ST3 opponents are wearing the $54 billion figure like armor. It’s doubtful that a 25-year program expressed in year of expenditure (YOE) dollars results in a figure that people can meaningfully evaluate, but that’s the number the press has settled on. There’s the median $169 per adult estimate, which hides a lot of variation, or the online tax calculator that’s a bit more complicated. But anyway, $54 billion is a lot of money.
On the other hand, there’s this:
Zillow says Seattle home values up 15.7% YOY. Ergo single family homeowners net worth increased $10.8 billion in a single year. ¯\_(ツ)_/¯
— mike eliason (@bruteforceblog) September 1, 2016
( The story is here, and says that the median single family home went up 14.3%, to $642,000. If there are 138,000 detached homes in Seattle, that comes out to $11.1 billion if you assume the median is the same as the mean. That means that $11 billion is an underestimate. Be advised that median home prices have their own problems. Mike used somewhat different inputs to get the $10.8 billion figure, but it’s really beside the point.)
For comparison, the entire Seattle portion of ST3 — light rail from Ballard to West Seattle, two infill stations, plus interim bus improvements — costs $6.8 billion in 2014 dollars at the high end of the estimates.
Some homeowners have earned the past year’s valuation gain through investment or sweat equity. But most others, including me, have seen a hefty boost to our net worth, passively, thanks to robust job creation and regulations that create artificial scarcity. If Seattle would simply capture about 60% of the single family home windfall in one year, it could fund the entire 20-year program for Seattle to transform transportation in several of the city’s most important corridors. That’s without touching the majority of residents that don’t live in detached homes at all. Moreover, not only would federal grants cover some of the projects, but income tax deductions mean that the Federal Government would effective cover up to a third of the project simply through the tax code.
Of course, this isn’t a real proposal. It’s not easy for the government to monetize that much of the capital gain in property, it would be hideously unpopular, arguably unfair, and in any case the legislature hasn’t granted the necessary taxing authority. But the point is that Seattle is a wealthy city that can easily afford this investment, scare numbers aside.
38 Replies to “Getting a Handle on $54 Billion”
Thanks Martin, the $54B number is intuitively meaningless to our 2016 brains. Going back in 25 year periods, that would be $30B in 1991 dollars, or $13B in 1966 dollars. Considering we spent about $6B on the DSTT/ULink/Northgate Link combined, $6.8B seems much more in the ballpark when we’d be getting a Ballard-to-IDS line, a second downtown subway, another high bridge over the Duwamish, 10 new Seattle stations, and 3 rebuilt stations.
Of course, another way to look at that was that the (far superior) 1968 rail plan was supposed to cost $1.1B; we’re certainly not going to get a system that’s 12x better than that for those “$13B in 1966” dollars.
Certainly not saying to vote No, just pointing out that it isn’t really the value that having spent the money then would have been.
Zach – $54B isn’t NPV 2016, it’s a sum of year-of-expenditures. Someone ought to get the expenditures by year and then discount it to NPV. Also, in terms of taxpayers’ additional contribution to ST3, the total amount should be halved (since MVE+Property+Sales Tax = $27B YOE).
How can I figure out what the cost of regular old road construction and repair will cost the average adult over the next 25 years?
To do a meaningful comparison with ST3 it would have to be in inflation adjusted dollars and use compatible growth estimates so it doesn’t seem like something that can be done with a simple napkin calculation. This site has a nice tool where you can see the current budget. If I understand it… the total budget for the WSDOT for the current two year budget cycle is about 6 billion dollars, but road construction and repair is just part of that.
I’m not sure what the point of this post is? You want to somehow claim the equity people have received on their homes over the last year? You can’t force people to sell their property and even if you could, you’re not getting that money.
The equity is also theoretical gains until all those people sell. Just like stock, if all of these homes were put on the market to get that equity transferred via the biggest property sales tax ever made (60% of all equity being a tax would cause riots), it would collapse the equity gained into much less as everyone sells off at the same time.
