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What Went Wrong

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Kyle Webster

If the demise of the monorail can be traced to a single date, it might be June 3, 2002, when the board of the Elevated Transportation Company (soon to be the Seattle Monorail Project) voted to fund the monorail with a 1.4 percent motor-vehicle excise tax. The size of the tax, as the agency later discovered, was based on an overestimation of the value of cars in Seattle. The error ended up costing the monorail agency nearly one-third of the revenues it predicted, and, eventually, its existence.

But even such a monumental mistake didn't have to be fatal. The monorail didn't die because of an error made by a misguided financial analyst; it died because the same grassroots spirit that sustained the monorail idea through multiple elections produced an agency that was secretive, defensive, and unwilling to reach out to other governments for help. Compounding the monorail's problem, those governments didn't trust a transportation agency that came from ordinary citizens, not the political establishment. When the monorail ran into trouble, the city, the state, and Sound Transit had no political or financial incentive to bail it out.

The mistake that led to all the monorail's later troubles occurred in late summer 2002, months before the third monorail measure would pass by a razor-thin 877-vote margin, when a financial consultant to the monorail estimated the monorail's tax base at about $4.5 billion. The consultant, named Daniel Malarkey, based his conclusions on Sound Transit data for its "North King" subarea, which includes Seattle. That data, unbeknownst to the monorail agency, included some suburban addresses that aren't part of Seattle; including them inflated the monorail's tax base by about $1 billion. Then, in the spring of 2003, those already-inflated numbers were thrown off further, when Malarkey misread a spreadsheet provided by the state Department of Licensing, accidentally including new cars, which are exempt from the monorail tax. Taken together, the two errors produced a tax base that was about $3.3 billion too high. Even after the new-car exemption was factored out, the Sound Transit error accounted for a revenue shortfall of about 30 percent—a predicament monorail officials first concealed, then attempted to minimize.

"I think a different approach when the revenue shortfall came up could have had a significant effect," says Peter Sherwin, coauthor of the 2000 monorail initiative and campaign manager for this year's pro-monorail campaign. "At the time, they thought they could cut costs [instead of finding new revenues] and get the price of the project way lower." But because the monorail agency didn't want to publicly acknowledge that its error posed a long-term financial problem, it didn't start looking for solutions—or reach out for help to other government agencies, which were, at that point, relatively sympathetic—until it was far too late.

The monorail's financial shortfall, grave as it was, might not have become a catastrophe if the agency hadn't been run by leaders who valued secrecy and the appearance of a unified front over transparency and honest dialogue with the public. If the monorail agency hadn't nurtured a closed-door culture and discouraged dissent, it seems conceivable that none of the problems that followed—the revenue shortfall, the loss of already tenuous political support, the disastrous $11 billion finance plan—would have been fatal.

Some, including several longtime monorail proponents, warned that the agency was making a mistake all the way back in 2002, when the board of the Elevated Transportation Company decided to hire Joel Horn, a staff researcher and property developer who had directed the failed Seattle Commons campaign, as executive director, forgoing a national search in the interest of moving forward on the project quickly. At the time, board members called the $172,000-a-year appointment a "reward" to the politically savvy Horn for his hard work and tenacity during the 2002 campaign. Additionally, monorail leaders hoped that the decision to hire Horn, a prominent developer with strong ties to Seattle's political establishment, would buy them credibility with developers and city government—a government that had done everything in its power to defeat the monorail, even yanking its funding in 2000. The move, an attempt to earn goodwill with the city's developer-friendly political establishment, backfired, as critics belittled Horn as an inexperienced PR man who had no business running a multibillion-dollar transportation project.

Even inside the agency, the choice of Horn as director was controversial. Cindi Laws, one of two elected monorail board members, made no secret of her disdain for Horn; indeed, she was the only voting member of the monorail's executive committee to oppose an $8,789 merit raise for the director in 2004. Cleve Stockmeyer, the board's other elected member, voted for Horn's raise but now says hiring the onetime Paul Schell treasurer was "a mistake," something he says he recognized after seeing John Haley, the interim executive director hired by the board in August. Haley, unlike Horn, has 30 years' experience working for transportation agencies.

Some suggest that it was Horn's drive to make the monorail succeed at any cost that led him to treat even catastrophic news (like the 30 percent revenue shortfall) as a temporary PR setback; others blame Horn's cliquish, cagey management style for the agency's eventual downfall. Whatever the case, the agency's (somewhat understandable) us-against-the-world culture undoubtedly contributed to PR blunders in the wake of the $11 billion financing plan—a plan that, had the SMP reacted with appropriate contrition, might not have blown up into a full-scale media fiasco. Instead, the agency took out full-page ads in every newspaper in the city, defending the proposal and explaining condescendingly that voters simply didn't understand the nuances of bond financing.

Patrick Kylen, a longtime monorail supporter who worked for the Cascadia Monorail Company, the team of companies under contract to build the project, says he understands "why the mayor and council lost confidence: They didn't want to take a risk" on an agency so focused on succeeding that it defended a plan that was politically indefensible. "The board was just too passive. They should have done something about the way the staff was running the agency." Instead, the monorail agency closed ranks, underestimating the severity of the reaction to the $11 billion plan and selectively withholding information from the public and the political establishment.

Some say, with the benefit of hindsight, that had the monorail agency reached out to that political establishment, things might have turned out differently. If the agency had approached the city or state as soon as the 30 percent shortfall came to light, it might have had enough money to move forward without resorting to a financial proposal that relied on junk bonds. "They never really had a good relationship with city hall—that's something they should have worked on," Kylen says. When Sound Transit got into a similar bind, it was the support of the political class that made all the difference. "They had people who had staked their political careers to create" the project. In contrast, "the monorail is a volunteer board. No politicians' careers were in danger."

Without politicians' careers on the line—without Ron Sims and Greg Nickels staking their political futures on the project—the monorail owed the political establishment nothing. (And that's exactly what it got—from Sims, who worked behind the scenes to kill the project; from the Seattle Times, which treated every press release from monorail opponent Henry Aronson as a story; from developers like Martin Selig and Equity Office Properties, who funded the 2004 Monorail Recall campaign; and from the city council, which never really supported the project.) While monorail staffers and board members were justifiably proud of the agency's grassroots heritage, the limitations of trying to build a transportation project without a political infrastructure should have been obvious. The monorail came from the people, and when things got tough, the support of the people wasn't enough to keep it alive.

"It's like the mayor and the city council are in bed together, and the SMP is the third person in the bed," Hill says. "And they get upset—'Who is this third person? You're new! Get out of our jurisdiction!' To be the third agency getting tax money from this jurisdiction—I think that was always the tension, from the very beginning."

barnett@thestranger.com
 

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