New monorail plan relies on old tax estimates

The monorail's new financial plan continues to rely on a prediction that car-tab tax collections will grow 6.1 percent a year — an estimate that has been disputed.

Kevin Phelps, financial adviser to the Seattle Monorail Project, said this morning he finds that figure reasonable because of social changes that include rapid population growth in the Puget Sound area and the likelihood that more elderly people will be driving.

By sticking with 6.1 percent growth, and by reworking the monorail borrowing plan, Phelps said the agency can reduce total principal and interest payments from $11 billion to $7 billion, he told The Seattle Times editorial board this morning.

Car-tab taxes — the monorail's sole source of revenue — have taken on their own political life since mid-2003, when collections turned out a third lower than predicted when voters approved the tax in 2002.

Local economist Dick Conway, state Treasurer Mike Murphy, the Downtown Seattle Association, and the critics' watchdog group OnTrack have all challenged the SMP's numbers. Conway recently suggested a 4.4 percent rate that is slightly less than his forecast for a similar Sound Transit taxing zone.

Conway assumes the population of city drivers age 20 to 64 will stagnate, while Murphy has questioned whether the city can hold all the cars.

Phelps and the SMP's economic consultants, Portland-based ECONorthwest, point to San Francisco as proof car ownership and new transit lines can proliferate at the same time.

Yesterday, Phelps said he would submit a reduced forecast, but it turns out that's only true for years beyond 2030. Until then, Phelps said the 6.1 percent figure is fair — although he rejected the SMP's attempt to boost the rate to 6.7 percent for later years.

In a public monorail board meeting tonight, Phelps is expected to discuss changes to the 50-year finance plan that the board rejected under pressure in late June.

Sales of construction bonds would be spread over several years, so interest payments begin later, he said. SMP had planned to sell a huge $1 billion batch next year to take advantage of current low interest rates.

Phelps also estimated today the agency might save $63 million by relaxing its seismic requirements, so the tracks can withstand the worst probable earthquake in 500 years, rather than a costlier 2,500-year standard.

He criticized an SMP proposal to pay nearly $1 million a year in compensation to Seattle Center, for running part of the proposed Ballard-to-West Seattle Green Line through the Center grounds. Phelps said he's seen no justification for paying that much money.

Mayor Greg Nickels has issued a Sept. 15 deadline for SMP to propose a November ballot measure to either raise taxes or shorten the route. Monorail leaders are avoiding a re-vote, and instead say they are making progress on a better finance plan.

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