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It's the Contract, Stupid.
There was an exchange at the June 28 special Alaskan Way Viaduct Committee meeting that deserves attention—mainly because it answers the question Mayor Mike McGinn has been asking. (However, it's probably not the answer he wants to hear.)
"We're just asking a simple question," McGinn spokesman Aaron Pickus says. "Who will pay for cost overruns when the tunnel goes over budget? We ask that question and we get accused of playing politics, of trying to sabotage the tunnel. But it's a fair question." (It's also a rhetorical question. The answer, according to McGinn, is that the city is on the hook for the money. And that's his political hook to stop the project.)
The mayor should review the simple exchange (check it out at at the 26:18 mark), between council member Sally Bagshaw and SDOT viaduct project manager Bob Chandler at the late June meeting. Because the answer to the overruns question is right there, and it's a reality check on the claim that the city will be held responsible for any cost overruns on the deep bore tunnel contract.
The significance of what Chandler said is this: The state and the team that ultimately builds the tunnel—led by either Dragados USA or S.A. Healey Co.—will be the only two parties on the contract. And that contract—as all construction contracts do—will divvy up responsibility for all the costs between the two parties, including the responsibility for any cost overruns.
Who covers the extra ten gazillion dollars for unforeseen seismic issues, for example? The contract will decide. That's why you have contracts. Given that the city is not a signator to the contract, it can't be assigned any responsibility for cost overruns. It would be absurd. It'd be like the Department of Defense signing a contract with Boeing that says McDonald's will cover the costs for any screw ups.
"We cannot be held responsible for an agreement between the state and the contractor," Bagshaw says.
Her pro-tunnel council ally, council member Tim Burgess, adds: "We don't have liability. It's not our project."
McGinn's spokesman Pickus, however, says the state won't agree to a contract that assigns liability for cost overruns to the state. "Are they going to sign a contract that breaks their own law?" he asks, referring to the infamous provision in the state's viaduct legislation that says Seattle property owners will have to pay for any cost overruns.
Of course, that raises the question of whether or not the state provision is even enforceable—most observers (including McGinn ally and tunnel opponent, City Council member Mike O'Brien) don't think it is. "Their intent was to make us pay, but it's not enforceable," O'Brien says.
However, that's not any comfort to O'Brien (who, by the way, also agreed that "the city is not a party to the tunnel contract.") O'Brien foresees a situation where the tunnel contract assigns overrun costs to the state and not the city, but in which the state finds itself running out of money. In that case, O'Brien predicts, the state will "have to go to the legislature and say, 'we need more money.' And the legislature will say, 'Well, it's time for us to tax the city, just like we said we would.'"
"We're just asking a simple question," McGinn spokesman Aaron Pickus says. "Who will pay for cost overruns when the tunnel goes over budget? We ask that question and we get accused of playing politics, of trying to sabotage the tunnel. But it's a fair question." (It's also a rhetorical question. The answer, according to McGinn, is that the city is on the hook for the money. And that's his political hook to stop the project.)
The mayor should review the simple exchange (check it out at at the 26:18 mark), between council member Sally Bagshaw and SDOT viaduct project manager Bob Chandler at the late June meeting. Because the answer to the overruns question is right there, and it's a reality check on the claim that the city will be held responsible for any cost overruns on the deep bore tunnel contract.
Sally Bagshaw: Will the city be a signator to that [the deep bore tunnel construction contract] or not?
Chandler: The city will not be a signator to that. This is a WSDOT [Washington State Department of Transportation] contract. The contract with the design builder or subsequent contractors will be with the state. The city may be contracting for certain utility re-locations that are [a] responsibility for the city—or those may be done by the state under state contract—but the the actual tunnel boring would be a state contract
Bagshaw: I think some concern has been raised about who is going to control the risk and the responsibility of the deep bore tunnel and the actual digging of it. And the city is not responsible for that piece of the contract, correct?
Chandler: That's correct. And the agreements ... specify that the state will be responsible for both building the tunnel, mitigating any impacts of the tunnel, and remedying any issues that develop during construction.
Bagshaw: Thank you.
The significance of what Chandler said is this: The state and the team that ultimately builds the tunnel—led by either Dragados USA or S.A. Healey Co.—will be the only two parties on the contract. And that contract—as all construction contracts do—will divvy up responsibility for all the costs between the two parties, including the responsibility for any cost overruns.
Who covers the extra ten gazillion dollars for unforeseen seismic issues, for example? The contract will decide. That's why you have contracts. Given that the city is not a signator to the contract, it can't be assigned any responsibility for cost overruns. It would be absurd. It'd be like the Department of Defense signing a contract with Boeing that says McDonald's will cover the costs for any screw ups.
"We cannot be held responsible for an agreement between the state and the contractor," Bagshaw says.
Her pro-tunnel council ally, council member Tim Burgess, adds: "We don't have liability. It's not our project."
McGinn's spokesman Pickus, however, says the state won't agree to a contract that assigns liability for cost overruns to the state. "Are they going to sign a contract that breaks their own law?" he asks, referring to the infamous provision in the state's viaduct legislation that says Seattle property owners will have to pay for any cost overruns.
Of course, that raises the question of whether or not the state provision is even enforceable—most observers (including McGinn ally and tunnel opponent, City Council member Mike O'Brien) don't think it is. "Their intent was to make us pay, but it's not enforceable," O'Brien says.
However, that's not any comfort to O'Brien (who, by the way, also agreed that "the city is not a party to the tunnel contract.") O'Brien foresees a situation where the tunnel contract assigns overrun costs to the state and not the city, but in which the state finds itself running out of money. In that case, O'Brien predicts, the state will "have to go to the legislature and say, 'we need more money.' And the legislature will say, 'Well, it's time for us to tax the city, just like we said we would.'"
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