Report warns monorail finances are risky

The Seattle Monorail Project's assumptions about its fares, ridership and revenue from car-tab taxes are uncertain enough that they pose financial risks to the public, according to a city consultant's report issued Monday.

The report found problems in six of seven areas related to the SMP's income, though the consultants didn't render an overall judgment about whether the monorail should be built.

They did praise a key part of the plan — a proposed contract for the tracks and trains meets or exceeds industry standards to ensure the project gets built. Builders and train suppliers would put up $500 million worth of performance bonds.

But the report, done by Atlanta-based Manuel Padron & Associates for the City Council, raised warnings about other aspects:

• Income from ticket fares, needed to break even on operating costs, "may be overstated." Some of SMP's plans assume higher prices than what Metro buses and Sound Transit charge, but others do not. If fares were equal for all transit, the monorail would make 31 percent less money, the report says.

• The monorail's estimates for car-tab tax collections, the sole source to pay for construction, "indicate potentially significant risk to the monorail," says the report, which advocates a more cautious estimate.

• Trains and stations are undersized for the 57,000 predicted daily riders on a 14-mile system by 2030, and there is no strategy yet for handling thousands of other trips by West Seattle riders if the Alaskan Way Viaduct shuts down.

The report comes two weeks before a Nov. 8 public vote on pro-monorail Proposition 1, to allow the SMP to continue. The measure mentions a shortened 10-mile line from Interbay to West Seattle, but the length and exact alignment could be changed.

"I don't see what the basis is for looking at this now, except for influencing the election in some way," said Kristina Hill, SMP chairwoman.

Three council members said the report was just finished, based on monorail information that only recently became available.

"We need to have all the facts out there," Councilwoman Jean Godden said.

"They [SMP] are like a house of cards here," said Richard Conlin, the council's strongest monorail critic. "There are so many uncertainties and risks, and in virtually every circumstance, they chose the riskier option. The discrepancy on the ridership and fare numbers is just extraordinary."

The report raised concerns about the monorail's disputed estimate that the car-tax collections would grow an average 6.1 percent a year. That number itself is a midpoint, so the agency's odds of meeting or beating it are 50-50.

Nancy Whelan, a member of the consulting team, said Monday the monorail should use a conservative number, to hedge against uncertainties in the rest of the plan.

Seattle-area forecaster Dick Conway and city Finance Director Dwight Dively have suggested using 5 percent or less. Last night, the SMP issued letters from two professors, Alan Hess of the University of Washington and Timothy Mount of Cornell University, criticizing Conway's methods.

Monorail brochures say a 10-mile line would take 38 years to pay off if growth is 5 percent, and 31 years at 6.1 percent.

Hill said that if the agency uses a low estimate, the agency can't sign a contract deal to reach Ballard. That's a "risk" too — that the line will not be long enough to help serve the growing city, she said.

Last month, Mayor Greg Nickels and the City Council yanked the monorail's street-use agreement. The monorail is trying to overcome a shortage of one-third in its tax revenues.

The consultants questioned whether the monorail's proposed plan for a two-part commute, with shuttle buses bringing people to the train stations, would be successful.

But if it works, the trains and stations would be overcrowded, they said.

Currently in North America, only New York and Toronto systems provide less personal space than the monorail envisions, the consultants said. Based on industry standards, "The proposed monorail would fall between 'tolerable with difficulty' and 'totally intolerable,' " the report says.

John Haley, the SMP executive director, vehemently objected to capacity criticisms as shortsighted.

Last week, he proposed having two additional trains to add service. He also said the monorail's automated-switching system can place trains where the crowds are, and the line can be improved over time.

"The project will have, at a minimum, a century of benefits that will help shape the future," he said last night.

Also, the consultants said that under a cautious, "plain-vanilla" debt plan using 30-year bonds, it could raise $872 million.

SMP's plan is to sell $1.3 billion in bonds for what presently appears to be a $1.8 billion, 10-mile project over a longer payoff period.

If voters vote yes on the city's fifth monorail-related ballot measure next month, the actual outcome is unknown because the agency, contractors and city would have to renegotiate the deal.

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

In an earlier version of this story, a pair of numbers were transposed regarding how long it would take to pay for the Seattle monorail. The Seattle Monorail Project predicts that a 10-mile line from Interbay to West Seattle would require 31 years of car-tab taxes if tax collections grow an average 6.1 percent annually, and 38 years if collections grow by only 5 percent.