Streetcar bosses to city: We need more money

Sharon Coolidge | Cincinnati Enquirer

The streetcar's budget is facing a nearly half million shortfall next year mostly due to ridership falling short of expectations.

That coupled with the cost of a ridership study and an increased marketing budget, plus the fact that naming rights won't bring in as much money as they did this year, the shortfall totals $474,530,

A plan to use tax incentive money companies along the streetcar route return to the city could make up the difference and will be part of what city officials look at when setting the budget later this month.

The troubled budget came to light last week when the agency that runs the Cincinnati Bell Connector requested $4.1 million for 2018. That's a 6 percent increase to this year's streetcar budget in the streetcar's budget, or $225,000 more than the $3.9 million allocated to the project this year.

But it's also less than than the $4.4 million called for the in the long term budget.

Council must approve the final operating budget by June 30. The additional costs include $100,000 for a ridership study, an additional $37,000 for marketing and $32,000 for Transdev, the company that runs the streetcar, per their contract.

Any deficit would likely come from the streetcar's contingency fund, which is made up of savings from project construction. But it's up to council. The issue is expected to be vetted at a special Budget and Finance Committee meeting next week.

The request comes as the April revenue report, the most recent available, shows a $15,000 operating deficit. It marks the first time since the September opening the streetcar has run in the red.

The request was due April 30 but was made June 1. City officials are in the midst of trying to cover a $26 million deficit in the 2018 budget, which must be approved by June 30.

Councilman Kevin Flynn told city leaders in an email he won't give the project extra cash to meet its goals for time between stops, known as "headways."

"I am not inclined to reward failure by giving them a 6 percent raise," he wrote. "We contracted for certain headways to be met, no matter how many cars it took (up to the max we purchased). As of today, I have seen no evidence that the headways have been met on a consistent basis.

"If SORTA can't do the job that they contracted with the city to do, or (if) their vendor, TransDev, isn't meeting its obligations, maybe we need a new operator that can do the job, and we sue TransDev for any difference that it costs us," he added.

The streetcar budget comes from fares, advertising, naming rights, tax incentives (given to companies near the 3.6-mile streetcar line, who then give a portion back the project) and the Federal Transit Administration.

The request asks for nearly $4.2 million in operating money for 2018, which runs from July 1, 2017, to June 30, 2018. Of that, SORTA projects $877,752 would come from fares, advertising and naming rights. That leaves $3.32 million to come from other sources.

If parking comes in at the same $1.8 million it did this year, Haile U.S. Bank Foundation kicks in the same $900,000; tickets for fare dodges bring in the same $62,907; and money given back to the city from businesses that got tax incentives comes in at the same $10,947, the city still would still need $474,530.

The tax incentive money could be as much as $531,000 for next year, the Enquirer has learned. Though the SORTA financing spreadsheet does not reflect the projection.

Fare revenue through the end of April is off by 31 percent and ridership 26 percent less than expected, according to SORTA records given to the Enquirer via a public records request.

Projected ridership numbers for this year were based on a 2011 study by Parsons Brinkerhoff, numbers which do not include fluctuations for seasons. The new numbers are based on actual riders for the first nine months the streetcar operated and a projection of the rest of the year.

The streetcar has been plagued by delays, not meeting the promised 12-minute to 15-minute wait time between stops. They are improving. In April, they were off by an average of one minute per trip.

It still struggles to find riders during the week but has proved popular on weekends.