State treasurer says halt monorail

With Seattle's monorail headed for a contract signing next month, state Treasurer Mike Murphy yesterday urged local officials to shut the project down.

Murphy is worried because the Seattle Monorail Project's financing plan — which includes 40-year bonds, deferred interest payments and some high-interest "junk bonds" — would require $11.4 billion in taxes through the year 2053 to fund a $2.1 billion elevated train system.

"I'm hoping good sense will prevail at the monorail board and they will stop dead in their tracks," Murphy said in an interview.

He explained: "The average guy can't afford a Ferrari, because he can't afford it. There should be somebody at the monorail saying we can't afford this thing. The numbers keep getting bigger and bigger. To finance something at 5-½ times the construction value is totally ludicrous."

Joel Horn, monorail executive director, says the true burden is much lighter than the numbers suggest, because as a result of inflation, a dollar four decades from now will be worth a dime in today's money.

The agency must push interest costs onto future generations because of continuing shortages in a citywide car-tab tax to build the line.

"The benefits of the monorail will go on for over 100 years," Horn said.

City Council members, who must grant permits before construction can begin, were startled at new figures the Seattle Monorail Project (SMP) released this week. Several said they are awaiting an independent financial report in about a month, before judging whether the project is feasible.

The Greater Seattle Chamber of Commerce yesterday sent a letter to City Council President Jan Drago, a monorail supporter, expressing "serious doubts that a rigorous and in-depth financial analysis can be adequately conducted in 30 days."

None of the nine council members said yesterday they wanted to kill the monorail, which Seattleites have approved in four different votes.

Councilman Richard McIver, a monorail skeptic, called the latest figures "extremely disturbing." But McIver said he would respect the will of voters, as long as the city is not held liable for any monorail problems. "It's not my place to overturn the votes. I'm not going to lay my body across the track," he said.

An agreement last year between SMP and the City Council requires the council to certify that SMP can afford to build the line — but the council's review covers only the construction period and the first five years of operations. The line is scheduled to open in December 2010.

State Sen. Jeanne Kohl-Welles, a nonvoting member of the monorail board, said recent messages to SMP board members are still running 2-to-1 in favor of building the Green Line, a 14-mile route linking Ballard, Seattle Center, downtown and West Seattle. A contract vote by the monorail board is planned July 13 or 20.

A bond is a certificate issued by an agency when someone lends it money to pay for costly construction or equipment. Over many years, the investors get their money back, plus annual interest payments.

Washington state usually sells bonds for just 25 years, and normally the payout doubles the sticker price of the project, Murphy said.

Replacing the Alaskan Way Viaduct with a tunnel, an estimated $4 billion project, will cost about $8 billion with interest payments on the bonds, said Amy Arnis, financial planning manager for the state Department of Transportation. Another example is Qwest Field, whose $295 million public cost will require $592 million in payments, according to the state Treasurer's Office.

Sound Transit is funding its light-rail line from downtown Seattle to Tukwila with $800 million in local cash, $500 million in federal grants and $900 million in bonds, which will cost a total of $1.9 billion to pay off.

Horn said a tax through 2050 won't add costs for middle-aged people, since they'll quit driving cars sooner than that. "Some people who were younger are going to pay a few more years, but they will get the benefit of the system," he said.

Contractor and monorail officials see virtually no chance of saving money by reopening talks between SMP and Cascadia Monorail Co., a 28-member team led by Fluor Enterprises, for the proposed $1.62 billion contract. The rest of the money for the $2.1 billion project would go for buying land, relocating utilities, administration and other expenses. The two sides already talked for nine months before announcing a tentative deal Monday night.

"We're looking for the people, the agency, the city and the board to vote yes or no," said Cascadia President Pat Flaherty.

Murphy said he and state Auditor Brian Sonntag have scheduled a July 8 meeting with four monorail officials in Olympia.

Murphy, who has no direct authority over SMP, said he could use his "bully pulpit" to challenge the project.

He said he hopes to avoid a repeat of the Washington Public Power Supply System debacle, known as "Whoops" because the agency defaulted on $2.25 billion in nuclear-plant bonds in the early 1980s. Murphy said that unlike WPPSS, the financial risks of the monorail are known before construction begins.

Although WPPSS bonds were backed by electric utilities and not the state, the state's credit rating suffered for years after four out of five nuclear plants were left unfinished, Murphy said.

"As chief financial officer for the state, I cannot sit idly by and watch someone take the rest of our good reputation down," he said.

Times reporters Bob Young, Drew DeSilver, Susan Gilmore, Andrew Garber and Eric Pryne contributed to this report.

Mike Lindblom: 206-515-5631 or mlindblom@seattletimes.com