Sound Transit Realignment Needs Visibility

 For years Sound Transit has provided access to videos of Sound Transit Board meetings.  That ended with their February Board Meeting video.  It's particularly unfortunate in view of recent Board meeting transactions.  Sound Transit's April 22 presentation of their "Financial Plan Update, April 2021" to the Board showed increased costs had resulted in needed "Tax Based Debt" exceeding money they could borrow, "Agency Debt Capacity," by $7.9B.  That "Tax Based Debt" in 2042, when ST3 taxes ended, had increased from $17B in their 2019 budget to $34B in 2021.

Again, it's "unfortunate" no videos of the Board's response are available.  Apparently Board members' concern over increased costs resulted in Sound Transit Board Chair Kent Keel's April 30th letter to  Sound Transit Board and to CEO Rogoff.  It detailed the need to "not cut and run" but to delay projects, "Realignment", until they could borrow the funds needed.  Chair Keel planned to present his "Realignment" proposal in July.  Council members Constantine, Durkan, and Balducci advocated postponing "Realignment" for a year.

Chair Keel's realignment proposal was presumably the basis for the June 24th Sound Transit Board Meeting Agenda, "Reports to the Board, Realignment Update and Chair's Proposal".  Most residents probably had no idea what that agenda item meant.  The April 22 presentation to the Board that had detailed how Sound Transit planned to implement the realignment is no longer available on their website.

Board Chair Kent Keel's April 30 three-page letter to Sound Transt Board and CEO Rogoff detailing the reasons for proceeding with the realignments is also no longer available.  This lack of visibility means very few residents recognize that the "Realignment Update and Chair's Proposal", if approved, will result in light rail construction extending well beyond the 2041 completing date.

Again, the lack of any video precludes residents knowing Board members' response to Keel's proposal.  It  also prevents area's commuters from knowing which projects will be delayed and for how long.  What will their "Tax Based Debt" be when realigned extensions are completed and how do they intend to pay for the extensions when ST3 taxes end in 2042?

A more "practicable" response would be Board members recognize the legislature enabled voters approve the taxes not the extensions in the 2016 ST3 vote.  The taxes, that would fund the $54B in 2016 allowed a $96B expansion expenditure in CEO Rogoff's 2019 budget.  Sound Transit and the Board should use their claimed "Project Scope Discipline" to better spend the $96B.  Come up with a "realignment that ends "Tax Based Debt" in 2041 when ST3 taxes end.  Part of the realignment should include funds to expedite, not delay, the West Seattle-to-Ballard link.  Those commuter, whose 70% approval enabled ST3 should benefit sooner rather than later.

Again very few residents are aware what Sound Transit's plans today could result in billions in construction costs and huge debt service payments 20 years and more from now.  Future residents deserve better.   The Seattle Times Traffic Lab ignores the issue. My King County Executive candidacy is, as with my previous candidacies, is an attempt to make up for their failure. 

Sound Transit Board Rejects April Budget???

The previous post detailed Sound Transit's Long Range Plan in their April 22, 2021 "Financial Plan Update" included a "Financial Plan Unaffordable" chart which classified $7.9B as "unfunded expenditures" because spending exceeded the amount they could borrow.  The Sound Transit 3 voters approved in 2016 resulted from legislature enabling Sound Transit impose property, sales, and motor vehicle excise taxes through 2041.  

Voters were told the taxes would be used to fund Sound Transit's $54.8B light rail expansion of the existing Link light rail system  to Tacoma, Federal Way, Everett and Issaquah as well as to Seattle neighborhoods Ballard and West Seattle. Pierce County voted against the taxes. However, voters who approved the initiative approved the ST3 taxes not the extensions.

It was the Sound Transit Board that approved the extensions when, three years later, they approved CEO Peter Rogoff's  2019 Budget Long Range Plan for 2017-2041.   The budget increased ST3 expenditures from $54B to $96B, completed all the ST3 extensions by 2041, but left Sound Transit area residents with a $17B "Tax based debt" in 2042 when ST3 taxes ended.  It wasn't clear how they intended to find willing lenders without any taxes to make debt service payments beyond 2041.  However the Board not only approved Rogoff's budget they renewed his contract for three years with a hefty raise.

CEO Rogoff's April 2021 budget increased spending to where the needed "Tax Based Debt" exceeded money they could borrow, "Agency Debt Capacity".  The shortfall began in 2030 and increased to $7.9B from 2035 through 2041.  The increased spending also resulted in 2041 "Tax Based Debt" increasing from $17B in 2019 budget to $34B in the April 2021 update.  Again with no ST3 taxes to make debt service payments after 2041.  

Sound Transit "concerns" led to the following in chart, "Key Considerations" in the April 22 update:

Project scope discipline remains imperative

Typical of Sound Transit, a second April presentation detailing their response, failed to include any "Project scope discipline" response.  It would have reduced needed debt by eliminating some of the extensions.  Instead choosing "Realignment" that delayed the extensions to when financing was available. 

