Collaboration in Civic Spheres

Cab car cost bump to grow Sound Transit’s queasy debt load

by June 10th, 2013

The taxpayer-funded regional transit agency serving the three-county Greater Seattle region, Sound Transit, says its looming purchase of nine new cab cars for expanded service on its South Sounder commuter rail line between Seattle and Tacoma-Lakewood will cost $21 million more than expected, and its Pierce County regional subdivision or “sub-area” will have to issue debt to pay for the difference. According to a staff memo distributed to members of the ST Operations Committee last Thursday, that would pose at least three troublesome effects.

First, it would come at a time when the agency’s revenues are projected to fall short of required levels, compared to debt service costs. The so-called “debt service coverage ratio” or proportion of net operating revenues to debt service costs is already projected to be below the annual minimum of 1.5 to 1. Sound Transit was already reeling financially. Due in part to the recession projected revenues for 2009 to 2023 are now expected to be more than $4 billion less, or 30 percent short, versus the amount promoted to voters during the ST2 campaign in the fall of 2008.

Second, the issuance of the needed $20.9 million in bonds for the safer, more crash-resistant Bombardier cab cars – which carry passengers but also can serve as lead driver car opposite the locomotive on every other trip – “will reduce” the “financial capacity” of ST’s Pierce sub-area to pay for its part of a third agency-wide expansion plan dubbed “ST3” which is to go before voters in the next year or two. Lastly, to compensate for the unplanned added costs of the cab cars, agency staff will by the end of next year’s first quarter recommend cuts in the scope of a planned Sounder maintenance base in Pierce County, and other such cost savings.

Expansion of South Sounder service was part of the 2008 voter-approved “Sound Move” or “ST2” funding package. The new cab cars are part of fleet growth the agency says is needed for that. Sumner Mayor Dave Enslow, a member of Operations Committee, said, “it is a big deal” – and a definite concern – that agency staff project the added debt will restrict the Pierce sub-area’s ST3 fiscal capacity, but the need for better cab cars is clear. Enslow added he would have liked for the South King County sub-area of Sound Transit to have been assigned some of the related debt load, but it is already stretched to the limit.

Added ST spokesman Geoff Patrick, “this is an issue of balancing safety and having an opportunity to utilize state-of-the-art crash management, versus affording it all.” When a traditional locomotive is in front there’s a much higher level of protection to the whole train, in the unlikely event of a crash at an at-grade crossing, explained Patrick. But when the cab car is in the lead on a return trip there is far less insulation and the distribution through the train of crash energy can be far more harmful, Patrick explained. The new Bombardier “crash energy management” or CEM cab cars eyed for purchase address those shortcomings, he said.

The possible trims to the Sounder maintenance base’s project scope would be far from enough to address the $21 million surprise the nine new Sounder cab cars pose to the agency’s long-term financial plan. That’s because the maintenance base itself, even at full projected cost, would account for no more than about $7 million, according to a March 2013 Sounder program update. (See pp. 93 and 97).

Cutbacks in the Pierce County Sounder maintenance base would also countermand the agency’s own recommended financial best practices. A 2009 Sound Transit presentation noted that to “save operating dollars” it was important to implement the recommendations of its Transit Operations Task Force including to “accelerate (development of the) Sounder maintenance base.” (See. p. 12). Currently Sounder maintenance is handled through a contract with Amtrak.

A resolution to approve the Pierce sub-area’s issuance of bonds to cover the $20.9 million in unplanned-for cab car costs was endorsed by Sound Transit’s Operations Committee at its meeting last Thursday and is on its way to the agency’s full board of directors for possible final approval at its June 27 meeting.

An initial ballot measure OKd in 1996 set Sound Transit in motion on planned express bus, light rail and commuter rail projects for King, Pierce and Snohomish Counties. There are five “subareas” which by agreement must share fairly in costs and benefits of building the system. They are Snohomish; the north, east and south sub-areas of King; and Pierce.

The lion’s share of ST funding is via a portion of the sales tax plus a motor vehicle excise tax and a rental car tax. Passenger fares and other revenues including interest earnings are equal to just 11 percent of projected tax revenues flowing to ST from 2009 to 2023 according the 2012 update of the long-term financial plan.

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2 Responses to “Cab car cost bump to grow Sound Transit’s queasy debt load”

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  2. […] loom, though another funding measure will come to voters within the next few years. Meanwhile, ST recently reported that its debt service coverage ratio, or proportion of operating revenues to debt service costs, is […]