It’s “interesting” the Seattle Times chose to put the news “Sound Transit takes out loan” in “Around the Northwest” on page B2, next to the obituaries on Sunday’s paper. The only reason I noticed it was my wife, who always reads the obituaries and is “aware” of my ST interests, pointed it out. It’s not clear why the Seattle Times staff selected this location. (It was paired with other “important” news “Witnesses catch stabbing suspect”.)
The $1.33B loan has a rate of 2.4 percent interest and won’t be paid off until 2058. Doing so, according to my amortization calculator, will require an annual payment of $48,972,904. One would have thought the news ST was committing to spend nearly $50M a year of the area’s transportation funds for 44 years would have merited more than a B2 page article next to the obituaries. Particularly since ST 2015 budgets projected the total revenue from all their passenger fares for the year would only be $58M, with only $16M anticipated from light rail.
It’s clear why ST needs the money. Their 2015 projected expenses, $1.213B, exceeded expected revenue, $933M, by $279M. Thus it’s likely they’ll need additional loans within the next few years since ST expenses will increase dramatically with major expenditures on East Link and other Prop 1 extensions. The fact that other revenues aren’t likely to increase substantially “probably” explains why they’ve recently announced plans to ask voters in 2016 to approve property taxes for needed funds.
As a result, when all of the Prop 1 light rail extensions are finally completed in 2023, the area's taxpayers will likely be forced to pay a minimum of $50M and more likely twice that amount for 35 years to pay off the construction loans. Unfortunately those millions are only a part of funds ST will need to meet future revenue shortfalls.
ST has two problems. The first is light rail fare box revenue will be minimal. More than 80% of light rail riders will be commuters who transfer from buses for one reason or another. (The East Link Integrated Transit System forces all I-90 transit riders to transfer to buses for the commute into and out of Seattle.) Since it’s unlikely they’ll be forced to pay two tolls for their commute, the Prop 1 extensions will add a minimal amount to fare box revenue.
However, the fare-box-revenue problem pales in comparison to ST’s second problem, the increased operating costs for the Prop 1 extensions. A light rail car costs ST $23 per mile to operate (2015 budget). ST plans to route East Link’s 4-car trains the 77 miles to Lynnwood and back to Redmond will cost them $7,084 per trip. With 121 trips each weekday and half that on weekends, East Link will provide 726 trips per week, 37,752 trips per year, with operating costs of $267M. (It’s hardly worth mentioning depreciation costs will add another $30M annually.) East Link alone will require more than a $250M subsidy to cover the shortfall between operating costs and fare box revenue.
The bottom line is ST’s current “quiet” loan is only the beginning of their financial problems. Similar loans or other financial sources are going to be needed to create a light rail system that, in the end, will be too expensive to operate. The fact light rail will do essentially nothing to ease I-5 congestion and actually increases I-90 congestion simply adds to the insanity.