COUNCIL APPROVES TUNNEL AGREEMENTS WITH STATE



On Monday, February 7, the Council voted 8 to 1 in favor of an ordinance that approves three agreements with the State to protect Seattle’s interests as the SR 99 Tunnel project moves forward.  We expect the Mayor to veto this ordinance, and an override vote has been scheduled for February 28.

The SR 99 Tunnel was adopted as the preferred alternative by the State in 2009.  SR 99 is a State highway and the State can and will proceed with this project whether or not the City is a participant.  The project is funded from gas taxes, which can only be spent for highway purposes under the State Constitution, and cannot be used for street repairs, transit, or any other general fund purposes.  These agreements affirm that the City of Seattle has no liability or responsibility for the tunnel project, and that the State will complete the project within the established budget and sources of funds.

Section 2.8 of the Transportation Agreement defines that “The STATE is responsible for designing and constructing the PROJECT (the deep bored tunnel)…” while Section 2.6 of the agreement provides that “Each PARTY shall provide the funding and resources necessary to fulfill the responsibility of that PARTY as established in the Agreement.” and Section 10.1 further clarifies that “The STATE shall provide necessary funding for all PROJECT costs as referenced in this Agreement without reimbursement from the City of Seattle, except for the CITY cost responsibilities established in this Agreement, in SCL Agreement UT 01476, and in SPU Agreement UT 01474.”

The Council added confirmation language in Section 10.2 stating “By entering into this Agreement, the CITY is not waiving its position that the CITY and/or its citizens and property owners cannot be held responsible for any or all cost overruns related to the portions of the PROJECT for which the STATE is responsible.”

This legislation puts into law agreements negotiated between the State and the City over the past year.  City negotiators included the City Attorney and the Directors of Seattle Public Utilities, Seattle City Light, and the Seattle Department of Transportation.

These agreements were endorsed by the Council last August to give guidance to the companies bidding on the tunnel project as to what they would be required to do in order to meet Seattle’s standards for design and utility relocation.  The Council deferred final approval until a contract was signed with the successful bidder so that we could review any suggested changes.  Only a few minor modifications are required to conform the agreements to the bid contract, none of which substantively affect the City.

Approval of this legislation provides certainty to the contractor as to how to proceed with project design, which has been authorized as the first stage of the construction contract signed by the State.  The second stage of the contract would give the green light to actual construction.  This cannot be authorized until the final environmental documents are completed and approved by the federal government this summer.  At that time, the Council will again review the proposed agreements to ensure that they are still consistent with the final environmental requirements, and can then proceed with a final legislative action to authorize construction.

Imagine what would happen if these agreements were not in place.  Would the State decide to explore another alternative like the surface/transit/I-5 option?  The State has made it clear that it would not fund this option and that no Federal money would be available either.  Instead, the State would proceed with the project, but the City would be at risk for third party claims (indemnified by the State in the agreements), could be stuck with infrastructure that is below Seattle standards, and many other potential problems.  The agreements include specific provisions that commit the State to fully funding the project and to completing all of the required elements within the project budget.  By signing these agreements, we have everything to gain and nothing to lose – the reverse scenario leaves the City vulnerable and with no leverage over the design and construction of the project.

The Mayor plans to veto the legislation because of his concern about potential cost overruns.  The Council has commissioned a series of studies by independent experts that document that this project is well-designed, includes substantial measures that protect the City and State (including a $500 million indemnity and eight different kinds of insurance policies), and retains a 15% contingency reserve in the budget (at the high end of industry standards).  These experts have testified that there is a high degree of confidence that this project can be constructed on time and on budget.  The Council has conducted 18 public meetings over the last year, and has thoroughly reviewed the project.  In any case, as noted above, the Agreements contain language clearly assigning the responsibility for all costs to the State.

While the project meets all technical criteria for success, every study of cost overruns on projects has tabbed political obstruction and delay as a major cause of such problems.  Ironically, the Mayor’s tactics can lead to the very scenario that he claims to be concerned about.

February 28 will mark the 10 year anniversary of the Nisqually earthquake and 10 years of robust public dialogue on this project.  I hope that we can complete the replacement project and take down the vulnerable viaduct before the next earthquake.

For more details on the project, please go to the following: 

http://conlin.seattle.gov/2010/05/18/time-to-tell-the-truth-about-costs-about-costs-and-the-viaduct-tunnel-project/

http://conlin.seattle.gov/2010/08/20/tunnel-agreements-endorsed-by-council/

http://conlin.seattle.gov/2010/12/21/tunnel-bid-on-target-for-budget/