The KC Streetcar Authority could prevent the city's downtown streetcar line from receiving any federal grant funds for operations, according to a report from the City Auditor's Office.
The report published Thursday says the Federal Transit Administration requires recipients of grants for transit operations to be "procured through a full and open competition."
The Streetcar Authority was appointed by a partnership between the city and the Downtown Transportation Development District, not through a competitive bidding process. That means any future grants that would offset the costs of streetcar operations could be out of the city's reach.
Donna Mandelbaum of the Streetcar Authority says the city isn't expecting to fund any of the downtown line with FTA operational grants, and the project is expected to follow the audit's recommendations.
"We will work closely with the city manager and the city of Kansas City to work on [the city auditor's] recommendations," Mandelbaum said. "We work really closely with the city as well as the FTA making sure this is all coordinated and in line with what they require."
FTA operations grants would give the streetcar project money for preventative maintenance, replacement parts and vehicle hardware. The report says the city could ask for a written exemption from the FTA if it decides to apply for the money after all.
"Because this is a starter line and the KC Streetcar may expand one day, ongoing analysis will be needed to understand the implications of an expansion and funding availability," the report reads.
City Auditor Doug Jones says the streetcar line hasn't violated any FTA regulations so far, but the audit gives the city a good idea of how to proceed with the project in the coming months.
"This audit is forward-looking at things that we can change today to mitigate any risks of violations," Jones said. "We're in no conflict with the operational side."
To keep the streetcar in compliance with FTA regulations, the auditor's report recommends several best practices to the city manager's office. It suggests that all streetcar revenues go straight into city accounts and that the project's budget be reported separately as part of the city's overall budget.
It also suggests the manager's office take stock of streetcar operations periodically to make sure the current funding and governance structure is the most financially sound option for the city.
