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Streetcar Losing Money, May Soon Be Owned By Taxpayers

Tribune photo by JIM REED

Even with a modest gain in 2009, the endowment used to partially fund the streetcar system could be gone in two or three years.

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By RICH SHOPES | The Tampa Tribune

Published: January 11, 2009

TAMPA - The way the streetcar system is bleeding money, city taxpayers could well find themselves in the streetcar business in a couple of years.

Its main source of revenue other than the fare box is rapidly dwindling, taking a huge hit courtesy of the economic downturn. Unless the board that runs the system devises a way to replace those lost dollars, the city will be on the hook because of an agreement when the streetcar was created in 2003.

Back then, developers left a $5 million endowment to help fund the system in addition to revenue from fares, advertising, sponsorships and special assessment collections. The city said it would play a backup role in case the streetcar ran out of money.

It looks as if that's happening.

In 2007, the endowment accounted for about 40 percent of the streetcar's $2 million annual operating budget. That still left the endowment at about $3.3 million.

But in the past year, the fund plummeted to $1.4 million, partly due to its contribution to operating expenses, but mostly because the endowment was invested in securities that took a beating on Wall Street.

Even with a modest gain in 2009, the endowment could be gone in two or three years.

"We're all concerned and we're trying to cut operating expenses," said David Mechanik, president of the streetcar board, which is comprised of appointees from the city and Hillsborough Area Regional Transit.

In recent months, the board has cut service and increased one-way fares to $2.50. In December, it moved the endowment out of equity investments and into a money market account.

"Because of the volatility of the stock market, it was just to a point where you cannot afford to take the risk with the continued downturn," Mechanik said.

On average, about 1,200 people ride the streetcar daily, most of them tourists and conventioneers. Except for 2006, ridership has increased steadily since the streetcar began running in 2003.

The board wants to use grant money to extend the line from the Tampa Convention Center to Whiting Street to entice more riders from downtown. HART, which operates the cars, soon will seek bids for the $5 million project.

Meanwhile, the city is contemplating a role running the streetcar.

Mayor Pam Iorio said she expected the city to be playing a financial role in 2015. Now it looks as if that will happen in 2011, when her second term ends.

Given that scenario, she wants the city to exert control over the streetcar's finances now.

"I learned of this a couple of months ago and was extremely concerned that the endowment money would be invested so heavily in equities," Iorio said. "They should have taken a more conservative investment approach. It's better to make a 2 percent gain than a 40 percent loss.

"From now on, I want the city's finance staff to exercise greater oversight over how this money is invested," she said.

In recent months, the city has asked for and received the streetcar's financial reports, although it remains to be seen whether it can wrest financial control from the board.

Bonnie Wise, the city's budget director, said the city could trim the days or hours of operation if the system becomes a financial drain. Or it could shut it down.

That would disappoint folks such as Jim and Cheryl Kovalsky of Jupiter, who were visiting Tampa with their two children Friday. The family has visited the past three years, taking a ride on the streetcar each time.

"From a visitor standpoint, that would be a tremendous loss," said Jim Kovalsky, 44. "It's a real convenience to visitors and it connects the downtown to Ybor City. Plus it saves you from driving and trying to park."

Reporter Rich Shopes can be reached at (813) 259-7633.

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