FOX19 Investigates: Streetcar funding in jeopardy?

CINCINNATI, OH (FOX19) - A FOX19 investigation reveals that since at least the first of the year, Cincinnati streetcar staff have been dealing with yet another hurdle that could potentially jeopardize federal funding for the project. The hurdle hinges on a Cincinnati Bell agreement with the city for utility relocation being compliant with federal Buy America requirements.

The City of Cincinnati and Cincinnati Bell Telephone (CBT) signed an agreement in February of 2012 where the city agreed to reimburse CBT up to $3 million to relocate CBT facilities that potentially conflicted with the Streetcar Project public improvements.

According to a letter from the city to CBT in March, "Failure to include Buy America provisions in the CBT agreement jeopardizes the City's access to $40 million in federal funding for the streetcar project."

Project Executive John Deatrick tells FOX19 the materials that may not be Buy America compliant are estimated to total less than $70,000.

Currently the City is working with the Federal Transit Administration to ensure compliance of CBT sub-components in question, but it is possible a waiver will be necessary. In the meantime, Cincinnati Bell work in connection with the streetcar project continues downtown.

"To us it's not an issue. It's just one more thing we have to work out between the FTA and the City and Cincinnati Bell," Deatrick told FOX19. "There are many things like that all the way through the contract."

Deatrick says it is too early to say whether a Buy America requirement will need to be added to the agreement with CBT to ensure federal funding.

"I think the whole problem may go away," he said. "The vast majority of this work is iron and steel. It's what you're seeing out here and plastic conduit which is all made in the good 'ol USA."

Deatrick says the FTA has not changed the statute, but it is now emphasizing something that was in the regulation all along.

Documents obtained by FOX19 show the following timeline of ongoing discussions between the city, Cincinnati Bell, and the FTA:

January 18, 2013

Cincinnati Bell Telephone email informs a Cincinnati project engineer that CBT is not willing to amend its reimbursement agreement with the city stating "Cincinnati Bell does not want to add unique or different equipment and materials to its network simply to comply with this amendment." The email goes on to state CBT would be willing to help the City prepare paperwork to apply for a waiver for exemption of CBT's materials from the Buy America Requirements. CBT maintains the existing agreement is enforceable with regards to the city's agreed reimbursement for work on manhole adjustments and aerial line relocations for the Cincinnati Streetcar.

January 24, 2013

City Manager Assistant Chris Eilerman informs FTA they have sought clarification from Cincinnati Bell, "as to the specific components of their work which may be problematic for them to verify that they are in fact components to which Buy America might be applicable". 

January 28, 2013

The FTA Office of Program Management and Oversight emails Chris Eilerman to set up a time to discuss Buy America waiver requirements.

February 4, 2913

Eilerman clarifies the Buy America language is included in the agreement with Duke Energy and that Greater Cincinnati Water Works work will be performed as a part of the general construction contract and does not require it.

February 11, 2013

FTA regional administrator informers Eilerman in an email that Buy America rules apply to the entire scope of FTA funded projects, including all contracts necessary to complete projects such as utility work agreements. The letter goes on to cite the Buy America Statute:

"…FTA may obligate money for a project 'only if the steel, iron, and manufactured goods used in the project are produced in the United States'."

The letter includes two additional letters from FTA Administrator Peter Rogoff dated February 16, 2011 and September 7, 2012 which reiterate the Administration's position on enforcing the Buy America requirement.

The 2011 letter clearly states a caution for projects that necessitate a waiver as "it is unlikely to be granted."

March 20. 2013

Eilerman requests CBT "develop a plan for including Buy America provisions in the CBT Agreement and for complying with such provisions." The letter to CBT maintains when the city entered into the agreement with the utility company, both parties thought the relocation work wouldn't be subject to Buy America rules, but that the FTA later informed the city the work "must comply".

March 27, 2013

Attorney Douglas Hart responds to city email on behalf of CBT stating, the company must "respectfully recline the request" to amend the agreement. According to the letter, "CBT uses certain equipment in its network that either does not comply with the strict requirements of the FTA Rules or for which CBT cannot provide affirmative confirmation that it is compliant".  According to Hart, the subject was never talked about during the agreement negotiations with the city, stating CBT would have declined then as well.

CBT also maintains its reimbursement agreement with the city is not subject to FTA rules based on the following arguments:

  1. CBT's work is not a part of the scope and budget of the FTA-funded projects
  2. CBT materials will not be incorporated into, become a part of, or have any use in connection with the streetcar project
  3. The City will fund the agreement solely from city funds.
  4. The materials will be installed outside the project area, will remain CBT's property, and the city will not have any interest in the property.

CBT suggests a "small purchases" waiver from the FTA could be used to exclude the materials in question from coverage. According to CBT the sum of all materials that would not compliant with Buy America restrictions would total less than $100,000.

April 10, 2013

Eilerman forwards letter to CBT and the response to the FTA. He writes, "Once we get through the budget issues, I would like to discuss how we can work with FTA to move forward on this one.

August 20, 2013
The Federal Transit Administration informs FOX19 that at this point it would be premature to speculate on the outcome of this particular situation, explaining that they work with project sponsors on an individual basis to help them comply with Buy America requirements.

The FTA does not award grants in a lump sum, but rather reimburses project costs over time.

October 2013

Streetcar project staff will hold a quarterly meeting with the FTA in Chicago to discuss the project.

In our commitment to Balanced News FOX19 has reached out to Cincinnati Bell and is still awaiting response.

Copyright 2013 WXIX. All rights reserved.