Loop Trolley Needs Another Half Million Dollars To Start Service

UNIVERSITY CITY, MO — The Loop Trolley Company says it needs another half million dollars cash before it can begin services, according to Les Sterman, the company's president. An Oct. 19 letter sent to county and city officials said the nonprofit would be insolvent by January due to recurring delays in starting service and the accompanying delay in revenue that was expected from fares.

"The constantly shifting dates for completing construction made it very difficult to plan for hiring management and operating staff," Sterman wrote. "Since construction will be completed long after the date anticipated in our opening contract, we will have been paying our senior staff for more than a year, and incurring substantial costs, without income to the organization from the sales tax, fares, or any other source aside from our own fundraising and loans to the organization from private sources."

A $25 million Federal Transit Authority grant as well as local grants, tax credits and a special districtwide sales tax have made up the bulk of the project's initial funding. St. Louis County has provided $3 million toward the project, while University City has kicked in $250,000.

A 1-cent sales tax on businesses in the Loop Trolley Transportation Development District has provided less revenue than expected, according to Sterman, and company has used what revenue has materialized to pay for unplanned construction and design costs. "While sales tax receipts have not fallen during construction, as some have asserted, growth has been slow for the last couple of years," he said. "This is a departure from trends that were anticipated in 2014, when the initial operating budget was developed."

University City Mayor Welsch hopes the county will approve the additional money. She doesn't see any of it coming from her city. "St. Louis County voters approved a sales tax for transportation, and this trolley project is a perfect fit for the funding," she said.

St. Louis County Executive Steve Stenger told the Post-Dispatch last week that he's still not convinced of the need for further funding from the county. “I would say at this point it’s probably not going to happen,” Stenger said in an interview with the paper. “We would need to have more of a demonstration of need than we’ve been given.” He encouraged the company to explore other avenues for obtaining funding.

Nonetheless, Welsch has few doubts the project will go ahead, and that the project will benefit the entire metro area when completed. "If this project were to fail, and I don’t believe it will, it would not bode well for future federal funding of transportation projects in this region. Regional leaders supported this project as it got off the ground years ago, before I was elected Mayor of University City. I believe regional leaders should join hands as we take the project over the finish line," she said.

Sterman said the Loop Trolley Company has taken steps to address delays and raised more than $300,000 in private funds, much of it from the company's own board members. The company, he explained, was run by volunteers as long as possible, and has a very low operating budget compared to similar projects in other cities. "But the LTC can no longer bear the fiscal burden alone; we need the urgent assistance of the TDD."

The trolley company has laid out a series of demands before it can start service. These include a one-time $500,000 grant, state and federal certification, increased access to sales tax revenue, reduction of the Trolley District's administrative costs to no more than $60,000 annually, and an agreement by the St. Louis Development Corporation to defer its asset management fee for several years.

"We regret that we are unable to begin revenue service under the current conditions, but we have no choice, given the financial circumstances resulting from delays in completing the project," Sterman wrote in closing. "That decision will certainly change if we can reach agreement in the very near future that the foregoing conditions can be satisfied. In the meantime, please be assured that we will continue preparation to start revenue service and we stand ready to work with the TDD to meet the requirements for a successful start of the Loop Trolley Service."

Image via Loop Trolley Company