Urban Politics #272: Dig That Tunnel



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.

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DIG THAT TUNNEL

Chants of “drill, baby, drill” from this past fall echo in my mind, as the near unanimous political and editorial constellations line up to support the deep bore tunnel option for replacing the Alaska Way Viaduct. Although technically I suppose it would be “bore, baby, bore”.

In any case, unlike Governor Palin, the clear winners in this billion dollar poker game are Mayor Nickels, Governor Gregoire and King County Executive Ron Sims. Kudos should also be given to Seattle Councilmember Jan Drago who, as I recall, was one of the first to promote the deep bore tunnel after the prior tunnel/surface solution was rejected by almost 70% of Seattle voters.

No need to mention who the losers are, other than identifying myself as one who had sided with the general public in rejecting the tunnel as too expensive an option for local tax payers to be burdened with. The latest tunnel financing option adroitly sidestepped that obstacle by having the State pick up the tunnel construction costs and any cost overruns as well. If that truly is the case, then Seattle has gained a significant victory. Considering that more than 99% of the design work has yet to be done on the project, the current cost estimates being accurate are as likely as a crowded race for Seattle Mayor this fall. I note that the Mercer Project’s cost doubled from the original estimated costs based on a similar level of design work.

The ball really is in the State Legislature’s court, but if media reports are accurate in saying that the chairs of the transportation committees in both the Senate and the House are supporting this option, then even the party leaders in those chambers will have their work cut out for them to forestall any vote of support for the tunnel option. I suspect the debate will center around who picks up cost overruns, so Seattle should expect that the State guarantee might be whittled away.

Keeping your eye on this ball however does distract you from the other one that is whizzing toward your head; which is about a billion dollar ball. So what is that all about? Well here’s how it is rolling out as best I can tell, some of it will be incomplete, as full details are still emerging.

BORED TUNNEL HYBRID ALTERNATIVE

The $4.2 million Bored Tunnel Hybrid Alternative includes a $1.9 billion, 4-lane bored tunnel that will handle 85,000 of the current 110,000 daily trips, and travel from north of the Battery Street Tunnel to the area around the stadiums. Also included is ongoing work to replace SR 99 south of the current Viaduct, a reconfigured Alaskan Way with a promenade, seawall replacement, utility relocation, work on city streets to improve transit, additional bus service, and a streetcar on 1st Avenue from Mercer to Jackson. John, Thomas and Harrison streets would be re-connected in South Lake Union over Aurora. 

FUNDING DETAILS

The complete package includes the following elements, to be funded by the governments as listed:

  • $1.9 billion for a 54’ diameter bored tunnel (down from the $2.1 billion estimate in December, 2008): funded by the State. It has been suggested by critics that the configuration may not be wide enough to support transit.
  • $900 million in current “Moving Forward” work to replace SR 99 south of the Viaduct: $600 million from State, $300 million from Port of Seattle. The previous Port of Seattle Commission had rejected a $200 million contribution to this project, but with the new deep tunnel they may agree to this higher amount.
  • $390 million for an Alaskan Way surface street and promenade: $290 million from the State for the street; $100 million from Seattle for the promenade
  • $255 million for a seawall replacement: Seattle
  • $250 million utility relocation: Seattle
  • $215 million city streets and transit pathways: $25 million King County, $190 million Seattle for Spokane widening project, 2-way Mercer from I-5 to Elliott, plus widening Mercer under Aurora from 4 to 6 lanes.
  • $250 million transit infrastructure and services: $115 million King County, $135 million Seattle for a streetcar on 1st Avenue from Mercer to Jackson; operations costs are unclear
  • $80 million construction transit service: $30 million State, $50 million King County
  • $15 million annual transit operations cost: King County

The state would fund $2.8 billion total, the City of Seattle $930 million, King County $190 million, and the Port of Seattle $300 million for construction. The funding package information packet notes that it depends on action by the US Congress, the Port Commission, state legislature, City Council, and King County Council.

STATE FUNDING/ACTION

The state legislature originally set aside $2.8 million for Viaduct replacement; they later moved $400 million to the 520 project, leaving a $400 gap. This is likely to come through a tolling proposal the state legislature would need to approve. Tolling studies indicate that tolls need to be low enough that drivers won’t seek other free options.

The legislature would also need to act to approve a 1% MVET for King County, and act to authorize LIFT for Seattle (see below).

CITY FUNDING

The proposal lists $957 million in potential City funding source. It’s not yet clear what the connections are between funding sources and individual projects.

  • $200 million parking tax: this would require the City Council to approve doubling the commercial parking tax. The tax is now 7.5%, and will be 10% in July. I’m not yet clear if doubling refers to the current rate or the July rate.
  • $300 million LIFT and/or LID: this would either be a Local Improvement District (LID), or a Local Infrastructure Financial Tool (LIFT). A LID is a taxing zone within a designated area, within which property owners pay an additional tax. Current LIDs in Seattle fund the South Lake Union Streetcar and business associations.

