Council votes not to raise assessments for streetcar

South Lake Union property owners will not be tapped to cover a gap in the construction cost of a new streetcar line running through their neighborhood — at least for now.

A majority of the Seattle City Council on Monday rejected a proposal that would have forced property owners to pay for a $2.8 million shortfall in streetcar financing. Instead, the council, led by its newest member, Sally Clark, voted 6-3 to give city officials more time to raise the money from the federal government or other sources.

If those options fail, the council eventually could charge local property owners more than the $26 million they already are scheduled to pay for building the $50.5 million line that would run from Westlake Center to the south shore of Lake Union.

City officials expect to break ground on the 1.3-mile streetcar line this summer. "We're going to be riding the streetcar next year, in the fall of 2007," Councilwoman Jan Drago said.

Mayor Greg Nickels said the streetcar would provide an important link to the light-rail system Sound Transit is building between Tukwila and downtown Seattle. That line is supposed to open in 2009. Nickels also said the streetcar would "help us shape growth in Seattle by encouraging continued investments" in the South Lake Union and Denny Triangle areas.

The city has identified a number of funding sources for the public's share of the streetcar costs, including a combination of federal and state grants, proceeds from the 2001 sale of city property to Allen, and a plan to sell development rights above the proposed streetcar-maintenance shed.

But Councilmen Peter Steinbrueck, Nick Licata and Tom Rasmussen argued that property owners near the streetcar line should take on the cost of the $2.8 million shortfall because they will benefit most from the project.

The three also said their approach would safeguard taxpayer funds used for basic services, such as police and parks, from being siphoned away for a streetcar shortfall.

A council-funded "special benefits" study found that nearby property owners, including The Seattle Times, would see their property values increase by a total of $69 million if the streetcar is built. The council already plans to charge them $26 million through a special tax district for the streetcar.

Paul Allen's company Vulcan, which owns 60 acres in the area, is redeveloping much of the South Lake Union neighborhood as a biotech center ringed by apartments and condos. Vulcan would pay $8 million for the streetcar, according to preliminary assessments.

Final assessments will be sent to property owners in several weeks, said Nickels' aide Michael Mann. The city will hold a final appeals hearing on assessments May 2, Mann said.

Council President Licata said Monday's debate would probably prove moot, and that the streetcar likely will get the federal grants needed to cover the financing gap. But he said the strategy he, Rasmussen and Steinbrueck favored was more "conservative" and "judicious."

Clark, appointed in January to fill a vacant seat, said she crafted the winning proposal because the city didn't need to charge property owners more at this point.

She said if the federal grants don't come through, the city would dip into a South Lake Union transportation fund; developers are expected to contribute $14 million to the fund in the next 20 years. Clark acknowledged that might mean postponing other improvements, such as street repairs and new bicycle lanes.

But she said that would be better than tapping property owners for more.

"A lot of property owners are not Paul Allen, and they can't just write a check," she said.

Bob Young: 206-464-2174 or byoung@seattletimes.com