Tell The City Council You Want Monorail
The usual well-funded monorail opponents are giving one last try to stop us from building a new monorail in Seattle. The last step is for the Seattle City Council to approve the use of city streets for monorail tracks. It is crucial that you let your voice be heard and tell the City Council that we've voted 4 times for monorail and you want it built. more...
We Must Build The Monorail
There are times where communities face critical tests: do they build for the future, or retreat to the past. This is one of those times for the citizens of Seattle. more...
Monorail MVET Growth Analysis
The SMP says the monorail tax will grow at 6.1% per year. The mayor has a more pessimistic view of his economic policy and says it will be 5% per year. We've got the details on the actual difference between the two.
Help Build the Monorail Message
We'll be publishing some print-your-own flyers and brochures here on the site. Help out by adding your suggestions to the comments in this thread. more...
We Must Build The Monorail
There are times where communities face critical tests: do they build for the future, or retreat to the past. This is one of those times for the citizens of Seattle. more...
Mayor and City Council Defy Will of the Voters
Once again the denizens of Seattle City Hall are trying to kill the monorail. more...
Equity Office's Anti-Monorail Activity Causes Employee to Resign
There's a triumvirate of wealthy property owners downtown that are bankrolling the anti-monorail campaign. One employee has had enough of her employer's questionable ethics and has resigned her job. more...
More Endorsements for the Monorail
The campaign to save the monorail from greedy landlords and corporations continues to rack up endorsements. The anti-monorail campaign is stuck at 0. more ...
WAMU Hit Hard By Boycott
Last week's protest against Washington Mutual's anti-monorail activities was a huge success, resulting in the removal of twice 10 times as much money from the bank than what they've spent to fund lies about the monorail. more ...
Boycott WAMU
Although the anti-monorail campaign is late as usual with their public disclosure filing, reliable sources indicate that Washington Mutual has donated $85,000 to the effort to permanently ban the construction of a monorail in Seattle. It's time to boycott WAMU. more...
Monorail Grassroots At Work
The monorail has won 3 elections due to the combination of a great, common sense idea and the dedicated efforts of ordinary, inspired, grassroots volunteers. See how they're back at work this campaign season. more ...
Get a Break From High Gas Prices
Analysts say that the age of cheap oil is over. If that is the case, why would we approve an initiative that will ban the construction of rapid, electrically powered monorail anywhere in the city? more ....
Anti-Monorail Campaign Breaks Copyright
The anti-monorail forces have made another ethically questionable, if not downright illegal move. Their recently launched television commercials feature video that was stolen from a monorail supporter's website. more ...
WAMU Turns To The Dark Side
A buildthemonorail.com exclusive: It appears that another billion dollar downtown business has turned against Seattle and the monorail. more...
Anti-Monorail Campaign Gets Extreme Makeover
In the last several weeks this website has cataloged the distortions, outright lies, and right-wing agenda of the wealthy forces working against the monorail. It looks like that may have had an effect. more...
More Ethics Problems for Monorail Opponents
The anti-monorail campaign has been characterized by two things: distortions of the facts and deceit about who is actually behind their efforts. buildthemonorail.com has filed an official ethics complaint that alleges further illegal activity. more...
Monorail Winning the Endorsement Race
A surprising thing is happening so far in the campaign to save the monorail from right wing extremists. Many of the groups that opposed the monorail in 2002 are now supporting it in 2004. more...
Are Monorail Opponents Simply Anti-Transit?
Monorail opponents say that they oppose the monorail because of their distaste for taxes and elevators. Is it possible that they're also opposed to all forms of mass transit? There's some interesting new data that could answer that question. more ...
Another Recall Lie Exposed
The Seattle Times recently quoted Tim Wulf as saying that his involvement started with his registration of their website domain last year. A simple internet search has revealed that it was actually registered by the chairman of the King County Libertarian party. more...
The Truth About Selig
The monorail opposition is almost entirely funded by a single wealthy property owner. Who is Martin Selig and why does he hate the monorail? more...
