4 Comments (Leave Comment)
By City Councilmember Nick Licata.
Urban Politics (UP) blends my insights and information on current public policy developments and personal experiences with the intent of helping citizens shape Seattle’s future.
- 1. An Overview
- 2. My Legislative Proposal
- 3. The 1997 Monorail Vote
- 4. Court Decision On City’s Obligations
- 5. Current Council Proposals
- 6. Etc Proposal
- 7. Intitiave 53
- 8. Tax & Bond Funding
- 9. How Much Do Monorails Cost?
- 10. Details Of My Legislative Proposal
1. An Overview
This issue of Urban Politics (UP) may provide more information than you want to know about the monorail. But if you do read on, you will know the history of how the City got to its present status with regards to its obligation to build a monorail. You will also know what the current political thinking is on the Council and what other options citizens are proposing.
I encourage you to send this report to friends on your email lists as well.
2. My Legislative Proposal
I will introduce legislation that does the following:
1 – Immediately fund the ETC so that they can hire staff and continue their work
2 – Fund a thorough and professional analysis of building a monorail based upon ETC’s final report and proposal.
3 – Require that a more complete monorail proposal be on the ballot for voter approval before a monorail is built.
Details of my proposal are at the end of this UP.
3. The 1997 Monorail Vote
Seattle citizens voted for Initiative 41 in the fall of 1997 by a 53% majority and by law it became an ordinance creating a Public Development Agency called the Elevated Transit Company (ETC) whose task was to build a monorail system for Seattle.
I think the Monorail vote was a call from Seattle residents to government saying, “Hey, pay attention to us. We want a “local” system, something that will serve community to community transit needs. The Monorail works and makes money, so let’s extend it.” That attitude is still very much alive. City Council continues to receive a steady stream of email and phone messages wanting the City to follow through on the Initiative’s mandate to build a Monorail. And, from what I can tell, it is not an organized campaign like some other issues have been. It comes from a broad cross section of citizens.
I publicly supported Initiative 41 when it reached the ballot in 1997 and may have been the only City Council candidate running for office who did. None of the returning Councilmembers supported it either. In fact, the Council passed Resolution 29655 in October of 1997 by a vote of 8 to 1 (Councilmember Chong voted ‘no’) urging the public to vote against the initiative. The resolution said that “the Monorail Initiative lacks a budget and a sound financing plan — it requires that a system be built but does not state what the cost will be or establish a source of funding.”
So the Monorail was delivered to the doorstep of City Hall like an unwanted orphan child in the middle of the night. The next morning some elected officials were said to have commented, “What were the voters smoking when they passed this thing?” Whatever it was, it had the aroma of optimism laced with the pungency of anger. Frustration with traffic congestion was, and remains, the number one citizen concern as shown by city opinion polls. This emotion was captured in the first line of Initiative 41 explaining it’s purpose: “Government has failed to provide for rapid mass transit; therefore*”
In the preceding year, 1996, this frustration manifested itself through a show of overwhelming support when about 70% of Seattle voters agreed to locally fund a regional mass transit system now known at Sound Transit. Like most people I too supported the plan because I felt that although it was not perfect it at least would be a good start. That is an assumption that I now recognize seems to become more tenuous with each passing day. Some had predicted Sound Transit’s current problems. A public letter from 10 leading environmental groups that predated the election criticized the plan’s cost effectiveness and supported efforts to test new technologies.
I believe that the Monorail is one such technology that should have been studied by Sound Transit. Several volunteer ETC board members spent considerable time this year applying for a $50,000 grant from Sound Transit at the suggestion of some Councilmembers. The grant was approved by the Sound Transit Finance Committee but some Councilmembers and the Mayor successfully lobbied Sound Transit to deny the grant. They argued that the monorail project did not deserve more public money and that it lacked Council support, which was not true- Councilmember Judy Nicastro and I did support it.
The majority of City Councilmembers believed that the Council had met its obligation to Initiative 41 by creating the ETC in 1998 as required by law and providing a $200,000 operating budget to allow it to hire staff and pursue private funding. The initiative mentioned public funding only as a back-up if private investors did not step forward.
In opposing any further funding for the ETC, the Council’s Transportation Chair was quoted as saying that the ETC did not provide anything that the Council could use. In its defense, County Councilmember Greg Nickels noted that it took Sound Transit $50 million and five years to get started, while the ETC had less than half that amount of time with less than five percent of those funds.
Board members of the ETC also believed that private investors were interested in seeing a monorail built but that the City’s restrictions on extending the ETC budget last year, along with other actions and statements, created a hostile environment for pursuing a public-private partnership.
