Sound Transit's Central Link Light Rail:
Seven Billion Dollars and No Way to Pay (Yet)
Two important questions discussed and debated among supporters and critics of Central Link Light Rail demand an answer:
|Of all the numbers bantered about, what is the cost of the 14 mile Link Light Rail Initial Segment (IS)?|
|After completion of the Link Initial Segment in 2009, what authorized public funds are available to fund North and South Link Light Rail extensions?|
Details for reaching the answers to these questions are provided in a working paper that I have prepared with financial tables from Sound Transit spreadsheets. The working paper is available by clicking here. Below on this page is a summary of what I found.
The Link Light Rail Initial Segment costs $2.9 Billion
Sound Transit claims the cost of the Initial Segment is $2.1 billion. But in addition there are a number of other costs to taxpayers that must be incurred in the Link project development. When these are added to the basic cost, the total cost increases to $2.5 billion, another number that Sound Transit is sometimes willing to concede. But this is not where the Federal Government stops counting. Program costs must also include the costs of debt service up to the year of project completion and full operation. That yields a $2.9 billion total cost of the Link Initial Segment program through 2009. For this, the region has a 14 mile light rail line carrying passengers between Westlake Mall in downtown Seattle and a park & ride lot and shuttle bus terminal at S. 154th Street in Tukwila about two miles from the main terminal of Sea-Tac Airport. The recently announced extension planned to a new North Airport Terminal is covered in the next section.
In 2009 about $200 million will be left to pay for billions in light rail extensions
Unrestricted cash available in Sound Transit's bank account as of the end of 2009 is forecast to be close to zero. What there is can either cover further Link IS cost increases, cover completion of delayed stations, or be used for Link extensions. I assume these small amounts are available for Link extensions.
Then I add the amount of additional bond capacity available for extensions as of the end of 2009. But actually both the North and South subareas will be considerably "overdrawn" in bonding, assuming the Sound Move policy of a 1.3 safety margin is maintained. So, at the end of 2009 ST will have only $198 million available to apply to Link IS extensions.
Sound Transit finds that delaying expenditures and extending the program buys time to accumulate more tax money. However, with all programs operational and the huge debt service obligated for the $1.7 billion in combined North and South subarea bonds, there will be little net revenue after obligatory expenses. For example, in 2010 North will take in $127m in revenues and spend $117m in Operations & Maintenance (O&M) and debt service. Debt service alone will be $68m and rising. South is estimated to take in $81m in revenues and expend $81m -- net zero in cash increase available for Link extensions.
By summing up available cash from tax collections that is not needed for committed expenditures and turning that cash into borrowing under existing financial policies, I can show that by 2016 ST forecasts reveal only $598m is available for extension toward the University District and Northgate, and $191m is available for south extensions toward the 1996 promise of a southern terminus at S 200th Street.
Cost Estimate for Link Extension to South 200th Street: $800 million
Extension of the Link Initial Segment from S.154th to the Airport terminal is about 1.5 miles (vicinity of S.175th Street). Extension to S.200th Street is about 2.9 miles. All of the southward extensions are planned to be on elevated structures. Given ST's current estimates for structured guideways, these extensions are expected to cost somewhere on the order of $250m per mile plus the added cost of several more years of delay beyond 2009. So, extension from S.154th to the Airport terminal is estimated to be about $400 million; from S.154th to S.200th about $800 million.
Cost Estimate for Link Extension to Northgate: $3.5 billion
The costs of northward extensions will be much greater. In early 2001 Sound Transit's first proposed Minimum Operating Segment (MOS-1) from S.Lander Street to the U-District (7.6 miles) had a cost estimate of $2.6 billion. MOS-1 included the Downtown Seattle Transit Tunnel (the Bus Tunnel) plus free use of the Metro E-3 Busway south to Lander -- 3.1 miles of virtually free right of way. It also included the rail maintenance base. I will generously assume that the cost of converting the DSTT and Busway to rail use would be $100m per mile, and that the maintenance base would cost $200m. That leaves $2.1 billion as the cost of extending Link from CPS to the U-District (4.5 miles at $467m per mile). Add costs of further years of delay beyond 2009, and the cost estimate for Link extension from CPS to the U-District is approximately $2.5 billion.
But many in Seattle including the Downtown Seattle Association do not want to accept a northern terminus short of Northgate -- a northern terminus that Sound Transit has always acknowledged as its goal. Getting to Northgate requires another 3.2-mile extension beyond the U-District. It will be a combination of tunnel and elevated structures. Given 2016 or beyond for earliest completion, this segment from the U-District to Northgate is estimated to cost in the order of and additional $1 billion.
Summary of Central Link Light Rail Costs: Over $7 Billion to get to Northgate
|S.154th Street to Airport Terminal||$400 million|
|Airport Terminal to S.200th Street||$400 million|
|Total needed for South subarea||$800 million|
|Convention Place to U-District||$2,500 million|
|U-District to Northgate||$1,000 million|
|Total needed for North subarea||$3,500 million|
Including the cost of the Initial Segment, the total construction cost for the 1996 Light Rail Plan of 21 miles from S.200th Street to the University District: $6.2 Billion
The total construction cost for Link Light Rail from S.200th Street to Northgate: $7.2 Billion
Sources of Money: Doubling Taxes and More Federal Grants
Sound Transit Board Chairman Ron Sims says Sound Transit will complete Central Link Phase I from S.200th Street to the U-District without increasing the Sound Transit Phase I tax levies set in the 1996 vote. He has not yet released his financing plan, but it will certainly have to be creative.
I calculate that to accommodate just the northward extensions, Sound Transit will need to do all of the following:
To extend from S.154th to the Airport terminal could possibly be done with creative financing, some combination of Federal assistance, state assistance, and Port of Seattle assistance. Current revenue estimates indicate that ST could finance about half of that 1.5-mile extension need by 2016 with existing Phase I revenue estimates for the South subarea.
However, the South Link extensions would be easy if taxes were increased to build to Northgate. The North extension will require a major tax increase, and any tax increase must extend to all five subareas, including South.
But why would citizens of the other three subareas be interested in approving any further Sound Transit tax increases? Snohomish, Pierce and East King are all expected to complete their Phase I programs with existing Phase I tax levies by 2009. After 2009 they will all be accumulating excess revenues to fund any Phase II program needs. In fact by 2020 the East subarea would have accumulated over $1.5 billion to finance any post-Phase I program desires -- such as BRT in the I-405 Corridor.
The subarea equity policies create a problem for Sound Transit in that raising taxes solely because of the need to pay for the massive expenses of light rail to Northgate creates the need to raise taxes unnecessarily for many citizens.
No More Recessions for the Puget Sound Region?
And one final note. The Sound Transit revenue forecasts predict no further economic recessions for its three-county tax region through the year 2025. But history shows economic slowdowns occur on a 10-year cycle for this region. By 2010 we will likely be looking toward another economic downturn. This could place the maintenance of Sound Transit Phase I and Link IS O&M and debt service costs into jeopardy. It certainly could negate any ability for the North and South subareas to accrue any additional cash and bonding capacity from Phase I taxes for use in Link extensions beyond Link IS. And certainly the East King, Snohomish and Pierce subareas would be additionally reluctant about extending any inter-subarea loans to North and South.
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Last modified: February 07, 2011