Mercer Plan has a new price tag: $290 million

For the first time, cost estimates for the western part, phase II, have surfaced. Adding $100 million to a project that is already short of funding is starting to look like a kind of farewell fling from Mayor Nickels. A critic traces all the funding maneuvers.
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For the first time, cost estimates for the western part, phase II, have surfaced. Adding $100 million to a project that is already short of funding is starting to look like a kind of farewell fling from Mayor Nickels. A critic traces all the funding maneuvers.

Only a week after Mayor Nickels' election loss, the City's Department of Transportation (SDOT) Director Grace Crunican presented a new budget for the Mercer Plan to the City Council'ꀙs Transportation Committee. Councilmembers in attendance, including the committee'ꀙs chair Jan Drago, did not bat an eyelash when Crunican'ꀙs powerpoint showed that project costs had risen from $190 million to $290 million.

Undaunted by a shortfall of over $60 million when the project was set at $190 million, Crunican announced the Mayor'ꀙs intention to move ahead with a second, more westerly phase to their Mercer plan adding another $100 million to its cost. For several years, SDOT has said there is the potential for a second phase but not since about 2006 have they seriously presented the idea to the City Council, least of all with a budget attached. Apparently, SDOT has quietly continued planning on a second phase even earmarking $10 million from existing sources to keep the planning going.

For nearly a year, SDOT and Mayor Nickels have used a budget figure of $190-$200 million for a project they have called 'ꀜshovel ready.'ꀝ Suddenly, a second phase has been added, and the full Mercer is now a $290 million project. How SDOT can dedicate city funds for a second phase and get this far along without a public airing or even council discussion seems puzzling, but neither the committee'ꀙs chair Drago nor other councilmembers have raised a peep of concern about it.

What makes this even odder, Nickels and his staff at SDOT do not have full funding lined up yet for phase I. With phase II added to the budget, the shortfall would be well over $150 million for both phases. Perhaps activating the second phase now is the Mayor'ꀙs version of a 'ꀜHail Mary.'ꀝ Or he hopes to solidify funding for Phase I and get some funding lined up and spent on a second phase before he leaves office — deep enough into it so his successor and the City Council can say with at least a semi-straight face, 'ꀜit'ꀙs too late to turn back.'ꀝ

Crunican indicated that to fill that $150 million gap, SDOT already was aggressively going after a host of additional sources including more federal, regional and local funds. She also made clear that more 'ꀜBridging the Gap'ꀝ dollars would be tapped to make up the difference as well. Bridging the Gap (BTG) is the name given to the $544 million, 9-year transportation package passed in 2005 to cover a backlog of basic street, road, sidewalk, and bridge repairs in our neighborhoods. Voters approved a special property tax levy to cover $365 million of its cost, and the City Council passed an employee head tax ($51.5 million) and parking lot tax ($127.5 million) to cover the rest of the tab.

In 2005, planning for the Mercer Project was well under way. Phase I plans called for a rerouting of traffic from I-5 headed westbound along Valley St. onto a widened two-way Mercer St., which is now only an eastbound street. Valley would become a two-lane residential street. These Phase I Mercer improvements would run from I-5 to Dexter Avenue which parallels Aurora one block east. Today, these plans remain essentially the same.

There was talk in 2005 of a second phase that would extend improvements westward beyond Dexter to Seattle Center, but those plans were never well defined or if they were, they were kept hidden as project costs on the first phase went up.

The plan that Crunican announced two weeks ago for Phase II calls for improvements west along Mercer from Dexter all the way past Seattle Center and down the hill to the waterfront. Most of the cost of this second phase is related to the cost of sinking Aurora just north of the Battery Street tunnel and "reconnecting the grid" with overpasses across Aurora at Harrison, Thomas, and John Streets. That portion of Broad Street that now angles under Aurora from Harrison near the Seattle Center to Roy Street at the South end of Lake Union would be eliminated; Roy Street would be reconnected and run under Aurora. This $100 million estimate for the second phase is just a "5 percent engineering estimate," so it is still very rough.

In 2005 with the price tag rising to about $90 million, up from $75 million a year earlier for phase I, councilmembers committed $30 million from BTG sources for the project. Assurances were also made that only monies from the employee head tax and parking lot tax would be used and not the voter-approved portion destined for neighborhood projects. Too bad no one wrote that into the ordinances creating the package.