Pro-monorail Campaign Launched - Funding, Volunteers Needed
The official pro-monorail campaign has started up to defend the Seattle Monorail from its attackers. It's crucial that you send them any funds you can to run the campaign and any time you can give to help win in November. more ...
What would I-83 do?
Curious about what the anti-monorail initiative would actually do? Get the facts here. more...
Don't Let Tim Eyman Style Anti-Tax Politics Kill The Monorail
Do monorail recall leaders really represent Seattle? Or are they in fact nothing more than local versions of Tim Eyman? more...
I-83 Is An Illegal Initiative
Why vote for something that will only be thrown out after the election due to it's blatant illegality? more...
Monorail Opponents Lie about "Grassroots" Campaign, Fined by Ethics Commission
Remember back in the summer when the monorail opponents such as Liv Finne were collecting signatures and claiming the work was done by their "grassroots volunteers"? Turns out it was a huge deception campaign. more...
| Get the facts on the Green Line from the source |
Monorail MVET Growth Analysis
Growth Rate Years Required to Payoff Bonds 6.1% 31 5.825% 33 5.55% 35 5.257% 37 5.0% 39
One of the key points raised by the mayor and city council members over the last few weeks has been about the projected growth rate of the Motor Vehicle Excise Tax (MVET) that funds the monorail project. A private firm hired by the SMP has created a model that estimates the growth to average 6.1% per year.
The mayor's economist takes a dimmer view of the city's future and says that 5% would be more reasonable. (Also note that the average growth rate throughout the 90's was 8.5%. Too bad our current city leaders can't put together an economic plan as good as their predecessors.)
So is 1% really that big of a deal? Last week the staff at the SMP gave a detailed presentation on how the terms of financing change depending on the growth rate. Here's what they came up with:
Project Price: $1.34 billion
This shows that the real difference between the pessimistic view of the mayor and the well-researched estimate of the SMP actually only equates to 8 years of financing. Note that 8 years is less time than we've been talking about building the monorail.
And it's important to point out that no matter what the growth ends up being, there is absolutely no risk of default because the bonds will be insured. If the growth is lower than expected, the payoff timeline will be extended. If we get new leadership in the city that is able to get us back to our previous level of prosperity, the payoff timeline will be shortened.
The real question is for the mayor: Do you not understand the basics of finance, or is this just an excuse to cover the real reason you want to kill the monorail project?
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MVET rate discussion
by Robert Allyn on 11/1/05 |
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The following is an email discussion I had with Dwight Dively about the MVET forecasts and assumptions. It is long, but was helpful. I hope it helps others understand the issue. - Robert To: Dwight Dively From: Robert Allyn 10/19/05 10:12 AM Hello, I am very interested in your financial assertions about the monorail project. I am trying to educate myself on the facts of the project and trying very hard to verify the information I am hearing, so I can make an informed decision. The Seattle Times article attributes the following to you: "City Finance Director Dwight Dively estimated that with the 5 percent growth the project would be able to raise and repay $1 billion, not including interest, far less than the construction-operating cost of $1.7 billion." http://seattlepi.nwsource.com/transportation/245126_monorail19.html Wednesday, October 19, 2005 Monorail plans meet skepticism Financing revisions aren't drawing city's support By LARRY LANGE Yet from the SMP I see: "A $4.9 billion overall cost, including construction, operation and interest, assuming a 5 percent average annual growth in the license tax. At that rate the bonds would take 38 years to repay." http://seattlepi.nwsource.com/transportation/244986_monorail18.html Tuesday, October 18, 2005 Shorten Monorail, save $7 billion By LARRY LANGE What is the background information for your assessment? I need to get the facts to be able to make a good decision. Can you send me more information on this so I can see where you get your numbers? Thank you. Robert Allyn Seattle, WA >>> Date: Mon, 24 Oct 2005 06:26:16 -0700 From: Dwight Dively To: Robert Allyn Subject: Re: Monorail finance assertions Mr. Allyn, sorry for the delay in replying: last week was the first set of City Council budget review sessions, which tend to be all-consuming. The Mayor asked me to do an analysis of the latest SMP proposal using three key assumptions: 1) the MVET would grow by 5.1% per year (lower than SMP's forecast, but still well above what Sound Transit is using and above what almost all economists would recommend); 2) 60% operating recovery