The Federal Transportation Administration said the seven streetcars Tucson plans for its 4-mile line aren't enough and have ordered the city to buy an eighth car for $3.6 million.
City Streetcar Project Administrator Shellie Ginn said city planners believed six active cars and one spare were enough.
But she said the FTA was "very concerned that having one spare was not enough, especially for a starter system."
Exactly how the city is going to pay for the extra car is unclear. On Tuesday the City Council voted 6-1 to authorize the purchase of the additional car and to explore all funding options, including selling "certificates of participation," a form of non-voter-approved bonds.
Ginn said the $196 million streetcar system budget included provisions for additional cars. "If we didn't have to purchase it, it would have been a savings for the project, but it's not an addition to the project," she said.
However, the city is already about $19 million short of having enough money to pay for the system.
Ginn said the city is preparing to sell for a profit the option to buy some additional cars that were included in the original budget. Costs for the project thus far have been lower than expected, so the city might not have to pay as much as originally anticipated, she added.
But Councilman Steve Kozachik questioned Ginn's position that money is not a problem.
If it's not additional money and the project is coming in under budget, why did the city staff ask the council on Tuesday to approve certificates of participation to acquire the vehicle, he asked.
"They specifically asked for COPs for $3.6 million to pay for this, and we are already $20 million in the hole on this thing. If the money is in the budget, why are they asking for new money to fund it?" Kozachik said. "For them to say it's not new ignores the fact we don't have the money."
Kozachik said the city staff often interprets an item listed in a budget as the same thing as the item being funded, and the city has ignored this unfunded streetcar debt for too long.
"You can budget for your light bill every month. But when it comes time to pay it, you have to make sure there's money in the bank to cover it. We don't have money in the bank," he said. "Staff needs to understand we are not going to roll over and play dead on a $20 million debt."
He said he would like to see the city approach the FTA and try to persuade it to waive the requirement of the eighth car.
Even if the city finds the $20 million, it still doesn't address how the city is going to pay for the operating costs once the system is up and running, he said.
The city estimates the line will cost around $2 million a year to maintain and is basing its cost recovery on 4,000 riders using the streetcar every day - numbers Kozachik considers suspicious.
Although the FTA notified the city that it needed the extra car in March, the city staff didn't present the issue to the council until July 10, five days before a deadline to order the new streetcar.
Ginn said the staff delayed going to the council to work out all the details with the streetcar company first.
"I was troubled by the timing of this," said Councilwoman Karin Uhlich. "I feel like we were backed into a corner on this issue, and I am concerned about the flow of information between staff and council. I know it's a requirement, but it's unacceptable the way staff approached this."
The council should have been told weeks ago, she said.
Uhlich said she is also concerned the city staff used subterfuge to avoid alerting the council to this new expense sooner.
Early Transportation Department budget presentations included a vague $5 million gap which transportation officials wanted to close by raising bus fares. That gap included a $3.5 million item listed only as "capital," or roughly the same as the capital cost for the new streetcar.
"I don't want to assume that, but if anybody saw the difficult process we went through to balance the transit budget, they would understand why that kind of question would be raised at this point," she said.
Councilwoman Regina Romero said hiding things from the council is a common practice by the city staff, and it needs to end.
"The fear for me is that staff, especially the finance staff, know how to cover holes without telling the mayor and council," she said.
She said City Manager Richard Miranda is responsible for fixing the culture in the city and needs to communicate to his staff that holding things from the council will not be tolerated any longer.
Contact reporter Darren DaRonco at firstname.lastname@example.org or 573-4243.