Impatient for Mass Transit? Here’s a Fantastic Idea.

Sounds good. Get 'er done.

This would be amazing. More good paying construction jobs, less impact from long term construction, and more transit sooner.

I really hope this happens.

I'm all in favor of spending more now to speed things up, but isn't one major problem that we're already up against the maximum taxation levels allowed to local and regional governments by the state?

I echo Wes. Get 'er done!

I am guessing that this wouldn't require new funds, but just use existing taxes as collateral to get loans now. Kinda like those J.G. Wentworth ads 'IT'S MY MONEY AND I WANT IT NOW!!!!'

The idea is that you borrow against the future stream of tax revenues to get all the money up front. The risk is that future tax revenues fall short of projections and the loan cannot be repaid without additional taxes. Conservative planning can alleviate much of this risk. We could already do this by issuing bonds, but the interest we would have to pay would significantly reduce the amount of construction we get.

The plan wouldn't call for more taxes. It would use the taxes Sound Transit will be already be collecting under ST2 over the next couple of decades as collateral to borrow a lump sum of federal dollars now.

Even if we didn't go for broke like L.A., we could still borrow smaller sums to accelerate short segment construction. For example, there was a lot of hope last year that we would be in line to receive stimulus funding to extend south from Sea-Tac to 200th Street. Word was that with the cash that project could have been wrapped up in 2013.

I think you misunderstand the problem.

We essentially need a “down payment” to issue bonds. That's what has to trickle in. If we had that up front, we wouldn't have any problem doing the repayments.

That's why you take out the loan; then you can get the money you need up front in a nice big lump sum, and use the tax money to pay it off, rather than holding building plans back while tax money dribbles in.

It's a great deal all around. Transit agencies aren't constrained by the rate of tax money, and building faster can actually be cheaper: you get service online and bringing in revenue faster, rather than just having half-built infrastructure waiting for money. The federal government basically gets free stimulus – it's a low-interest loan that will be repaid in a few years, not a grant, and it's still stimulating construction nicely. Everybody gets expanded transit (and the economic benefits thereof) faster. Win, win, win!

It wouldn't reduce the amount of construction we get – in fact, it could increase it. A lot of what we're “waiting on” now is essentially down payment money. What an infusion would do would improve our debt/equity ratio significantly, not only keeping ST's bond rating high (it's already very high), but also getting them better rates.

In that the system loses money, the sooner it's built the sooner operating losses need to be covered by the same tax revenue. It can be argued that the service is worth more than the cost, but it is specious to imply bringing in (fare) revenue sooner reduces costs.

after hearing about 30/10, i've been hoping Sound Transit would get on this. isn't this the idea behind the proposals for a National Infrastructure Bank, as opposed to adding these proposals (probably as amendments) to other bills?

In theory due to it's decreased operating costs and higher fairbox recovery (when operating at high capacity) rail transit saves money over bus service. However considering the ST/KCM split I'm not sure how this would play out here.

Josh the sales tax committed to repay is a dedicated revenue source, but not really collateral. ST has tax-free bonds out now funded by all of the taxes they collect.

What the mayor of LA seems to be saying -”The city can't issue bonds on its own to fund the project, officials say, because it can't guarantee lenders the amount of revenue that the sales tax will generate” – is that either the tax isn't separable from other city taxes or that reasonable projections aren't enough to cover the money he wants.

At the end of the linked story – “Build America Bonds” program, begun in 2009 to spur job growth, beyond its scheduled expiration at the end of this year.

The bonds generally carry higher-than-normal rates, but Washington picks up 35 percent of the interest. The Obama administration has proposed making the bonds permanent, but reducing the subsidy to 28 percent. Los Angeles, however, is seeking a much higher interest-rate subsidy of 70 percent.”

- so it appears what he really wants is a drastically below market loan with a revenue source that would normally qualify for the amount he wants.

Stop the wars and just fund transit. No tricky crap, just fund it.

Any internet transit experts care to make a stab at how fast ST2 could be built out were ST to get all the funds up front?

It took ST about 7 years to build the first 14 miles after the go ahead. Right now the plan is about 9 years from now. I don't think they have said funding is slowing them down.

Now ST3 without additional taxes, that would be something else.

