[nfbwatlk] FW: [Urban Politics] WHO PAYS FOR TUNNEL COST OVERRUNS? Urban Politics #294 - 6-7-2010

[Jacob Struiksma]

-----Original Message-----
From: Licata, Nick [mailto:Nick.Licata at seattle.gov] 
Sent: Monday, June 07, 2010 5:24 PM
To: 'urbanpolitics at speakeasy.net'
Subject: [Urban Politics] WHO PAYS FOR TUNNEL COST OVERRUNS? Urban Politics
#294 - 6-7-2010


Urban Politics #294, 6-7-2010

By City Councilmember Nick Licata


WHO PAYS FOR COST OVERRUNS? TUNNEL AGREEMENTS AND CONTRACT

The question that has dominated the discussion of the deep bore tunnel
replacement for the Alaskan Way Viaduct has been: who will pay for any cost
overruns? The answer is the State with regards to the contract for the
tunnel. The reason is that the contractor that wins the design-build
contract for the tunnel will be signing a contract with the State of
Washington, not the City of Seattle. The contract will oblige WSDOT to cover
risks associated with the tunnel.  The City of Seattle will not be
contractually obligated to cover cost overruns for the tunnel.

Think about it for a moment, the contractor could care less who pays the
bill, as long as they get paid. They are not going to sign a contract in
which this is left in doubt. Since the City is not a party to the contract,
there would be no legal standing for either WSDOT or the contractor to look
to the city to cover any of the bill spelled out in the contract.

That said, what does the $2.8 billion cap that the State legislature set on
the entire tunnel project mean? The cap is real in the sense that the
Governor cannot spend more state money than the legislature has approved. So
let's assume that the $1.96 billion tunnel goes over budget; the State is on
the hook, not the contractor. The state could pay them and still be under
the $2.8 billion cap. However, what happens to the other parts of the
overall tunnel project?

The most important project element for Seattle is taking down the current
Viaduct to free up the waterfront to pedestrians. The State funding toward
viaduct removal and rebuilding Alaskan Way is $290 million, but the State
could use this money to cover any additional tunnel costs. The City could
argue that the State was still obligated to do the project, but if the money
isn't there, the State Legislature would have to approve funding, which
would put Seattle in a weak position. This problem could be solved by the
State and the City agreeing in advance to put aside the money for the
waterfront, thus creating a separate locked box for it.

Another major part of the tunnel project, to be tackled after the tunnel is
completed, is to reconnect Thomas, Harrison and Republican streets across
Aurora Avenue, to "reconnect" the street grid between Queen Anne and South
Lake Union. It is a critical engineering task, necessary to avoid congestion
problems on Mercer and facilitate access to the tunnel. The same approach of
separate funding should be undertaken with this project as with the
waterfront; in a worst case scenario, this is the portion of the tunnel
project that could be sacrificed - it would be the most difficult one to
convince the State Legislature to fund if this money is used for the tunnel.

Seattle and the State are negotiating agreements to allow the tunnel and
related projects to proceed. Hopefully they will protect funds for the
waterfront and reconnecting the grid. We will need to see what is included
before knowing how well or whether this is addressed.



COUNCIL MEMBERS & MAYOR'S EMAIL ADDRESSES

Sally.Bagshaw at seattle.gov<mailto:Sally.Bagshaw at seattle.gov>
Tim.Burgess at seattle.gov<mailto:Tim.Burgess at seattle.gov>
Sally.Clark at seattle.gov<mailto:Sally.Clark at seattle.gov>
Richard.Conlin at seattle.gov<mailto:Richard.Conlin at seattle.gov>
Jean.Godden at seattle.gov<mailto:Jean.Godden at seattle.gov>
Bruce.Harrell at seattle.gov<mailto:Bruce.Harrell at seattle.gov>
Nick.Licata at seattle.gov<mailto:Nick.Licata at seattle.gov>
Mike.OBrien at seattle.gov<mailto:Mike.OBrien at seattle.gov>
Tom.Rasmussen at seattle.gov<mailto:Tom.Rasmussen at seattle.gov>

Citizens are directed to the following website to complete a form to send an
email to the Mayor's Office.
http://www.cityofseattle.net/mayor/citizen_response.htm


URBAN POLITICS SUBSCRIPTION INSTRUCTIONS

To subscribe, send a message to:
urbanpolitics-subscribe at speakeasy.net<mailto:urbanpolitics-subscribe at speakea
sy.net>
To unsubscribe, send a message to:
urbanpolitics-unsubscribe at speakeasy.net<mailto:urbanpolitics-unsubscribe at spe
akeasy.net>
You do not need to include anything in the body of the messages.