4. Court decision on city’s obligations
Without additional funding, the ETC was forced to close down on April 30. A citizen demanding that the City do something to fulfill its obligations under Initiative 41 filed a lawsuit the following week. Superior Court Judge Kathleen Learned heard the case and ruled on June 7, 2000 that: ‘The City Council may repeal or amend it (Initiative 41). * But it may not ‘de facto’ repeal it by mere inaction.”
Furthermore, the Judge concluded that Council must act in the immediate future to resurrect the ETC. “There is an urgency to prevent the demise of the ETC, since if the ETC is dead, the Initiative’s purpose cannot be furthered at all.” To date the City has not taken any action to fund or formally dismantle the ETC.
The Judge’s decision reads: “The City is not required to seek or support funding alternatives other than those two set out in Initiative 41. (Increasing the Business and Occupation Tax and/or issuing Councilmanic bonds) Any matter to be submitted to the voters shall be submitted at the next possible election opportunity.” That could happen this fall.
The bottom line is that if the City Council does not repeal or amend the initiative, at a minimum the City must continue to fund the ETC in order to “enable it to prepare various funding packages that could be presented to the people and/or continue its efforts to obtain private funding.”
5. Current Council Proposals
Councilmember Judy Nicastro and I had previously drawn up legislation to go to the voters with a $4 million property tax levy to fund a more detailed monorail study. The Council voted 4 to 5 to deny referral of our legislation to committee. Since that time, Councilmember Margaret Pageler proposed legislation to repeal the entire Initiative 41 but has only been able to secure 4 votes.
Councilmember Peter Steinbrueck has suggested a type of open forum or public hearing to hear from experts and the community on alternative transportation modes, including the monorail.
Councilmembers Richard Conlin and Judy Nicastro have suggested a $500,000 study to look at an extension of the current monorail that could stretch out to the surrounding areas, like the waterfront, South Lake Union, Eastlake and/or Westlake.
Further public discussions may be useful, but there was a very informative public forum “The Monorail in Seattle: Finding the Money and the Right Technologies” held in early 1998 by the Washington Institute Foundation. Most of the major monorail builders participated. I participated in it and I doubt that another forum on monorails is needed. Also at the end of 1998 the ETC issued a report from its Charette team, lead by Neil Peterson, former head of King County Metro, which concluded that with some initial public investment a monorail system could be built and operated with private money. A copy of the Charette report is available at: http://www.elevated.org/report.htm
Funding a study to extend the monorail has some advantages and disadvantages. It might identify a particular viable route and a private partner. On the down side, $500,000 is insufficient to adequately determine whether a monorail can be built or what the best route in the city might be. The study must include some neighborhoods outside of the central downtown area. Otherwise, it could become another public project serving tourists not residents. And if current proposals to either relegate to an advisory role or disband the ETC succeed, the primary body charged with overseeing a monorail project would be decapitated. In the end, we could be right where we are today: trying to define the City’s responsibility.
6. Etc Proposal
On June 20, ETC delivered its Summary Report and Draft Work Plan to the City Council and Mayor in response to Judge Learned’s decision. The report briefly set forth its activities since forming and offered a $4 million, thirty month work plan predicated on the belief that in the absence of the City’s active involvement a project could not be built.
Consultants and engineers would analyze five transit corridors that the ETC has identified as having merit for possible monorail development. Each also connects station locations set forth in Initiative 41 and they do not duplicate or replace corridors to be served by the Sound Transit Light Rail Lines.
The final product would be a request for proposals from private developers to bid on a monorail project in the primary corridors. There is no assumption of further public funding. The ETC proposal is available via the internet at: http://www.elevated.org/workplan.htm
7. Intitiave 53
New on the horizon is Initiative 53, which was filed on June 30th by citizens demanding that the City fund and build the monorail whether private funding is available or not. The initiative has the City spending $6 million of its general funds or from loans paid from the general fund (these are Councilmanic bonds) to pay ETC to prepare a citywide monorail plan. This portion of the initiative is pretty much in line with the ETC proposal.
However, Initiative 53 goes on to require that the City reserve up to $200 million of its Councilmanic bonding capacity for construction of a monorail should a final plan be approved by the voters.
8. Tax & Bond Funding
Think of Councilmanic debt as the City loaning money to itself and repaying the loan with taxes it collects. Councilmanic bonds do not require voter approval and they must be repaid either from existing city revenues or from revenues generated by the projects that are funded by the debt. State law limits the City’s capacity for issuing this type of debt to 1.5% of the assessed value of all property located within the city. The City now has approximately $241 million in reserve debt capacity.
The City follows two policies on this type of debt. First, it is only applied to capital projects and not to operations and maintenance (O&M) costs. Second, a $104 million debt capacity reserve is maintained in case of major fiscal emergencies. This practice also keeps our City’s bond rating high thus insuring lower bond costs.
