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Tunnel Agreement Won’t Protect Taxpayers from Overruns, Even With McGinn Language

During yesterday’s city council viaduct oversight committee meeting, at which the council discussed a proposed agreement between the city and the state over the deep-bore tunnel, city and state officials told council members it would be “illegal” for the state department of transportation (WSDOT) to spend more than the $2.8 million the state has committed to spend on the deep-bore tunnel without explicit approval from the state legislature. And they repeatedly reassured council members that the state, not the city, would be responsible for any cost overruns on the project, because the city will not be a party to the contract to design and build the tunnel.

However, the agreement the city  is contemplating might not ultimately protect city taxpayers from cost overruns. That the case even if language proposed by Mayor Mike McGinn, which would halt construction until the state legislature removes a provision in state law that says “Seattle taxpayers” would be on the hook for any cost overruns, was included in the agreement. McGinn has asked the council to insert that language into the city’s agreement with the state, but the council has been cool to that idea, calling McGinn’s move a “delaying tactic.”

First, although it affirms the city’s desire not to pay for any overruns, the existing agreement between the state and the city is silent on what happens if the project exceeds the $2.8 billion cap. As assistant city attorney Darby Ducomb put it yesterday, “The [agreement] does not address the situation in which the state’s costs for the program exceed $2.8 million.” A future state legislature would have to decide how to pay for anything in excess of that amount.

Second, the agreement between the state and the city can’t bind future legislatures: The state legislature could add the McGinn language next year, sign a tunnel contract, then turn around and put the language right back in. Alternatively, if the tunnel ran into overruns, the agreement only stipulates that the state department of transportation (WSDOT) is responsible for picking up the excess. It doesn’t specify where that money would come from. That’s the legislature’s decision, and they could conceivably decide that Seattle taxpayers should foot the bill.

“The agreement makes it clear that the corporate city is not responsible” for overruns, council central staff director Ben Noble said at yesterday’s meeting. “What it does not say, and cannot say, is where WSDOT can secure all the money it might need to meet those obligations. We know what the state has budgeted for the project and we know the intent of the state legislation, and that’s more or less where the story ends.”

Of course, that might actually be an argument for McGinn’s proposal: If the council and mayor show a unified front now, there’s a chance the legislature could find that compelling in the future. Only one problem, though: The odds that the legislature will pass McGinn’s language are slim to none. The chairs of the house and senate transportation committees, Judy Clibborn and Mary Margaret Haugen, respectively, have said they won’t consider any tunnel-related legislation this year; assuming they keep their word, that would push viaduct construction back two years, and that’s something most of the city council can’t accept.

I have a call in to McGinn (a lawyer) to find out what he thinks of all these different scenarios.


  • Ziggity

    OK, whose quotes are those around “Seattle taxpayers”? Because here's what the actual state law says:

    “Any costs in excess of two billion eight hundred million dollars shall be borne by property owners in the Seattle area who benefit from replacement of the existing viaduct with the deep bore tunnel.”

    I'd really love to see the state try and assess who will benefit from this project. The flurry of resulting lawsuits would be tied up for years to come.

  • hobgoblin

    The reason the agreements are silent on overruns is because the issue of what to do in the event of an overrun will be dealt with in the contract (just as with any construction project) between the state and the contractor.

    Furthermore, the City of Seattle is not, nor will it be, a party to that contract – no matter how much the legislature or the Mayor would like us all to believe that.

  • Gomez
  • N8

    Well put. But in the end McGinn flip flopped back to his original position of being anti-tunnel no matter what, screwing over the voters that he gained by his original flip flop in which he stated that he would not oppose the tunnel, only ask tough questions. But I guess he is being true to some of his earliest statements that said even if the money was there he would still be against the tunnel for environmental reasons.

  • http://www.joeszilagyi.com/ Joe Szilagyi

    If that were really true, then Conlin would have absolutely no problem with stepping on the legislature's toes to say so. Richard Conlin has the power to magically de-fang Mike McGinn with one simple up and down Council vote on the subject, or by simply saying so outright. But that would skeeve off Gregoire, Chopp, and lord knows who else, so he won't.

    Which gives us another week of this.

  • N8

    How the legislature decides to get the money for overruns (if needed) is up to it, not Mayor McGinn.

    If McGinn doesn't like the governor or legislature screwing Seattle over with the State's project, then maybe he should stop screwing over Pend Oreille County and the environment with Seattle's boundary dam!

