Published on August 11th, 2016 | by James Ayre0
Seattle’s ST3 Plan Would Add 62 Miles Of New Light Rail Over 25 Years — What Are The Costs?
August 11th, 2016 by James Ayre
Seattle’s Sound Transit 3 ballot initiative (up for vote in November) concerns the potential development of a suite of projects intended to greatly expand the public transportation options in the region … over a period of 25 or so years.
In particular, the ST3 (Sound Transit 3) initiative would see the a large expansion of the region’s light-rail network — with more than 62 miles of new light rail extent added. But how much would all of this cost?
The folks over at the Seattle Transit Blog recently did an in-depth series of articles on the subject, detailing both the expected project delivery timeline and the costs that could be expected (through increased property, sales, and vehicle taxes) if ST3 is approved.
Those interested in finding out the exact details as far as project delivery timelines can find them here, here, and here. What I’m wanting to do with this article, though, is highlight the blog’s attempt to unravel the implications (on the personal level) of the somewhat-Byzantine funding mechanisms.
Here are some key bits from that coverage:
I don’t want to read this whole article. How much is it going to cost me?
The easiest value to understand is the cost per individual. The median adult in the Sound Transit District will spend about $169 per year, or 46 cents per day. If you have your financial records together, you can use this Seattle Times calculator to compute your individual tax burden. Obviously, this bill will vary over time as car values, taxable spending, and house prices change.
I’ve used up my seattletimes.com pageviews. How can I compute it?
An annual tax of 0.8% of the assessed value of autos, 0.5% on taxable purchases, and 0.025% of the assessed value of real estate. The last amounts to $100 a year on a $400,000 house.
I’ve been paying close attention to your series, and all the projects add up to maybe $20 billion. What’s this $54 billion figure I see in the paper?
Inflation. The individual project studies are priced in 2014 dollars because the studies aren’t attached to any completion date. The reporting convention is that the overall package is quoted in YOE (Year of Expenditure) dollars. The same project costs more when it finishes in 2030 than if it finished in 2025, because the purchasing power of a dollar declines.
You might wonder how you’re supposed to have any sense of whether a billion 2040 dollars is a high or low expenditure for infrastructure, and you’d be right. That’s why I’m a firm supporter of the individual cost estimates at the top of this article.
I thought the legislature authorized $15 billion in taxes. How can ST afford $20 billion, much less $54 billion?
Once again, this relates to reporting conventions. The original ST3 concept would have completed in 15 years, presumably with many fewer projects. As a shorthand, legislators referred to total tax collections in 15 years as a handle on the size of the package. Even in that case, some of that figure is 2017 dollars and some are 2031 dollars. And as it happened, various amendments to the bill chopped a few percentage points off the sum that Sound Transit can actually realize.
However, the tax was never going to stop after 15 years. In that period, Sound Transit would have sold bonds that it would have paid off with taxes collected after 2031. So overall, it would have been able to fund something like $25 billion of projects.
The last big leap in size occurred when they added projects that would arrive in up to 25 years. This accomplished two things. First, it meant they would accumulate capital for a longer period of time. Second, in the second half of those 25 years most of the ST1 and ST2 bonds expire, freeing up the revenue streams that pay off those bonds.
Sound Transit also expects billions in federal grants, amounting to about 13% of the total capital cost. This is in line with past experience.
Do any locals have any comments to make on the potential value of the proposed buildout?
As noted at the beginning of the article, the ST3 initiative will be voted on this November. We’ll keep you posted on any major developments.
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