By 2007, project costs for the first phase had shot up to $190-$200 million — about the time we also stopped hearing about a phase II. With only about $30 million in hand, Mayor and council decided to make up the difference by inserting Mercer into the $18 billion county-wide roads and rail ballot measure. When voters soundly rejected it that in 2007, City Hall turned back to Bridging the Gap for more of those funds.

First, the Mayor and council unceremoniously scrapped long-held plans to improve South Lander Street, taking these BTG dollars and reprogramming them for Mercer. For years, city engineers planned a grade separation from First to Fourth Avenue along Lander so freight haulers would no longer be stalled by train traffic moving through the city'ꀙs industrial area. At present there are no plans to revive this important project.

That maneuver brought the amount of BTG funding committed to Mercer up to about $75 million. On top of that, SDOT cobbled together monies from several other sources including city general fund revenues (from sale of land along Mercer bought earlier by Paul Allen) and federal grants passed through the Puget Sound Regional Council. That still left them $60 million short of $190 million needed for Phase I.

In spite of the shortfall, last spring, Mayor Nichols pressed the City Council to release the monies already in hand and let him proceed with construction. Both he and Jan Drago, also a longtime proponent, assured councilmembers that the state Legislature soon would approve use of some the state'ꀙs allotment of federal stimulus money to cover the gap in Mercer funding.

Over the objections of Nick Licata, Tom Rasmussen, and Sally Clark, the council gave the Mayor the go-ahead. Within a day of that council vote, legislators turned down the City'ꀙs request for stimulus funds. Subsequent news stories indicated that both the Mayor and Drago were made aware of the state'ꀙs intentions days earlier and before of the council'ꀙs vote to release Mercer funding, which they both denied was the case, saying the signals coming out of the Legislature were murky.

Only Licata seemed particularly upset at the seeming deception. Councilmembers did re-impose the proviso preventing the Mayor from proceeding with construction until full funding was found, but they did give him what was called a 'ꀜyellow light,'ꀝ releasing about $40 million for design and land acquisition. Licata reminded his colleagues that by allowing the Mayor to proceed even to that degree without full funding violated their own auditor'ꀙs recently released 'ꀜbest practice'ꀝ guidelines.

From a review of BTG reports posted on the City'ꀙs website, it looks like anywhere from $10-$20 million already has been spent on planning, design, and land acquisition for Mercer. At least two dozen property owners are being bought out and businesses forced to move under threat of condemnation.

Meanwhile, undaunted by the state'ꀙs rejection of their first stimulus fund application, city planners are filing again for about $60 million in stimulus funds. On September 15, they'ꀙll submit an application for $50 million from a $1.5 billion pot controlled directly by the federal Department of Transportation. Another application for $8-$10 million already has been filed for a portion of a small pot of stimulus funds controlled by the Puget Sound Regional Council.

At a recent City Council briefing, Licata asked the Mayor'ꀙs staff what other backlogged transportation infrastructure projects would be part of the City's application for stimulus money. He was told they didn't want to submit other applications in competition with their first priority — Mercer. They didn't want to muddy the waters asking for help with roads, sidewalks, or bridges in our neighborhoods — a backlog of needs estimated at around $1 billion including over 30 bridges listed by city engineers in 'ꀜpoor" condition.

Hundreds of cities from across the country are applying for stimulus funds from this current round, including as many as 30 in Washington state. King County has submitted a $100 million application for replacement of the South Park Bridge, a structure considered seven times more unsafe than the Viaduct and beyond repair. It'ꀙs an important artery and link for freight in that industrial area. Given the competition and with its champion, Mayor Nickels, now a lame duck, prospects for Mercer getting stimulus dollars very likely have dimmed.

Even if SDOT does secure the $60 million, which planners say is enough to cover the shortfall in Phase I'ꀙs $190 million budget, there are more complications. Business interests are unified in their opposition to the employee head tax portion of Bridging the Gap (BTG) that accounts for $51.5 million of that $540 million package, and the council seems poised to eliminate it. Most of these funds already were designated to cover a large chunk of the $75 million in BTG funds dedicated for Phase I Mercer.

With that pot of BTG funds eliminated, it means the $127.5 million parking tax portion of BTG would be the only major source left to cover that $75 million in BTG funding already committed to Phase I of the Mercer plan. And don'ꀙt forget there is a $90 million shortfall needed to complete Phase II. All or nearly all of the parking tax would have to be drained for Mercer, or the council would have to renege on a promise to avoid tapping any of the voter-approved $365 million portion now earmarked exclusively for neighborhood projects.

