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A quick update on the next steps on the deep-bore tunnel contracts the city is preparing to sign with the state. Today (7-19) the weekly viaduct committee will convene after our regular council meeting around 2:30pm. There is no confirmation on when legislation will be introduced, but I expect it will be either today or next Monday, July 26. Once the legislation is introduced, we can begin discussing changes and improvements to the specific ordinance. A committee vote and full council vote can come as early as July 26, although if the council feels we need more information or more time to discuss, the final vote could be delayed by a week or two. Public testimony is always allowed at the beginning of each meeting. I encourage you attend and share your thoughts on this project and related agreements. If you cannot make it to testify in person you can also call or send emails. Your feedback will help shape the outcome.
My primary concern is the potential for the impact of cost overruns to Seattle’s budget. A year and a half ago, the state passed a law capping the state’s contribution at $2.8 billion with very clear language that Seattle-area property owners are responsible for all costs in excess of $2.8 billion. I take their legislative intent very seriously, and I will be offering four amendments to try to better protect Seattle’s fiscal health.
In the event that there are cost overruns on this project, the state legislature will need to take action to allocate more money to the project, and they have clearly indicated that Seattle will pay. How they do this is unclear, but as the state legislature, they make the laws and will have a number of choices to take the money from Seattle if they so choose, including creating new taxes that target Seattle, or redirecting existing state funding that pays for other programs in Seattle to now pay for the overruns. In any of these scenarios, Seattle will ultimately be paying for the cost overruns.
The four amendments I will introduce all will give Seattle more leverage as the project evolves in the coming months. Without these, Seattle is largely at the whim of the state and WSDOT, and that is not a strong position for Seattle, regardless of whether you like the tunnel or not. The amendments are:
1. Remove the cost overrun provisions in state law. This is the most critical amendment. As long as the state has explicitly told us that Seattle will pay cost overruns and we proceed with the project without directly challenging the legislators who created that law, we are very exposed in a cost overrun scenario. The language of this amendment will state that the city’s contracts with the state will only be effective upon the legislature acting to remove the overrun clauses. This shifts the burden back to the state to rework the financing of this project. Some tunnel supporters have claimed this will cause unacceptable delay to the project, but if this is a priority in Olympia, they can act in January or February which would not delay the state‘s contracts with the contractor.
2. Secure the Port of Seattle’s $300 million commitment before the state signs a contract with the contractor. The state’s portion of the project has a total estimated budget of $3.1 billion. The financing plan is composed of $2.4 billion from state gas tax and an additional $400 million from tolling the tunnel. The state and the Port CEO signed an agreement in April, but explicitly states that no funds are in place to actually meet this commitment. This amendment will allow Seattle to exit its contract with the state if the port’s $300 million has not been secured at the time the state executes its contract with the contractor.
3. Negotiate surface traffic agreements and mitigation plan. In the fall, the Supplemental Draft Environmental Impact Statement (SDEIS) will be released and include detailed modeling of the projected traffic impacts on our surface streets of the tunnel and its tolling. We already know the planned four-lane Alaskan Way surface street is projected to carry between 35,000 and 40,000 cars per day – about four times what it carries today. This fall we will learn more about the specific impacts in Pioneer Square and around the north portal as a result of the big interchanges in each neighborhood and the projected $7 round-trip tolls. When this data is released, it is imperative that Seattle have some leverage to negotiate a robust mitigation plan with the state. This amendment would allow Seattle to exit its contract with the state if the city council could not reach agreement on a mitigation plan.
4. Protect Seattle from risk in the deep-bore tunneling contract. In the late fall, when the two bids for the tunneling contract are opened, we will know a lot more about how expensive and risky this project will be. The contractor’s bid price and the subsequent negotiations between the state and contractor over who bears what risk will give us a better understanding of how much risk the public will bear and how many contingency dollars are left to cover overruns. It is critical to preserve some leverage to protect Seattle if the project starts to look too risky. This amendment would allow Seattle to exit its contract with the state if the city council is not comfortable with the public risk or the contingency left in the budget.
These amendments are all designed to protect Seattle on what would be the largest deep-bore tunnel ever built in the world, in very tricky soil conditions, under the most expensive real estate in the state. The first of the amendments would require legislative action for the project to proceed, but would simply make this state project like every other state project – one where the state is responsible for all costs. And this legislative action could be taken in a timely fashion so that there is no delay in the project.
The other three amendments require no action on the part of the legislature and no delay. All they do is preserve some leverage for the city council to negotiate good outcomes for Seattle as we learn new information. The only way the project would be slowed down would be if five city councilmembers decided that the conditions had changed drastically enough to take this action.
I look forward to hearing your feedback on these amendments and any other thoughts you can share on the project as a whole.