Queen City Trolley March 16, 2012

“The Queen City Trolley”
…An innovative 21st Century solution to circulator transportation in Cincinnati…

us at ir st t e o s th t ry e t ng raf entu le d st c … … al h … a 21 y C o it u ur ativ q yo re c
March 16, 2012


Queen City Trolley March 16, 2012

The Queen City Trolley (QCT-Trolley) Index I. Executive Summary II. Background Green Technologies – CNG Trolley The Lean Concept Community Involvement Wi-Fi Enabled Flexibility – University Square & Clifton Transit Hub Financial Summary III. Description of North American Bus Industries 3

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Queen City Trolley March 16, 2012 Executive Summary This proposal will define a solution that minimizes initial capital investment and business risk, and provides a progressive solution to Cincinnati’s deteriorating business climate. The City of Cincinnati should invest in CNG Trolley’s, and develop business processes to encourage local business investments – engage mounted patrol and Segway patrol police officers; coordinate artwork and scholarships with local high schools; engage local businesses with free advertising, lower real estate taxes and immediate access to circulator transportation. Initial out-of-pocket capital cost will be less than $5 million. By committing more than $300 million to the outdated streetcar infrastructure, the city will have very limited financial resources to further encourage businesses and citizens to relocate to the central city. Note: the outdated 2007 feasibility study, which projects a $379 million Net Present Value, does not provide for any tax abatement for commercial or residential investors. This financial benefit is approximately 8-times that expected for a similar streetcar investment in Los Angeles. 1 The proposed Queen City Trolley (QCT-Trolley) will provide Cincinnati business executives and private investors with a safe investment environment to: • Ensure a consistent flow of customers to grow a profitable business; • Appreciate property values; • Thrive in a neighborhood environment that is warm, friendly and conducive to business development. Thus far, City of Cincinnati Administration believes that the only solution to convince private investors and taxpayers to invest in the city is to install a 19th century, fixed-rail streetcar system. The City of Buffalo’s failed rail system2, and the recent possibility of Portland’s, “… cutting several lines…” 3 suggest that this may not be a good solution for local business. The QCT-Trolley will be closely linked with local business and high schools, and will encourage city high school students to continue their education through scholarships. There would be minimal incremental cost to the city, considering the foregone capital and interest cost of a fixed-rail streetcar. Expanded police patrols, including mounted and bicycle/Segway/foot patrols, will create a safe commercial and residential environment. Employing green technology

http://thesource.metro.net/2011/02/08/study-downtown-l-a-streetcar-to-bring-11-billion-in-new-development/ 2 Wall Street Journal January 14-15 2012, written by Steven Malanga, Senior Fellow at the Manhattan Institute 3 http://www.bizjournals.com/portland/news/2012/02/24/trimet-union-buy-inagencys-woes.html?ed=2012-02-24&s=article_du&ana=e_du_pub 3

Queen City Trolley March 16, 2012 Compressed Natural Gas (CNG) Trolley’s (rubber tires) for circulator transportation within established routes will enhance the positive investment environment. Initial capital cost will not exceed $5 million, and additional police patrols costs will be minimal, when compared to the streetcar investment. It is likely that Cincinnati would require additional police protection, considering the impact of the fixed rail streetcar – i.e. drug and prostitution crime increased in Portland, “…when TriMet’s new MAX line began operation in 2009…” 4 The QCT-Trolley will provide a flexible circulator transportation system with savings of more than $200 million, when compared to a fixed track streetcar system. The QCT-Trolley uses proven technology - now used throughout the US, in trolley cars produced by American workers in Alabama. Thus far, the city has evaluated a single solution – a fixed track streetcar system - to accomplish the circulator transportation objective. The QCT-Trolley is a flexible, inexpensive 21st century solution to a 21st century challenge, when compared to the 19th century solution that commits taxpayers to more than $300 million cash outflow.


http://portlandtribune.com/news/story.php?story_id=129729019368514900 4

Queen City Trolley March 16, 2012 Background Green Technology Compressed Natural Gas (CNG) Trolley’s
(In the interest of full disclosure, descriptions of the streetcar and service are taken directly from the NABI website: http://www.nabusind.com/Optima/streetcar.htm )