Thank you for this research. Sounds like this is partly due to the high interest rates California has to pay due to its horrific financial situation.

It's hard to believe the Feds can loan money to everyone for no cost up front and not end up screwed. This can't be good national policy, even if would be nice to see here.

Sounds great, but keep an eye on the snake oil meter. Cash flow isn't the only constraint on how fast projects can be built. Consider these factors–

1. How long it takes to get through the decision process. East Link is on its FOURTH year and we still don't know how it will tranist downtown Bellevue. That's not a cash flow problem.

2. NEPA/SEPA. It takes easily 2-3 years to get through all the state and federal envisonmental review hoops. This is not a cash flow issue either.

3. Bidding Environment. At any given time, there is a finite number of engineering and construction contractors out there able to do this work. When governments flood the market with work, the advantage shifts and causes a “bidder's market” in which prices go up and costs run out of budget. And at some point the capacity of the economy to execute this sort of work is exhausted, thus limiting how much and how fast public works can be built.

4. Borrowing costs. The idea proposed in LA is essentially to borrow federal money and pay it off with existing taxes. Well, that's what Sound Transit and every other government does right now. The question is whether the feds can lend $$ in greater sums and lower interest rates than ST is currently able to do right now; and beofre you answer consider that ST issues triple-A low interest, tax-free municipal revenue bonds that Wall Street loves.

So yes, let's look at this, but no one should make the mistake of thinking there is a light-rail-now-panacea within immediate reach.

If you are suggesting that bus service be reduced, then yes it could reduce the subsidy, but that is precisely the problem with ST Link ridership – the lines in LA will need the bus service to make them work.

It seems the general idea is to provide significantly more service by adding rail to existing bus.

At any rate, your point makes sense if bus service were to be cut.

I don't think you meant to say that ST borrows from the feds. The muni rate is very low but the feds can always go lower, but it, as you point out, will costs us one way or the other.

Agree that money is only a part of the issue.

Let's do what is needed to get a full system built as soon as possible. The current timeline is not reasonable if we want to make a serious push for rapid transit. We failed to vote for the Forward Thrust package decades ago and now find ourselves decades behind the curve. I'm for anything that gives us a viable system as soon as possible. I'll even pay more taxes if needed….and I walk to work.

morning fizzy – it's not specious at all. The train service would actually help Metro's financial situation quite a bit, as it will replace a number of their core routes. And the sooner it's online, the more economic benefit it creates – and the more sales tax revenue the region generates to pay off those bonds.

These things are not as isolated as you think they are!

The 71, 72, and 73 will be cut back all the way to Roosevelt/65th. The 41 is likely to be eliminated entirely. Many downtown express routes will terminate at Northgate, as the train is much, much faster than a congested I-5 trip.

Several ST routes will be replaced or partially replaced with rail, so you'll see a direct benefit to ST as well. And University Link and North Link especially will be paying a much higher share of their operating costs with farebox than the bus routes they replace.

There's not going to be THAT much benefit. Remember that we're looking at a 13 year plan, not 30. We can't cut more than 3-4 years off most of those projects.

It took more than 7 years. Sound Move was in 1996, and Central Link opened in 2009.

While there was reorganization in the early part of that, much of the planning and public outreach time was before the reorganization. We can't cut much more than 3 years off ST2.

The current timeline is only a few more years than the minimum it takes to design and build projects of this magnitude. There are federal public outreach and due process requirements for a lot of the things Sound Transit has to do before they can start construction – just condemning property can take a year or two.

If you want the system built faster, start demanding more taxing authority from the legislature so we can get started on the NEXT lines, instead of waiting until the current ones open.

“Stop the wars and just fund transit. No tricky crap, just fund it.”

Right on.

“Stop the wars and just fund transit. No tricky crap, just fund it.”

Right on.

But I thought the reason we were stumping for a state income tax was because sales taxes were unreliable sources of government operations funding. How can you count on X dollars from a sales tax hike if a sales tax can't assure you of a set amount of dollars in the first place?

Thanks Ben. I will do just that and encourage others to do the same. I appreciate the constuctive input. I desperately want to see this system in my lifetime.

