Two independent experts disagree with state Treasurer Mike Murphy's contention that the monorail's unusual finance plan threatens the credit ratings — and taxpayers — of Seattle, the state and every government within its borders that borrows money.

Jim Hattori, a former Seattle financial consultant who has advised the city and Sound Transit on bond sales, calls the monorail's proposed financing "highly unorthodox." But "it's really stretching it to say a problem with the monorail is a problem for other entities."

Murphy has said that when cities, counties, school districts and other governments seek to sell bonds, they could face lower ratings and higher interest rates because of the monorail's finance plan: "It's possible the ratings agencies could look differently at other [local] entities and say, 'I wonder what's going on in Seattle?' " he said.

Such a ripple effect is unlikely, said Fitch Ratings analyst Amy Doppelt, who works for one of the three global firms that rank the creditworthiness of corporate and government bonds. "Each bond is secured by something different," she said. "It [the monorail] shouldn't affect ratings."

But if the monorail defaults on its debt, which Murphy maintains is a real possibility, it's possible Seattle could be penalized, Doppelt added — even though the city and the monorail project are legally separate, and the city isn't responsible for the monorail's debt. The monorail's finance plan calls for more borrowing to compensate for lower-than-anticipated revenue from the project's only source of money, a 1.4 percent motor-vehicle excise tax on cars and trucks registered in the city.

The plan projects $11 billion in debt service — total principal and interest — over 48 years to pay for the $2.1 billion line. As part of that plan, the monorail agency would sell high-interest "junk" bonds, a move Murphy and others agree is highly unusual.

Murphy questions whether the monorail will have enough money to pay off that debt. He invokes the specter of WPPSS — the old Washington Public Power Supply System — in discussing the monorail's ramifications for other municipal borrowers.

The supply system, faced with skyrocketing construction costs, canceled two unfinished nuclear plants in 1982, and later defaulted on $2.25 billion in bonds.

Murphy, who was an underling in the state treasurer's office at the time, says the state's bond rating dropped two notches — even though the state wasn't responsible for WPPSS' bonds.

"Our bonds said, 'Washington.' Theirs said, 'Washington Public Power Supply System.' They didn't care; they dinged us all," he said of the bond market.

Doppelt, Hattori and Jay Reich, a Seattle bond lawyer whose clients include the monorail, agree that, after WPPSS' default, the market penalized all the state's municipal borrowers for a couple of years. Interest rates on state bonds were 0.1 to 0.25 percent higher, Hattori said: "They just thought there were a bunch of flakes out in Washington."

The state high court's rejection of WPPSS bondholders' bid to recover their money also may have played a part, Doppelt said.

But Reich said WPPSS and the monorail "are not exactly analogous at all." The monorail hasn't sold any bonds yet, he noted, much less defaulted on them. The debt structure the monorail has proposed is designed to minimize that possibility, he added.

Just selling bonds under a finance plan as unconventional as the monorail's could create a ripple effect, Murphy counters.

Seattle City Councilman Richard Conlin shares that concern.

"They don't understand much about relationships [between governments]," he said of the bond market. Neither Conlin nor Murphy could cite examples of one jurisdiction's finance plan harming the credit rating of another. "Having worked in the market as long as I have, it just feels right," Murphy said.

The bond market could penalize Seattle or other Washington governments if it concludes the monorail is imposing such a huge tax burden on voters that a tax revolt is imminent, Hattori said. "That's a thread," he said, "but I don't think it's real strong."

Hattori and Doppelt said bond ratings depend mostly on the issuing entity's individual circumstances: its tax base, total debt burden and governance.

Talk of a monorail default is hypothetical, Doppelt said — but if it happens, there's some evidence one jurisdiction's problems can spill over to its neighbors.

When the Richmond Unified School District in California tried to sell bonds after the city of Richmond — a separate entity — had defaulted, it found no bidders.

Eric Pryne: 206-464-2231