Riders gather to board light rail at the Capitol Hill Station in Seattle during the station’s first day in March. (Jeremy Dwyer-Lundgren / Seattle Weekly)

Riders gather to board light rail at the Capitol Hill Station in Seattle during the station’s first day in March. (Jeremy Dwyer-Lundgren / Seattle Weekly)

How was the timeline of ST3 shortened? Creative borrowing

This is part of a Sound Publishing special report on the Sound Transit 3 expansion proposal, which is on the ballot on Nov. 8. More

Faster. That’s the number-one thing Sound Transit heard from critics after releasing a draft version of its ST3 expansion plan in March. If passed, the then-$50 billion project would have upgraded our transit network with lots more light rail and commuter trains, among other things, but many of the target dates were too far-flung. The Ballard line wouldn’t be done until 2038, for instance, and Everett wouldn’t see a train until 2041.

So when the regional transit agency announced in June that it had moved up the timelines on eight different projects — speeding them up by five years in some cases — there was much rejoicing in Seattle’s urbanist enclaves and transit-hungry suburbs alike.

But cork the champagne for a second and put on your thinking cap. How did they move the timelines up?

We put the question to Sound Transit spokesperson Geoff Patrick. The answer: finance.

Yes, usury! The dark and arcane art that gave us the housing-market bubble and the credit-card economy — this is the magic that will deliver fast transit to the Puget Sound region, faster. “Working closely with a financial team that included outside consultants, we were able to leverage bonding to borrow about $4 billion in addition to what we’d assumed,” says Patrick. “By increasing the funding by that $4 billion, we were able to move up the timelines.” As a result, the overall ST3 budget rose from $50 billion to $53.8 billion.

In other words, some hired-gun economists put their heads together and found a way to materialize $4 billion out of thin air by borrowing it via bonds (that is, loans from regular citizens to the government). In the long run, of course, taxpayers have to pay back those bonds with interest, but in the relatively short term — in this case, a quarter-century — this economic magic trick frees enough cash flow to allow Sound Transit to break ground on eight of its projects years earlier than planned.

Cash flow: That’s the keyword here. The whole dilemma of finance, after all, is balancing the value of getting money you can invest in transit now (which will pay dividends to individuals and the economy as the Puget Sound area gets more and more crowded) against the price of borrowing (that is, interest). Functional governments can usually borrow money on the cheap because it’s a safe investment: It’s hard for a debtor to skip town when the debtor is a town. On the other hand, there’s a limit to how much even a municipality can borrow before it has so much debt — and so much associated risk of default — that its credit score gets downgraded and borrowing money via bonds becomes more expensive. This is what famously happened to our country’s credit score during the 2011 debt crisis.

In this case, Patrick says, the eggheads of fortune concluded that borrowing an extra $4 billion wouldn’t trigger a credit-score downgrade. So while it’s not free money — taxpayers have to pay it back eventually — it is cheap money.

Patrick explains how that cheap $4 billion can speed up eight different ST3 capital projects by 30 years cumulatively. “There’s two main factors in how long it takes to build a project,” he says. “First, let’s say money’s no object, it’s just how long it will take to build something. You have to go through several steps.” In some cases, project timelines — without accounting for any kind of legal delays — can take up to 15 years, he says. “[You] go through all the steps of alternatives analysis and environmental review, and then preliminary engineering takes you up to 30 percent design completion, then you go to final design — that’s 100 percent — and then you have to build it and open it,” says Patrick. “So it’s a significant time period with any major mass-transit project.

“Factor two is you also have to take into account your cash flow,” he says. That means making sure the right amount of money is available at the right time to pay for pencils, asphalt, and whatever else the builder gnomes of the regional transit district need to complete their transit mission. “Part of the challenge that we had with the draft measure is the cash flow was such that some projects were occurring later in the timeline than we wanted to, just by virtue of cash flow,” says Patrick. “In other words, [projects were delayed] not by how long it would take to build them, but by revenues.”

So you want to borrow revenues to speed them up. But doesn’t that add risk? One of the main talking points against ST3 — as articulated by the reliably anti-transit Seattle Times editorial board — is that it has too big a budget and too little oversight. On the other hand, the Times and the No on ST3 campaign website (which entirely relies on that Times editorial as its supporting “research”) are mostly upset about ST3 increasing taxes on property and cars.

