UPDATE

In an hour-long conference call at 10:30 a.m. July 20, Mayor McGinn and Carl Marquardt who serves as his Legal Counsel spoke to Seattle media including the West Seattle Herald. The mayor's major theme was his desire to protect Seattle taxpayers from cost overruns on the Deep-Bore tunnel project. He and Marquardt pointed to a Washington State law that protects the state from paying cost overruns, or any costs associated with the project beyond a $2.4 billion cap.

He said if the contractor were to charge for extra costs while the boring machine was in the ground and all the streets were dug up, that invoice would go to the state and they would, in the current legal language, be protected from paying the extra amount and would then bounce it back to the City of Seattle who would be left to pay the tab.

The Mayor said, "Even a 10-percent cost overrun on the basic tunnel cost of $1.9 billion would amount to $190 million, a huge figure for our city. If the cost overrun was 30-percent, that would be over half a billion dollars (...) I want to be on the same page as the City Council, the State Legislature and the Governor. All this talk about litigation after the boring machine is in the ground is not the way to do business. We have to all agree on the cost overrun issue ahead of time."

The West Seattle Herald asked the Mayor, "What if all your concerns about financing the tunnel were met, would you still have any resistance to the project because of safety concerns?"

He said, "The State Legislature wants the project. The entire City Council, with the exception of Councilmember Mike O'Brien is in favor of it. My immediate concern is to insist the City Council takes the stance that we will not move forward without challenging the $2.4 billion State cap. Yes, there have been many concerns brought up about safety."

He added that he believes the Governor may argue that the tunnel is necessary because the viaduct is unsafe due to the threat of earthquakes. However, he said, "Governor Gregoire first said the viaduct would need to come down by 2012 for safety reasons, and now promises the viaduct will remain standing until the completion of the tunnel, which could be 2017 or beyond. So therefore the immediate safety issue regarding the viaduct is not her concern."

In the July 19 Council Meeting, Seattle City Councilmembers discussed how to best insulate Seattle's citizens from what they believe is the inevitable, the Deep-Bore tunnel's cost overruns. They referred to the " Memorandum of Agreement" the SDOT agreement the Mayor McGinn established June 28 between the city and the state on the Alaskan Way Viaduct and Seawall Replacement program to the City Council for their consideration.

"In short, this new contract language would stipulate that Seattle’s agreement to go forward (with the tunnel) will not take effect unless and until the state amends state law to clarify that the State is responsible for all project funding including cost overruns,” the Mayor said in that memorandum.

According to a press release sent just after today's meeting, Mayor McGinn stated that he does not believe the Council has yet succeeded in protecting Seattle tax-payers from this eventuality. He says:

“The City Council's proposed agreement with the state does not answer the question of who will pay cost overruns, nor does it protect Seattle. The state rejected language requiring it to pay cost overruns and rejected a provision that the agreement would not take effect until the state legislature agreed to pay cost overruns.
 
At most, the proposed agreement states that Seattle does not want to pay cost overruns.  But proceeding with the agreement while state law says the opposite leaves Seattle at risk for paying cost overruns.”

Aaron Pickus, the Mayor's spokesman told the West Seattle Herald, "The Council’s proposed agreement does not protect Seattle from cost overruns, as both state law holds and the legislature intends.  The state has capped its contribution to the project at $2.4 billion, plus $400 million in tolls. 
 
"The language proposed by the Council today does not protect us from the current state law.The mayor’s proposed city-state agreement would go into effect only after the law putting Seattle on the hook for cost overruns was removed.  That language was removed by the state."

The above statements may sound like a stern response in light of concerns for cost overruns discussed between Councilmembers and City Council Central Staff Director, Ben Noble, at today's meeting.

Councilmember Sally Bagshaw wanted Noble to clarify when she offered him a question and statement, "The city is not a signator to the tunnel contract, yes? When people are concerned with cost overruns with the tunnel we are not entering into a contract with the State of Washington over the tunnel. It's going to be between the contractor and the State. We are entering contracts about moving utilities and street vacations, and that is going to happen irrespective of building the tunnel or any other alternative."

Noble agreed with her statement.

Added Councilmember Tom Rasmussen, "I think there is language scattered throughout this agreement (to be clarified) and we want to make sure the city is protected against cost overruns. We can strengthen that language (…) I don't think anyone of us wants the city of Seattle to be responsible for cost overruns. We want to find ways to strengthen the language."

Said Noble, "There is at least the abstract risk that wsdot (Washington Department of Transportation) would proceed with a project in the city without seeking the city's agreement. The city has various authorities but regulatory power is driven from the state. A frustrated state could make (the tunnel) happen. The city is ultimately a creature of the state."

Noble added, "In the agreements the city is indemnified from cost overruns, delays, and environmental issues. The state is responsible for contaminated soils and environmental remediation. The city is responsible for the seawall, reconstruction of the waterfront, and utility costs.The Environmental Impact Statement is not yet complete. These agreements can be cancelled if an alternative to the tunnel is selected."

Said Councilmember Tim Burgess, "So the state can just do this project, and just leave us standing out on the sidewalk, if there's one still left."

Councilmember Mike O'Brien introduced four proposed changes to the agreemenst just released on his website:

http://obrien.seattle.gov/2010/07/19/proposed-changes-to-upcoming-alask…

1. Remove the cost overrun provisions in state law.  
2. Secure the Port of Seattle’s $300 million commitment before the state signs a contract with the contractor.
3. Negotiate surface traffic agreements and mitigation plan. 
4. Protect Seattle from risk in the deep-bore tunneling contract.