Mayor halts Center City Connector over capital deficit

The Seattle City Council is trying to get to the bottom of estimated cost overruns associated with the paused Center City Connector streetcar line.

Mayor Jenny Durkan halted the project last week after a preliminary assessment of costs concluded the city could face a large capital deficit.

“Right now, we have a $23 million deficit, and clearly that’s resources the project doesn’t have,” said interim SDOT director Goran Sparrman during a council briefing on Monday, April 2.

The Center City Connector is meant to bridge the gap between the First Hill and South Lake Union streetcar lines with a north/south connection through downtown.

"The City of Seattle has a critical obligation to spend taxpayer dollars wisely and an equal obligation to transparency,” said Durkan in a March 30 news release announcing her directing an independent technical review of the proposed costs of the Center City Connector. “There are too many questions about the true costs of this project and the risks to taxpayers, which is why we must put the brakes on this project. As your new Mayor, I will continue to scrub our budgets and act to protect taxpayers."

Councilmember Sally Bagshaw on Monday credited good news reporting for bringing the ballooning cost of the Center City Connector project to the council’s attention, alluding to coverage by the Seattle Times’ David Gutman.

Sparrman confirmed that if utility work were added to the project cost, the estimated $23 million deficit would bring the total project cost to more than $200 million. The project currently has $142.6 million in funding — $83.2 million from the federal government and $59.4 million in local funding.

“We honestly don’t know what the correct number is,” Sparrman said, which is why he supports pausing work to conduct an independent analysis of capital and operating costs, the latter estimated between $16 million and $24 million.

Pausing the project will also add costs to the Center City Connector, according to a letter to council from SDOT and the Central Budget Office, Sparrman saying construction costs tend to increase farther into the future. That cost increase is estimated at between $9.9 million and $13.62 million.

Sparrman said there will be impacts from rebidding work, and SDOT is working with the city attorney’s office to see what its obligations are under streetcar contracts that have already been executed.

Seattle has spent $90 million on the project so far, according to the Seattle Times, including $52 million for 10 new streetcar vehicles.

Councilmember Lisa Herbold said her assessment of the streetcar vehicles contract is that there could be some positives when it comes to the city’s liability. Steel tracks were supposed to be ordered in March, she said, but that didn’t occur, and Herbold also wants to know how that will impact the city and project costs.

City Budget Office director Ben Noble said direction from the mayor was clear that the independent investigation not involve SDOT, and the department will not be part of selecting the consultant group.

Transport Resource Associates in Philadelphia, KPMG in San Francisco and AECOM in Los Angeles are on the list of potential independent consultants, and Noble said a contract agreement could be reached by the end of the week. That cost is estimated at $500,000, and included in the added cost estimates for delaying the project.

Work will continue on a seismically vulnerable water main along First Avenue in Pioneer Square, Noble said, and Seattle City Light and Seattle Public Utilities are determining what other utility work that had been timed in conjunction with the Center City Connector project should still move forward.

Sparrman said he expects the independent review will provide project alternatives and lifecycle costs and benefits of the Center City Connector for councilmembers to consider.

The independent review ordered by Durkan includes examining the SLU and First Hill lines, to get an accurate cost assessment for the fully completed system. Noble said the investigation should also provide insight about what not following through on the Center City Connector could mean for those existing streetcar lines.

While the project is tentatively set to be delayed for six months, Sparrman and Noble said they’re hopeful all of the information needed to make a decision about moving forward can be gathered sooner.

A potential revised schedule provided to the city council on April 2 assumes construction could start by January 2019 and reach substantial completion by September 2020.