On Monday, the Seattle City Council released an agreement with the state that watered down language intended to protect the city from the ballooning costs associated with the deep-bore tunnel. Most specifically, they took out a provision from the mayor that would require the state to remove a law about Seattle property owners paying cost overruns and add a mechanism for the state to pay those overruns before the project can begin.

There are two likely paths forward at this point in the debate over the tunnel. One requires amending the state law, the other does not. One will satisfy most Seattle residents' interest in making sure the city isn't pegged with cost overruns, the other does not. One would allow the issue to get resolved in the next legislative session, the other does not. One will likely result in a tunnel being built, and the other will likely result in a new elevated waterfront freeway.

Scenario One:

The city council adopts the provision introduced by Mayor Mike McGinn, being reintroduced as an amendment by City Council Member Mike O’Brien, and widely supported by the public. For what it’s worth, I don’t think the state should remove its spending cap. All projects need caps to bridle departments from runaway spending.

But the legislature does need to identify where that money will come from—gas taxes, most likely—and possibly name other projects that will be deferred while the tunnel usurps the money if overruns crop up. Spurring the legislature to take action when it convenes in January is a minor delay, but realistically, it’s a delay we can live with and here's why: First, the final version of the impact statement isn’t due out until next June, according to WSDOT, and we can’t make any decision to proceed with the tunnel until we have that statement anyway.

Second, the state announced in May that the tunnel project was being delayed a year at the request of the construction teams. So the state has already got its delays in place. Third, lots of Seattle lawmakers, including Senator Ed Murray, are willing to sponsor and push legislation that fixes the state law. This fix would allow us to get the financing right in the next seven months—the sort of planning that should occur in the planning stage of a megaproject—and it’s faster and more certain than the second option.

Scenario Two:

The council insists it’s taking this route instead, which may be telegraphing a terrible result. The council removed a provision from the contract requiring the legislature to take action, instead settling on language that indemnifies the city if a lawsuit arises. Beside that being an absurd way to plan a project—by preparing for litigation—it’s unhelpful. If a contractor encounters unforeseen, expensive conditions and goes after the state for money, state lawmakers can still leverage power to collect from the city.

“The problem is that who pays cost overruns will ultimately be decided by the legislature—not WSDOT," says O’Brien, speaking to the problems with the council's watered-down contract. "If the city wants to protect Seattle from cost overruns, we need to engage the state legislature and get a commitment from them."

The council's current plan, unless they change it, instills enough uncertainty about financing and it clashes with public opinion sufficiently that a referendum on the tunnel appears inevitable. This week's recent SurveyUSA poll found that 63 percent of Seattle residents agreed with McGinn, that the tunnel shouldn't advance until we fix state law and that the city should require that fix before the state gets building permits.

"Rarely do you see numbers that good," says Brady Montz, leader of the local Sierra Club affiliate and one of the movers and shakers behind a potential referendum on the tunnel contract. He says the numbers on that poll show "people on every side of the tunnel issue all agree that we should not sign any commitment on this project until we have guarantees about responsible funding for it." And the draft contract that the council released Monday isn't enough to satisfy critics. "I don’t see how that protects the city at all," Montz says. "They can't control whether there will be cost overruns, but they can control what contract the city signs."

If the groups considering this referendum gather enough signatures to make the ballot—groups with proven labor muscle to accomplish other local political feats—then the decision will go before voters in a special election, probably in winter. Because the council hasn’t protected the city’s interests, voters will probably reject the measure (if polls are to be trusted). If that happens, the tunnel contract must go back to the council and we start again at square one planning how to replace the Alaskan Way Viaduct. But then it may be too late to goad the legislature into action in 2011. The tunnel could be on hold yet another year while we consider our other options.

Speaking of which, there are two choices left, if the tunnel is dead (and this process could easily kill it). One is a surface/transit option. However, there is no environmental impact statement for that option, and just writing that could take two years or more before we could actually begin the project. That's too long. But we do have an impact statement done for rebuilding the viaduct. That new viaduct—wider, huskier, more shadows underneath—would be the prevailing design for the sake of expedience, traffic throughput, and cost. But it would be death to the waterfront. The best way to avoid this scenario, as far as I can tell, is for the city council to follow the path of scenario one. But, again, the council isn’t doing that.

Surely the council has done this calculation: If we don’t require the legislature to act, this tunnel will encounter more delays. But if the council really wants to get the tunnel built—on time and on budget—they'll go with option one. If they go with option two it's because, (a) they no longer think the project is feasible (b) they want to kill the tunnel, (c) they want to be the baby daddy to the viaduct's love child.