The American Heritage Streetcar (see cover photo) can be an ideal compliment to the Queen City’s desire to embrace our brewing heritage. Using historical design, modern materials and accoutrements, the circulator QCT-Trolley can accomplish the local business objectives of a safe, progressive, business development tool that encourages local foot-traffic and protects capital investment. The updated transportation could be called the “Queen City Trolley”, “QCT-Trolley”, or simply the “Q”. The “Q” will link to the simple concept of “Queue” inferring a progressive line to receive service from local businesses. The CNG is abundant in Ohio, and using CNG in Cincinnati would complement Ohio industry. The QCT-Trolley Heritage Streetcar is environmentally friendly, seasonally comfortable with both heat and air conditioning, ADA compliant, immediately available and proven in towns across America. The smaller investment and mobility, when compared to the fixed-track streetcar, will allow the city to ‘tradeup’ when improved technology is available. When advanced propulsion systems based on improved battery vehicles are proven technology and easily available, the city, at its option, can upgrade the fleet and trade-in the equipment with negligible cost, when compared to the fixed-track streetcar. “The American Heritage Streetcar re-creates the look and feel of an authentic, turn-of-the-century streetcar. Our quality craftsmanship is apparent in the hand-finished Philippine mahogany seats and spiraled brass stanchions. The large windows allow for maximum viewing and are trimmed in the same rich mahogany, as are the exterior side panels. The exterior mounted bell, optional fare box and genuine leather hand straps add finishing touches of quality and authenticity.” This fully air conditioned, handicap accessible unit has a rated useful life of between 12-15 years, is built by North American Bus Industries (NABI) in Aniston Al. The Lean Concept Decades ago, business executives developed the lean business concept that can be successfully applied to any operational challenge or process. The concept is built upon minimal investment in capital equipment, eliminating non-value added activities and investment, and focused on flexible solutions that can be redeployed as demands change. Streetcars are limited to their established routes, and cannot change routes without substantial additional capital investment. QCT-Trolley cars can be redeployed immediately to alternate routes 5

Queen City Trolley March 16, 2012 accommodating changing demand. For example, the QCT-Trolley can be rerouted to handle sporting events, concerts, conventions or major events such as the 2012 Choir Games. As the city opens it’s new casino, evening routes can be added to accommodate hotel and convention guests’ travel directly to the casino. In off-peak times, QCT-Trolley cars can be redeployed to other venues (e.g. shuttles to be used at the US Tennis tournaments; TPC golf events; US amateur golf events; River bend shuttles etc.). QCT-Trolley cars can also be used as peak-time parking shuttles from remote parking lots now serving city downtown workers, relieving peak downtown traffic congestion. A fixed rail streetcar cannot be redeployed. The Lean Concept is a 21st century solution to Cincinnati’s circulator transportation challenge. Community Involvement: An integral part of this proposal is linkage to the local community. This proposal includes enhanced police patrols using people friendly mounted patrols and bicycle/Segway/foot patrols, which have historically been considered neighborhood friendly. This proposal includes two mounted-patrol, and two bicycle/Segway/foot patrols along the 1.6 mile route. Of course, since fixed tracks are not installed, “QCT” routes can be changed at will, and patrols can be realigned as needed. In addition, this proposal extends the linkage to local high schools and communities through artwork design competitions. The QCT-Trolley would have display panels available for designs and artwork created by local students (eligible schools to be determined…), as well as space available for advertising by community business. The design competition would include artwork; updated bi-monthly based on seasonal themes, or could focus on a community business, providing additional benefits to those on the streetcar routes. Incentives for the students to develop the artwork would include scholarships to selected universities (perhaps limited to local establishments such as University of Cincinnati; Xavier; Miami; The Ohio State etc.), and other prizes such as internships with local businesses. Artwork awards could have numerous achievement levels ranging from a $5,000 scholarship top prize to numerous participation awards such as iPads, iPods, or other suitable awards for achievement. Local businesses could participate by displaying finalist designs in their establishments, after initial rankings from Internet based voting. Total annual cost of the program would be less than $100,000, and the program would engage local high-school students, and community businesses in a positive, developmental manner.


