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With revenues for transit construction down sharply, Board outlines process to adjust capital program

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Yesterday, the Sound Transit Board continued its work on the realignment process through which it will manage the extensive financial impact that Sound Transit and other governments around the nation face from the COVID-19 crisis. 

We don't know how long or damaging the current recession will be. Economists are projecting a recession that could be worse than the Great Recession of 2008-2009. We estimate that cumulative fiscal impacts over the next two decades will range between $8 billion and $12 billion, or 12% to 18% less revenue than previously assumed.

With greatly depleted revenues, Sound Transit will not be able to deliver many expansion projects on their original timelines unless we receive alternative revenue from federal or state sources. The Board yesterday adopted two motions setting out its path forward with the realignment.

The first motion, put forward by Board Chair Kent Keel, established criteria that will help guide upcoming staff and Board work to manage the financial impacts, including identifying future project delays to the extent required to make the program affordable.

The second motion, put forward by Board Vice Chair Dow Constantine, directed that scenarios also be presented on what negative impacts might be avoided by identifying additional tools which could include but are not limited to securing additional federal funds, state funds, and/or increased debt capacity. 

The path forward that the Board discussed yesterday takes an incremental approach to the realignment challenge. It identifies what decisions need to made this year to continue to advance projects toward shovel readiness in a fiscally prudent manner. It provides time for the financial impacts of the recession to become clearer and additional funding opportunities are pursued. In summer 2021, the Board will adopt a comprehensive realignment plan.

The coming months will include analysis of potential scenarios, both with existing revenues and potential new sources, and Board discussion of projects whose status and schedules require next steps before the broader realignment plan is adopted. 

Based on agency contractual commitments already in place, Sound Transit will focus future realignment actions on projects that are not already in construction or under contract. Major projects that are still moving forward right now, contributing to our region’s economic recovery, include but aren’t limited to light rail extensions to Northgate, Lynnwood, Bellevue, Redmond, Federal Way and the Hilltop Tacoma Link Extension.

The process for moving forward with the realignment allows time for Sound Transit to collaboratively work with our partners to find ways to more efficiently deliver projects, potentially enabling more projects to be delivered sooner than they otherwise could. Through the remainder of 2020, Sound Transit will work on the potential scenarios that we will seek input on from the public in 2021.

Key strategies and principles for the realignment include:

•    In developing its annual budget for 2021, the Board will continue to fund early design work, environmental review processes and work to identify property requirements, even though project completion timelines will likely need to be revised. This strategy will keep projects “shovel ready” for delivery as quickly as feasible, particularly if new revenues are identified or fiscal impacts are ultimately lower.

•    The Board will use criteria adopted on June 25 as a framework for discussion to assist in making both near-term and long-term decisions relating to the system expansion plan. These include the criteria through which the Board shaped the Sound Transit 3 measure that voters adopted in 2016. The criteria are described in the presentation to the Board that is linked here

•    Sound Transit will use the upcoming months to engage contractors, consultants, and project partners to help identify cost savings opportunities. 

Information and updates on the realignment will continue to be available on Sound Transit’s website.

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