  • http://manywordsforrain.blogspot.com/ Mr. Baker

    I listened to the podcast a few hours ago.
    The councilmenbers take turns as chair, and each makes this point with WSDOT, that the State has the contract, not the City of Seattle.
    The State would have to enact legislation for ANY cost beyond what is aporopriated for any project. That is why WSDOT reviews as often as they do, they are required to account and request.

    It would be at that point McGinn, having been out of office for a year, could lobby the next mayor to fight having to prevent the City of Seattle from being the payer on a contract it was not a party to, for a state highway.
    Going through these motions now is meaningless, for reasons Erica pointed out above.

  • Longtime Seattle Voter

    If McGinn is really advocating shutting down the project mid-bore, if an overrun situation arises, then he really doesn't know what he's doing.

    You don't just turn off a 54-foot diameter TBM, lay off all the workers no longer working, and then come back after while and start up again. This type of heavy construction just doesn't work that way, and even if it did the amount it would ADD to the overrun would only make the financial problems much worse.

    McGinn is right that Seattle should oppose the Legislature's intent to stick it to Seattle taxpayers, and that opposition should be clearly acknowledged, by both sides, in the interlocal agreement — but without calling for a project shutdown mid-build.

  • Selma

    This whole thing is so stupid. Contractors are paying attention, and they are building all of this uncertainty into their bids.

    I wouldn't at all be surprised if all off the bids are over estimate when they're finally opened. And the worst part is that situation wouldn't actually kill the project — it would only delay it and increase costs further.

    McGinn's playing an idiot's game here, with zero chance that he'll get what it is he wants. All he's doing is alienating potential future allies and giving opponents clear ammunition to use against him if/when he ever puts a light rail measure forward.

    Picking on cost estimates is a two-way street, and using that strategy to kill one megaproject is only likely to make it a good strategy to kill all megaprojects.

    Surface/transit ain't happening. McGinn campaigned to get out of the way of the project last year. How about he recognize facts and let the grown-ups handle things?

  • 25 years experience dude

    The argument fails. When the state law says something, in effect, that's part of the contract. All contracts are subject to and within and in the context of state law. When the state law says the state is capped, then even a contract going over the cap is illegal! When the state law says Seattle residents pay overruns, that provision of law is in effect incorporated into the contract! Just like the city landlord tenant law is incorporated into your lease!

    In this context of legalities, every possible unit of ammunition the city could have to escape liability will help. One unit of ammunition AGAINST the city would be if in the context of all these laws and rules it never even protested and didn't inform the state no, thank you very much, we are not agreeing to be liable for overruns.

    The best legal advice? figure out what you want. Tell all parties that is what you want.

    The worst? Keep silent about what you want in a legal minefield, and count on courts and other actors to give you what you want later, while you don't even speak up as you're getting screwed.

    go hire a real lawyer and get a real opinion.

  • alitigator

    If the state law says the state isn't rsponsible for overruns, then that law is part of the contract.

    If the state law says Seattle it, that law is part of the contract.

    Whole lotta legal lyin' going on.

  • ivan

    The state will pay all cost overruns for a rebuilt Viaduct. The Legislature is not interested in funding Seattle's waterfront beautification project beyond a certain point. What part of that do people fail to understand?

  • Barleywine

    Ziggity and you are absolutely right.

    Maybe we need an emergency vote by “property owners in the Seattle area who benefit”, and nobody else.

    And if they vote it down, it's done.

  • User 12

    What the hell is this article. This line in the article is completely false:

    Second, the agreement between the state and the city can’t bind future legislatures: The state legislature could add the McGinn language next year, sign a tunnel contract, then turn around and put the language right back in.

    If Erica actually were an attorney or was responsible enough to wait for attorney to call her back, she would know about Section 23 of our state's constitution, which states:

    SECTION 23 BILL OF ATTAINDER, EX POST FACTO LAW, ETC. No bill of attainder, ex post facto law, or law impairing the obligations of contracts shall ever be passed.

    The whole point of this section of the state's constitution, as well as the US constitution, is to prohibit the scenario. If McGinn gets his way and the state signs a contract with the city that Seattle doesn't pay a thing, it sticks even if the next Legislature doesn't like it.

