Meanwhile, Duke Energy Corp. has agreed to begin the work immediately at its own expense to avoid delaying the $110 million streetcar from opening in 2016.
The development comes after years of failed negotiations between the two sides on who should foot the bill, with the city arguing that Ohio state law requires Duke to pay and Duke arguing that the city should pay because the utility lines wouldn't have to be moved if not for the streetcar.
"We have our interpretation of what the law says, Duke has theirs," City Manager Milton Dohoney Jr. said at a news conference at City Hall. "We could talk about it from now until the moon comes home; we need to ask a judge what it's really about."
To put the case in court, Duke Energy will file a lawsuit against the city in the next two weeks, spokesman Blair Schroeder said Friday.
"We felt this was a project that they were taking on and that they should bear the costs for that," Schroeder said, adding that Duke thinks the project is important for the city's future but is concerned about the costs.
Dohoney insisted that despite the lawsuit, the company and the city are working together. "This is not an adversarial situation," he said.
If a Hamilton County Court of Common Pleas judge rules in Duke Energy's favor, Cincinnati will reimburse the company for the work. If Cincinnati wins, then Duke will already have paid for it.
Both sides would be able to appeal the judge's decision, and the court case could take years.
Mayor Mark Mallory said what matters most is that the streetcar project is moving forward.
"From the beginning, I said that we would come to agreement with Duke, and we have," he said.
The utility lines in dispute must be moved because they lie under the streetcar's planned route, which would prevent utility workers from safety accessing them.
Moving the lines is the first concrete step in putting a streetcar in Cincinnati. Once that work is finished, the track can be built and electrified, and then the cars can be installed.
Companies have until Feb. 8 to apply to build the system, the same day the streetcars will start being built by a company in Spain.
Construction on the actual streetcar line is scheduled to begin in April, and city leaders hope the project will be finished in 2015.
The yearslong impasse with Duke is just one of many hurdles and delay city leaders have faced to move forward with the streetcar, including two ballot measures drafted by opponents to do away with the project. Both measures ultimately failed.
The 3.6-mile project will link popular spots throughout the city's downtown and riverfront areas with the trendy Over-the-Rhine historic district. Stops will be near the Bengals and Reds stadiums along the Ohio River, the city's soon-to-open $400 million casino and a bustling farmers market.
Detractors say the project is far too expensive for the current economic climate and that there are simpler transportation options, such as an improved bus line or trolleys. Supporters say a streetcar will spur new development and attract more visitors to the area, and buses and other transportation options historically have not had that effect.
Funding for the project comes from federal grants and various city sources, including $64 million from bonds and $6.5 million in sales of city streetlights to Duke.