City told streetcar operating cost will be 4 times earlier estimate

2013-03-06T00:00:00Z City told streetcar operating cost will be 4 times earlier estimateDarren DaRonco Arizona Daily StaR Arizona Daily Star
March 06, 2013 12:00 am  • 

City taxpayers could wind up paying a $4.4 million annual operating subsidy for the streetcar - more than quadruple what city officials were told two years ago.

In 2011, the city's projected share of streetcar operations was less than $1 million a year through 2026, after which the city share would double to about $2 million.

But updated financial projections indicate the streetcar will cost significantly more to operate. The problem is compounded by several community entities that were expected to help pay opting out, leaving the city to pick up their share.

As a result, the city share goes to $4.4 million in 2017 and $4.6 million in 2018. No projections are being offered for subsequent years.

Operating costs, previously estimated at $2.9 million, are now pegged at $5.2 million in 2017 and $5.4 million in 2018.

Transportation planners previously included contributions from the University of Arizona and other beneficiaries of the streetcar in their earlier estimates. But the Tucson City Council was told Tuesday that the figures had to be revised because none of those other contributors has agreed to participate.

Most of the increased expense is due to the city's new streetcar management company, RATP Dev McDonald Transit, recommending an additional 16 employees to properly operate the streetcar line.

Deputy Transportation Director Carlos de Leon said the new management company recognized that need after it was awarded the contract and analyzed the streetcar's plans, "based on their knowledge of the industry and what they think will be needed."

For the next three years, the Regional Transportation Authority has agreed to significantly increase its streetcar funding to cover the higher costs. But that means the agency will pay less in later years, which is a factor in the city's higher payments.

The news didn't sit well with some members of the council.

"I've been saying for three years these costs would soar. And now the truth comes out," Councilman Steve Kozachik said. "Staff needs to get a revelation that this is taxpayer money that's competing for other core services … and they need to tighten up how they're spending on this thing."

Mayor Jonathan Rothschild was incredulous when he heard the numbers.

"I don't think there's any way those numbers are that high," Rothschild said.

He said he believes the new figures are preliminary and nothing is final regarding outside contributions and the number of employees to be hired. Ultimately, Rothschild said, he expects the city's cost to be far lower when it looks at the issue again on March 19.

After Tuesday's meeting, de Leon said the staff still had a lot of work to do on this issue so it can reconcile the management company's suggestions with Tucson's economic position. "Our real expert was telling us what the costs should be, and we need to find a way to lower them."

De Leon said the first car is due in Tucson in July 2013, nearly a year later than original projections, with the last vehicle expected to arrive in April 2014. De Leon said the city has informed the streetcar builder, Oregon Ironworks, that it intends to charge liquidated damages if further delays occur.

He said the city is planning to begin service in July 2014 if there aren't any more setbacks.

On StarNet: Streetcar project's history: timeline.azstarnet.com/streetcar

Contact reporter Darren DaRonco at ddaronco@azstarnet.com or 573-4243.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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