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Appeals Court Agrees Cincinnati Should Reimburse Duke Energy For Streetcar Project

First streetcar being tested on the tracks in Over-the-Rhine.
Bill Rinehart
First streetcar being tested on the tracks in Over-the-Rhine.
First streetcar being tested on the tracks in Over-the-Rhine.
Credit Bill Rinehart / WVXU
First streetcar being tested on the tracks in Over-the-Rhine.

For right now, the cost of building the first phase of the Cincinnati streetcar project will not be getting any cheaper.

A three-judge panel of the Ohio First District Court of Appeals Wednesday upheld a lower court ruling that Cincinnati is responsible for the costs of relocating Duke Energy gas pipes and electric lines along the streetcar route.

“A municipality cannot require a public utility to relocate facilities at the utility’s expense to accommodate the proprietary utility operations of the municipality,” the appeals court decided. “Because the construction and operation of a governmentally-owned transit system, including a streetcar system, is a proprietary function, the trial court did not err in declaring that the City of Cincinnati and not Duke Energy was responsible for the cost of relocating Duke Energy’s utilities to accommodate the city’s streetcar project.”

Judge Sylvia Sieve Hendon wrote the 17 page opinion, and Judges Penelope Cunningham and Russell Mock concurred.  

Duke Energy spoksperson Sally Thelen said in a written statement the company is pleased with the appeals court ruling.

"Duke Energy Ohio has and continues to support the City of Cincinnati's streetcar project," Thelen wrote. "As a longtime partner in this effort, we completed our facility relocation work of gas, electric and fiber lines on time and on budget in May.  Our primary focus throughout the project has been two fold – safety and financial responsibility.  Duke Energy Ohio has steadfastly maintained that the City is responsible for paying Duke Energy Ohio’s costs to relocate its facilities to accommodate the streetcar project."

The city could appeal the latest decision to the Ohio Supreme Court.

"While this decision is disappointing, it is not necessarily the end of the road” said City Manager Harry Black in a written statement.  “We are assessing our appeal options and will make a decision soon about next steps.”

Duke sued in 2013 saying the city was responsible for utility relocation costs.  The city argued Duke was responsible.  The projected price tag for the work at the time was $15 million.  

Former Hamilton County Common Pleas Judge Carl Stich ruled in Duke’s favor in December 2014 saying the city should pay for the expense.  

The City of Cincinnati had attempted to reach a cost-sharing agreement with Duke Energy, but those efforts were unsuccessful.  The city had offered $6 million toward the projected $15 million relocation costs.

Without an agreement, Duke funded and performed the relocation work.  Cincinnati placed $15 million in an escrow account while the case worked its way through the legal system.  The city had set aside that amount from the sale of the Blue Ash Airport.

Duke has argued from the beginning the utility relocation expenses should have been included in the streetcar project budget.  The city had included some funding, but it says the company should foot some of the bill since the wires and pipes are getting old and would have to be replaced in the future anyway.

Cincinnati did reach agreements with other utilities including Time Warner Cable, Cincinnati Bell, Level 3 Communications, the Metropolitan Sewer District and Greater Cincinnati Water Works.

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Jay Hanselman brings more than 10 years experience as a news anchor and reporter to 91.7 WVXU. He came to WVXU from WNKU, where he hosted the local broadcast of All Things Considered. Hanselman has been recognized for his reporting by the Kentucky AP Broadcasters Association, the Ohio Society of Professional Journalists, and the Ohio AP Broadcasters.