Using Councilmanic bonds to build a monorail meets the first policy of using these funds for capital projects. But if the City set aside $100 million of councilmanic debt capacity for building a monorail it would probably have to tap its emergency reserve. Furthermore, the City would most likely have to delay if not abandon its previously committed bond funding for the following projects: the Southwest Police Precinct Station, the Municipal Courthouse, Police Headquarters, City Hall, tenant improvements in Key Tower and the Park 90/5 building as well as other capital projects.
Initiative 41 states that if private funding is not secured then the City Council would issue Councilmanic Revenue Bonds or raise the City’s Business and Occupation Tax (B&O tax).
Technically, Councilmanic bonds are obligations of the general fund not selected revenue streams. However, as noted above, some of these bonds have built projects that provide revenue streams that are then earmarked to retire the bonds. The intent of Initiative 41 appears to be to build a monorail with City bonds and have the monorail’s revenue pay them off. Since projections of monorail revenue have to be based on the cost of retiring the debt on capital costs and ongoing O&M expenses, it is impossible to determine what the revenue stream would be without a more detailed monorail plan.
There is the same need for such a plan when using B&O taxes. The B&O tax is levied on the gross sales of businesses. It does not take into account profit or loss. I believe that any increase in Seattle’s B&O tax should require a vote of the people. The Initiative 41 Campaign suggested that as a last resort to obtain funding, the B&O tax could be doubled from .4% to .8%, providing just over $100 million a year.
9. How Much Do Monorails Cost?
What would it cost to build a monorail? Although the Pro-Initiative 41 statement in the voter pamphlet predicted costs of $25 million a mile, a more accurate estimate seems to be between $45 and $60 million based on some recent projects. Consequently, it would run over $2 billion to build the configuration proposed by Initiative 41.
A four-mile project in Las Vegas is projected to cost $400 million to build, with another $250 for debt service. The bonds are to be paid back by monorail-generated funds but issued by the state to make them tax-exempt. Bombardier, the leading North American monorail builder, quotes around $45 million a mile including stations. On the other hand, Newark’s new airport monorail ran 2.1 miles and cost $354 million, which included $230 in overruns that the contractor absorbed.
The cost of light rail in comparison is much higher, whether it runs on the surface or underground. The complete Sound Transit light rail system is estimated to cost in 1995 dollars about $92 million per mile including stations. Because a monorail is elevated and has a smaller “footprint” than light rail systems it has another cost advantage since less private property must be purchased for right-of-ways.
The operating costs for monorail systems are also much lower since they are automated and require fewer operators. Normally 80% of a transit system’s operations costs go to personnel.
There are other non-financial advantages to a monorail system over light rail. In particular the advantage of safety has been raised. Placing a light rail system on grade, as it will be in the Rainier Valley, has led to a number of accident fatalities in other cities like Portland and Los Angeles. Monorail systems have a near perfect record for safety.
10. Details Of My Legislative Proposal
After I reviewed the above information and took into account Judge Learned’s instructions to the City, I have concluded that the Council needs to act quickly and decisively in fulfilling the intent of Initiative 41.
I was initially supportive of the various proposals floating around City Council which would stimulate more public discussion and fund a narrowly defined corridor study. However, I do not believe that those measures will lead to a clear resolution on whether to build a monorail.
The City Council should either vote to repeal or fund it. I vote to fund the ETC’s proposal. It is a realistic one and it is being presented by the citizens’ committee that we appointed to guide us to a program of action. I believe we should vote it up or down but we cannot ignore it or else we will be violating the spirit of the law and quite possibly the Judge’s orders to act without undue delay.
Our very first act should be to immediately provide the ETC with $50,000 to allow them to begin functioning again. This action follows directly from Judge Learned’s decision. Next, City staff should review ETC’s request for $4 million to determine if it is enough to get a detailed plan to present to private investors and rebuild the momentum that was lost through the Council’s prior lack of support.
The City can provide the $4 million from the general fund either directly or through Councilmanic Bonds. If the Council cannot agree on where to find the money in the budget, then we should go to the voters this November to obtain a one time only, one-year 5% increase in the B&O Tax. I originally suggested a property tax levy, but since Initiative 41 specifically mentioned the B&O tax and the public voted for it, I believe it is the most appropriate revenue source to tap.
Finally, because a proposal will require public resources and community approval of a monorail route, the ETC must provide a workable monorail plan that can be put to a public vote.
Please let me and the other Councilmembers know if you support or oppose this 3-step approach to resolving the Monorail issue. And thanks for hanging in there long enough to read this entire report.
Posted: July 5th, 2000 under Budget and Economic Development, Government, Transportation, UP
Tags: B&O tax, city council, Councilmanic, Elevated Transportation Company (ETC), Initiative 41, Initiative 53, monorail, property tax, Sound Transit, UP