A financial adviser hired to recommend new ways to pay for the monorail presented a plan to cut costs from $11 billion paid over 50 years to $7 billion that could be paid off in 39 years.

Kevin Phelps predicts revenue from Seattle's motor vehicle excise tax - the monorail's only financial source - will grow in the future, not shrink as forecasted in a previous economic study. Phelps is credited with straightening out the financial woes of Sound Transit's light rail project. He resigned his seat on the Tacoma City Council to take on the temporary task as financial consultant to the monorail project.

Phelps said his plan would not require shortening the 14-mile Green Line nor removal of any more stations.

Phelps laid out numerous recommendations to the Seattle Monorail Project board of directors last week, including restructuring the package into six shorter-term debts that could be paid off sooner. He called it "just-in-time borrowing." The previously rejected financial plan would've placed too much debt on the monorail project too soon, he said.

Phelps also advised dropping junk bonds from the financing package.

He also recommended that, once the monorail is up and running, some of the fare revenue could be used to pay interest on the debt.

Phelps also challenged some of the assumptions that guided the first financing proposal. For example, he disagreed with the prediction that Seattle's population will grow by just 0.3 percent annually. Phelps thinks the city's population will grow 6.1 percent a year.

State planners estimated the population of Washington's four most populous counties will increase 46 percent from 2000 to 2030

The difference is relevant because the amount of revenue from the motor vehicle excise tax is determined by the number of motor vehicle owners there are to pay the tax.

Traditionally the main group of car and truck owners are people age 20 to 64, and that "prime driving age" assumption was used in the monorail's earlier economic forecast, Phelps said. The previous study predicted Seattle's population of people aged 20 to 64 will decrease in the future, but Phelps thinks it will increase.

The average age of people living in Seattle is younger than the average age for the rest of King County, Phelps said.

Phelps argued the monorail's previous economic forecast didn't take into account current social trends that could have an impact on how much tax money will be collected from car and truck owners. For example, it's not uncommon today for people well into their 80s to be buying and driving cars. Last year, 14 percent of new car purchases were made by people older than 64, according to Phelps.

Baby boomers are approaching retirement age. Besides being numerous, boomers have more education, more money and take more trips than their ancestors, Phelps said.

People used to retire at age 65. Surveys show 82 percent of baby boomers expect to continue working beyond age 65, Phelps said.

Additionally, the number of women drivers used to drop compared to men after age 64. Phelps quoted a prediction that women age 75 in 2030 will be driving more than men age 75 today.

All of these factors indicate that motor vehicle excise tax revenue paid by people older than 64 was "understated" in past economic forecasts, and hasn't been included in calculations about future tax revenue from Seattle's motor vehicle excise tax, Phelps said.

Passenger fares will be an obvious source of revenue too. Fares are expected to rise gradually with the rate of inflation, Phelps said.

Monorail planners also expect there to be two separate 25-cent increases in fares over the span of several years.

Costs could be cut if the Green Line's guideway and stations were designed to withstand the worst earthquake likely to happen within a 475-year time span. Monorail planners have been using the standard of the strongest quake likely to happen in a 2,500-year earthquake. That could save an estimated $53 million, Phelps said.

He questioned the validity of the monorail project paying the state of Washington for use of air space above the Alaskan Way Viaduct. He also wondered why monorail planners agreed to pay $1 million for air rights at Seattle Center.

Another Phelps idea is to gradually phase in improvements to public infrastructure within a quarter-mile of monorail stations. He also suggested that an estimated $11 million in sales tax that will be collected buying materials for the monorail project from Seattle businesses be placed in a mitigation fund to help pay for the improvements.

Instead of buying the monorail trains, the Seattle Monorail Project could lease the trains and spread out its payments, Phelps said.

It has been acknowledges that the new monorail project wouldn't qualify for federal funds to help build it. But Phelps suggested the project apply for federal money to help operate and maintain the system once it's built. The 1962 monorail receives about $800,000 in federal money annually to help operate and maintain the ride from Westlake to Seattle Center, he said.

Two of the properties purchased by the Monorail Project could be used as pay parking lots to generate $300,000 a year. Other parcels purchased to serve as construction staging areas could be sold after construction for additional money to pay off the debt, Phelps said.

Next, Phelps' financial analysis is being studied by Jack Haley Jr., the newly appointed interim executive director of the Monorail Project. Haley is expected to make his own recommendations to the board of directors this week.

Tim St. Clair can be contacted at tstclair@robinsonnews.com or 932-0300.