  • TMN

    Complete in 3 years, huh? I call BS. This whole thing is a giant clusterfuck, and we're going to find at the end of it that we've spent a huge pile of money in the name of further handicapping our lagging public transport system, and also end up one of the few modern cities that still cedes their waterfront to individual automobiles. Ridiculous.

  • http://manywordsforrain.blogspot.com/ Mr. Baker

    The legislature would have to pass another appropriations bill to authorize spending above the 2.8 billion, using money it does not have the power to collect.
    The City of Seattle is not party to the contract. They could put all kinds of crazy things in legislation, call it the law, doesn't make it legal.

    An example of the state appropriating money it had no legal right to would be Convention Center funds. Just because they put it in legislation did not make it legal.

    (enjoy your new Public Facilities District and Convention Center, everybody).

  • Barleywine

    Yeah, but if we COULD get them to pay…

    Deep down, they love us. They'll cave.
    We got the name. Got the needle. Hendrix. Kurt.

    All we're missing is a tunnel.

  • hobgoblin

    You mean, like the City Attorney?

    http://slog.thestranger.com/slog/archives/2010/…

  • giffy

    The point though is what that means still has to be put in place by a future legislature. At that point all bets are off as one legislature cannot pass a law another cannot undo. Plus the law does not reference Seattle as a municipal corporation. Instead it refers to a select group of taxpayers. Its not like the state is going to call up all those condo owners on Alaskan Way and ask for their money. It will have to devise a tax, set a rate, etc.

  • giffy

    This is not what that provision applies to. Here what we have (will have) is an agreement from the state to pay a contractor a certain sum for preforming a project. Then we have the State saying it will get overruns from Seattle in a separate action. That is no more part of the contract then any other tax or the State's OSHA regulations. Even though the state uses gas tax money to build roads that does not mean it can't lower it just because there are some contracts outstanding to build some roads. The legislature can choose to get its money from elsewhere just as anyone can (the exception can be with bonds but that is not what we are talking about here).

  • Soapboxin'

    Do you think Frank Chopp is reading this and laughing so hard that the milk comes out his nose? Tempest in a freakin' teapot…

  • The People

    This is absolutely ridicules and I get fed up with the city council for not standing up for our interest.
    I do see cheerleaders testifying in front of city council, and all they are saying is “We need the tunnel project to go ahead” without addressing the real issue of cost overrun. Enough is enough, is a time to take the streets to demand a recall of the city council and replace them.
    I am done !!!!!!!!!

  • Soapboxin'

    The teabaggers welcome you, your anger, and all of your exclamation points.

  • N8

    Yeah, that is what Seattle needs, more voting. If I've learned one thing is that Seattle can solve everything by voting on it a million times (please get the sarcasm). Frankly, I'm glad to see the council make the tough decision and go forward with this without voting it to death.

  • Reason

    The sheer scope of things that apply to “McGinn really doesn't know what he's doing” extend far beyond the tunnel.

  • http://spifflines.blogspot.com/ John Bailo

    Here's a bike path, the Soos Creek Trail.

    http://www.flickr.com/photos/47446064@N00/47398…

    This is beauty.

    Here is a 7-11 station in Kent…with last night's sunset as background…even it is beautiful.

    http://www.flickr.com/photos/47446064@N00/47461…

    Low density makes life civilized and livable.

  • Soapboxin'

    Nice link. Illustrates the situation perfectly. Holmes, OUR attorney, does call it a red herring. McKenna, also OUR attorney, says he'll fight to enforce it.
    -
    Pro tunnel folks say delay is the #1 cause of overruns. Anti-tunnel folks insist on delaying the project until the issue is settled.
    -
    Mission Accomplished, Frank Chopp. We're arguing like crazy and the timely start of the project is being threatened.
    -
    Maybe that's where people like 'The People' (below) should direct their anger, rather than at Conlin. And maybe McGinn should stop playing right into Chopp's hands.
    -
    I'm still sticking with Conlin and Gregoire on this. I want SOMETHING built and I trust them more on this issue than the Mayor, the Speaker, and the State Transportation Committee Chairs combined.

  • morning

    they can't lower the gas tax if it's used to back bonds because that's part of the bond issue contract.

  • Gomez

    Or they'll finish it in 3-4 years while you, the Mayor and others are still griping and making baseless predictions. Either way, we're gonna learn something!

