On the surface, Sound Transit has much to celebrate over the next three years.
By 2024, ST’s light rail network will almost triple in size to sixty-two miles. Extensions to Federal Way, Lynnwood, and Redmond are nearing completion.
These accomplishments, set in motion with voter approval of the groundbreaking Sound Transit 2 package in 2008, will fundamentally change the Puget Sound region’s transit infrastructure for the better. But beyond 2024, the outlook for the next set of Sound Transit expansion projects gets murky fast.
In the months ahead, Sound Transit will have to make some important decisions about its ST3 projects, which were approved by voters in 2016.
With many important Sound Transit board meetings looming this spring and summer, let’s take a moment to assess the challenges the agency is facing.
The odd pandemic economy: pandemic plunge, creeping costs
Roughly a year ago, I remember heading to King Street Station on a Thursday afternoon for a Sound Transit board meeting.
On the agenda that sunny February afternoon was the potential opening of a light rail station at NE 130th St in North Seattle six years ahead of schedule, which I covered for NPI’s Cascadia Advocate. At that moment, Sound Transit enough financial breathing room to consider accelerating projects.
One year later, the agency faces an “affordability gap” totaling $11.5 billion through 2041. For context, the entire ST3 package came in at $53.8 billion.
How’d the agency end up in this situation? There’s more to it than the pandemic.
Over the first nine months of 2020, overall agency revenue was down by 7.3%, or $106 mllion. This was driven by major reductions in rental car tax collections, fare revenue, local and state contributions, and sales tax collections. (Note these figures cover losses only until September, seven months into the pandemic.)
Federal dollars, through the CARES Act and elsewhere, completely covered Sound Transit’s losses during that period. That helped. But those one-time measures cannot be relied on for long-term planning.
The other major squeeze: our regional housing shortage and increasing land values are driving up project costs, bigtime.
For the light rail projects currently in the pipeline ― including light rail to West Seattle and Ballard, the connection from Federal Way to the Tacoma Dome, and a new maintenance facility in the South Sound ― right-of-way cost and associated design costs have risen by between $4.8 billion and $6.2 billion.
That’s close to 50%. And that figure doesn’t directly factor in other projects currently in more preliminary design phases, like Link to Issaquah. (Future project cost ranges are already scaled up when current project cost ranges increase.)
The news is not all disconcerting.
Cost estimates for bus rapid transit (BRT) along the existing I‑405 and State Route 522 corridors have remained relatively stable.
The I‑405 project, connecting Burien to Bellevue to Lynnwood, has stayed at around $1 billion ever since it was presented to voters in 2015.
Since Stride bus rapid transit will make heavy use of existing transportation infrastructure, it is not subject to land valuation fluctuations.
The Sound Transit board issued a statement in February calling on lawmakers in Olympia to help ease the looming $11.5 billion project funding gap.
The call comes at a moment when the Legislature is considering multiple large transportation outlays that will last through the end of this decade.
Alarmingly, these packages do not contain funding for Sound Transit.
A proposal advanced by Senate Transportation Chair Steve Hobbs (D‑44th District: Snohomish County) would raise almost $8 billion through a tax on pollution over the next ten years. A price on pollution is a logical means of funding multimodal transportation infrastructure given that the 18th Amendment to the Constitution stipulates that gas tax revenues must be devoted to highways.
But instead of investing the revenue raised from putting a price on pollution to transit, one of the most effective ways to curb emissions that damage the climate, Hobbs’ plan calls for billions in highway capacity upgrades and other investments, and has virtually no money for transit expansion.
Representative Jake Fey (D‑Tacoma), the House Transportation Chair, proposed a $26 billion, sixteen year package that would give Sound Transit more wiggle room. Out of the $7.5 billion projected to be raised (less per annum than the Hobbs proposal), $333 million is designated for to-be-determined transit projects.
Yet over the course of sixteen years, and with high-speed rail one of the many transit investments that money could be slated for, there’s not much money in that proposal that could go to the already-approved set of ST3 projects.
In the other Washington, U.S. Representative Rick Larsen, who sits on the House Transportation Committee, announced that Washington will receive around $867 million in one-time grants through the Federal Transit Administration.
This total includes funds for Sound Transit, as well as other agencies.
CEO Peter Rogoff is certain to aggressively pursue these funds.
Details are murkier regarding the potential federal infrastructure package Democratic leadership wishes to advance after the American Rescue Plan is (hopefully) sent to President Joe Biden’s desk for signing.
Fortunately, Washington’s congressional delegation holds significant sway in the committees that will be instrumental in crafting infrastructure legislation.