So all in all, what’s your point? That there’s a good chunk of change that’s all theoretical and still only a fraction of total cost of ST3? I could have told you that but those people who bought property would never sell it when there’s these kind of gains, especially if the government started discussing how to get people’s equity via some form of additional tax.
I think the point of the post is just to give the package a sense of scale in current dollars. $54B is pretty meaningless, but knowing that the Seattle investments cost roughly the same as a single year’s fluctuation in the Seattle real estate market helps us get a more intuitive grasp on the cost.
Plus you have these statements:
“That’s without touching the majority of residents that don’t live in detached homes at all. Moreover, not only would federal grants cover some of the projects, but income tax deductions mean that the Federal Government would effective cover up to a third of the project simply through the tax code.”
First, even if you do live in an apartment, the owner of the building has to pay property tax on increased valuation, so your rent will likely go up.
Second, practically no one will see 1/3 of their money returned from income tax. Remember that you get either itemized deductions or a standard deduction. You need to pay a lot of money in property tax, mortgage interest, and sales tax for the itemized deduction to make sense. So your marginal benefit is much less. Plus a marginal income tax rate of 33% only applies at incomes over $230k for married couple. Most people won’t have that. For most people, the marginal rate will be 25%.
I’m not saying we shouldn’t spend money on transit, but at least we need to use valid reasons to encourage people to vote for transit.
“even if you do live in an apartment, the owner of the building has to pay property tax on increased valuation, so your rent will likely go up.”
Your rent will go up whether or not the property tax increases. Rents have been going up faster than taxes or inflation since 2000 (except 2008-2010), so the landlords have plenty of money in their windfall to pay the taxes.
True, practically speaking this will have minimal impact. Even on a million dollar house, you’re looking at only $250/year additional taxes, which is less than $21/month. For landlords, my understanding is that property taxes are treated as a business expense and hence deductible from taxes. And with rents/house prices going up so fast, this will get swallowed up.
That being said, if the market were stagnant and taxes went up $100/month, I think that would be passed through, so we can’t just write a blank check against property taxes.
If the vacancy rate were 10% and a $100/month tax increase went into effect, then some landlords might try raising the rent $50 or $100. Whether it succeeds would depends on how much it affects tenants’ applications. If they all go to landlords that don’t raise it, and if units were already remaining empty for two months or longer, then it might fail. But in that situation we’d have a very different conversation about whether the city and tenants should help landlords out to prevent them from going bankrupt or taking buildings off the market. Perhaps that would indicate scrapping the tax increase or offering landlords some kind of mitigating credit. But that’s the opposite of the situation we have now.
Martin, and Jon, a balance sheet has two columns. I personally think that as used to oppose ST-3, whatever the merits of the debit side, they’re being used dishonestly. As in every argument the last forty or fifty years against the public works that our country is falling apart without.
But as with every double-entry comparison, the only effective counter-argument is to present and explain in detail the credit side.
Jon, one rush hour trapped in traffic on I-5 – billed by at an attorney’s average rate, puts the numbers against you. In a region, as you point out. But Martin, I think same exact point needs a stronger address.
If we pass ST-3, what can this region get from ST-3, what is the likelihood we will get it, and if it passes, what will those of us who agree with it will have to do to politically to be sure we do get it?
In a region this rich, with an economy whose strength both makes possible and demands a positive vote, and a population this inclined…this election should be the positive side’s to lose.
This election should be the positive side’s to lose.
I don’t know if Jon is for or against ST3 (and for what reasons), but his point (and I agree) is that Martin’s arguments are not something that will help the case for ST3. Just because home values have gone up does not mean people have benefited from this. I don’t know if rents have gone up at quite the same speed as house prices, but the two are related so even if you sold your house and realized the paper gain you have right now, you still have to pay more in rent.
As for “one rush hour trapped in traffic on I-5 – billed by at an attorney’s average rate”, most people are not attorneys. And most people won’t save an hour on I-5 from ST3 (unless you live in Snohomish and commute to Seattle).
