BIKE: Toll road, monorail troubles, etc.

[Roger Baker]

Have you heard that the new US 183A  toll road is now calculated to 
cost $2 for 5 miles as opposed to the earlier much cheaper promises, 
before the toll roads were approved last summer.

These CTRMA toll road bonds will  nearly certainly default due to 
rising fuel costs over the long life of the bonds. Here is what the 
newly released official bond statement on US 183A says on page 77 of 
the PDF file of the almost 500 page document:

"... Motor Fuel Prices and Taxes  Among other assumptions, the Revenue 
Forecasts in the Traffic and Revenue Report are based on  (i) the 
assumption that motor fuel will remain in adequate supply and motor 
fuel prices (in current dollars)  will not exceed $3.00 per gallon and 
(ii) the assumption that federal and State motor fuel taxes will not  
increase to the extent that, together with price increases, motor fuel 
pump prices exceed $3.00 per gallon.   There is no assurance that motor 
fuel will remain in adequate supply or that motor fuel prices and 
federal  and State motor fuel taxes will not increase to the extent 
that motor fuel pump prices exceed $3.00 per  gallon during the 
forecast period covered by the Traffic and Revenue Report.  Motor fuel 
pump prices in  excess of $3.00 per gallon could negatively impact the 
Revenue Forecasts contained iRevenue Report.  See “APPENDIX D – TRAFFIC 
AND REVENUE REPORT.” ..."

In other words, the CTRMA toll road promoters despite repeated 
warnings, from myself and others, made NO effort to calculate the risk 
that rising fuel costs might cause the toll road bonds to default on 
about a third of a billion dollars worth of current investments based 
on deficit spending for municipal revenue bonds! When the toll bonds 
default and we get  a bad  reputation on Wall Street, it could get 
pretty hard for the Austin area to borrow more bond money for the stuff 
all cities like Austin need.

They do say in essence above, that if fuel prices rise about $3 per 
gallon in current dollars during the next forty years, then all bets 
are off and they will assume no responsibility for the outcome. Which 
is perhaps their quaint way of saying that these bonds will almost 
certainly default.

-- Roger


             *****************************

Why didn't they just shove aside all the cars on welfare and put in 
reliable, well-engineered, predictable, high capacity, ground level 
light rail into the newly liberated street space? Its never too late to 
learn I suppose. -- R


http://seattlepi.nwsource.com/transportation/210331_monorail02.html

Seattle Post-Intelligencer
Wednesday, February 2, 2005

Monorail plan on debt payoff finds skeptics

By LARRY LANGE
SEATTLE POST-INTELLIGENCER REPORTER


OLYMPIA -- Judging from an afternoon of skeptical questions, Seattle
monorail officials may not get the extra cushion they sought to finance 
the
city's $1.6 billion elevated rail line.

State lawmakers and citizens alike joined in questioning why the 
monorail
agency needs more than the 40 years already allowed to pay back a
bonded debt for the 14-mile project.

Monorail officials had sought authority for the extra time as a hedge
against the possibility that the motor-vehicle excise tax that supports 
the
agency doesn't cover the expected debt in the 30-plus years planned.

Some members of the Senate Transportation Committee, however,
questioned the wisdom of allowing the added time, saying extending the
debt would cost the agency more and might be a bad precedent.

"This puts tax policy in the hands of unelected public officials," said
Seattle economist Peter Malishka, speaking against the debt-extension
provision. Seven of the monorail's directors are appointed, two are
elected.

The hearing included suspicions -- denied by a monorail official -- 
that the
voter-approved rail project has hit a financial snag.

The request for the longer payback time "is tantamount ... to the 
failure of
its financial plan," monorail critic Geof Logan told committee members.

Monorail finance director Jonathan Buchter later said the agency is 
"not in
trouble" financially but wanted authority for the longer time period so 
it
could ensure bondholders that they would get their money if tax revenue
fell short.

"I truly believe we're going to get the project financed ... we're 
going to
build the monorail," he said.

Some committee members, including the chairwoman, Sen. Mary
Margaret Haugen, D-Camano Island, chafed at granting the added
authority.

"Somebody has to pay for this at some point," she said of the debt.

Committee members also appeared swayed by state Treasurer Mike
Murphy, who said that the payback time for state bonds is 30 years and
that longer than 40 years "is something I'm not comfortable with."

Buchter said there's a big difference between the amount of debt the
monorail can issue and what the state can. But Haugen and committee
vice chairman Dan Swecker, R-Rochester, expressed doubts that
lawmakers will leave the 40-year-plus payback arrangement in the bill.

"I don't think that's going to fly," Haugen said.

Critics also lambasted the monorail's attempt to retain a controversial
vehicle-depreciation schedule by putting it in the bill.

Monorail officials said Seattle voters authorized the schedule, which
allows heavy trucks to be depreciated faster than cars because of 
greater
mileage, in 2002 when they approved the monorail plan and the car-tab
tax.

Several speakers, however, said the schedule assigns higher-than-Blue
Book or even sale values to passenger cars in particular, in effect 
allowing
the monorail to levy more than the 1.4 percent tax on the values that
voters authorized.

Economist Christina Tapia noted that the schedule was thrown out by
Initiatives 695 and 776, two vehicle excise-tax limitation measures.

She called the tax based on the schedules "neither fair nor equitable."

Monorail officials have noted that the issue is now being fought out in
court, where citizens have sued to get the schedule overturned.


P-I reporter Larry Lange can be reached at 206-448-8313 or
larrylange