The presentation detailed a procedure by which the Sound Transit Board would approve the schedules for 8 "Projects".  A Project's schedule was determined by which of 4 Tiers it was assigned.  Tier 1 had no delay while Tier 4 projects were delayed for up to 10 years.   It wasn't clear what criteria Sound Transit would use to assign a project to a Tier.  

However construction delays on both Tier 3 and Tier 4 projects extended construction spending well beyond the 2041 cutoff date for ST3 taxes.  Thus construction costs would add to the unfunded debt service payments when ST3 taxes ended.  The presentation scheduled Sound Transit completing the realignment plan in July.

Sound Transit no longer provides videos of Board meetings so there is no record of the board's response.  One indication is an April 30th letter from Sound Transit Board Chair, Kent Keel, responding to an April 22 letter from Board members Constantine, Durkan, and Balducci.  They opposed the July realignment completion date, suggesting "we postpone action until next July".

His letter in response included the following "interesting" comments:

As local leaders, we know that when things get tough, we cannot stop or cut and run we must find a way to make it happen.

We have known our capital program to be unaffordable for more than a year

A delay beyond July could undermine our ability to maximize assistance from the federal government

Sound Transit is the nation's largest TIFIA borrower.

Again, Sound Transit stopped archiving videos of Board meetings in February so there's no way to view members response to the April budget.  However the comments in the letter suggest several issues.(Sound Transit's "Realignment Proposal" and Chair Kent Keel's April 30 response are no longer available on their website.)

The comment "we cannot stop or cut and run, we must find a way to make it happen" indicates many Board members rejected the large spending increase in the April 2021 budget.  Sound Transit spent hundreds of millions last year on a capital programs they knew were "unaffordable".  (Again Sound Transit's definition of "unaffordable" was not that ST3 taxes couldn't fund it, but they couldn't borrow the money.) The April 22 letter from Board members Constantine, Durkan, and Balducci  urging postponing the July realignment will result in hundreds of millions more spent on "unaffordable" extensions and a year's delay in exposing the magnitude of the problem. 

Chair Kent Keel's letter called Sound Transit's July realignment, "an attempt to demonstrate the Board is acting responsibly" rather than "cutting and running". Instead it will likely demonstrate Sound Transit still doesn't recognize the need for "Project scope discipline" to meet ST3 tax revenue. 

Sound Transit has already wasted billions on extensions beyond UW, SeaTac, and across I-90 Bridge that will do nothing to increase transit capacity into Seattle.  They need to terminate further extensions that won't increase capacity and use available ST3 funds to expedite extension to West Seattle and Ballad that will.  (The $96B 2019 budget estimate from ST3 taxes is nearly twice the $54B in 2016 vote.)

The Sound Transit Board (and lenders) needs to recognize the voters approved the taxes not the extensions.  They need to end the need for "Tax Based Debt" in 2042 with no ST3 taxes to pay.  

Keel's letter suggests Sound Transit Board dissatisfaction with April budget.  They and the public deserve a July "Realignment" this year that will recognize the limits of ST3 taxes..    My goal as King County Executive candidate is to expose why it should not be delayed.

Sound Transit's April Budget Debacle

 The previous post detailed how CEO Rogoff's December 2020 version of Sound Transit's 2021 Financial Plan & Adopted Budget included a Long Range budget plan to spend $98B on a transit system expansion by 2041 that ignored the end of ST3 taxes in 2042 needed to pay for the expansion.

It's the result of Sound Transit's definition of "affordable".  Voters presumably voted to approve ST3 in 2016 because they believed the $54B would pay for the transit system expansion in Sound Transit's ST3 Map.  This post details the absurdity of Sound Transit's April 2021 budget,  the latest update to the debacle.

The first demonstration of Sound Transit's "affordable"definition was you could "borrow the money" was CEO Peter Rogoff's 2019 Budget Long Range Plan for 2017-2041.  It detailed his plan to use ST3 taxes to spend $96B on the largest transportation system expansion in the country" by 2041.  However, while the extensions would be completed by 2041, Rogoff's budget left $17B in "Tax Based Debt"in 2042 with no taxes to pay for it.  (The Sound Transit Board responded by renewing his contract for another three years with a hefty raise)

Sound Transit's first example of their concern for "affordability" was the October 2020 presentation to the board's "Finance and Audit Committee".  It included Fall 2019 and Fall 2020 projects showing  the pandemic's effect on "Outstanding Debt" needed and "Debt Capacity" available.