A LIFT would presumably be tax-increment financing, which would need state legislature approval to be legal. The theory behind this is that because of a government’s action, property values and/or business tax revenue will increase enough to justify general government expenditures in that area. In practice, it means City general tax revenues—perhaps general fund—could be used.

A LID requires 60% of property owners to come into existence (with weighted votes according to the percentage of property within the district that one owns), and then Council approval. A LIFT could be created, if authorized by the state legislature, by City Council action alone.

  • $65 million transportation benefits district: under state law approved in 2007, the City Council could approve up to $20 in car tab fees within Seattle (see UP # 271).
  • $252 million utilities: this would be paid for by City of Seattle City Light and Seattle Public Utility ratepayers, upon approval by the City Council in a capital budget.
  • $55 million federal grants, $80 million economic recovery funds: this depends on action by the US Congress; the $80 million would be from a federal stimulus package.

COUNTY FUNDING

King County’s portion of funding depends on the state legislature granting the King County Council the authority to levy a 1% motor vehicle excise tax (MVET). The MVET would fund $190 million in capital projects and $15 million annually for operations, with increased service to West Seattle, Delridge, Ballard, and expansion of the Burien park and ride.

I’m not clear if the $15 million represents Seattle-only funding. King County currently distributes new additional bus service by the 40/40/20 formula: 40% to the eastside, 40% to the south end, and 20% to Seattle, Shoreline and Lake Forest Park.

BRIDGING THE GAP CLARIFICATION

One important clarification regarding the Bridging the Gap Levy ballot measure passed by voters in 2006: the authorizing legislation, Ordinance 122232, included an amendment I proposed that stated “No Levy Proceeds shall be used to fund the major repair or replacement, including but not limited to replacement with a waterfront tunnel, of the Alaskan Way Viaduct or the seawall located to the west of Alaskan Way.”

This section applies to the property tax portion of the Bridging the Gap program passed by voters. It does not apply to the commercial parking tax, which was passed separately by the Council, and contains no such limitations. While dedicating $200 million in parking tax revenue to the City’s portion of the Bored Tunnel Hybrid Alternative, rather than to existing City responsibilities such as the unfunded $200 million Magnolia Bridge replacement, or to other projects throughout the city would represent a policy choice regarding where to spend city tax dollars, it would not violate the terms of the ballot measure.

IMPLICATIONS FOR SEATTLE

It had been generally assumed that the state would likely fund the cost of repairing the seawall as part of the Viaduct project. This was the stated intention with either the cut and cover tunnel or the new elevated viaduct. It was not as clear with a surface street plan. Under this proposed plan, Seattle is solely responsible for the $255 million cost.

Utilities would need to be replaced in any Viaduct option. The City’s 2009 capital budget lists $100 million in Viaduct replacement utility work. The new proposal adds an additional $150 million in utility costs not yet accounted for in approved City budgets. It’s unclear yet what impact this will have on rates. To be fair, a good deal of this cost would have been the responsibility of the City in any case. Right now the first stage of the state’s Viaduct project, which is about $900 million and consists of work south of the central waterfront, is picking up the city’s utility costs, which come out to around $40 million.

Finally it’s unclear what role bonding will play in funding the City’s portion. For example, parking tax revenues could be used to issue bonds, which would require interest payments. If this is the case, the actual cost and funding figures would be higher. Including the interest cost in describing the cost of a project dramatically increases the public’s perception of that project’s tax burden; I believe it was this kind of dramatic, front page headline that drove public sentiment to vote against the monorail project. In the case of the bored tunnel there will be no public vote.

IN SUMMARY

I think the public is exhausted. They are tired of discussing alternatives to the Alaskan Way Viaduct. I think a plurality of the public would have been satisfied with fixing the current viaduct or replacing it with an elevated. But that was not the majority opinion. I don’t think there is a majority on any single solution. And as they say, that’s why you elect leaders. They lead, for better or worse. The leadership from the Mayor and the City Council has been clearly committed to removing “the blight” and “freeing up” our waterfront by demolishing the Viaduct.

They have recognized, as have many citizens, that this is a hundred year decision about the physical character of our downtown. And one would certainly hope that unlike the Kingdome and the Viaduct, the tunnel lasts at least that long. The funding however will not be spread out that long. It will be paid off in probably twenty some years.

It is difficult to judge what the financial impact will be on the populace. The city is becoming less affordable for many middle income families and it already has for those on limited incomes. Will this extra tax burden make a significant difference?

So one has to ask, is this generation willing to pick up the tab and make an open space waterfront their legacy for the next couple of generations? It is a fair question. And it should be asked in a way that an informed decision can be made by those concerned. I hope this Urban Politics has contributed to that ability.

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