Monorail Under a Microscope

State Auditor Brian Sonntag has questions about money, openness, bidding, and conflicts of interest. His scrutiny is prompted in part by memories of the gigantic 1980s WPPSS bond default.

State Auditor Brian Sonntag doesn't mean to imply that Seattle has a financial disaster in the making. But behind his decision to fully audit the books of the Seattle Monorail Project is the nagging memory of a financial disaster of the 1980s, a $2.25 billion bond default on nuclear-plant construction by the Washington Public Power Supply System (WPPSS)—fondly known as "Whoops!" "A lot of the questions about WPPSS were framed around, 'Where was the auditor?'" says Sonntag, who took office in 1993. "That is always on my screen of thought regarding these huge public projects."

So where the auditor will be in a few weeks is in the offices of SMP, asking questions and reading documents and financial charts, seeking to determine if the government agency in fact will have the money to build a planned 13.7-mile starter line from Crown Hill to West Seattle. The state's audit, to include a review of an SMP board member's possible conflict of interest reported by Seattle Weekly, will be independent of monorail and City Hall reviews. "We're the public's auditor, and that is on whose behalf we're asking these questions," says Sonntag. "Maybe there are perfectly logical, reasonable answers to our questions. If so, that would restore confidence that the monorail can go forward."

The outside audit includes a review of SMP's compliance with open meeting laws and bid regulations. Sonntag says he's read—and his office has been notified—about complaints that project bid specifications were changed and a liability insurance requirement was eased, enabling Cascadia Monorail to win the bid. The sole potential competitor, Team Monorail, chose not to bid just before the submission deadline last summer because it thought it couldn't meet some of the criteria that changed. The state audit could also nail down some absolutes by an agency that has adjusted tax-base projections by billions since its creation in 2002. SMP had to cut planned rail miles, train service, and stations because of miscalculations. SMP has now confirmed, as first reported June 8 by Seattle Weekly, that the budget will top $2 billion but claims it will have $2.1 billion in Seattle vehicle licensing revenue to cover loan, construction, and operational costs.

In a new analysis of the tentative pact released Tuesday, June 14, Team Monorail—the construction group that dropped out—estimates the cost of a Cascadia monorail at $2.4 billion. That would put the project $662 million, or 39 percent, over budget. Blair Butterworth, spokesperson for Team Monorail, which wants bidding reopened, says the figures are based on estimates recently released by the monorail project. SMP spokesperson Natasha Jones says the agency hasn't seen Team Monorail's estimate but expects its own projections to be born out during public hearings now set for July 5, 6, and 7.

Two main components of the monorail plan are to initially make minimal payments on borrowed money—easing up-front expenditures but costing more in the long run—and realizing a 6.1 percent annual growth in the license-revenue tax base. That requires Seattleites to buy more cars, preferably expensive ones, if the rapid transit experiment is to succeed. "That's kind of funny logic," says Sonntag. In a June 7 letter to SMP and Mayor Greg Nickels, the auditor outlined his audit plans, saying he wanted "to share our concerns and those of others about the viability of the Seattle Monorail Project, particularly the ability to finance it and meet projected costs." He noted that observers, including state treasurer Mike Murphy, "are deeply concerned about overly optimistic revenue projections, about the aggressive project scope, about what they believe has been a lack of openness, and about the potential effect of the project on taxpayers, not just in Seattle but throughout the state."

In an interview, Sonntag noted that the day after his letter was sent, SMP announced the budget was rising to more than $2 billion. "How ironic that is," says Sonntag. "It's just more evidence why we need to be asking these questions." Yet to be asked is whether it's a conflict of interest for Richard Stevenson, president of Clise Properties, from whom SMP is buying land, to sit on the board that approves such sales, even though he has recused himself from downtown property decisions. (See "Location, Location, Location," Dec. 22, 2004). "That situation will be reviewed," says Sonntag.

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