Streetcar taxes for South Lake Union landowners may rise

South Lake Union property owners may have to pay more in taxes than they expected to fund the streetcar line scheduled to open late next year.

Because a federal grant did not come through, Seattle City Councilman Peter Steinbrueck is proposing to add $3 million to the $25 million in taxes the neighborhood's landowners already agreed to pay.

The council's transportation committee will discuss the proposal at 9:30 a.m. today.

The taxes amount to about half of the $50.5 million cost of the 1.3-mile streetcar line that would run from Westlake Center to the Fred Hutchinson Cancer Research Center. The city hopes to start construction this year.

A council staff memo on Monday reported the city faces a $4.8 million funding gap for the project after a $2.5 million federal grant was not approved in 2005.

"I had serious misgivings about the streetcar," said Steinbrueck, who voted against the project. "This is no surprise to me."

Mayor Greg Nickels' office, though, expressed confidence the city can raise more money for the project without increasing taxes, said Michael Mann, deputy director of the city's Office of Policy and Management.

Potential revenue sources include a second request to U.S. Sen. Patty Murray to secure $3 million in a federal transportation appropriations bill, $3 million in a federal Economic Development Administration grant requested by the Puget Sound Regional Council and $1.5 million from city departments.

Mann said last year's federal request failed because earmarked funds went to the Hurricane Katrina response.

The city won't know until later this year whether it can secure the two federal grants.

The committee is considering three bills and a resolution from Nickels to finalize a construction contract and allow the city to break ground. If approved, tax bills would be sent to property owners, who include The Seattle Times. There are 760 parcels.

Jim Falconer of Vance Corp., which owns property on the south end of the line, is a longtime supporter of the streetcar, but he opposes paying more in taxes.

"It's like changing the rules in the middle of the game," he said. "This threatens the viability of the streetcar, and it threatens the credibility of the City Council."

Loren M. Holmes was told he would pay about $14,000 for the Athletic Awards property he owns, based on the $25 million total.

"They didn't have their ducks lined up, did they?" Holmes said of the City Council. "Is that fair to the people that were promised we weren't going to pay any more?"

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com