Extending light rail from the southern end of the current line to Federal Way will cost $460.3 million more than estimated when voters approved the Sound Transit 3 ballot measure in 2016.
Sound Transit leaders announced the increase during a Sound Transit board meeting Thursday. It comes nearly a year after a similar announcement that the line to Lynnwood will cost $500 million more (and take a year longer to complete) than previously expected.
The federal way project will now cost about $2.55 billion, up from the $2.09 billion previously budgeted. The agency still plans to start construction next year, with the line set to open in 2024. The project will take the line from Angle Lake to Federal way, a 7.8 mile route with three stations.
In both the Lynnwood and Federal Way projects, the agency blames construction and real estate costs.
Sound Transit CEO Peter Rogoff described a “supercharged construction market that is affecting projects all across our region.”
“Obviously, anyone who has bought a home in the region or sought to buy a home in the region is well familiar with the escalation in property values,” Rogoff said.
According to agency staff, construction costs have gone up 36 percent. As young people don’t seek jobs in construction, the industry faces a labor shortage and most of the work is done by higher paid experienced workers. Costs of materials like copper, aluminum, and steel have also gone up 10 percent and land prices have increased 45 percent, according to the agency.
The agency is also uncertain about federal grants the Trump Administration has not yet released. About 25 percent of the funding for the line to Federal Way is expected to come from federal grants. While President Donald Trump had proposed significant cuts to federal transit funding, Congress has spared Sound Transit in those cuts.
In the short term, Sound Transit plans to use a “design-build contract,” meaning the same firm designs and constructs the Federal Way project, to save some money. This fall, agency staff will present to the board its budget plans including a “discussion of the tools we have to manage our finances,” Rogoff said.
“Sound Transit has the financial strength to withstand increased project costs, or lower than anticipated federal funding or tax revenues, or a recession,” Rogoff said. “But a combination of any two or more of these factors would put considerable stress on the agency’s ability to deliver projects on schedule.”
“Presently,” he added, “market conditions are showing no signs of abating.”