Rogoff: Sound Transit faces headwinds for on time and on cost project delivery

Sound Transit CEO Peter Rogoff. Credit: Atomic Taco

The big news from the July 26 Sound Transit Board meeting was that the Federal Way Link extension will cost about $460m more than originally planned. It may not be the last project to cost more than expected: at the meeting, CEO Peter Rogoff briefed the board about mounting challenges in delivering capital projects on time and on cost.

"Sound Transit has the financial strength," Rogoff said, "to withstand increased project costs, or lower than anticipated federal funding or tax revenues, or a recession, but a combination of any two or more of these factors would put considerable stress on the agency's ability to deliver projects on schedule."

Sound Transit can't make any difference in a competitive labor market, or the increasing cost of real estate, or prevent a recession, but it is able to exercise control over design, alignment, and the like:

"We have already discussed that, first and foremost, controlling our work to reduce project costs will be critical for delivering our projects," Rogoff said. "This includes the discipline to not expand the scope of projects."

Notably, agency-perceived expanded scope is one of the reasons First Hill station didn't make it through the ongoing ST3 planning process, although cost-increasing alternatives in West Seattle and Ballard did advance.

Meanwhile, the federal funding picture is completely opaque. The Trump administration, like most Republican administrations, is hostile to transit projects. Trump transportation officials are doing their best to kill off projects that were thought to have the go ahead. In Albuquerque, for example, local officials constructed a BRT line under the assumption that they had $75 million in Federal Transit Authority (FTA) funds on the way. As of July 18, the administration hadn't ponied up.

Rogoff is confident that ST will receive the federal funds that it needs. But, for whatever reason, Rogoff felt the need to visit Washington, D.C. just a few days before the board meeting to make sure ST was still in good position. Before taking the ST job, Rogoff was one of the most senior officials at FTA, so he undoubtedly knows how to read the relevant tea leaves. Yet it seems, based on his statement, that there is reason for concern.

Rogoff also expressed concern that local tax revenues, particularly in the South King and Snohomish subareas, are lower than expected. Continued weak receipts could lengthen project delivery times.

That, in turn, which would probably put further pressure on subarea equity, and shift funding away from Seattle and the Eastside to those areas. Snohomish County officials have already expressed their desire to siphon Seattle funds to build the Everett Link extension faster. Sluggish local revenues could increase that pressure, or fracture the Sound Transit political bargain. Without robust federal funding, which Sound Transit can move fairly easily from subarea to subarea, sustained revenue shortages would be hard to fill in. ST is already talking about financial engineering to accelerate the Everett line, presumably to head off the subarea equity fight.

Even if that infighting doesn't get worse, projects could be delayed for a long time if revenues fall short of expectations. However, ST insists that no projects will be cut in scope:

"Peter has consistently emphasized the agency's full intention and commitment to build all voter-approved projects," says ST spokesperson Geoff Patrick, "but the issue we have also consistently flagged is that our timelines are contingent on the necessary revenues. The scenario we want to avoid is one where the federal dollars we've reasonably assumed don't come in and we have to backfill that funding at the local level.

"That could mean having to collect taxes for a longer period to generate the necessary funding, and potential delays to project schedules. The same threat exists if our MVET revenues are reduced without actions by the state to keep our projects whole with commensurate increases in revenues or reductions in costs in other areas. Any project delays would cause highly unfortunate impacts to our commuters and economy in the context of our fast-growing population and congestion."

Only time can tell if ST will be able to stick to the cost estimates and schedule that it's laid out for itself. We'll know more about this issue when the agency releases its long range plan in the fall.