Urban Politics #131: 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 – See UP # 130

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

Part II

Timing Of This Legislation
Impact On Our Utilities
My Amendments
Conclusion

Timing Of This Legislation

ST plans on beginning construction in early 2004. Construction should take about three and a half years. The entire 14 mile route will not be under construction at the same time. ST will operate in segments of approximately a quarter mile. However they have begun acquiring properties along the route and in particular MLK to make way for their future work. About 300 businesses, mostly small minority owned ones, will be impacted by the work along the entire route. About 65 have been identified as having to move. The remainder will try to stay open during construction but most will likely suffer a loss in revenue.

ST argues that they need the CDF to begin immediately so that these businesses may begin to tap into the fund for revenue relief and assistance in relocating. ST acknowledges that federal funds pay for some of the moving costs but on some “re-establishment” activities federal dollars are limited to $10,000 per business. In addition there are no federal dollars available for recovering loss business revenue during construction. Consequently ST states that the CDF is providing “supplemental” mitigation. That is mitigation above what the Federal government will provide.

However, the ST funds derived from local taxes face the same limitation that City funds would face, so if our City dollars will be used to address this problem, so can ST’s dollars.

Since construction is a year and a half away and the number of businesses that have to move before then would most likely be those impacted during the first year of construction, the amount of funds available for “re-establishing” them would certainly be less than the full amount ($21.5 million) set aside in the CDF for the “Supplemental Mitigation Account”. ST has not presented any detailed figures on how much needs to be provided in assistance to the first wave of businesses impacted. Instead the entire construction impact on all 300 businesses are presented as a single one time, immediate need.

In addition, the other half of the CDF is earmarked for a “Community Development Account” to be used for real estate development and community improvement projects. The Operating Plan, which has not been completed, will define the geographic boundaries.

Certainly the expenditure of mitigation and development funds should be planned before actual construction begins. But why should the City commit to spending $42 million now rather than taking it up during our normal budget period in the fall?

I strongly suspect the answer is that the motivation to pass this legislation now is to favorably influence the FTA’s current review of ST and more importantly to influence Congress, which has yet to decide on whether to provide the pending $500 million Full Funding Grant Agreement (FFGA). ST boosters need to show that local politicians, and thereby the general population, are still strongly behind ST’s light rail project despite its route being cut in half and it’s projected ridership reduced by two-thirds.

Impact On Our Utilities

Public utility rates should not be subsidizing ST. City Light is already in debt to the tune of $1.7 billion, why are we adding to that debt at this time?

Those on fixed incomes will suffer as will our industries. Recently when the Mayor toured a neighborhood, one of the seniors commented that her utility bill already takes up most of her social security check. By contributing the additional $17.5 million in City Light funds to the CDF, her rates will certainly go even higher.

Local businesses will also be impacted. The CEO of a local shipyard wrote to the Council last week that in consideration of the enormous rate increases last year this idea (of funding the CDF) is untenable.

Unfortunately a City Light ratepayer’s advisory group was not convened to review this proposal, which will most likely result in a rate increase.

My Amendments

At Friday’s Transportation Committee meeting I proposed four amendments. Two of them were accepted with some modification. These were to allow the City Council, with a two-third majority, to decline to accept a revised ST financial plan if they did not receive their FFGA money and also to halt payments to the CDF if ST was not meeting its construction schedule in a timely manner.

My other two amendments were defeated two to one (McIver, Conlin vs. Licata). The first would have eliminated the city’s utility contribution of $21.5 million to the CDF. The second would have stricken the City’s contribution to the CDF that was not generated by the sales tax rebate. The rationale for each is documented above. I do not believe that there is support on the Council for either amendment.

Conclusion

The basic purposes of the CDF to provide legitimate mitigation to those businesses negatively impacted by the ST construction and to provide additional funds for economic development in a low income community, are good objectives which deserve to be funded. However the legislative history is clear that the City wanted ST to finance the CDF and the FTA mandated that it should be part of ST’s mitigation package.

If the City ends up funding the CDF, then I believe we will be in a situation where we will be putting dollars into one of our pockets by way of taking it out of the other. We will be helping businesses that are in need of assistance by taking dollars away from other city residents and businesses that also need our assistance.

The only fair solution is that any agency which imposes hardships on a community (as in this case with ST) should be responsible for paying the mitigation of those hardships. Otherwise, we end up in a situation where the City is diverting our limited revenue away from ongoing city services to subsidize a projects that have their own revenue stream for that express purpose. ST has its own taxing authority. It should use it to finance the CDF, otherwise I fear that ST will continue to go down the path of taping the treasuries of other governments to balance their own budget.

Keep in touch…

Leave a comment