Patrick says bonding is not particularly risky. “The Sound Transit 3 plan is built using direct funding for about 70 percent of the project cost and borrowing for about 30 percent of the project cost. In the greater scheme of things nationally, that kind of balance is very strong. There’s not an overextension, as far as the amount that’s appropriate to borrow. We’re able to do it with the assumption of maintaining our — outstanding, frankly — credit ratings.”

So are these new dates real? Can ST3 deliver Everett light rail five years sooner? Well, we who inhabit the region all know how unreliable infrastructure projects are. Sometimes they finish on time, but sometimes they really don’t. Patrick says that ST3’s updated dates were always deliverable in terms of construction timelines. The problem was cash flow and timing. Now that those eggheads figured out how to squeeze another $4 billion out of thin air, there’s no built-in reason why ST3 shouldn’t be able to keep the dates that it promises.

Casey Jaywork: 206-467-4332; cjaywork@seattleweekly.com.

Stories in this special report

Is Sound Transit 3 the $54 billion answer to our congestion?

What Snohomish County would pay — and what ST3 would deliver

ST3 skepticism in Snohomish County might be irrelevant

Sound Transit CEO Peter Rogoff takes on critics of ST3

How was the timeline of ST3 shortened? Creative borrowing

Meet the constituencies for and against Sound Transit’s plan

Not a smooth ride: A brief history of Puget Sound light rail

ST3 is more than rail: A look at bus rapid transit

Talk to us

More in Local News

Kevin Duncan puts his ballot in the ballot drop box outside of the Arlington Library on Tuesday, Feb. 11, 2020 in Arlington, Wash. The Arlington school District has three measures on the February ballot, including one to replace Post Middle School. (Olivia Vanni / The Herald)
High court: State must pay for some, not all, ballot boxes

Snohomish County sued to recoup the cost of adding 21 ballot drop boxes to comply with a 2017 law.

Les Parks, left, talks with his daughter, Kenzi Parks, after a laser etched drum finished printing Tuesday afternoon at his home in Tulalip, Washington on January 25, 2022. (Kevin Clark / The Herald)
After 1,200 positive cases, Tulalip Tribes face ‘deepest fear’

“We used to be big on family doings — not anymore.” On top of a cultural toll, the pandemic has exposed health inequities.

Stevens Pass on Dec. 30, 2021.  (Kevin Clark / Herald file)
Amid rocky ski season with 300 complaints, Stevens Pass offers deal

Vail Resorts said returning customers can get discounts for 2022-23 if they renew their passes by May 30.

A car drives by Everett Station where Everett Mayor Cassie Franklin's proposal for its ARPA funds includes funding a child care center at station. (Olivia Vanni / The Herald) 20211118
Council approves lease for Bezos Academy at Everett Station

The preschool will be tuition-free. “I just know how darned important it is,” Councilmember Liz Vogeli said.

‘Armed and dangerous’ carjacking suspect last seen in Edmonds

A man in a stolen truck led troopers on a chase. He crashed, assaulted another driver and took that car.

Sen. Ron Muzzall, R-Oak Harbor, left, speaks on the floor of the Senate, Wednesday, Jan. 26, 2022, at the Capitol in Olympia, Wash., during debate on a measure that would delay implementation of a long-term care program and the payroll tax that pays for it. The Senate passed the measure, which was passed by the House last week, and Gov. Jay Inslee is expected to sign the measure on Friday. (AP Photo/Ted S. Warren)
Delay of Washington’s long-term-care program signed into law

The bill addresses concerns about the program’s solvency and criticism about elements of the underlying law.

Police: Marysville Pilchuck student arrested for wielding knife

Neither of the students involved in the Wednesday morning fight was injured, police reported.

Police looking for Mukilteo bank robber, seeking tips

The man appeared to be in his late 20s or early 30s, white, slender, about 5-foot-8, with dark blond hair.

Registered nurse Estella Wilmarth tends to a patient in the acute care unit of Harborview Medical Center, Friday, Jan. 14, 2022, in Seattle. Washington Gov. Jay Inslee is deploying 100 members of the state National Guard to hospitals across the state amid staff shortages due to an omicron-fueled spike in COVID-19 hospitalizations. Inslee announced Thursday that teams will be deployed to assist four overcrowded emergency departments at hospitals in Everett, Yakima, Wenatchee and Spokane, and that testing teams will be based at hospitals in Olympia, Richland, Seattle and Tacoma. (AP Photo/Elaine Thompson)
Past the omicron peak? Snohomish County’s COVID cases declining

Hospitalizations are still a concern, however, and infections in Eastern Washington and Idaho could have ripple effects here.

Most Read