The city of Omaha, Neb., released updated cost and bond revenue estimates of its modern streetcar project informed by advances in the project design, which is expected to reach 90 percent this summer. The city says the development in the urban core, particularly in the streetcar corridor, is now estimated at $1.3 billion by the end of 2024, exceeding estimates and accelerating.
Municap, a public finance consulting firm that was hired to provide an independent analysis of the financial plan for the project, projected $2 billion during the course of 15 years and $608 million in revenue generated by the increase in Tax Increment Financing (TIF) to be paid by developers. The Municap analysis and estimate was completed in 2022.
The new estimate, prepared by the City of Omaha Finance Department, has nearly doubled to $3.9 billion during the next 15 years, resulting in a minimum of $940 million in revenue generated by the TIF proceeds. The TIF revenue also greatly exceeds the amount necessary to build the streetcar.
“The primary recommendation of the Greater Omaha Chamber’s Urban Core Strategic Plan was the streetcar, to create development and bring 30,000 new jobs and 30,000 new residents downtown,” said City of Omaha Mayor Jean Stothert. “The pace and value of the new development demonstrates the streetcar is already successful.”
The updated estimate is based on 26 development projects underway in the urban core.
“The streetcar creates a different dynamic in the core of a community and that’s more attractive to developers,” said Omaha Streetcar Authority Chairman Jay Noddle. “There is a huge uptick in interest in Omaha from the national development community.”
The initial cost estimate for the project has increased. The preliminary $306 million bond estimate was based on the 2022 conceptual design. The updated streetcar bond estimate is $389 million. The city of Omaha says the $70 million difference is the cost of infrastructure improvements to the utilities, sewers and bridges that will be paid by others. The bond estimate is the cost paid with the revenue created by development.
The Omaha City Council has authorized up to $440 million in bonds for the streetcar; the new estimate remains far below the bond authorization. The estimate includes information such as the specific locations of underground water, gas, electric and sewer infrastructure, the cost of the cars and the number of stops and locations and their design.
The initial route has been modified, the Farnam and Harney Street bridges over Interstate 480 have been redesigned for pedestrian and bicycle access and safety, the location of the vehicle maintenance facility has been determined and the design has been completed.
The city of Omaha is working on a cost-share agreement with the Nebraska Department of Transportation (NDOT) for the bridge replacements.
“We expected the initial estimate would be higher but it remains easily within our range. Taxpayers will not pay for streetcar, there will not be a tax increase and the streetcar will not put the city in debt,” Stothert said.
The Omaha Streetcar Authority hired Krebs Corporation to review project costs. Krebs specializes in large transit and transportation projects to provide an independent analysis and estimate. Krebs estimated the cost of streetcar construction, Metropolitan Utility District (MUD) water line replacement, city sewer reconstruction and replacement of the bridges.
The Omaha Public Power District (OPPD) estimated costs for the additional capacity needed for electrical service to support the increasing development in the corridor.
HDR, which is developing the final design of the project, estimated the costs for MUD’s gas line replacement, streetcar right of way and easements and professional services.
The actual streetcar construction cost estimate is $206.7 million, which is up 18 percent from the initial $176 million. The city of Omaha says the increase is comparable to the 20 to 25 percent increase in general construction industry costs since 2021. The majority of cost increases are for subsurface utility and sewer systems and the complete replacement of the Farnam and Harney bridges.
The estimate for MUD gas and water line replacement has increased from $10.6 million to $43.3 million, which includes replacing nearly 80 percent of the water lines and about 50 percent of the gas lines along the route.
OPPD’s costs to add electrical infrastructure have increased by $30 million. The city of Omaha says OPPD must increase its capacity to serve the nearly $4 billion in projected development.
The cost to rehab 100-plus year old city sewers along the corridor has also increased to approximately $49 million from the initial $11.2 million. The city of Omaha says many are cement-lined brick sewers that will eventually have to be replaced.
The increased revenue from development will pay the majority of these expenses, reducing future costs to ratepayers, accelerating the pace of these improvements and avoiding potential disruption of future repairs and replacements that could impact streetcar operations.
