“I’ll vote for it just for this ad, this is awesome,” said the hipster as he and his girlfriend joked about it.

I think it’s a great ad!

Its a good ad; very reminscent of an airline ticket special or something like that, maybe that will subconsciously show people that they are in fact getting a great deal!

$69/year is an oft cited cost number for ST2. But can someone explain to me what it really means?

A representative from Sound Transit used that very number in a recent presentation to the Kirkland City Council. He stated that for the “price of a thankful of gasoline” we can have a greatly expanded transit system including light rail.

After the city council meeting, I asked the Sound Transit representative what he based that $69/year number on. He told me that to get to that number, Sound Transit assumes 800,000 households and that each household has 2 adults.

But $69/year doesn’t say anything about how long the payout period is. So, using a bit of algebra and the numbers given by Sound Transit I figure figure the payout period:

$17.9B / (800,000 households * 2 people /household * $69 / year) = 162.1 years

A 162 year payout seems kind of nutty to me, so how about I calculate the payout period based on the lifetime of ST2 – 16 years. Again, a bit of algebra:

So, instead of $69/person/year for 162 years, it seems to me it is going to cost each person $699 per year and each household $1,400 per year for 16 years. Is it just a coincidence that $699 is ten times $69? Is it a misplaced decimal point?

I’m not a financial person, so maybe I’m missing something. Can someone explain it to me?

Thanks

$69 is taxes paid for average person in *today’s dollars*. To get the real cost, you need a much more complex equation figuring in inflation. See other posts on the financing on this blog, or more likely you’ll need to rely on the state audits coming out clean and take their word for it. Truly understanding this stuff takes at least a career and even then it can go wrong since it relies on predicting future costs. (Full disclosure: my dad is a cost/scheduling engineer so I’ve been hearing about this all my life.)

I object to the term “real cost.” The cost in 2009, or 2012, or 2030 is $69 in today’s dollars.

The $18 billion figure is bigger than it needs to be, because it mixes in 2018 dollars and 2023 dollars with 2008 dollars.

Furthermore, part of the measure’s cost will be covered with federal grants and previously accrued East subarea funds, rather than new taxes. So even if you adjusted for inflation, you wouldn’t come up with $18b by adding up all the taxes.

Mea culpa. I should have said something like “SoundTransit’s $17.9b cost estimate” instead of “real cost”.

I finally found Ben’s post here which in my opinion does the best explanation: These Costs Are All Voodoo. Light Rail Is A House: “This would be a lot like advertising a $300,000 house as $600,000 on the sign because that includes operating costs for 20 years and your total mortgage payments over that time.” What matters is that $69/year payment is very affordable.

“I’ll vote for it just for this ad, this is awesome,” said the hipster as he and his girlfriend joked about it.

I think it’s a great ad!

Its a good ad; very reminscent of an airline ticket special or something like that, maybe that will subconsciously show people that they are in fact getting a great deal!

$69/year is an oft cited cost number for ST2. But can someone explain to me what it really means?

A representative from Sound Transit used that very number in a recent presentation to the Kirkland City Council. He stated that for the “price of a thankful of gasoline” we can have a greatly expanded transit system including light rail.

After the city council meeting, I asked the Sound Transit representative what he based that $69/year number on. He told me that to get to that number, Sound Transit assumes 800,000 households and that each household has 2 adults.

But $69/year doesn’t say anything about how long the payout period is. So, using a bit of algebra and the numbers given by Sound Transit I figure figure the payout period:

$17.9B / (800,000 households * 2 people /household * $69 / year) = 162.1 years

A 162 year payout seems kind of nutty to me, so how about I calculate the payout period based on the lifetime of ST2 – 16 years. Again, a bit of algebra:

$17.9B / (800,000 households * 2 people / household * 16 years) = $699/person/year

So, instead of $69/person/year for 162 years, it seems to me it is going to cost each person $699 per year and each household $1,400 per year for 16 years. Is it just a coincidence that $699 is ten times $69? Is it a misplaced decimal point?

I’m not a financial person, so maybe I’m missing something. Can someone explain it to me?

Thanks

$69 is taxes paid for average person in *today’s dollars*. To get the real cost, you need a much more complex equation figuring in inflation. See other posts on the financing on this blog, or more likely you’ll need to rely on the state audits coming out clean and take their word for it. Truly understanding this stuff takes at least a career and even then it can go wrong since it relies on predicting future costs. (Full disclosure: my dad is a cost/scheduling engineer so I’ve been hearing about this all my life.)

I object to the term “real cost.” The cost in 2009, or 2012, or 2030 is $69 in today’s dollars.

The $18 billion figure is bigger than it needs to be, because it mixes in 2018 dollars and 2023 dollars with 2008 dollars.

Furthermore, part of the measure’s cost will be covered with federal grants and previously accrued East subarea funds, rather than new taxes. So even if you adjusted for inflation, you wouldn’t come up with $18b by adding up all the taxes.

Mea culpa. I should have said something like “SoundTransit’s $17.9b cost estimate” instead of “real cost”.

I finally found Ben’s post here which in my opinion does the best explanation: These Costs Are All Voodoo. Light Rail Is A House: “This would be a lot like advertising a $300,000 house as $600,000 on the sign because that includes operating costs for 20 years and your total mortgage payments over that time.” What matters is that $69/year payment is very affordable.