The monorail's first phase of 10 miles can be built for no more than $1.7 billion and can be built and financed for no more than $6 billion and repaid in less than 40 years, says John Haley, new monorail executive director.

The $6 billion is at the high end of the cost potential, he said, depending on which finance plan the Monorail board chooses. He made it clear than no junk bonds or other "creative financing" would be used.

The new construction and financing proposal cuts $300 million from the previous estimates, he said, even though he still believes the entire 14 mile Green Line can be built with the money earmarked from the Motor Vehicle Excise Tax.

"But others wanted a lower rate," he said. "The (monorail) board is trying to demonstrate they are listening."

Haley said three separate plans were to be presented to the board Tuesday evening for their decision.

He also noted that he had brought in independent analysts to go over the car-tab tax and they decided it was a solid financing method, even if the income grew at a rate less than the official projection of 6.1 percent.

The first phase shortens the monorail from 14 miles to 10 miles, with the line running from West Dravus Street in Interbay to Alaska Junction. Ballard and the crossing over the ship canal are gone for now. In West Seattle the Green Line will end at Alaska Junction instead of Morgan Junction.

Since the Seattle Monorail Project Board was forced to place its future on the Nov. 8 general election ballot, the agency has been working on the financing plan for the shorter first phase.

Haley stresses the system is not being shortened, but that pressures caused the board to break construction into two parts. Eventually, the line will run the full 14 miles, with the West Seattle terminus moving from the Alaska Junction to Morgan Junction and from Norwest 85th in Ballard, across the ship canal, connecting with the first phase at Dravus.

He said there will be no loss of equipment and there will be 12 stations at opening. Since there will be the same number of trains as were planned for the longer route, it will allow increased service; six minutes between trains in peak hours, or a 33 percent capacity increase. Haley says the fact monorail is an automated system, trains can be doubled back from downtown.

Service hours would remain the same and the line would be able to handle increased ridership during peak hours and during special events.

Estimated daily ridership in 2010 is forecast at more than 38,000 daily and up to 57,000 by 2030.

Plans will be offered to the board that include multiple long-term borrowings to meet contract payments, that it will use multiple short-term borrowings with one approved by the Monorail Board. Those short-term borrowings will be used to pay contingency costs and reserve expenditures.

Short-term borrowing will be reduced as quickly as possible. In addition, the plan suggests "possible use of some variable rate debt."

The new plan says that even assuming the annual income from the Motor Vehicle Excise Tax grew at only 5 percent, 80 percent of its forecast of 6.1 percent, the debt could be repaid in less than 40 years.

Critics have said all along that the 6.1 percent growth rate was overly optimistic, suggesting that number could be as low as 4 percent, despite the fact the city is predicted to grow in he next 20 years.

Revenue from the car-tab tax increased 5.5 percent in June, following a 4.9 percent increase in May and 6.1 percent hike in April.

Haley said the car tab tax can vary from month to month, from a high of an 8.8 percent increase down to the current 4.4 percent.

The original proposed contract would have totaled $11 billion, then the cost was said to have been reduced to $7 billion to build it and to finance it. At that point, pressure from Seattle Mayor Greg Nickels and the City Council forced the issue to the ballot.

However, many observers of public construction financing have noted that rarely, if ever, is the total cost of interest made an issue in making a contract.

"I can count on one hand and have three fingers left over, the number of projects where the financing cost is discussed," Haley said. "You buy a $400,000 house, not an $800,000 house with the finance charge."

But when the $11 billion figure came out, former Monorail executive Joel Horn tried to explain the huge number as "normal financing charges" but his words seemed to exacerbate public anger at the huge potential cost.

Haley said this project is unusual in his experience, because it is ready to build and construction could begin before the end of the year.

"We have the needed property, we have a sound delivery plan, we have a stable financing stream," he said. "This could be a transportation system that lasts 100 years."

He added that the Boston subway system is now over 100 years old.

The hardest thing for the monorail board has been that they had expected the support of the city, but when that changed it was a difficult adjustment.

"But the board is unified and resolved that this is a good project," he said. "This is a very doable project."

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