The financing plan for troubled Seattle Monorail project has now been scrapped, in part due to the shocking revelation that the $2.1 billion system will actually cost upwards of $11 billion when interest payments are included. According to the Seattle Post-Intelligencer:
- A heavily criticized $11.4 billion financing plan for a new monorail line has been dropped, and a key official says voters may be asked to authorize additional tax revenue.
The nine-member Seattle Monorail Project board voted unanimously Thursday evening to seek other alternatives for raising money to build a $2.1 billion elevated line that would link Ballard, the Seattle Center, the downtown area and West Seattle.
Grappling with a 30 percent shortfall in revenue from a car license tab tax and a 20 percent increase in costs, the board and consultants that included Citigroup came up with a combination of 40-year bonds and high-interest "junk bonds" to supplement the tax revenue, boosting the total cost, including interests, to $11.4 billion.
Last week, state Treasurer Mike Murphy said that showed the project should be terminated as unaffordable, and on Thursday state Sen. Ken Jacobsen, D-Seattle, asked Gov. Christine O. Gregoire to call a special legislative session to kill the project.
You know you're in a tight spot when even your friends have to administer some tough love:
- Like friends staging an intervention for a troubled loved-one, two of the Seattle monorail's staunchest City Hall allies yesterday warned monorail board members the project needs to change its ways or it will die.
In a letter to the Seattle Monorail Project (SMP) board, Seattle City Councilman Nick Licata and City Attorney Tom Carr said the monorail agency's approach "is not working" and urged board members to consider drastic actions – including a staff shake-up or sending the contract out for a rebid – in light of recent public furor over the monorail's costs.
"We do not believe that changes at the margin or more explanations will be enough. Do not be afraid to reorganize the staff dramatically, consider new taxes or even to re-bid the project," Licata and Carr wrote.
The two cited impeccable pro-monorail credentials in offering blunt advice. Carr was the first chairman of the Elevated Transportation Co., the fledgling monorail agency created by a 1997 voter initiative. Licata has been the monorail's longest-serving sympathizer on the council.
"We have been monorail supporters from day one. We have been with the project through the highs and the lows. We understand that at this difficult time you are hearing the loud drumbeat from those who have vehemently opposed the project. We thought that it was important that you heard from two of your friends," the letter said.[...]"The monorail can survive this difficult period, but only if you are not afraid to act boldly," the letter concluded.
And from the Seattle Weekly:
- Back in March, when Seattle Weekly reported that the true taxpayer cost–principal and interest–of Seattle's planned new monorail could be as much as $6 billion, Seattle Monorail Project (SMP) officials sniffed at the notion, calling it "a worst case scenario."
We regret the error. So, likely, will taxpayers. The cost, according to SMP's own revised estimates released June 20, is almost double our projections–more than $11 billion. We hadn't anticipated the monorail agency would extend the taxpayers' mortgage so far into the future that the heaviest payments will fall on today's unborn.
But, it now turns out, there is an even worse worst case: The cost to build Seattle's new 14-mile monorail system could be as much as $14 billion, agrees state treasurer and newly anointed monorail critic Mike Murphy, willing to step over the inert body of City Hall and get in the monorail's face. "That's like," says Murphy, "a billion a mile!"
Actually, since both the monorail's tax revenue and proposed junk bond loans have no sunset clauses, the full cost is unknowable, says Murphy. "Under their plan, the financing could go on and on and on," he says, "and that has been deceitful. There are only two reasons why a municipal entity would issue junk bonds: because they don't have enough revenue or the project is too expensive. They negotiated this deal in secret, with a single bidder, as well. They ought to be ashamed of themselves. The project should be stopped."
The Seattle Times pulls no punches today:
- Monorail may remain as an idea and a dream for Seattle, but this monorail project and this monorail agency are finished. The Seattle Popular Monorail Authority should be closed.
The question presents itself: Would the people of Seattle do this over with the same line, same managers and same board?
We recall the claim from Monorail Executive Director Joel Horn, made to us with earnest conviction, that if they could not build the Seattle Monorail Project in the form promised, at the cost promised and in the time promised, that they would not build it at all.
The Monorail Authority is already more than $100 million in debt. If it is not going to build a monorail, it has no reason to exist. It is time to cut our losses.
But don't underestimate the ability of the Monorail Authority to whistle past the graveyard:
- Said a monorail spokeswoman, Natasha Jones: "[...] I have no indications from board members or anyone else that any changes in strategy or exit strategies are planned. We're chugging along."
She blamed the uproar on "confusion" over the $11 billion figure. "We need to get back to basics," such as the 14-mile line and 2,100 construction jobs, she said.
Rigghhhhht.....why focus on that pesky $9 billion in future interest payments when we'll create (fingers crossed) 2,100 jobs!