Mayor proposes changes to street car interfund loan

SEATTLE – Mayor Greg Nickels sent legislation to the City Council to increase the interfund loan to the South Lake Union Streetcar from the city’s consolidated cash pool. The $1.45 million streetcar loan is expected to be paid back to city coffers as early as 2018 with market-rate interest.

The loan is needed because King County Metro Transit is funding 75 percent of operating costs two-and-a-half months later than expected. In addition, the economic recession has impacted sponsorship revenues, and it’s taking longer than anticipated to receive federal grants and reimbursements.

Ridership on the South Lake Union Streetcar is strong, and more than 800,000 passengers have traveled on the 2.6-mile line since its debut in December 2007. Currently, on an average day, more than 1,300 passengers ride the streetcar. The number is expected to hit 4,210 by 2012. This increase is due to the thousands of jobs being located on or near the streetcar line in the near future, including the Amazon.com headquarters. A City Council amendment to the permitting legislation requires a minimum of 60 percent of Amazon employees to commute using carpools, transit or other means instead of single occupancy vehicles.

Streetcar operating revenues, which include farebox return, sponsorships, and Metro funding, are expected to exceed operating costs beginning in 2011.

There are two options to service the interfund loan, which was originally $2.2 million. The loan can be paid off in 2023 with no additional revenue required, or the loan can be paid off as early as 2018 as originally authorized, with $250,000 per year in additional revenue.

The following are possible sources of additional revenue to service the interfund loan:

• Seattle Department of Transportation (SDOT) will aggressively market sponsorships. While there was a drop-off in sponsorship in 2009 due to the recession, SDOT is already in talks with many potential sponsors for 2010 and beyond.
• The introduction of the ORCA regional fare system, and increased ridership rates above initially predicted levels will result in added farebox return and increase the average fare per rider.
• SDOT will explore additional funding opportunities from sources such as transit and street advertising, and reallocation of federal transit maintenance funds received by the city.

The city of Seattle built the South Lake Union Streetcar line to provide local transit service and support economic development in the South Lake Union and Denny Triangle neighborhoods. The South Lake Union line is envisioned as the first of a streetcar network endorsed by the City Council in 2008. Much of the construction work was funded by private property owners through a local improvement district.

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