End of the line? FTA rejects streetcar funding deadline extension

CINCINNATI -- The Federal Transit Administration said Friday it will not extend the looming Dec. 19 deadline on streetcar funding.

Friday's extension rejection means the FTA will pull nearly $45 million in streetcar funding if upward of $80 million in private funding isn't raised by the deadline.

Mayor John Cranley met with FTA Administrator Peter Rogoff Friday and asked for the extension to restart streetcar construction. When Rogoff refused, Cranley asked if he would field a call from pro-streetcar advocates to allow them to make a pitch for an extension, Cranley's office said. 

Rogoff agreed to take that call.

According to Cranley's office, the FTA's position is the city is not required to certify the streetcar operating plan until 2016 -- but if the city builds the streetcar, it will be required by the federal government to operate the system for at least 25 years.  

"Because of that requirement, others will have no incentive to contribute to the operating cost," Cranley's office said in a release. "Thus, a legally binding agreement to cover the systems operating costs with private funding must be in place before construction can continue."

Cranley and labor union leaders at City Hall announced Thursday morning the conditions for accepting any money.

The mayor was joined in a 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 conference, Cranley and Flynn said the private groups must come up with the $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 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 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.

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.

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