City can't foot the bill for streetcar, council says

By Bob Young
Seattle Times staff reporter

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The council also wants to study the benefits property owners would get from a South Lake Union streetcar line before approving the project. That study might show that property owners near the line could reap benefits in increased property values that far exceed the $25 million Mayor Greg Nickels has proposed they spend to build a streetcar. Such a conclusion, in turn, could lead the council to ask for more private financing.

A majority of council members announced the conditions yesterday. The full council will probably vote Aug. 16 on the conditions, said Transportation Committee Chairman Richard Conlin.

Council members said they like the idea of new streetcars, particularly if rail lines were extended to the Chinatown International, Central and University districts.

But they couldn't justify city spending on a South Lake Union streetcar given the city's budget problems and other pressing needs. Conlin said "scarce city resources must be conserved for longstanding needs in other neighborhoods and the challenges of maintaining transportation infrastructure."

A recent city-sponsored study found that Seattle had a $500 million maintenance backlog for its streets, sidewalks and bridges. Meanwhile, recent reports from council staff members have raised concerns about the proposed 1.3-mile South Lake Union streetcar line. Those reports said the streetcar would start with relatively few riders, wouldn't be very helpful to the neighborhood's workers and probably was not needed to spur development in the area, which is being led by Paul Allen's company, Vulcan.

The council's conditions "aren't a poison pill" intended to kill the project but rather a "reality pill" reflecting budget pressures, Councilman Nick Licata said.

Streetcar conditions South Lake Union line A majority of Seattle City Council members agreed they would approve building a South Lake Union streetcar line only under the following conditions: • No city money can be spent on the construction and operation of the streetcar. The only exception would be assessments on city property that are near the streetcar line and part of a special taxing district called a "local improvement district." • An overall financing plan, including a plan for cost overruns, must be developed and reviewed. Needed grants must be secured. • An existing transit agency is willing, able and legally committed to operating and maintaining the streetcar. • If Metro runs or contributes to running a streetcar, it will not reduce new bus service that the city is entitled to. • The Seattle Planning Commission and Seattle Design Commission will review preliminary design and engineering. Source: Seattle City Council

Streetcar critic John Fox, head of the Seattle Displacement Coalition, said he was "floored" by the council's tough stance.

"This effectively ties their (streetcar supporters') hands," Fox said. "Where are they going to get their money from?"

That's a good question, said Marianne Bichsel, spokeswoman for Nickels, who has pushed hard for a South Lake Union streetcar. But Bichsel sounded upbeat about the council's action.

"It really isn't a poison pill," she said. "The council is showing a willingness to take the next step. And part of that is to figure out" how to build and operate the line without city money. Under the council's conditions, the only city money that could be used for the streetcar would be assessments on city property that are near the streetcar line and part of a special taxing district called a "local improvement district."

As it stands now, many private-property owners have committed to spending a total of $25 million to build the line. The city has secured or applied for $17.5 million more in state and federal grants. That leaves a $2.5 million gap in the proposed construction cost. In addition, the streetcar is projected to cost at least $1.4 million a year to operate.

Jim Falconer, head of a nonprofit group called Build The Streetcar, said he would need to study the council's conditions before he could assess their effect on a South Lake Union line.

Vulcan spokesman Michael Nank said the company would work with the council and the streetcar group to move the project forward.

The benefits study is aimed at getting a more-precise estimate on how property values would be increased near the streetcar line. Council members said it was the most fair, accurate and legally defensible way to impose a special tax on property owners. "It's insurance we need to have," Councilwoman Jean Godden said.

Nickels and the streetcar group had supported a plan in which property owners would pay according to their proximity to the streetcar line and the size of their property. Several experts said the mayor's proposal could prompt complaints that properties were unfairly taxed for the streetcar.

An appraiser hired by the mayor said the plan might result in "an inequitable method of assessment" and could "put the city at risk for construction cost overruns and costs to mitigate successful challenges by property owners."

The same appraiser said properties near Portland's new streetcar line saw their values increase by 2 to 10 percent. A council analyst estimated that a 2 percent increase in the value of South Lake Union properties near the proposed streetcar would amount to a $42 million benefit.

The council analyst concluded a South Lake Union streetcar would draw about one-fourth as many riders as the Portland streetcar, which travels through several densely populated neighborhoods.

Based on Portland's experience, the analyst also concluded that a South Lake Union streetcar would serve as a "selling point" for neighborhood developers more than as a catalyst for new jobs, industries and housing, as Nickels had claimed.

In the end, Conlin said, "it is hard to argue that the South Lake Union streetcar is essential to developing" South Lake Union and that it should be viewed more as a transportation and development amenity than a necessity.

Bob Young: 206-464-2174 or byoung@seattletimes.com

Copyright © 2004 The Seattle Times Company

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