Mayor finds $2.6 billion more to pay for viaduct tunnel plan

If city officials have their way, an estimated $5 billion will be available for replacing the Alaskan Way Viaduct with a tunnel.

Deputy Mayor Tim Ceis on Thursday laid out the city's financing plan, which calls for assessing waterfront-property owners and collecting a rebate on sales tax. The plan was presented to the expert review panel that is looking at viaduct-replacement plans.

Already $2.4 billion is available for the viaduct project, which includes the $2 billion from the recent gas-tax increase.

Ceis said $2.6 billion more could be available, if all identified funding sources are used. Most of the city's numbers assume the viaduct will be replaced with a tunnel.

But City Council President Nick Licata questioned Ceis' estimates, calling them "high risk." And he said Mayor Greg Nickels is "looking through deep rose-colored glasses in his revenue projections."

The state hopes to choose its preferred alternative next year. Work would begin in 2010.

Replacing the viaduct with a tunnel is expected to cost $3 billion to $3.6 billion. Rebuilding the viaduct as an elevated structure would cost $2 billion to $2.4 billion. The state has enough money available to replace the viaduct but not to build a tunnel.

According to Ceis, this is where the city hopes it could secure the extra money:

• $280 million in future federal transportation funding, but that is years away. The federal government already has put nearly $200 million into the replacement project. The new federal money wouldn't come until 2009 at the earliest, when Congress approves its next transportation funding package.

• $60 million in federal emergency-relief funds for damage to the viaduct from the 2001 Nisqually earthquake for viaduct repairs.

• $200 million from the U.S. Army Corps of Engineers for the seawall replacement. If a tunnel replaces the viaduct, the outside wall will be the new seawall.

• $800 million from a proposed Regional Transportation Investment District funding-package measure expected to be on the ballot in 2007.

• $150 million in tolls. The state hasn't decide yet whether the viaduct will be tolled, but Ceis said this is what a toll could collect over 20 years. While no cost has been identified, he said a $2 per one-way trip is under consideration.

• $176 million in sales-tax rebate. This means all the sales tax on materials and labor for the project would be forgiven, assuming the State Legislature agrees, and the lost taxes would be credited to the project.

• $80 million in city money for open space. This is a mitigation fee that will be assessed on developers, perhaps funded by a real-estate excise tax.

• $400 million from the city for utility relocation. Ceis said this likely won't require an increase in City Light rates.

• $200 million from the Port of Seattle.

• $250 million in Local Improvement District (LID) tax to be assessed on properties near the waterfront, although the amount hasn't been determined. Ceis said a study commissioned by the city found that a tunnel would generate $600 million in value to property owners.

Jan Drago, chairwoman of the council's Transportation Committee, said the LID is a reasonable, and even modest, estimation. She said the city has had success with an LID on South Lake Union and used the same consultant to study the viaduct.

"The $250 million is at the low end of the possible value," she said, adding that the council could increase it.

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com