from the farebox (higher than almost any transit system in the U.S., but lower than SMP's assumed 100% recovery by 2020); and 3) 30-year bonds. I took the initial MVET, operating cost, and construction schedule figures from SMP's September plan (I did not have the latter two items for the October plan, but they would not materially affect the result), and then determined what amount of debt could be supported under these assumptions. The total is about $1.0 billion. This should be regarded as a rough estimate since the actual amount would vary depending on interest rates, construction schedule, the structure of the debt, etc., but it is reasonably close. There is no way to come close to the estimated debt amount the SMP needs for their latest proposal under the assumptions listed above. SMP says it can finance the line because it makes different assumptions than the ones the Mayor listed. As I understand it, they do not have a financing plan at this point, but rather have several options. They say they can finance their proposal by assuming combinations of higher MVET growth, longer terms for debt, and/or full farebox recovery. The particular option you listed in the email combines a longer debt term and full farebox recovery. So, one's view of this project really depends on the assumptions you are willing to make. I hope this helps. Dwight Dively Director of Finance >>>Robert Allyn 10/24/05 6:49 AM >>> Mr. Dively, Thank you very much for your reply. You have helped clear up the differences in the numbers. So it sounds like both sets of numbers are accurate, just that they use different assumptions, specifically the farebox return and length of bonds. That makes more sense. Do you have any idea why Dick Conway's model for the MVET has never been given to the SMP for review? Sounds like valuable information to be withholding, but maybe I misunderstand the situation. Thanks again for your assistance. It really helps me better understand the debate. - Robert Allyn Subject: Re: Monorail finance assertions Date: Mon, 24 Oct 2005 08:18:34 -0700 From: Dwight Dively To: I'm not completely familiar with the issue about Dick Conway's model. Dick has sent a detailed comparison of the results of his model and the ECONorthwest model to SMP, which I've seen. This would seem to satisfy the issue, so I'm not sure what SMP thinks they have not seen. I've never "seen" ECONorthwest's model, which SMP uses. Rather, I've seen the assumptions it uses, the methodology employed, and the results it produces, which is all that is really necessary. Suffice it to say that Conway and ECONorthwest used very different modeling approaches that yield quite different results, but the real reason they yield such different results is the assumptions that are used. I can go through those differences if you're interested. Thanks. >>>Robert Allyn 10/24/2005 1:11:41 PM >>>>>> I am very interested in the differences between Dick Conway's model and the ECONorthwest model, if you have the time to enlighten me. I would appreciate it. I am not clear if the SMP is referring to the assumptions and methodology, or other information about Dick Conway's model. They did mention that they had received results, but not supporting information to verify or back it up. Thank you for your time. I really appreciate your responses. It is helping me get a much better understanding of what is going on. - Robert Subject: Re: Monorail finance assertions Date: Tue, 25 Oct 2005 12:56:57 -0700 From: Dwight Dively To: Robert Allyn Conway's model is a traditional time-series model used to forecast future revenues based on past relationships with econometric variables, such as inflation, population growth, car ownership, etc. ECONorthwest used a cross-sectional analysis comparing different counites in Washington to get an estimate of how econometric factors affect MVET. Conway's is the more traditional approach to these types of analysis; ECO defended their approach as a better way to conduct an analysis since there is no historical data on Seattle MVET (the State only has data at the county level). While the modeling differences can be argued ad nauseum, the more important differences are in underlying assumptions. ECO uses a population growth estimate derived from the Puget Sound Regional Council and a vehicle value growth rate that is nearly double the overall rate of inflation. Conway uses a lower population growth estimate for Seattle in the future and a vehicle value growth rate that is closer (although still above) long-term inflation. ECO's approach yeilds about 6.1% MVET growth while Conway's is more like 4.5%. If you accept ECO's population growth forecast, which is used by the City, but Conway's vehicle value forecast (which seems far more realistic in the long run), you get about 5%. Hope this is useful. >>> Robert Allyn 10/25/05 3:44 PM >>> Thank you for the details. I appreciate your time. It really has helped me understand the underlying information. I can see that 5% looks to be a more acceptable forecast number, and a medium