The purported concern was the pandemic had reduced the "debt capacity".  However, it was the increase in "Outstanding Debt" (i.e. cost) between the two years that made the 2020 budget"unaffordable".  The result was a chart, "Financial Plan unaffordable under current forecasts" with $2.7B in "Unfunded expenditures" in "2020 fall financial projections"

The solution was a "realignment" consisting of a 4-year program delay that dramatically reduced debt requirements.  With the delay, October's "Projected Amount of Outstanding Debt" didn't increase until 2029 and remained well below the pandemic's reduced "Debt Capacity" throughout 2017-2041.

All that changed with Sound Transit's Long Range Plan in the April 22, 2021 "Financial Plan Update" to the Board.  The "Unfunded expenditures" in the "Financial Plan Unaffordable" chart increased from $2.7B to $7.9B.  In 6 months, Sound Transit's estimate of 2041 debt needed (again cost) increased from $20B to 34B, double the 2019 2041 debt.  (It apparently had been even higher during the period as the $7.9B was "narrower" than an earlier $11.5B estimate)

Sound Transit's response to the increased debt in the April 2021 update was a chart, "Key Considerations" with the following:

Project scope discipline remains imperative

The irony is if CEO Rogoff had demonstrated a modicum of competence he would have used "Project scope discipline" in his 2019 Long Range Plan to limit light rail extension to what ST3 funding could fund rather than extensions he currently can't even borrow to fund.  My goal as King County Executive candidate is again, not to win, but to expose this debacle, something the Seattle Times assiduously refuses to do.

Sound Transit Ignores "End of ST3 Funding in 2041"

 One of the reasons I filed as a candidate for King County Executive this year was it gave me the opportunity to expose problems with Sound Transit's long-range financial plans.  Something that began with Sound Transit CEO Rogoff's "Long-Range Financial Plan" in their "2019 Financial Plan and Adopted Budget".

That budget prompted a November 4, 2018 post on this blog, "Sound Transit 2019 Budget Fantasy" with the following:

The 2017-2041 plan in Sound Transit's proposed 2019 Budget should be a "wake-up' call for those who believe Sound Transit's ST3 "Prop 1 and beyond" light rail extensions will reduce congestion on the area's roadways.  It's just the latest indication Sound Transit CEO Rogoff's plan to spend $96 billion over the next 23 years continuing Dow Constantine's Sound Transit Board decade of refusing to recognize the reality of effective public transit.  That what Rogoff calls their new mission statement , "We are connecting more people to more places," was instead sheer fantasy.

The 2019 budget's long-range financial plan to spend $96 billion resulted in "Tax-Backed Debt" increasing from $5.5 billion in 2017 to $17 billion in 2041.  The 2019 budget estimate for 2041 included $1 billion in annual debt service payments and $2.4 billion in expenditures.  Those payments were funded by estimated revenue in 2041 of $4.3 billion, with $3.7 billion from tax revenue, $480 million from fare revenue and $100 million from grants.

The 2019 budget "neglected" to provide any details as to how they intended to fund the debt or expenditures when ST3 tax revenue ended in 2042.  The budget also ignored the problem of finding "lenders" for the $17 billion debt in 2041, when the taxes needed to "service the debt" ended in 2042.

Sound Transit's presentation of the Long-Range Financial Plan at last year's October 14th meeting with the Sound Transit Board's "Finance and Audit Committee" also ignored the issue.  It concluded the COVID-19 pandemic and cost increases necessitated a "realignment" consisting of a 4-year delay to "make program affordable".  Their criteria being the "Projected Amount of Outstanding Debt" needed should not exceed the "Debt Capacity" available.   Again, Sound Transit ignored potential concerns with finding the "Debt Capacity" from those willing to provide the loans with ST3 tax revenue ending in 2042.

The October presentation concluded the 4-year delay allowed Sound Transit to delay increasing "Projected Amount of Outstanding Debt" until 2029.  However, the pandemic response added to the potential "Lack of Debt Capacity" issue by increasing "Outstanding Debt" in 2041 to $20 billion.

The Long Range Financial Plan in Sound Transit's December 2020, "2021 Financial Plan and Adopted Budget" exacerbated the problem.  Between the October presentation and the December budget the need for increased "Outstanding Debt" began five years sooner, in 2024, not 2029. Also the December budget "allowed" the need for increasing debt to exceed "debt capacity" from 2031 through 2040.  What was "unaffordable" in October was instead "leaving a portion of expenditures unfunded".  "Outstanding Debt" in 2041 increased from $20 billion in October to $25 billion in December budget.  It's not clear what prompted the changes between the two budgets.

The bottom line is previous posts have detailed Sound Transit's decade-long failure to deal with the area's congestion.  This post details their failure to recognize the problems with funding that debacle.  CEO Rogoff plans to spend $98 billion by 2041 will result in $25 billion in "Tax Backed Debt" with no taxes to pay for it in 2042 when ST3 funding ends.  Yet the Seattle Times Traffic Lab, the paper's project to "dig into the issues", continues to abet rather than critique them.

That's why I'm the "lesser known" candidate this year for King County Executive".