As Publicola has mentioned in the past, we do have a political action committee working toward that. You could support us!

http://nwtransit.org

You count on having X, and then you make sure you're getting X+30%. That's why Sound Transit is still able to deliver projects even in this recession – they make very conservative estimates. And the way ST2 is written, Sound Transit will stop collecting the new taxes when they pay off the projects, so if it really only costs X+10%, that's all you'll pay.

I will. Thanks for sending the link.

Ben,

Yes, it took 12 years to build 2/3 the miles and 1/2 of the capital costs promised – but as you have pointed out many a time ST started over in 2001 because it is from then that you claim “On time, On budget”

I don't see how your comment is relevant. ST didn't start over on land purchases, engineering, FTA process, or public outreach, and those are a big part of the 10 year best case a new line takes.

Gomez was talking about revenue not costs.

ST collected through the Dot Com boom without building any LR. Then they benefited from the housing and building boom from 2002 through 2007/8.

Currently I believe that they are suffering from lower revenues and that in part accounts for their fare increase plans.

The original estimate on costs were clearly well under actual costs. $1.7B for the first 21 miles (and maybe 24) could hardly be described as a conservative estimate. We don't really know what ST2 will cost yet. It may well be the case that a national inflation could result in quite an escalation in costs over the next few years. Of course, should that inflation materialize, the revenues from sales tax and MVET will also increase.

If ST could borrow money now at the current low rates (4.25% on a twenty year bond), they would most likely be able to pay back the loan with less valuable dollars.

I do believe they purchased the land after the go vote in 2001. There was debate about the route in the south for some time. In the north they were planning an under Portage Bay route or possibly running on an Eastlake route using the freeway bridge to get across the Ship Canal.

No one believes that ST operated well before Tuck Wilson came and cleaned house. ST wasted most of the 4 years before 2001.

The point was and is that a federal loan program won't speed up the building of ST2. If the feds would give us $1/2B the tunnel through Bellevue wouldn't be such an issue and that decision would speed the process, but slow the building.

I'm basically agreeing with you, it takes time to build a system no matter how much cash you have in the bank. I wonder if LA is in such bad shape that they can't get any money from the muni market.

fizzy – the route in the south was pretty much chosen in 1991. The Sound Move ballot measure map included the rainier valley.

fizzy, ST hurt a lot during the housing boom. Construction costs went up much faster than revenue.

ST's current bonds are much lower than 4.25% – many are at 3.2%.

Ben they went up because the plan voted on was way under what it was going to cost. PB gave the RTA low numbers to pass the vote. The according to you, in other posts, the project was well underway by 2001 and the real estate had hardly peaked by then.

I'm thinking you weren't here when this all came down. In 1997 there was a big debate about whether to go down RV or a more direct route. Sims and others pushed and eventually won RV partially as a social equity issue and urban renewal.

Whether or not ST has lower percentage loans isn't relevant. Current rates are low historically at 4.25% and I'll bet you a streetcar that rates will be going up and we will have a big inflation in next 10 years.

Do you have a link to chart showing the revenue, projected revenue, costs, projected costs etc.? Love to see it. Really.

If you were to repeat back to me what I'm saying was under way in 2001, you would understand very quickly why the real estate market at that time wasn't such a big deal. FTA, design/engineering, and public outreach work was under way. How many times are you going to make me repeat that, and how many times are you going to ignore it?

The whole “I'm thinking you weren't here” thing is offensive. I've been writing about transit for five years. I know this topic backward and forward, and it doesn't sound like you're interested in listening – you're interested in being right.

Ben,

You weren't here for the 1996 vote, right?

Below is a quote from the RTA campaign of 1996 – note 25 miles and along the I-5 corridor.

“Twenty five miles of light rail will alleviate traffic in our most congested corridor, along I-5 from the Sea-Tac Airport to Downtown Seattle and further on to the U-District.”

http://www.globaltelematics.com/pitf//1996adcam…

Follow the links for more of what was promised; for example $8 tax per month for the average family -

http://thestatecolumn.com/articles/march_24/los…

Works if only the city wasn't going bankrupt.

Um, unless I am reading it wrong, it never states that Link will run on or near I-5 from DT to the Airport, only that it will alleviate traffic from DT to the Airport.