Queen City Trolley March 16, 2012 There are many other creative ways to engage the community that could be funded using the foregone resources to be saved from a fixed-route streetcar (i.e. interest expense alone would be more than $7 million for the streetcar bond… a considerable pool to engage the local community). A sample seasonal/business calendar follows:

Artwork Calendar
Feb Apr Jun Aug Oct Dec

Theme Seasonal MardiGras Business Specialty Themes






In'tl Food Fest October Fest Graeter's Cincinnati Zoo Coney Island Kings Island

Wi-Fi enabled: Investment in the QCT-Trolley will save the city more than $140 million of initial capital investment, and up to $5 million of annual interest expense. The opportunity capital and operating expense savings of the QCT-Trolley will allow for many creative 21st century solutions to develop our city. For example, free Wi-Fi access on the QCT – effectively with unlimited Apps – may help local businesses expand and be more profitable. Since this proposal will save the city several-hundred-million dollars overall, and achieve the safe, secure investment environment that encourages capital investment in the city, the QCT-Trolley can be equipped with secure, Wi-Fi enabled iPads that could serve multiple functions: • Local business could advertise ad hoc specials in real time to promote traffic. Real-time promotions by local businesses could be available to 7

Queen City Trolley March 16, 2012 those traveling on the QCT-Trolley. Advertising revenue could be used to reduce the cost of operation and scholarships. Alternatively, foregone advertising revenue could provide a significant promotional opportunity for the local business community. Event updates – baseball and football scores could be posted; live feeds through Wi-Fi could display highlights of events such as the Choir Games. Google maps could be accessed to display business locations and event status… real traffic reporting. High-school contestants’ art could be displayed on the iPads for voting. Local businesses displaying the full size artwork could be identified for inperson review, which may also improve business revenue. Local high school students could be responsible for managing the “QCTTrolley” website, providing real-world business experience and a qualifying reference for future employment …And more.

• • •

There are so many solutions to be generated by creative executives and students that understand the potential of a 21st Century Business Model. Challenge the local universities and investors to be creative and grow our city. And the QCT-Trolley won’t be a cost, since the city will have saved more than $100 million of capital, and $150 million of interest over the 30-year investment period. Ask the local private investors if they want a $300 million fixed route streetcar system, or a lower tax bill, a booming business with security and community involvement. Flexibility – University Square & Clifton Once the city invests the $150 million in a fixed streetcar route, this sunk cost may inhibit local investment. Consider that private industry may select an architecturally unique section of the city not immediately served by a fixed route streetcar. In such a circumstance, they may not make an investment. Or, to accommodate these investors, the city may choose to extend the rail line – two years lead time and –e.g. $20 million. Is this conducive to real time community growth? Using the QCT-Trolley, these investors can be quickly and easily accommodated. Extend the route… change the route … add several QCTTrolleys at a cost of about $400,000 each… far less expensive than a $3.5 million, fixed route streetcar. Private investors have already started to develop University Square and Clifton. These concentrated investments are perhaps 2-3 miles from the center of the city, and The Banks. This 2-3 mile gap between University Square and The Banks represents an immediate development opportunity zone. Investment in the short-lead-time QCT-Trolley could immediately connect University Square


Queen City Trolley March 16, 2012 and The Banks (at the route extremes), and create a development opportunity for the gap… QCT route service between University Square and The Banks would transit the gap. Investment in the QCT would save the City more than $200 million – a financial resource that could be used in further city development and incentives. Private investors at University Square in Clifton? You can have immediate service for your project that will be open in the fall of 2012, or you can wait 3-4 years for a fixed rail service. Would the QCT-Trolley be helpful? Xavier University, Campus Master Plan (…including a town square…) investors? You can have immediate service for your project that will open in 2014. Would the QCT-Trolley be helpful? Transit Hub The city built a transit hub several years ago that is substantially unused. By investing in the QCT-Trolley, the city can expand Park & Ride services to outlying towns, and provide immediate circulator transportation to those commuters. Once again, flexible routes and short lead times to implement the QCT-Trolley will allow the city to use established infrastructure and minimize traffic congestion. Financial Summary Example financial comparatives follow. Note that the downside risk of the QCTTrolley is minimal, since the sunk cost is only $5 million compared to $150 million. Private investors will invest in the city if they trust the city administration. If they don’t trust the administration, installing a streetcar won’t fix the problem.


