The proposed downtown Seattle streetcar, which has been plagued by cost overruns, the potential loss of $75 million in anticipated federal funds, and news that the streetcars the city ordered are 10 feet longer than the existing vehicles, will now cost as much as $252 million, according to a new report from outside consultant KPMG—an increase of $55 million from the previous estimate of $197 million. (The $197 million figure, released in May, was already $37 million higher than the original estimate of $167 million for the 15-block line connecting the existing South Lake Union and First Hill streetcars.)
Mayor Jenny Durkan did not say Friday whether she planned to terminate the streetcar project, although the report makes that outcome appear much more likely. Last week, the Seattle Times reported that Durkan had hired Anne Fennessy, a longtime friend of the mayor’s who lives on the streetcar route with her husband, Durkan’s deputy mayor David Moseley, to oversee the streetcar review. Fennessy’s firm, Cocker Fennessy, is a public relations firm, not an engineering company.
The cost increase, according to today’s report, is being driven primarily by the escalating cost of construction materials and labor, higher costs for utility work, much of which will be necessary with or without the streetcar; and extra contingency funding “to account for risks such as SDOT civil and facility costs to accommodate new CAF vehicles.”
Last month, Durkan announced that the new streetcar vehicles the city ordered under the previous mayoral administration were longer 10 feet longer than the existing streetcars, which the city says could necessitate alterations to the existing streetcar maintenance barn and changes to the route and existing tracks themselves, to accommodate the wider turning radius of the longer cars. These apparent engineering errors, along with the earlier cost overruns, prompted Durkan’s decision to put the streetcar “on pause” in late March, and to order the independent review.
In addition, according to the report, the city has outstanding debts totaling $17.9 million for the existing First Hill and South Lake Union streetcar lines, which the city has considered paying off with funds from the sale of city property.
The report projects that the current plan could result in an operating deficit of up to $9.9 million a year if ridership is low and external funding from other (non-city) sources, including Sound Transit ($5 million), the Federal Transportation Administration ($430,000) and ads and sponsorships ($980,000) all fails to come through. If ridership is high and all the anticipated external funding does come through, the system could have as much as a $1.9 million annual operating surplus. The report also presents a scenario where the streetcar would run less frequently during off-peak hours (the current proposal assumes it would arrive at stations every 15 minutes for most of the day, and every 10 minutes at rush hour); under that scenario, the streetcar could see an annual surplus of up to $2.7 million with all the external funding, or an annual deficit of up to $4.7 million without it.
The streetcar plan assumes that the Federal Transportation Administration will come through with a $75 million grant; however, the city has not signed an agreement for that funding and the Trump Administration has shown a persistent reluctance to fund transit projects in cities. The administration has already withheld funding for $1.4 billion for shovel-ready transit projects—like the extension of Sound Transit’s Link light rail to Lynnwood—for which federal agreements have been signed, so the $75 million in streetcar funding is far from a done deal.
The report does include a couple of bright spots for streetcar supporters. First, the report estimates that the streetcar will cost between $16.6 million and $19.6 million a year to operate—lower than King County Metro’s estimate of $24 million a year. Second, the report predicts that building the downtown streetcar connector will boost ridership significantly by 2026, to almost four times what it would be on just the First Hill and South Lake Union streetcars combined if the downtown streetcar does not open.
Ridership on both existing streetcar lines has consistently fallen short of estimates. Proponents of the downtown streetcar have argued that linking the two lines with a downtown connector in dedicated right-of-way, separated from auto traffic, will dramatically boost sagging ridership as people choose the streetcar over buses to travel through an increasingly congested downtown core. They also say that a continuous loop connecting First Hill, South Lake Union, and downtown will create a convenient, predictable one-seat route between those destinations.
If Durkan decides to kill the streetcar, the utility work currently underway on First Avenue downtown will continue. The report estimates that that work would account for about $16.5 million of the $55 million cost estimate for the “no build” option, $31 million of which has already been spent. The remainder of that figure would come largely from spending that has already occurred, including design work ($17.3 million), vehicles ($5.8 million) and construction ($8.7 million, although that includes some work SDOT would have to do anyway because of the ongoing utility work, according to the report.)
The report says that if the city decides to move forward with the project, it should immediately start engineering work to figure out how to integrate the new, longer vehicles into the existing system, coordinate with the federal government to start the additional reviews the FTA has said will be needed “to confirm that the Project can continue with the changes” in order for the city to receive a full funding grant agreement for the $75 million in federal funding, and ask the city’s attorneys to weigh in on any liability the city may incur by either restarting or terminating the streetcar project.
Read KPMG’s 23-page summary of its report here.