In addition to Representative Larsen, Marilyn Strickland (D‑Tacoma) sits on the House Transportation Committee. (It is also chaired by Representative Peter DeFazio of Oregon, who represents Eugene, Lane County, and surrounding areas.)
Washington’s junior United States Senator, Maria Cantwell, now chairs the Senate Committee on Commerce, Science, and Transportation, while Washington’s senior United States Senator Patty Murray, a veteran appropriator and ally of Sound Transit, sits on the Appropriations Committee’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee.
Rogoff, who was the head of the Federal Transit Administration before becoming CEO, often tells Sound Transit’s board that there is a limit to how much money Congress will spend on projects in any region. And it is true that Sound Transit borrows much more from the federal government compared to peer agencies.
With all that influence, and with the possibility of a infrastructure bill later this year, an infusion of federal cash in 2021 does not seem out of the question.
State and federal financial assistance now would be particularly useful and effective. Given the nature of Sound Transit’s finances, a dollar today is much more useful than a dollar tomorrow. Borrowing costs are low right now.
On the other hand, with less cash coming in, the agency will have less capacity to issue debt. This will lead to project delays, which then heighten the risk for increases in land acquisition costs, borrowing costs, creating a vicious cycle.
Realignment: A spring/summer of options and uncertainty
Sound Transit is almost certain to receive some funds from the Legislature or Congress in 2021. But they probably won’t add up to $11.5 billion.
Interestingly, the agency is not slated to run out of money until 2029, when the amount of cash on hand will decrease drastically. Therefore, it is planning for next steps, so that its costs won’t exceed how much money it has in any given year.
That process is known as “realignment.”
Last summer, the board decided that it would not take any final decisions on realignment until this summer.
This gave the board more time to see how the COVID-19 pandemic would play out before making decisions that will impact how we move around the Puget Sound region for the next century.
The fundamental calculus has always been straightforward: Sound Transit needs more money to fund its voter-approved mandate.
If it cannot afford to build everything in the ST3 plan, the board has the authority to delay or even cancel projects beyond the current 2041 end-date.
For a detailed look at what realignment could look like, and the criteria being used to make decisions, The Urbanist has a thorough piece describing the Board’s recent conversations here.
Some key points to bear in mind:
- The agency believes it could receive between $2.2 billion and $7.8 billion from the federal government through various programs to fill the gap.
- Voters living within Sound Transit’s regional district (covering most of Snohomish, King, and Pierce counties) could approve measures to increase the agency’s debt capacity limit and help it borrow more without tax increase.
- This could free up between $1 billion and $3 billion
- Voters could also approve a business head tax of $24 per year to raise $865 million.
- Substantial delays are likely for projects that are not part of the “spine” — the envisioned light rail links connecting communities from Everett to Tacoma.
- Prioritizing equity, maximizing ridership, completing the spine, and adhering to technical requirements for the sequencing of projects are the four main criteria being used to make decisions.
It is also possible that certain expansions — such as light rail to Everett and Tacoma — will be opened in segments (at Mariner and Fife, respectively).
Snohomish and Pierce County officials were very resistant to this idea during the 2016 campaign, since they feared the board would shorten the extensions in the event of a downturn. Now, Snohomish County Executive Dave Somers is cautiously behind the proposal — though he made a point of stressing to his fellow boardmembers that light rail to Everett must be eventually completed.
There is also considerable uncertainty around the ultimate size of the hole.
Boardmember Claudia Balducci, who chairs the Metropolitan King County Council, made clear during the Sound Transit board’s recent meeting that course out of the pandemic is still highly uncertain.
This “program realignment” item is too complicated for tweets but just my own interests are: I would like to see more information, which may take more time than we are giving this process, and a broader set of meaningful scenarios to consider.
— Claudia Balducci (@KccClaudia) February 25, 2021
Balducci is one of the most influential members of the Sound Transit Board. As a Bellevue City Councilmember, she was heavily involved in choosing the alignment for East Link, from Seattle to Mercer Island through Bellevue to Redmond.
Her words underscore just how much uncertainty there is in the whole process, and how much uncertainty there still might be when the board is likely to make a decision on realignment this summer.
Despite that, the board will most likely press on in the coming months.
We hope Sound Transit will pursue all possible avenues to maximize funding opportunities and minimize delays in delivering the ST3 projects.
The past year has underscored just how important an accessible, climate-friendly regional transportation system is for the future of our region.
And while coming up with a timely realignment plan is important, the long-term integrity of the system cannot be sacrificed.
This system will likely outlive us all — much like how the London Underground, the New York City Subway, and the other earliest urban rail networks continue to power their cities more than one hundred years after their creation.