Mayor, union leaders: Private donations for streetcar must have assurances

CINCINNATI -- As private donors try to raise money to help pay for Cincinnati’s streetcar project, Mayor John Cranley and labor union leaders at City Hall announced Thursday morning the conditions for accepting any money.

The mayor was joined in the news conference by Councilman Kevin Flynn and representatives from the Fraternal Order of Police; International Association of Fire Fighters; the American Federation of State, County and Municipal Employees; and Cincinnati Organized and Dedicated Employees.

During the news conference, Cranley and Flynn said that the private groups must come up with upward of $80 million in guaranteed funding.

The nonprofit Haile Foundation and some individual benefactors are discreetly trying to raise pledges of money for the troubled project, multiple sources told WCPO.

“We've been talking with a number of people who are willing to solve that $3 million to $4 million gap every year. We know there's a way of doing that. There's 17 ways of doing that. There's some uniquely Cincinnati way of doing that,” Haile Foundation Vice President Eric Avner said.

The groups must do this before the Dec. 19 deadline looming over the project, the mayor said. That's when the Federal Transit Authority says it will pull nearly $45 million in funding.

“I believe this community cannot afford new, ongoing liabilities that last forever,” Cranley said.

The mayor said the private funding would go toward the streetcar's operating budget and the city must guarantee 25 to 30 years of operational funds. Those are estimated to cost $3.5 million to $4.5 million annually.

That full 30 years' worth of operating costs are the system's “useful life” before upgrades would be required.

“I want to be clear, they haven’t made any commitment that I would consider to be binding,” Cranley said.

Cranley said he wouldn't support any plan that would have operating funds being taken from the city's General Fund. The account is used to pay for the city’s daily operations, including salaries for municipal workers like police and firefighters.

“This is saying the risk of this new endeavor is not going to be borne on the backs of our basic services -- that our operations will be able to continue for our city -- and if the streetcar is a success and the monies come in the guarantee will never have to be recalled because the streetcar will pay for itself and it will give us the opportunity to explore all these wonderful ideas that people have been coming up with,” Flynn said.

If streetcar supporters could get private funding in place, Cranley said, he would support construction of the project's first phase.

“I'm here to say that I'm willing to partner with them if they can guarantee the operating expenses before we incur additional costs. And, I know that that is an enormous undertaking," Cranley said. "I know that it may not be possible.

"“Frankly, if they can't come forward with those kinds of operating dollars, I won't be upset," he added. "It's a huge obligation, but it's an obligation that I believe these guys shouldn't have to bear, and the citizens shouldn't have to suffer.”

Cranley is listening to community members and is willing to "roll up his sleeves" to find a compromise, he said.

The mayor’s statements were met with skepticism from streetcar supporters. Still many proponents said they will work to find the funding and see the project move forward.

“I believe that once we get to the deadline that we'll (make it)," said Galen Gordon of We Believe in Cincinnati.. "We are working diligently. We are working hard pushing forward with the charter amendment. We're speaking along with our attorney to the business community, hoping that something will be done."

Some people have speculated that the business community is putting pressure on Cranley about the streetcar. The mayor said that isn't the case, and has met with the Cincinnati Business Committee and other groups.

“My relationship with the business community, I would say, is stronger than any mayor’s in a long time,” Cranley said.

Cranley campaigned on ending the streetcar project as too costly. It has an estimated price tag of $133 million to $148 million.

Construction began in August, and about $32 million has been spent so far.

“It’s simple math. Take out the Duke (Energy) money and the $32 million spent so far,” Cranley said in reply to a question about the cost of the streetcar funding so far. Cranley mentioned that the city would have to spend another $64 million to complete the project.

City Council voted 5-4 last week to suspend work on the streetcar, pending the results of an independent audit.

KPMG began work on the audit Tuesday. The audit’s scope includes calculating the cost to end the project, as well as completing the current phase.

Additionally, the audit will evaluate operating and maintenance costs for 30 years; and review how city staff devised earlier estimates about cancelation costs.

Previous estimates by city administrators stated it would cost between $34.6 million and $51.6

million to stop the project; and between $52 million and $74 million to complete it.

A pro-streetcar group kicked off its effort Tuesday to place a charter amendment on the ballot that would force City Council to continue the project, if approved by voters.

The mayor also spoke out about the ballot initiative being promoted across the city by streetcar supporters.

“I support their right to put something on the ballot, but I will campaign against it,” Cranley said.

If successful, a special election must be held two to four months after an amendment is certified for the ballot.

“Hope is not a strategy, but we are believers in this city. We are believers in the streetcar. We're going to move forward. I am very confident that one way or another, this will work out,” Gordon said.

If circulators gather signatures quickly enough, that means a special election likely would be held in February at a cost of $400,000.

The streetcar’s first phase is a 3.6-mile looped route through downtown and Over-the-Rhine, with 18 stops. The project will cost between $133 million and $148 million to complete.

Of the amount, $44.9 million comes from federal grants that Cincinnati could lose if the project is canceled.

WATCH: Part 1 of Cranley's address

WATCH: Part 2 of Cranley’s address

WATCH: Part 3 of Cranley’s address

WATCH: Part 4 of Cranley’s address

Click here to watch the complete series of Cranley’s speech on tablet and mobile

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