Adjusting project schedules and plans due to lower revenues and higher project cost estimates

Sound Transit is facing an unprecedented financial environment caused by two major, simultaneous factors: (1) a pandemic-driven recession that has severely reduced consumer spending and government agency tax revenues; and (2) ongoing pressures in the real estate and construction sectors of the economy that are continuing to drive project cost estimates to levels significantly beyond those foreseen in our plans. 

Realignment public engagement

In April 2021, we launched an online open house and survey to invite public input on the challenges ahead. More than 31,000 people visited the website, and we received nearly 10,000 survey responses. Thank you for sharing your priorities and helping to shape your transit future!

On May 27, we presented the survey results to the Sound Transit Board. In addition to the online survey, Sound Transit hosted more than 50 briefings for elected leaders and their staffs. We also conducted an additional 55 briefings to a broad range of stakeholder groups, including Sound Transit advisory boards, healthcare industry leaders, Rotary clubs, chambers of commerce and disability advocates. Over the course of a year, these meetings helped keep our jurisdictional and community partners apprised of changes to Sound Transit's financial situation while soliciting input on how the agency might respond to lower tax revenues and higher estimated costs.

Sound Transit staff also completed a round of listening sessions with organizations that work with communities most affected by institutional and systemic racism and other forms of oppression and who are potentially impacted by program realignment decisions. This effort included organizations that serve or represent Black communities, other people of color, people experiencing economic hardship, limited- or non-English speaking communities, immigrants and refugees. 

Results from this jurisdictional and community engagement are included in the report to the Board along with results of the online survey.

Public engagement will continue. Intensive stakeholder and public input during our environmental review and final design processes will remain a key part of shaping the scopes, schedules and budgets of every single project we design and build. Engagement going forward will include informing and involving the public in work to improve the agency’s project delivery by securing more funding and working to control costs without sacrificing projects' public benefits.

Reduced consumer spending limits available revenues for construction

The COVID-19 crisis has greatly reduced the revenues Sound Transit relies on to expand our regional transit system. As COVID-19 forced businesses to close and people stayed home, sales tax revenues critical to funding transit construction declined rapidly. Severely reduced ridership fare earnings and other lower tax receipts have compounded our revenue reductions. At its April 22 meeting, the Sound Transit Board received updated financial projections that forecasted tax revenues through 2041 are projected to be $1.5 billion in year-of-expenditure dollars less than forecasted prior to the recession COVID-19 crisis. 

Real estate and construction costs continue to surge

The recession has not slowed the pace of growth in costs for real estate acquisition or for construction labor and materials. Light rail extension projects in early planning and design, including those to West Seattle, Ballard, Tacoma Dome and a new Operations and Maintenance Facility South, are seeing significant cost estimate increases. As designs advance for these projects, the cumulative impact of the revised estimates is significant: approximately $4.8 billion to $6.2 billion, or an increase of more than 40%.

Learn more in the Capital program cost estimate growth and response actions memo.

Realignment of project schedules and plans is required to address financial constraints 

Increased cost estimates combined with reduced revenue projections result in a currently projected $7.9 billion affordability gap to complete the full expansion program as originally planned.

Through a process called realignment, the Sound Transit Board of Directors is working to determine how plans and timelines for voter-approved projects will need to change to address these financial pressures. The ST3 ballot measure approved by voters requires this process when we know the program is not affordable. We owe a transparent and honest reading on what can be accomplished in what timeframe to the voters, taxpayers and communities that have waited so long for high-capacity transit. We must make realignment decisions this year to achieve affordability in our long-range financial plan. Taking measures now will prevent a spending trajectory of costs exceeding revenues in future years. 

Pursuing alternative revenue sources 

Alongside identifying options to manage costs, the first emphasis of the realignment is aggressively pursuing federal grants and other alternative revenue sources to help close the financial gap. We will join other agencies and allies in urging that federal recovery efforts and potential actions at the state level provide funding support for transit infrastructure so we can deliver our planned projects on schedule and maintain our place at the center of our economic recovery. 

Current construction unaffected

Projects now under construction, including light rail extensions to Northgate, Lynnwood, Bellevue, Redmond, Federal Way and Tacoma's Hilltop neighborhood, as well as the Puyallup Sounder garage, are not subject to realignment. We are poised to open all of these projects on schedule, almost tripling the light rail system in the next four years. 

Projects not yet in construction that may be delayed from their original schedules, phased, or scaled back, by subarea

Under construction, on schedule

May be delayed from their original schedules, phased, or scaled back

Under construction, on schedule

May be delayed from their original schedules, phased, or scaled back

Under construction, on schedule

May be delayed from their original schedules, phased, or scaled back

Under construction, on schedule

May be delayed from their original schedules, phased, or scaled back

Under construction, on schedule

May be delayed from their original schedules, phased, or scaled back

Board options for realigning Sound Transit's capital program 

The realignment process is moving forward under the Board's two-pronged approach. The first prong prioritizes pursuing new revenue sources, such as federal and state funding and cost relief to help bridge the affordability gap. 

To the extent that sufficient new resources are not secured, the Board's second prong, as required by the ST3 Plan, will ensure affordability under updated projections for current revenue sources. The Board's options for addressing revenue shortfalls and increased cost estimates include: delaying the delivery of projects to provide longer periods to collect revenue; 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. 

Realignment process

After considering input from the public and partner organizations the Sound Transit Board is scheduled to work in summer 2021 to adopt a realignment plan that provides a framework for managing whatever affordability gap remains after efforts to secure expanding financial capacity.

January: review project evaluation

  • Board workshop provides common grounding for the 2021 realignment requirements, processes, and decisions. Review project evaluation results, clarify tools available to the Board, clarify project and program elements subject to realignment. Update federal revenue prospects.  Provide direction to staff on realignment approaches to develop.  

February: discuss realignment approaches  

  • Board reviews financial update, previews work on approaches emerging from the Board workshop.   

March: define realignment approaches for public feedback  

  • Board reviews financial update; discusses public engagement plans.  

April: engage with the public and key stakeholders  

  • Board asks public what is important for the Board to consider before making realignment decisions.  

May: discuss realignment options  

  • Board hears public engagement results and identifies priorities for a draft realignment plan.  

June: develop draft realignment plan  

  • Board leadership outlines what they have heard as priorities and requirements for realigned plans. They present and discuss proposals for a realigned plan; identify potential refinements; and direct staff to prepare final plan/action for Board consideration in July.  

July: take realignment action  

Transit construction will help our economy recover  

Sound Transit is currently building 40 miles of new light rail track and 28 new stations, including three which will open this fall. This construction will help our region's economy recover from the COVID-19 recession, just as transit construction helped fuel our recovery from the Great Recession.  

Family-wage jobs offered by Sound Transit's construction projects will help thousands return to the workforce, and in turn will support even more retail and service jobs in the community. As the economy recovers, investments in these new transit infrastructure projects can help deliver tens of thousands of daily riders to work and other destinations.