between the Conway and ECO models. I guess this leaves me the issue of how long I think is acceptable to pay off a major infrastructure project, and what farebox recovery rate looks likely. There aren't many automated systems like the proposed monorail to compare to. I will have to poke around and see what I can find. Thank you again for all your information and assistance. Would it be acceptable for me to share your information with friends who have the same questions I have been asking? I don't want to repeat this information without your permission, but I know it would be very helpful to a whole group of us that have been trying to figure out which way is up with the monorail project. - Robert Date: Thu, 27 Oct 2005 06:24:59 -0700 From: Dwight Dively To: Robert Allyn Subject: Re: Monorail finance assertions Yes, feel free to share this: I've said just as much to the SMP, the Council, and the press. Thanks. >>> Robert Allyn 10/28/2005 1:02:46 PM OK, so I have poked around a little and I have a couple of other questions. 1. Why your decision to use 30 year bonds in your analysis, where it looks like the city's policy would clearly allow 40 year bonds for a project such as the monorail? Maybe I misunderstand the city policy. 2. Why do you assume 60% farebox return? Other systems have certainly reached 100%, such as the SkyTrain, or the Las Vegas monorail which is above 100%. Certainly most systems do not, but the automated grade separated systems seem to do the best at it. I would greatly appreciate it if you could help me understand your basis for using these assumptions? Thanks again for your assistance. - Robert From: Dwight Dively To: Robert Allyn Subject: Re: Monorail finance assertions The City's debt policies would allow longer term bonds, but we have not issued bonds with terms in excess of 30 years for at least 30 years (sorry for the confusing sentence). We have financed many projects with lifespans equal to or greater than the monorail and the City's leaders have simply not wanted to enter into such long term obligations. In fact, we have generally been shortening the terms of debt in order to avoid sending large costs to distant generations. Finally, the term is not the only issue here: the proposed SMP debt is heavily backloaded with no principal and interest repaid for many years. The City has not ever issued bonds of this type to my knowledge. Please note that I am not saying that the SMP bond proposal is somehow unprecedented. There are similar financing plans for some other transportation facilities in other parts of the country. I fully believe SMP could sell bonds in the manner they propose; in other words, the financial markets would accept this plan. My observations are solely about whether this is an approach the City would use and a request that people understand the high long-term costs of a financial model of this sort. The 60% farebox standard was one the Mayor was interested in. I'm not an expert on these issues so I can't suggest what figure would be "right." I've heard that Vancouver comes close to breaking even. Las Vegas is a special case due to tourist use and I don't think that can fairly be extrapolated to a commuter facility. Thanks. To: Dwight Dively Subject: Re: Monorail finance assertions Thanks for your reply. I appreciate the additional information. I guess if the monorail had the $500 million up front as did the light rail we would not be having this conversation. The financing plan would be in line with your stated expectations. Without the up front dollars, the monorail's only option is to back load the payments to free up money for construction now. That tactic costs money, as I can see. So, after all this what do I think...? I guess I am willing to gamble on the monorail. After looking around at other systems, I am more optimistic about the farebox revenue than the mayor. Not sure about 100% but more than 60% I think. I wish the monorail had the up front financing grant to offset the costs. Since it doesn't I am left thinking the existing plan would still be cheaper than starting over with a new plan and waiting what would probably be 5 more years. Light rail sounded promising years ago, but looking at estimates to expand the system, the costs are very high, tunneling especially. Higher it seems than the cost of the monorail with the existing financing plan. As I look at the future of monorail expansion with better financing plans, it seems to beat light rail hands down, at least in this city with its property values, terrain, and lack of available right of way. Thank you for all your time and information. I now feel I understand the financing issues at work, and the basis for them. I will share this wealth of information with friends to help them understand the issues as well. I know some of my friends will not agree with me. At least we all will have some common ground now on the fundamentals. We can then argue about the assumptions and details of the plan. Sincerely, Robert |
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