There are good arguments to make for ST3 and it’s better if the pro-ST3 side sticks to them rather than come up with bad ones.
“Just because home values have gone up does not mean people have benefited from this.”
In fact, largely the opposite. Many people are reeling from the property tax increases that go along with increased home valuation. They often then complain that our property tax rate is too high and vote against levies.
In fact our property tax rate is only a few cents per $1000 higher than the nationwide median.
David, whatever location or actual count by the clock, your point could legitimately be that the higher one’s income and status, the less likely their work-life and compensation will lose a dime or a minute over traffic.
Or ever again in their lives punch a time clock, or whatever digital thing is called now. But fact that people who both have more time constraints and worse consequences for being late are the majority of the motionless, the more votes are at stake for or against ST-3.
Recalling a certain fish-truck spill (wonder what fish company or Alaskan town that should be named after, though liberal media has been covering up desperate attempts to keep the fish- oil-soaked birds from swarms of otters and elderly cod-liver-oil addicts), a wreck on I- or SR- anything reverberates.
Can e-mail you several years worth of Sound Transit Express schedule delay records, and apologies. And KIRO radio traffic reports keep cutting ever deeper into Dave Ross’s dwindling air-time. Not advocating we get drawn into years’-long anti-transit line on how transit doesn’t directly “cure congestion.”
But we can concentrate on giving people the chance not to get stuck in it. Meaning that in both campaign language and action, we find ways to start carrying passengers around jams soon as possible. Starting with existing inefficiency as easily cured as they are overdue. Like the permanently pathetic operation of the Downtown Seattle Transit Tunnel.
Since nobody knows for sure how long joint use is really going to be necessary, getting it straightened out starting tomorrow can be both a campaign promise before November, and a kept one after.
And since Sounder service to Olympia will be technically possible soon as Amtrak starts, Thurston County will have powerful electoral incentive to rejoin the region. For the first time, getting passengers visibly past everything blocking I-5 as far as Seattle. Without a single transit-lane fight the whole route.
Also. An all-day southbound transit lane between Northgate and the north end of Seattle CBD- if not Convention Place, then shortest lane-reserved arterial from I-5’s closest north end I-5 access. Which would make express service for Lynnwood and Everett seem much closer to voters in that subarea.
All examples of the approach I think will have most appeal to most voters.
So Mark, since you’ll be directly affected by the Link Tacoma extension, will you be inclined to use it? Will it bother you if the 59x buses are truncated at Tacoma Dome and Link might take 20 minutes longer than they do?
Except, keep in mind that by the time Link reaches Tacoma, those same buses will have been stuck in traffic on I-5 for some decades, and Sounder may be vastly improved.
I’d say that the house price argument cuts against ST3. Land keeps getting more expensive while electronics get ever cheaper. We’re a high-tech mecca, so why don’t we focus on applying technology to make better use of our existing roads and better signaling to better use our rails? Most of the trouble with our traffic is due to “phantom jams” that occur due to human reactions or to wrecks. Self-driving vehicles that talk to each other and react in microseconds could make those jams and wrecks go away. Throwing billions in tax money at last century’s train technology won’t bring anywhere near the same benefits, and that’s not even considering the lives saved through fewer crashes.
I suspect that many undecided voters will not focus on a final price tag or affordability. The final decision will rest of whether they think it is a valid public investment.
If ST3 supporters want this to pass, I think that they need to focus more on travel time benefits and farebox recovery ratios rather than focus on how much it will cost the elusive median person – which vary so widely by home value, location in the region and household side that the numbers don’t seem relevant.
If you start asking anyone to buy anything, talking about cost as the primary focus is a good way to have someone say no. Would you go to a restaurant more because of the prices on the menu or because of the savory quality of dishes?
Yeah! Just look at those big, multi-million dollar homes in the post pic! Those selfish rich people can afford this! Cuz all Seattleites live like that, right?
So, do you think the selfish rich people should get to keep the money and spend it on second pools, or do you think it should be spent on public works?
