotte because its corporate headquarters is located there.

Last year, Duke also guaranteed a $10 million line of credit for the Democratic National Convention as part of an effort to attract the event there. The firm said it was important for the city's economic development to make the commitment.

At the time, a Duke spokesman explicitly said stockholders, not rate payers, would be liable if the convention's host committee defaults.

Cincinnati officials noted the streetcar's primary purpose also is economic, hoping it will spark redevelopment along the route.

Duke denies that it's given preferential treatment to Charlotte.

"As a longtime partner in this effort, we have given $6.5 million dollars to the project for economic investment, spent countless hours and resources researching and traveling to multiple cities to learn streetcar best practices, and have offered solutions and compromises to achieve this project," Schroeder said.

"But, we have never said our customers or our company should pay for project costs to relocate our infrastructure," he added. "How we get there is important."

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