City to Forestall Signing Tunnel Contracts Until Next Year

By Erica C. Barnett July 26, 2010


The city council will vote next week on a resolution that affirms the council's desire to move forward with a deep-bore tunnel, but will not vote on an ordinance signing three contracts with the state until January or February, after two potential tunnel contractors have released their contracts.

"The council's intent is to enter into the contracts with the state, but we're not signing those now," viaduct oversight committee chair Sally Bagshaw said at this morning's council briefing. "We're sending a strong signal to the tunnel proposers that the city is determined to move forward with this project. ... Our commitment is to proceed [but] why don't we wait to see what the proposals look like when they're opened?"

The idea, council members said this morning, is to wait to approve the contracts until council members can see how much the bids are and how they divvy up risk between the city, the state, and the contractor.

"If [a contractor] comes in with the lowest bid but they're really lowballed what the risks are ... we want to see that as well," council member Sally Clark said. "Price is one component, but we really need to understand the risk spread as well."

The resolution would forestall, at least temporarily, any referendum on the tunnel agreement, because referenda can only be used to overturn ordinances; tunnel opponents have been planning to put a referendum on the ballot if the ordinance doesn't include language taking Seattle property owners off the hook for any cost overruns on the tunnel.

Mayor Mike McGinn's office didn't respond directly to a question about whether he would sign the resolution. However, in a statement this afternoon, McGinn accused the council of "doing everything possible to prevent a public vote" and said that "Until the state law is changed, Seattle remains at risk of paying cost overruns.”

During a press conference after this morning's briefing, I asked City Attorney Pete Holmes whether a referendum would still be possible after the bids are released. Could tunnel opponents ask the voters to repeal an ordinance once it's passed next year? Holmes said, "That's a question for another day that may never even arise." However, nothing in state or city law precludes a referendum after the bids are released. Essentially, the city is kicking the overruns can down the road.

Additionally, council member Sally Bagshaw said this morning, delaying the ordinance will also give the city a chance to decide if it wants to go back to the state legislature and ask legislators to remove language in state law stipulating that "Seattle-area property owners" must pay for any overruns on the tunnel.

"Removing that language is really critical," council member Mike O'Brien, a tunnel critic, said after this morning's press conference. O'Brien did not participate in the press conference and says he needs to take a closer look at the resolution before saying if he'll support it. "I would like to see us make asking the state legislature to state their new legislative intent that the city will not pay cost overruns be a priority for the city council."

However, council members didn't seem especially eager to pressure legislators to remove the language.

"We've talked to the governor's office about exploring that option, but we've also been warned by legislators, 'Don't go down and reopen that [legislation] because we have other projects elsewhere in the state" that could use funding as well, Bagshaw said.

Council member Tom Rasmussen added, "I would rather have a more positive approach continue to work with the state on these bids ... An intent statement that's not enforceable—why put energy into something like that?"

The resolution also re-states the city's intent that Seattle-area property owners aren't on the hook for any cost overruns on the tunnel.

Although council member Mike O'Brien had planned to propose amendments to the agreement that would do just that, he didn't have enough support on the council.

This morning, City Attorney Pete Holmes called the resolution "a very good solution that's in the city's best interest." Although "there's nothing in the contracts and nothing in state law that would put the city on the hook for cost overruns," Holmes said, "the state legislation contains a hard cap [on costs] and that cannot be ignored."

At the press conference, I asked Holmes what he meant by his statement about state law. Given that state transportation leaders, in floor speeches as well as the language of the legislation itself, have made it pretty clear that their legislative intent was to make the city pay cost overruns, how could the city be so sure Seattle taxpayers wouldn't have to pay?

"Legislative intent and enforceable state statute are two different things," Holmes said. "Attorney General McKenna, the governor's office, and the lawyers in my office all agree that there is nothing in that statement of legislative intent, while [it's] disturbing to citizens in Seattle ... that [provides] for it to be carried out. That would require the city to agree to those responsibilities, and it's not doing so, or for the state legislature to take further action."

The resolution doesn't delay the tunnel; it merely puts off the signing of contracts between the city and state until next year.

Explicitly, it says:
Section 1. Subject to requisite environmental review... the City Council intends to authorize the agreements attached as Attachments 1, 2, and 3 to this Resolution [the city's three agreements with the state] if the State awards a contract consistent with the Draft Design-Build Contract and can complete all elements of WSDOT's Program within the Program budget.

Section 2. It is the City's policy that the State is solely responsible for all costs, including any cost overruns, relating to implementing WSDOT's Program.

Section 3. It is the City's policy that in no event shall the City or any Seattle-area property owners be specially required by the State to pay for costs or any cost overruns related to implementing WSDOT's Program.

The council will discuss the resolution further at the viaduct oversight committee meeting at 2:30 this afternoon. According to Don Stark, a lobbyist for tunnel proponents, as many as 100 tunnel supporters will be on hand to comment.

Mayor Mike McGinn "will be commenting later today" on whether he intends to sign the resolution, his spokesman, Aaron Pickus, says. The resolution does not require the mayor's signature.
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