On Tuesday, municipal elections across the United States brought fourth a lot of change to the way urban policy will be shaped in the coming years. While we await to see how the policies of many new big-city mayors will impact their cities, Cincinnati’s mayor-elect John Cranley has placed the streetcar project on death watch, saying that the project will be shelved as soon as possible once he takes office on December first.
Cranley, a Democrat and former councilman, made his opposition to the project a central point of the campaign, and many feel that it was the biggest difference between him and his opponent Roxanne Qualls, the current Vice Mayor who favored the project. Cranley criticized the streetcar and felt that costs had been problematic. The city already has over $20 million into it with over $90 million in contracts that are expected to complete the street car in 2015 or 2016. Track has already been laid, as workers have continued to do until ordered to stop. If Cranley makes good on his promise, it’s not sure what will happen to either the current rail infrastructure or the financial obligations the city is under contract to uphold. It is curious to see what the liabilities of the city will be, and it turns out they may be on the hook for quite a bit of that $90 million owed to contractors.
This isn’t the first big government project that has come under fire for going over budget. Recently, out of control costs on a county jail in Detroit Michigan forced Wayne County to abandon the project and sell the land – a prime location in Detroit’s rapidly growing downtown – to Quicken Loans Developer Dan Gilbert, who will purchase the land and the partially complete jail. The difference here is that there is nobody who you can sell partially finished rail infrastructure to. Even for a private party to be interested in running a fully independent streetcar project, you would need better infrastructure in place than what is currently there. Los Angeles has faced similar issues, dishing out over $500m in the past couple years for their streetcar project which has also (you guessed it) far surpassed its budget. With no real way to sell the investment and gain anything back, the fiscal logic of Cranley seems to be that we either take a big loss now, or a much bigger loss later.
This is a microcosm of a problem happening across the country as project costs either spiral out of control, or are so poorly projected that the actual cost is nowhere near the projected cost. For a long time, this was simply considered part of doing business: the politicians need to make good on their promises no matter what, so the contractors have little incentive to accurately predict costs if they know that if they come back later and ask for more money, they will almost certainly get it.
The decision hits home especially hard for the people of Cincinnati as we approach the 100the anniversary of the abandonment of the city’s subway system. In that case, the inflation brought on by World War I had more than doubled the cost of construction, and the project was simply out of reach. To this day there exists an interested network of underground tunnels that have been sealed off leading to the subway, which has been called the city’s biggest failure.
We won’t know for sure until after December first, but with a new mayor and six of the nine members of city council now opposed to the street car initiative, it looks like another failed transit project for the crown jewel of southern Ohio.
Update: November 9, 2013
The Twitter account @CincyStreetcar posted this image, estimating the cost of turning down the streetcar project is now over $100m, while the cost to complete the streetcar is around $133m.