This is my third post about Fort Lauderdale’s proposed streetcar project, The Wave. I am very hopeful and reasonably confident that it will be my last.
On May 1, the city voted to withdraw from the controversial project after more than 14 years of trying to get it off the ground. The vote was 3-2, with the newly elected mayor breaking the tie. Mayor Dean Trantalis and several of the new commissioners expressly campaigned on a “Kill The Wave” platform earlier this year; the recent vote reverses the previous commission’s 3-2 decision in February to continue funding, despite public disapproval and advice to the contrary from the city attorney.
Although the Sun Sentinel news outlet called the Wave streetcar project “fully funded” in its coverage, the actual budgeted cost for the initial construction of the 2.8-mile leg is $114 million. The contract approved by the prior city commission required the city to stay in the project even if the re-bids exceeded that amount by 25 percent, meaning a contract price of up to $142.5 million. The actual low bid in the current round was $144.7 million, giving the newly elected commission the legal option to cancel. Last week’s vote took advantage of this escape route.
Officially, The Wave is not quite dead. The project is the responsibility of Broward County and the state, not the city. So it technically remains alive, at least until a County Commission meeting scheduled for today.
But without the city’s participation, the financing is not there, even if the county declines to put the matter to rest. No matter what the County Commission decides, at this point it is clear that The Wave will not get built.
The only question is who, if anyone, is liable for repaying any money already spent. This is why some of the project’s advocates warn that Fort Lauderdale is on the hook for “millions” after its vote to pull the plug. That claim may or may not prove true, depending on exactly how stupid the agreements previous city governments ratified turn out to be. A commitment to buy something without a ceiling on what you might pay is never smart, and only occasionally enforceable in court. Critics of the city’s move also point out that if the lowest bidder reduced its estimate to below the contract threshold, Fort Lauderdale could be considered in default of its obligations.
Still, the amount the city might spend to get out of its obligation is almost certainly far less than its residents would have spent to go ahead with The Wave. If you really believe the project had significant benefits, that fact might not matter to you, but this ideological Trojan horse has almost no constituency in the neighborhoods it would supposedly serve. Building it would be money spent on less than nothing; we would just be buying ourselves more congestion.
This conclusion is apparent even before you factor in the inevitable cost overruns to build The Wave, the ongoing expense to maintain it, and the subsidies necessary to keep it going when passenger fares fail to come close to paying the day-to-day bills.
Consider: Six months ago, the lowest bid to build the system was nearly $189 million. Now it has magically fallen to around $145 million, or by nearly 25 percent. Have we had deflation of 25 percent in the past six months? If we have, the financial media missed the biggest story of our lifetimes. Otherwise, at least one of the two sets of bids was a come-on. It isn’t out of the question that they both were.
I was skeptical of The Wave years ago, citing the inflexibility of its design, the relatively uselessness of its proposed route and the short-sightedness of a system that uses overhead wires in a city that gets hit by tropical storms and hurricanes. But even its former boosters (including Fort Lauderdale’s new mayor) have come to see the project as an expensive waste of money. At the city’s vote last week, locals complained that the proposed route moved away from popular destinations to routes that would serve few residents. As activist Art Seitz commented of the project, “A 10-year-old would tell you it sucks.”
So here’s a promise: I will only write about The Wave in this space again if someone actually signs a binding contract to build it. Otherwise, it is as gone as a breaker that has left nothing behind but damp sand.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
Streetcar wires: no longer coming soon to Fort Lauderdale, Fla. Photo by Flickr user SounderBruce.
This is my third post about Fort Lauderdale’s proposed streetcar project, The Wave. I am very hopeful and reasonably confident that it will be my last.
On May 1, the city voted to withdraw from the controversial project after more than 14 years of trying to get it off the ground. The vote was 3-2, with the newly elected mayor breaking the tie. Mayor Dean Trantalis and several of the new commissioners expressly campaigned on a “Kill The Wave” platform earlier this year; the recent vote reverses the previous commission’s 3-2 decision in February to continue funding, despite public disapproval and advice to the contrary from the city attorney.
Although the Sun Sentinel news outlet called the Wave streetcar project “fully funded” in its coverage, the actual budgeted cost for the initial construction of the 2.8-mile leg is $114 million. The contract approved by the prior city commission required the city to stay in the project even if the re-bids exceeded that amount by 25 percent, meaning a contract price of up to $142.5 million. The actual low bid in the current round was $144.7 million, giving the newly elected commission the legal option to cancel. Last week’s vote took advantage of this escape route.
Officially, The Wave is not quite dead. The project is the responsibility of Broward County and the state, not the city. So it technically remains alive, at least until a County Commission meeting scheduled for today.
But without the city’s participation, the financing is not there, even if the county declines to put the matter to rest. No matter what the County Commission decides, at this point it is clear that The Wave will not get built.
The only question is who, if anyone, is liable for repaying any money already spent. This is why some of the project’s advocates warn that Fort Lauderdale is on the hook for “millions” after its vote to pull the plug. That claim may or may not prove true, depending on exactly how stupid the agreements previous city governments ratified turn out to be. A commitment to buy something without a ceiling on what you might pay is never smart, and only occasionally enforceable in court. Critics of the city’s move also point out that if the lowest bidder reduced its estimate to below the contract threshold, Fort Lauderdale could be considered in default of its obligations.
Still, the amount the city might spend to get out of its obligation is almost certainly far less than its residents would have spent to go ahead with The Wave. If you really believe the project had significant benefits, that fact might not matter to you, but this ideological Trojan horse has almost no constituency in the neighborhoods it would supposedly serve. Building it would be money spent on less than nothing; we would just be buying ourselves more congestion.
This conclusion is apparent even before you factor in the inevitable cost overruns to build The Wave, the ongoing expense to maintain it, and the subsidies necessary to keep it going when passenger fares fail to come close to paying the day-to-day bills.
Consider: Six months ago, the lowest bid to build the system was nearly $189 million. Now it has magically fallen to around $145 million, or by nearly 25 percent. Have we had deflation of 25 percent in the past six months? If we have, the financial media missed the biggest story of our lifetimes. Otherwise, at least one of the two sets of bids was a come-on. It isn’t out of the question that they both were.
I was skeptical of The Wave years ago, citing the inflexibility of its design, the relatively uselessness of its proposed route and the short-sightedness of a system that uses overhead wires in a city that gets hit by tropical storms and hurricanes. But even its former boosters (including Fort Lauderdale’s new mayor) have come to see the project as an expensive waste of money. At the city’s vote last week, locals complained that the proposed route moved away from popular destinations to routes that would serve few residents. As activist Art Seitz commented of the project, “A 10-year-old would tell you it sucks.”
So here’s a promise: I will only write about The Wave in this space again if someone actually signs a binding contract to build it. Otherwise, it is as gone as a breaker that has left nothing behind but damp sand.
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