Actually they get to do anything they want to do with their money. It’s their money remember?
However, owning a house (or cars for that matter) doesn’t by definition make one rich… Indeed most home owners are very much in the red considering they usually only have equity in a fraction of the home (or are making payments on a vehicle).
My own experience is that I simply got tired of paying the same amount of rent that a reasonable mortgage payment could be. Does this make me rich?
I suspect a lot of the recent fluctuation upward in Seattle home prices is actually driven by previous investments in transit infrastructure. I certainly took the future light rail openings as well as bike access and bus access into account when choosing where to live. Businesses also do this in a cycle that increases property values. That’s a positive way to increase property values, by investing in the city. A negative and ultimately destructive way of doing it would be to say “I’ve got mine” – neglecting to invest in similar improvements elsewhere or to artificially restrict the housing supply. Sound Transit has been making high quality, valuable upgrades.
In cities like London and Moscow where most people don’t have a car and rely on the subway, rents around stations are higher than other areas. But in cities like Seattle where most people drive the effect is much less because transit proximity is not one of their primary factors. Its effect is often dwarfed by factors such as how close it is to downtown, how close to a freeway entrance, how desirable the neighborhood is, whether it has quirky things like Fremont, and whether it was majority white through the entire 20th century. So central Seattle is expensive with a bit of Link and frequent buses. Ballard is expensive even though it has nothing better than RapidRide D and the 44 that get bogged down in traffic. Rainier Valley is less expensive and development is slow even though it has four light rail stations.
Landlords are expecting premiums in the immediate 1-2 blocks around Link stations, because there’s pent-up demand to live there, and because it’s now become trendy to live there. But in the larger 10-20 minute walk circle, the effect of transit is drowned out by other factors. It will be interesting to see what happens to Roosevelt because it’s the only Seattle station not in an urban center and not in south Seattle. If we assume that Capitol Hill and the U-District are expensive because they’re large urban centers where most needs are within walking distance, and Northgate is headed that way because it’s also a dedicated urban center, then you might think, “I’ll go to Roosevelt where there are fewer things within walking distance, and that will translate into lower rents.” So Roosevelt is kind of like the Beacon Hill of the north side. But Roosevelt will probably get expensive. The question is, is that because of light rail or would it have happened anyway? With the population increasing so much and Roosevelt being a historically white non-redlined area between the U-District and Greenlake, it will inevitably get expensive. On the other hand, there are a significant number of people who really want to live within walking distance of a Link station, as I do. So Roosevelt probably will have a Link effect but it will be muted by other factors raising the price too.
The halo effect of a mile-long downtown streetcar might be limited to 1-2 blocks. Landlords advertise proximity to bus routes. I can’t believe Link’s not adding at least a few hundred dollars (probably more) in value a year up to a mile out from each station. A study in Charlotte saw effects like this in newly-opened stations: https://www.jtlu.org/index.php/jtlu/article/viewFile/261/242
Then you have to consider how job growth city-(region?)-wide would be stunted if it was expected to be much more difficult to physically get workers into the dense job centers. That’s also a source of upward pressure on land values.
Roosevelt is already expensive, but there’s plenty of headroom for more increases when the station opens.
Ballard–I think you chalk it up to White bourgeoisie cache (and a lot of good dining) in spite of the paucity of good transit options.
Rainier Valley–Crime reputation accounting for lower rents and slow development in spite of the good transit options.
The Ballard development was based partly on the promise of the monorail. When the monorail failed the development had enough momentum to keep going.
Rainier Valley is clearly due to the long lingering effects of redlining and the perception that you move down there you’ll be shot by gangs. Never mind that some STB people have lived there for years and haven’t been shot.
Mike, Glenn’s got it absolutely right about the Sounder right now, and LINK when it gets to Tacoma. At which time, I’ll probably switch to LINK.
Unless ST finally gets its own track the whole way, either eliminate grade crossings or make sure crossing gates always worked, and eliminate everything else with the word “issue” after it.
