Viaduct tunnel cost offset by other gains, study says

In a report critics say is high on assumptions but low on facts, a consultant hired by the Seattle City Council suggests that replacing the Alaskan Way Viaduct with a tunnel could bring $8 billion in increased tourist spending and property value.

But even the consultant, Greg Easton of Property Counselors, acknowledged yesterday that the $5,000 report was not complete. For example, he didn't calculate the business losses during construction.

"We were just trying to look at the information available," said Easton. "There's lots of work to be done. The message is the benefit of replacing the viaduct [with a tunnel] exceeds the costs."

"There's nothing here. It's an out-and-out sales job," said Councilman Nick Licata, who was critical of the report. "If you call this a report, it wouldn't pass muster in any college course I know. It's very faulty and has very shallow reported assumptions."

But Councilman Peter Steinbrueck disagreed and said the report reinforces the city's contention that it makes financial sense to replace the viaduct with a tunnel.

Late last year the city and the state Department of Transportation (DOT) announced that a tunnel was the preferred alternative for replacing the viaduct, but rebuilding the viaduct is also on the table.

A tunnel could cost at least $1 billion more than the rebuild option — money the city will have to find if it wants a tunnel. A rebuild is estimated to cost $2.7 billion to $3.2 billion, while the tunnel would cost $3.4 billion to $4.1 billion.

Much of the information in Easton's report came from a DOT-funded study by Berk and Associates that evaluated economic benefits for the viaduct project.

That report said that if the viaduct is not replaced, increased traffic congestion will cost 10.4 million hours of delay each year and $190 million.

Over 20 years, the report said, if the viaduct is not replaced, the cost of increased regional congestion would be $3.2 billion. "The congestion and delay costs of not replacing the viaduct's transportation capacity are greater than the costs of rebuilding it," Berk said.

The study also said that a tunnel along Seattle's central waterfront would add up to $1 billion a year over the next 25 years in enhanced value of the waterfront. It also would bring up to $1 billion in new visitor spending and up to $960 million in increased property values.

Easton said the enhanced value was calculated by assuming 20 to 30 million local visits each year, at $2 a visit, and a 1 percent increase in out-of-town visitors.

He said the added property value would come from improved views and less noise, which can lead to higher rents and higher property sales.

Easton looked at other projects around the country where similar projects led to financial bonanzas. He said removing Harbor Drive in Portland led to property-value increases of 10 percent a year, and removing the Embarcadero along the San Francisco Bay waterfront increased property values by 300 percent.

Councilman Jim Compton said the study didn't include the thousands of jobs that would be created if the viaduct is replaced. "It's butt-ugly," he said of the viaduct. "I don't want to see it on my waterfront. I want open breathing green space."

But Licata said the study failed to note that a tunnel would take 50 percent longer to pay back its costs than the rebuild option. He said even if the city creates a local improvement district to assess the waterfront-property owners, as has been suggested, the payback would only be about $50 million a year.

Licata said if the city can't come up with enough money to build a tunnel by the fall of next year, it should do the rebuild.

"I absolutely disagree," said Steinbrueck. "I would take to the streets before I'd see an aerial rebuild. I'd rather not rebuild at all if that were the choice and let the traffic go someplace else."

Steinbrueck acknowledged the report is not conclusive. "This was more an indication of potential benefits to the city," he said. "The hard analysis has not been calculated."

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com