City Bad News for Nickels
As we predicted two days ago, the state’s new numbers for replacing the Alaskan Way Viaduct with either a cut-and-cover tunnel or a new aerial rebuild are significantly higher than the original estimates. The new estimates put the cost of a “core tunnel” (that is, a tunnel that does not include fixing the northern seawall, lowering Aurora, or any other improvements north of the Battery Street Tunnel) at a range of $3.56 to $5.54 billion—an increase between 18 and 54 percent over the previous range of $3.0 to $3.6 billion. Put another way, the high estimate on the tunnel has increased nearly $2 billion. (The daily papers, taking a cue from Nickels’s press release, are reporting that the cost estimates have risen from “a range of $3.0 to $3.6 billion to $4.63 billion”; but that $4.63 billion estimate is actually the middle number. The real new range is $3.56 to $5.54 billion.)
Nickels looked visibly shaken at today’s press conference at City Hall, where he tried to spin the hugely inflated numbers as no big deal. “I remain committed and confident in our vision of reconnecting the city to the waterfront,” Nickels said. He blamed the much higher new numbers on the state department of transportation’s “desire to have a large range of cost estimates to cover any possible contingency.” He then added that the cost increase was due to “a $3 billion insurance policy.” The truth, however, is that the original numbers grossly underestimated construction-cost inflation, assuming an inflation rate of just 2.4 percent, versus current construction-cost inflation rates between 6 and 10 percent. (The state’s expert review panel called attention to this discrepancy two weeks ago, in a report that warned the council that the state’s original cost-inflation figures were “overly optimistic”. Still, even the new numbers assume much lower inflation than the current rate: just 4 percent.)
Nickels has a major problem. He barely had enough money (real and “anticipated,” including hundreds of millions that were shaky at best) to pay for the old “core tunnel.” (Indeed, the expert review panel called the city’s projection of $40 million in federal funding “optimistic,ā€¯ and said it was “skepticalā€¯ that another $153 million in anticipated state funding “is viable, given that sales tax revenueā€¯—the source for the presumed $153 million—”is typically earmarked for the state’s general fund.ā€¯) Now that cost estimates have ballooned between $560 million (the low end of the range) and $1.94 billion (the high end), the only way Nickels can build his tunnel is if he gets all the “anticipated” funds and the true cost is near the low end of the range—a scenario the city’s own estimate says is very unlikely, with a “strong prospect that risks will emerge beyond this level.” (The new low end, incidentally, is almost identical to the old high end).
And forget about the fully lidded tunnel and a reconnected street grid in South Lake Union: If the range of cost increases reflected in Nickels’s new core tunnel estimates are applied to the full tunnel, the new cost for a full tunnel will be between $4.4 billion and $6.9 billion—way outside anybody’s range of possibility.
Given all this bad news, it’s not surprising that Nickels, who had been pushing to put the viaduct question on the November ballot, had a sudden change of heart, declaring that now is not “the time to put a question about the viaduct on [the] ballot. We need to pick a preferred alternative and move it forward.” Nickels then echoed a majority of the city council, calling the viaduct question “the kind of thing elected officials need to dig into and make decisions on. When we have large policy issues we need to make decisions on them… It’s very confusing for the voters.” (Asked whether the cheaper tunnel proposal might also contain lots of confusing numbers, Nickels said something about the goalposts shifting, and went on to the next reporter’s question.)
Nickels, as he typically does, painted the viaduct decision as an urgent matter of public safety, calling the viaduct a “crumbling, deteriorating” structure. However, he declined to say whether he would close it down, saying only that “we hope we don’t get to that point.”