What I’m stressing is that until I-5 gets turned back into an Interstate highway with good bus lanes from its present condition as a parking lot where you can’t leave your car and get breakfast or groceries, regional transit’s stated priority should be to give voters the choice of being in motion.
Sounder service between Olympia and Seattle would be an emphatic start requiring nothing whatever on I-5 itself. And with its own fully reserved right of way when it opens, very likely reliably faster than Sounder, or really same time either way.
There’d probably still be reasons to keep the 594 terminating at Lakewood. Or at least in Downtown Tacoma. Though LINK will probably make the 574 to the Airport unnecessary.
As a refugee from the economethnic cleansing on Ballard, the demographic truth was that the place was last at its best when the workers on the fishing boats, and in the boat-yards and the small industries, actually lived in those little houses.
The “white” part is interesting. To shut up a lame and ignorant claim, this country’s treatment of its involuntary African immigrants did not have the exact same struggle Irish, Poles, Norwegians, and Swedes did, Seattle or anywhere else.
Because no group from Europe made it into the middle class by their own very hard work, and then had the decent life they’d earned taken from them by armed and legal force. Also the freedom, and their lives. Look up “The Reconstruction.”
For me, saddest thing about the Fall of Ballard was that a few years before, Ballard gained the most authentically modern-Scandinavian thing of all: an excellent East Indian restaurant. In the Norse lands and Finland, the least expensive and most delicious food. In the food court of Sweden’s main railroad station, “Stockholm Centralen”, a huge sign proclaims: “Swedish Food-Kabobs!”
And most infuriating was the new owner’s advertising booklet for the ruins of our home: Something like, “A long-time comfortable neighborhood.” Maybe printer accidentally left out the “Formerly.”
I think your credit to the Monorail was as much a joke as the project itself, except a lot funnier. Though has to be admitted that like with a certain candidacy, much energy was a protest against regional transit’s stubborn inattention to the West Side- which long predated the monorail.
Personally, with the exception a fine Kenyan restaurant, and of the Empire Cafe, whose top-echelon coffee justifies its existence anywhere, and the really nice public library, I’d only set a voluntary foot there if it was on the power pedal of the Route 7.
Because my bet is that not a one of my high school age passengers can afford to live there now that they’re forty. If the lower quality of Columbia City life and building condition had been remedied by decent working wages and conditions for these kids and their families- the fine Red Bear espresso would taste a whole lot better.
It’s hard to say since we don’t know the status Sounder will have once Link gets to Tacoma. However, I can tell you that someone I know was on a test train run by Amtrak and BN in the 1970s. At that time railroads had a bit more freedom to work their own speed limits during special test runs. He says that the Sumner to Seattle section was coverd at 90 mph.
Today, you can’t run over 79 mph unless you have cab signals, but PTC signals are on their way. You could very well be seeing Sounder speeds increase a bit.
The ST3 plan has Link travel time from Tacoma to Seattle at one hour. That’s twice the typical midday time by car. If, over the next 20 years, self-driving technology can make traffic flow reliably on I-5 then laying Link tracks beside I-5 will have been a colossal waste of land and tax dollars. Since Sounder already has rails to run on, why don’t we concentrate on using inexpensive communication technology to improve the use of those rails rather than building costly new ones.
I’m not sure what rocket ship you drive, but Google maps puts Tacona to Seattle at 44 minutes by Uber and 50 minutes by express bus.
The issue with the tracks already there is that BNSF charges a pile of money to use them, and they don’t go to the population centers along Highway 99.
One person taking up 17 feet of road is still going to take up 17 feet of road with self driving vehicles, no matter how it is controlled.
Self driving cars can get you safety, but it can’t get you capacity. The best PRT control system out there can only do one vehicle every half second, and that is an environment that has a far higher degree of control than a highway.
In fact, the closest thing we have to comparison has been the conversion of certain railway lines in Europe to sdvanced signaling systems. In general, this actually makes the capacity go down slightly.
