Increased project cost estimates presented to Sound Transit Board Executive Committee

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At its meeting today the Sound Transit Board Executive Committee received updates on the continuing toll that real estate and construction market conditions are exerting on the estimated cost of the next wave of Sound Transit expansions, including light rail extensions to West Seattle, Ballard and Tacoma Dome, and a new operations and maintenance facility. 

Deputy Sound Transit CEO Kimberly Farley described how unrelenting pressures are continuing to drive up cost estimates to significantly higher levels. 

The estimated cost increase for the light rail extensions to West Seattle and Ballard are more than 50 percent higher than the 2019 estimates. For the Tacoma Dome it’s up at least 10 percent. For the Operations and Maintenance Facility South the latest estimates for the multiple options under review predict an increase of 54 to 77 percent, with the latter being necessary to build on the Midway Landfill if that alternative is chosen at the end of the current environmental process. 

Cumulatively, the increased cost estimates for these projects amount to between $4.8 billion and $6.2 billion.  

While estimated construction costs are up as we learn more during the project development process, the largest single cost driver is the need to acquire right-of-way while real estate prices continue to rise unabated, even during the pandemic, and new development occurs near projects. 

Three parcels near the West Seattle Junction offer one example impacting the West Seattle extension. These parcels, which are being redeveloped into a mixed-use site with 306 apartments, were initially estimated at $76 million to acquire but are now estimated to cost over $250 million, including relocation of 306 households. 

Cost challenges have also burdened other major local infrastructure projects and other areas of the country where rapid population growth, urban development and economic growth have driven up costs of construction and real estate. 

The agency has commissioned an independent review of its cost assumptions and underlying methodologies. 

It is important to emphasize that projects that are currently in construction continue to advance within their current budgets and schedules, having already absorbed these challenging market factors. By 2024 Sound Transit remains on track to launch light rail service to Northgate, Tacoma’s Hilltop neighborhood, Bellevue, Redmond, Lynnwood and Federal Way. These expansions will nearly triple the length of the region’s light rail system from 22 to 62 miles. 

All but one of Sound Transit’s eight current major capital construction projects are on or below budget and on or ahead of schedule.  

In 2021 the Sound Transit Board will continue a realignment process to adjust plans and schedules for projects not yet under construction in response to the COVID-19's revenue impacts as well as these cost estimate increases. They expect to make final capital program realignment decisions by summer 2021. 

Unfortunately, there are no signs, despite the pandemic-induced recession, that long-term property or construction costs will improve much in the coming years as more projects move into development, including the voter-approved light rail extensions to Everett, South Kirkland, Issaquah and Tacoma Community College. 

In advance of the design work that will bring route options and cost estimates for these later projects into better focus, staff is increasing the estimated costs for these projects by 36 percent in the Long-Range Financial Plan, which will guide the Board’s realignment decisions. 

Cumulatively, the cost estimate increases described and included within the finance plan total $7.9 billion in 2019 dollars and $12 billion in year-of-expenditure dollars on current project schedules. They contribute to an overall $11.5 billion affordability gap, that is 10.9 percent of the agency’s Long-Range Financial Plan through 2041 as the Board moves forward with its realignment process.   

The first emphasis in working to close that gap is securing additional financial capacity by seeking increased federal and state funding and employing every creative means that can be identified.  

The Board’s options for addressing whatever gap remains include delaying the delivery of projects to provide longer periods for revenue collection; delivering projects in phases; and reducing project scopes.

The Board also retains the most extreme option, which it has not yet discussed, of suspending or deleting projects if deemed necessary to best realize the region’s critical transit needs within the parameters provided by voter-approved plans. 

Learn more about the realignment process

Deputy CEO Farley provided background through this in-depth memo that provides detailed information about the cost estimate increases and response actions.    

The case for expanded infrastructure investments is strong.

Building infrastructure not only improves peoples’ lives in the long term but in the near term provides one of the best sources of economic stimulus for our region and nation. Expanding our regional transit network will provide thousands of family-sustaining jobs and in turn support many more service and retail jobs in the region. Growing regions like ours have few realistic options for dramatically expanding their transportation capacities beyond expanding mass transit.  

Sound Transit will continue its commitment to delivering the mobility and economic benefits that led voters to end our region’s long period of underinvestment in the transit infrastructure on which similar urban regions depend.

 

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