On October 27th Sound Transit accepted the Memorandum of Understanding (MOU) with Bellevue for East Link Construction. With Bellevue’s approval anticipated on November 14th, including a commitment to fund up to $160m (2010 dollars) of the increased costs associated with a downtown Link tunnel, it now faces the hard part: coming up with the money for its share.
It turns out that a lot of this money will actually be “credits” that come from waiving various payments from ST to the City,or doing things that the City would do anyway. From September 19th and October 10th staff reports to the council: (slide version is here).
As an up-front commitment, the City will take all or a portion of the following actions to reduce Sound Transit’s costs by a minimum of $100m:
- Providing permanent ROW easements
- Providing temporary easements for construction staging
- Contributing the depreciated value of city-owned utilities
- Helping to direct conflicting private utilities to relocate
- Contributing certain taxes received by the City as a result of the Project
- Purchasing certain properties for the Project which may also serve other public purposes
- Other actions that reduce Sound Transit’s costs.
The staff divided these actions into three categories, ordered from least to most painful, below the jump:
First, Categories 1 and 2, which comprise $100 million in up-front contributions.
- No cost and low cost items totaling a Sound Transit credit value of approximately $40 million. [Up-front costs to the City would be between $0 and $8.1m.]
- City expenditures that provide collateral benefits beyond the East Link project, totaling a Sound Transit credit value of approximately $60 million. Category 2 is comprised of property purchases, and carries a considerable up-front cost to the City of roughly $58 million. These investments are also highly leveraged, providing very tangible ancillary financial benefits to the City in addition to the East Link credit. All the property purchases are needed for City parks or transportation ROW, which the City will retain after providing needed easements to Sound Transit.
Next, Category 3, which is currently the least developed plan, provides credits of up to $60 million to Sound Transit.
- These may include credit for the HOV lane on Bellevue Way (assumed as a$25 million City expenditure), code amendments that provide Sound Transit with greater certainty, permit processing that saves time and reduces the project schedule, clear expectations about construction mitigation, cost reductions as a result of value engineering and/or reductions in project scope, and grant funding or partnerships that provide additional funding for the Project.
The Category 3 expenditures are a “contingent contribution” and only come into play if the tunnel project expends the entire budgeted amount. Should the tunnel costs come in under projections, Bellevue will be the first entity to benefit from any savings, up to $60m.
It appears that the main effect on Bellevue’s finances will be to “crowd out” other capital improvement projects, or at least prioritize the ones that happen to sit along Link’s path, rather than impose steep new taxes or cuts to the general fund. The City developed three different revenue scenarios for its capital budget through 2030. From least optimistic to most optimistic, the scenarios assume partial to full funding for the city’s Mobility & Infrastructure Initiative, which would fund many of the capital improvements for redevelopment in the Bel-Red Corridor.
The scenarios don’t make any assumptions about which capital projects will or won’t be funded by Bellevue’s future budgets, but the City is expected to make an update to its 2013-2019 Capital Improvement Plan next year that might incorporate the MOU’s specific upfront contributions in more detail. Right now, it seems that the biggest policy leverage Bellevue has in the MOU is to work “cooperatively” with ST through the 60% design, so the contingent contribution can be lowered.
Before that happens, however, the city council will still have to approve the full MOU as agreed upon with Sound Transit. There will be a public hearing tonight on the agreement, with large turnout expected from both sides. Bellevue residents interested in seeing the City approve its funding share should attend and speak out. You can RSVP for the hearing with TCC here.