Smart phones are great, but they don’t change the basics that you need letters to be a certain size to read them.
Self driving cars will be great too, but don’t expect them to change fundamental system characteristics.
If a northbound shoulder lane from the Nisqually Bridge to the weigh station were provided you wouldn’t even need to take the trains all the way into Olympia. Just make the transfer at DuPont.
It’s a LONG way out of the way to go via the brewery and buses are more flexible, something that means a lot in a sprawl city like Oly.
Should read: ” And with its own fully reserved right of way when it opens, LINK will very likely be reliably faster than Sounder, or really same time either way.” And: “I’d only set a voluntary foot in Columbia City if it was on the power pedal of the Route 7.”
Apologies. Also for not being able to see to it on “my watch” that along with the rest of this country’s actual work force, I could hire a personal editor who could now live comfortably in either Ballard or Columbia City and not be voting for ….pick your favorite “other one.”
To say that $54B isn’t really much money is insane.
First paragraph of the post:
“But anyway, $54 billion is a lot of money.”
Straw man much?
It’s not the money, it’s the myopia. The ST3 plan ignores self-driving technology that will change the face of transport in less than 25 years. Betting against that would be like betting against smartphones in 2000. Cut ST3 into smaller pieces and I’m all for parts of it. Keep it a bloated boondoggle that commits $2 billion of our transport spending for 25 years to last century’s technology and I’m dead-set against it. You should be too.
I agree, Seattle is a very wealthy city, but the fact of the matter is that the ST-3 proposal is also asking residents of areas that surround Seattle, such as south King County, Everett (especially south), and parts of Pierce County – none of which are “wealthy” – to pony up to pay for something that’s mostly in Seattle and where many won’t be alive to ride or won’t be able to continue to afford to live in this area to ride. Yes, values are going up, but when you sell, there’s a cost to that, and unless you move to somewhere much further away – which ST3 encourages, sprawl – chances are the costs of buying in those areas has risen as well. That is, the jump in King County home prices has spread north and south.
I’d invite the Seattle folks to take a gander down some of the streets in the suburbs, such as the wide open spaces of industrial area along Airport Road, where one can see the airport lights and pitch black at night, not the density of King County Boeing Field, or Casino Road in Everett, where you’ll see people carrying their purchases in backpacks or pushing grocery carts with them, for they cannot afford to buy a car. For others who have a car, it’s one car, shared between multiple people, and this measure will hit either of those examples squarely between property, sales, and vehicle taxes, and unlike in Seattle, service hours won’t be freed up in their areas by a single, permanent rail line that opens decades from now. In Everett, today’s commuters get zilch beyond waiting 20 or so years for light rail to take the long way (i.e., not I-5), while options that would arrive faster with money left for providing benefits for today’s commuters were deliberately ignored. Local (Everett Transit) bus service is, at best, intermittent with a total of 11 routes, 7 on Sundays, with weekday service ending before 9 (except for the #7) and weekend service that mostly resembles a work schedule, e.g. 830-530. A light rail line to appease the mostly Boeing workers of the future, primarily those that live in cities to the south, isn’t going to replace/free up much existing service, unlike, say, East Link, which will free up the ST #550 hours.
Since the article is about costs, it should be noted that the masters of spin at ST are, IMO, inflating the spending for Snohomish County to $9.3B/17% of the $54B you cite by including I-405 BRT, hoping that most people won’t notice that BRT level of service virtually already exists with their own route #532 and #535 to Bellevue, #560 south of there, thus what’s in ST-3 merely consolidates what’s already there. Similarly, on 522, the Metro #372 and ST #522 do similarly already.
Lastly, few if any of who run ST today will be running ST when the projects are, say, midway through their completion, should this proposal pass. There is no guarantee that there won’t be problems in carrying out the projects: just ask Seattle’s utility customers on that one. This proposal gives bureaucrats and public officials of today and those hired in the future a blank check with zero accountability, somewhat like never having a performance review for 25 years. That’s something that any rational person could “get a handle on.”
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