Indeed they already are chipping away at more BTG funding. At Drago'ꀙs Transportation Committee meeting, Crunican also told councilmembers they'ꀙd manage to realize a savings of $15 million from the Spokane Street Bridge project and had already decided to add that to the Mercer budget, half for phase I and the other half for phase II. No one on the Council Committee objected.

Even if the Mayor proposes creation of a local improvement district or some other way of taxing abutting property owners, it seems inevitable that millions in more BTG dollars formerly destined for the neighborhoods will have to be tapped if the project proceeds. That's a far cry from the 2005 promise that only $30 million in BTG would be used for Mercer.

Why is there such determination to complete this project regardless of costs and what must be sacrificed? There are at least three studies now that have been done since 2004 saying a two-way Mercer plan will exacerbate traffic along that Corridor. The most recent study, done as part of the preliminary environmental review, cites delays of traffic by as much as 7-18 minutes in the eastbound direction if this plan is implemented.

The Mayor'ꀙs office and most councilmembers dismiss these studies saying this isn'ꀙt about moving traffic through the area but improving circulation and making the area more 'ꀜpedestrian and bike friendly.'ꀝ Tell that to thousands of commuters and freight haulers who depend on this important arterial to get to and from their destinations. Councilmember Richard Conlin, at one point, said it didn'ꀙt matter if the Mayor'ꀙs Mercer plan made traffic worse. Perhaps it was time to turn Mercer into a residential street anyway. After all, he said, 'ꀜneighborhoods don'ꀙt have freeways running through them.'ꀝ In an earlier presentation to the council, Crunican even said that when this project was completed, she could imagine sidewalk vendors, shops, and outdoor cafés lining Mercer.

The Mayor's planners also have tried to argue that Mercer improvements will help move traffic through downtown during State Route 99 and Alaskan Way Viaduct construction. According to the City Council'ꀙs analysis, no research shows that the proposed changes will in any way alleviate congestion during this construction. By contrast, in 2000, there was a plan preferred by the South Lake Union neighborhood (for 100 years called Cascade until Paul Allen came along) and by former Mayor Paul Schell that was called the "small and simple" fix which, if implemented, would have cost only $10 million (in 2000 dollars). That plan simply would have smoothed out the weave from I-5 westbound to Valley and added a series of small fixes to improve traffic flow at intersections in the area. Licata and others claim this plan actually would reduce congestion in the area, but it was dropped from consideration after Mayor Nickelstook office and after the City sold all the properties along Mercer to Paul Allen's real estate company in 2001.

So the best way to understand the Mayor and City Council'ꀙs devotion to this project is to see it as devised to mesh with redevelopment plans now occurring in South Lake Union where Mercer is located. That plan is driven by Paul Allen's Vulcan development company, which owns nearly half of all developable land in that area and especially along Mercer and Valley streets. While billed as a traffic improvement, critics say it'ꀙs really a beautification plan aimed at turning Valley into a residential street and deflecting traffic away from residential developments along Valley that face Lake Union and a new Lake Union Park.

Vulcan is also benefiting because in order to widen Mercer for their plan, the city must now buy back some of the land along Mercer it sold to Allen in 2001 and at a price significantly higher than what Allen paid for it seven years ago. (It'ꀙs also conceivable that if Mercer is not completed, or even if it is, portions of the parcels the city now is acquiring for right of way could be sold back to Vulcan yet again.)

If the federal government denies stimulus funds for Mercer it'ꀙs hard to imagine this project (either phase) moving forward at all. Then again, big ticket projects backed by the city'ꀙs powerful interests — like the waterfront tunnel, light rail, stadiums, and convention centers — have a way of rising from the grave.

One thing is certain: the next Mayor will have a lot to do with determining the fate of Mercer and indeed the rest of Nickels' largely unfinished South Lake Union Agenda. To date mayoral candidate Joe Mallahan has expressed doubts about what'ꀙs going on in South Lake Union especially the Mercer plan and told several groups he would not support it, at least under current fiscal constraints. Mike McGinn on the other hand has taken a wait-and-see attitude suggesting he supports it but only if funding can be found. That'ꀙs the whole problem — the city won'ꀙt give up on it even when funding cannot be found.


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