  • cvbrown pe

    Y'all:

    Tunnel cost overruns can be easily covered by a $1.00 surcharge on tunnel tolls for a lotto death fund with half the proceeds going to the overrun fund and half to the winner. Oh! The gamble – guess the time for the first traffic fatality in the tunnel. This is followed by a second gamble – guess how many people die in the tunnel in the first (second, third, etc.) year. This can establish an on-going lottery with the reader board at each tunnel entrance reading, “X hours since the last death”.

  • Gomez

    This is a good point. I know officials and scientists aren't infallible, but where does one get off assuming these highly educated engineers, who spend anywhere from 4 to 8 years studying their craft and then decades working long hours underneath senior engineers to pay their dues before they can get in a position where they can plan any major aspect of a city's construction, design or development, who could lose their careers with a single mistake… aren't inherently planning for each and every possible logistical contingency that could undercut or hinder the project?

    I studied civil engineering for a spell, and one of the reasons I didn't continue was the sheer volume and difficulty of the work needed just to establish competency, let alone break into the field, let alone rise to a position of authority.

    That the project could run into problems is a given, and these engineers are planning for those potential problems, because that's part of their job description… little do many of you (including the Mayor) know.

  • sirkulat

    It's good that Erica highlights this story with the “old version” artist rendering of the north portal because the DBT's main fatal flaw is the inextricable “Mercer West” project – which CANNOT ably redirect traffic that now accesses SR99 in Lower Belltown.

    (The “new version” of the DBT north portal has both entrance and exit between Aurora and 6th Ave, plus, the Battery Street Tunnel may be closed.)

    SR99 could be rebuilt below John, Thomas and Harrison Streets to reconnect the grid — without building the DBT. Entrance and exit to SR99 would be at Repukelican Street. The end result is the same grid restoration at a fraction of the cost and a better traffic pattern.

    It's the traffic pattern that condemns the DBT. How will 40,000+ vehicles be redircted from the short, straight, commercial route on Elliott and Western to the DBT north portal? So far, WSDOT and SDOT, its minnions and sycophants refuse to consider, let alone answer this major question.

    I'm just asking the question: How is the traffic going to be redirected?

    No one should pretend Mercer Place is a suitable, not SDOT, not WSDOT, not the residents of Lower Queen Anne, no one. It's a narrow 2-lane road up a steep hill through a totally residential neighborhood. The DOTs are NOT informing the affected neighborhood.

    Will the current design for Alaskan Way handle as much traffic as expected? I doubt it and lay out plausible scenarios why it won't work and how it could be arranged to handle more traffic better. Too many self-proclaimed environmentalists can't be bothered to consider these real world problems.

    All the studies show Tunnelite produces the least traffic on Alaskan Way. Tunnelite retains the main traffic pattern through Lower Belltown to Interbay and Ballard. The entrance and exit ramps to the Battery Street Tunnel should be closed.

  • sirkulat

    Your glaring lack of reason suggests a name change is in order.

  • Bore Baby Bore

    Ah, Wells, how we've missed you… no matter what name you post with.

  • Barleywine

    I wasn't being sarcastic when I said you were right.

  • RossB

    Yes, but even the best engineers make mistakes. Sometimes the people they work for are crooks, sometimes they just don't fully understand the problems they will encounter. The “Big Dig” is one such example. Another example, from software engineering, is the development of Microsoft Word for Windows. The folks working on it were probably the best software engineers in the world (or close to it) but they delivered their product way late (as in several years, or several times original and then updated estimates). Books have used that project as an example of how not to manage a project (to be fair, software engineering has always been way more ad-hoc than civil engineering).

  • RossB

    The state can't make the city pay, but it can refuse to do additional work. This is why it is quite possible that the state will build a hole, not a tunnel. If the contractors get 3/4 of the way done, and say they need more more money (it wasn't as easy as they thought), then what? This is how projects go over budget. The state usually just says “OK”, and pays the extra (whether through the same contractor or someone else). In this case, the state says “OK, Seattle, now you pay your share”. Seattle, of course, says “What, we can't pay for it, we can't even fix our own bridges”. The state says “But you wanted it..”. The fight continues, both legally and politically. If nothing else, McGinn is saying (quite clearly) that “we don't want it, and that we won't pay for it”. Even if he loses this legislative battle, he will make it extremely clear that the city doesn't want to pay for it. This will help both legally and politically. As a result, of course, we will have a hole for a while (we have had freeway ramps to nowhere, so a hole to nowhere sounds appropriate).