Urban Politics #130: Paying For Sound Transit’S CDF


No 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.

________________________________________________________________

Part I

Introduction
How The CDF Originated
What The Paper Trail Reveals
What FTA Says About The CDF

Part II – See UP # 131

Timing Of This Legislation
Impact On Our Utilities
My Amendments
Conclusion

Introduction

On Friday, April 13th, the City Council’s Transportation Committee voted 2 to 1 (McIver & Conlin vs. Licata) to pass Council Bill 114115, giving Sound Transit’s Community Development Fund (CDF) $43 million. Half of the money will come from our public utilities: $17.5 million from City Light and $4 million from the Water Department. The other half will come from our general fund or Community Development Block Grant funds if they are available.

Although I did successfully amend the legislation, which I will describe below, I voted against it for two main reasons. First the obligation to finance this fund is Sound Transit’s not the City’s and second, there is no immediate need to pass it at this time. The rush to pass this legislation has more to do with trying to create some political momentum behind a faltering Sound Transit (ST) than it does in meeting any immediate need of the Rainier Valley community which will be impacted.

The argument for the City picking up the tab has largely been framed around the recognition that ST will displace many small, minority owned businesses and that the City has made a commitment to help them. The first half is certainly true. The second half is literally true but not to the extent of paying the entire mitigation costs. And ignoring that little distinction punches a $33 million hole in the City’s budget. I’ll explain below how the $33 million figure is derived.

In this Urban Politics I provide an abbreviated history on how the City ended up in this situation and explain my position. I also fully expect that this ordinance will pass the City Council when it comes before the Full Council on April 22nd or the 30th. At this time I’m not certain of any other councilmember who intends to vote against it.

How The CDF Originated

Former Mayor Paul Schell and then Council Transportation Committee Chair Richard McIver deserve much of the credit for originating the idea of creating a fund to stimulate economic development in Southeast Seattle in conjunction with Sound Transit trains going through Rainier Valley. The $50 million figure was not tied to any specific list of projects so that amount was somewhat arbitrary, although its size was most likely determined on what could garner support from Sound Transit’s 18 board members, 13 of whom represent areas outside of Seattle.

On October 14, 1999, all nine City Councilmembers, including myself, and the Mayor signed a letter supporting a $50 million CDF, stating in part “the City is willing to contribute assistance and revenues in the form of negotiated utility assistance, a rebate of the City’s portion of the sales tax on construction, and an amount from the City’s General Fund beginning in 2001. The success of this effort, we believe depends on King County’s willingness to make a similar contribution.”

The origin of the City’s written commitment to support the CDF can be found in this letter. The three types of support noted above were: utility assistance, sales tax rebate and revenue from our General Fund. In addition the County was expected to make a “similar” contribution. Let’s take a quick look at each of these elements.

When we made this offer to negotiate utility cost assistance, City Light had not yet been hit by massive cost increases in purchasing energy. Since the time of that offer City Light has gone to carrying over a billion and a half dollars in debt. Our ability to negotiate contributions must take into account this reality.

The sales tax rebate amounts to about $8 million and this still seems like a reasonable contribution to make since it amounts to returning to ST the tax revenue its construction would generate.

The contribution from the City’s General Fund must take into account the fact the city’s budget has shrunk tens of millions of dollars from its expected revenue in both 2002 and 2003 because of anti-tax initiatives and the contraction of our region’s economy. The City budgeted $2 million in 2002 to the CDF and that amount has not yet been spent. I believe it is reasonable to still make that contribution but not continue the contribution in 2003 since we have already taken a mid-year budget cut of $ 8 million which has resulted in reducing funds to programs that serve some of our most needy residents.

And finally the County’s “similar” contribution amounts to only around $7 million and they still have to pass legislation on it. Where is the “similarity”? If the City made the $8 million sales tax rebate and the $2 million 2002 general fund contribution to ST, it would be similar to the County’s. And our utilities and general fund would not be impacted at a time when we can least afford it.

So the question is why are we spending the additional $33 million on the CDF when ST should be picking up this cost?

What The Paper Trail Reveals

On 11/15/99 City Council unanimously passed Resolution 30073 and sent it to the ST Board. It said “ST must establish a $50 million CDF to make transit-related improvements in SE Seattle. The City is committed to making a financial contribution above the amount provided by ST to expand the pool of funds available.”

In that same November, Sound Transit passed Resolution No. R99-34 in response. It said that the City and the County should contribute “to the extent possible” to the CDF. But neither the City’s nor ST’s resolution says or implies that the City would fund the entire CDF, as is being proposed now in Council Bill 114115.

What FTA Says About The CDF

In early 2000 the Federal Transit Administration (FTA) issued a Record of Decision (ROD) document on ST’s Link Light Rail. The ROD is a document that lists Federal decisions following the completion of ST’s Environmental Impact Statement (EIS). The ROD set the requirement for a $50 million CDF as an environmental mitigation under its “Environmental Justice” section since the ST route went through Southeast Seattle, a low income community with a large minority population.

The ROD stated: “The Final EIS recognizes that the light rail project may have adverse impacts on certain businesses located within the Rainier Valley É Sound Transit shall, therefore, implement a community reinvestment program funded at a level of $50 million (Community Reinvestment Fund ).” This is the CDF.

The ROD goes on to state the ST will establish the fund as a project requirement, but may not use federal dollars to fund it. However ST has been collecting over $200 million a year in regional taxes since 1998 and may use these funds for the CDF.

In response, ST created a 15 member Steering Committee in August 2000 to develop a proposed operating plan for the CDF. It has yet to be published or submitted to the City Council for review.

If the City Council refuses to fund the entire CDF, then ST has only three choices. It must convince the County to contribute more and the State to contribute as well. Neither is going to happen given their budget reductions. They could ask the FTA to eliminate the CDF as a requirement, but that would trigger, under the National Environmental Protection Act (NEPA), a new FTA review of ST’s light rail project and that would mostly take a year to conduct, something that ST wants to avoid. Consequently the only option left is for ST to fund the balance of the CDF itself, something that it can do from its available funds.

Keep in touch…

Leave a comment