During a meeting that stretched well into the evening, but left many questions still outstanding, the Seattle Monorail Project released details Monday, June 20, about its contract to build the 14-mile Green Line from Ballard to downtown to West Seattle. Gesturing toward a two-foot-high stack of contract documents, SMP director Joel Horn pronounced dramatically: "We have fulfilled what the voters authorized us to do."
The moment, which should have been celebratory, was somber. Criticism about the cost, scale, and affordability of the plan put agency finance director Jonathan Buchter on the defensive. "This is not something Joel dreamed up in his basement on his home computer," Buchter said Monday.
Under the proposal released Monday, the monorail would open on December 1, 2010 and cost around $2.1 billion—hundreds of millions more than the initial $1.75 billion proposal. The tax that pays for it, a 1.4 percent levy on car values in Seattle, would last until 2050 if it grows at the rate the SMP predicts, or longer if it grows more slowly. The financing plan that will pay for the monorail includes $300 million in short-term debt called "commercial paper," plus $1.9 billion in bonds through 2014. That total, Buchter said Monday night, would include uninsured, non-rated "junk" bonds, which would carry a comparatively high interest rate of 7 or 8 percent. The SMP would have to pay those higher interest rates because its revenues (which continue to fall short of estimates by 30 percent) won't be sufficient to pay off debt until after the line is built, forcing the agency to defer paying off interest and principal until tax revenues can cover the cost.
Even if tax revenues don't grow as quickly as expected—as respected economist Dick Conway noted in 2003, Sound Transit's anticipated growth rate is 5.1 percent a year, 1 percent lower than the monorail's, and Seattle is growing more slowly than the rest of the Sound Transit area—the agency can continue collecting the tax until it pays off the bonds. In one scenario, in which the MVET grows at a much lower rate of 4.5 percent, the last series of bonds wouldn't be paid off until 2078. Even then, board member Cleve Stockmeyer noted, the SMP will stop collecting the tax once the bonds are paid. "Unlike other taxes, our tax will end. What other transit agency can say that?"
Others, including board member Kristina Hill, noted that extending the tax spreads the costs among current Seattle residents and those who will ride the monorail in the future—a fairer policy, some would argue, than concentrating the costs on people alive today. But opponents said the agency was putting positive spin on a bad situation. "The reason they have to extend the tax out that far isn't because it's good policy," said Krista Camenzind, a spokeswoman for OnTrack, a monorail critics group. "It's because their revenues are 30 percent short and their costs are 20 percent high."
On Monday, the agency repeated its vow to avoid using the monorail tax to pay for operating the system after 2020. If the system fails to pay for itself, agency officials say, the SMP could be forced to go back to the voters and ask for an extension of the tax. "We either cut services or we pass more taxes—the same thing that always happens when [agencies] don't meet a financial goal," Stockmeyer said. The contract now moves into public hearings, with three meetings scheduled for July 5, 6, and 7. The city council, meanwhile, is beginning its financial review of the project, which agency officials hope will wrap up before it grants a "notice to proceed"—something it plans to do around August 15. â–