Queen City Trolley March 16, 2012





Capital Cost Cars Maintenance facility Streets, sewers, utilities Bridge decking across Fort Washington Way Wi-fi

1 2 3 4 5

5.0 0.1

21.0 4.0 128.0

Total Capital
Annual Operating costs Base Mounted patrol (2) Segway/foot patrol (2) Tranist patrol (4) Scholarship Misc Administrative Interest Expense 6 7 8 9 10 11 12

2.5 0.3 0.2 0.1 0.1 -




Total Operating Cost



Required Private Investment



Notes: 1. QCT Trolley conservatively includes 10 trolley’s to allow for special events, additional routes etc. Streetcars are as originally estimated in the 2007 proposal, although there is certain to be inflation – i.e. Portland’s streetcar cost – even before a final prototype is developed – has increased by 15%. 2. The QCT Trolley can use the existing SORTA maintenance facility. Estimated that the streetcar facility will cost $4 million. 3. Streets, sewers etc. required to reach the $153 million investment total referenced in early correspondence. 4. Bridge decking for bridges crossing Fort Washington Way have not been included in any existing feasibility study estimate prepared by the city administration. This is a placeholder. 5. Wi-Fi is now free within certain operating zones in the city. The $100,000 represents investment in iPads, Website development etc. 6. The city’s estimate for annual operating loss from the feasibility study. Assumed that the costs would be similar, but due to the extraordinary difference in initial capital costs, any operating cost variance would be


Queen City Trolley March 16, 2012 insignificant. Added $100,000 of operating expense assuming several dozen iPads and miscellaneous operating costs. 7. Mounted patrol annual operating costs estimated at $150,000 per unit 8. Foot/Segway patrol estimated at $100,000 per unit. 9. Estimated transit patrol at $75,000 per unit, with 4 patrol personnel. 10. Scholarships and prize awards, administrative costs estimated at $100,000 total. 11. Interest expense estimated at 4.5% on $110,000 million of bond debt.


Queen City Trolley March 16, 2012 III – Description of North American Bus Industries

North American Bus Industries – extract from their website “Today, NABI’s products which range from 31 to 60 feet in length, are produced using state of the art manufacturing processes and equipment, including the transit industry’s first robotic paint system. The design philosophy of all NABI bus products is one of simplicity, utility, reliability, and maintainability, coupled with the advanced styling desired by modern, forward-thinking transit operators. North American Bus Industries is totally committed to assisting mass transit organizations in the public and private markets with the highest quality mass transit vehicles in America. Our commitment to you is to focus on your needs while creating value through better products, lower costs, greater speed, and superior service.”

“North American Bus Industries is a full line supplier of OEM transit parts. Our Aftermarket Parts Operation works with a linked network of locations that shares inventories in order to help insure our customers can take full advantage of our inventory investment, regardless of the location. If an “Out of Stock” situation exists at the location nearest the customer, the order is automatically transferred to a location with available stock. The North American Bus Industries Aftermarket Team is staffed by 52 dedicated transit professionals who have more than 800 years of combined experience. From the Sales and Customer Service Team, 12

Queen City Trolley March 16, 2012 to the Bidding Department, Engineering, Finance and the people who pack the parts for shipment, no company goes to greater lengths than NABI to provide total customer satisfaction. We are very proud of the personal service that is available from our knowledgeable group of “real people” who can answer your questions, offer solutions and take your orders over the phone or via email and fax. Our Sales Force makes regular calls to all major Transit customers on a regular basis for the purpose of troubleshooting and to review parts needs. In a world of increasing electronic sterile exchange, North American Bus Industries feels it is important to maintain the personal touch that builds relationships and trust between people. As a service to our customers we offer a customized recommended spares list for each new build of coaches. In addition, all backorders are now subjected to prioritized expediting to assure prompt response from our suppliers. Normal shipping goals for stock items include a turnaround of 48 hours from time of order receipt until shipment is made and same day shipment of critical need or coach down items. From our order entry personnel to the people who “pick it and ship it” we maintain a high level of awareness regarding your need to keep the vehicles rolling and meet your pull out goals. The tenure of our employees and their consequent vast accumulation of knowledge, our attention to detail and our track record as a prompt and accurate supplier of quality parts makes North American Bus Industries the increasing “first choice" of transit authorities nationwide.”


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