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Seattle’s Real Estate Boom is Driving Up Transit Costs

12:27 PM EDT on July 27, 2018

The same issues that are driving up the price of housing in Seattle are having an impact on transit costs.

The price tag for the Federal Way Link light rail project, connecting the airport to the suburb of Federal Way, ballooned from $2.09 billion to $2.55 billion, an increase of 22 percent, reported Peter Johnson at Seattle Transit Blog and confirmed by the SeattlePI.

Rising real estate prices and a busy construction market are the cause, Johnson says:

The Federal Way cost increase is driven by the same issues that drove up Lynnwood’s budget. The Puget Sound region’s gobsmacking real estate market has increased the price of land acquisition. Right of way, stations, and parking garages are all much more expensive than the agency’s 2015-16 cost estimates predicted.

Construction is similarly pricey, as the development boom has created a hypercompetitive contracting bid market, especially for technically sophisticated projects like light rail. According to construction firm RLB, the U.S. average for construction costs increased from 2017 to 2018. Seattle had one of the highest local cost increases, trailing only Portland, San Francisco, and Los Angeles among major markets.

According to Johnson, cost overruns on the earlier Lynnwood Link Extension into Snohomish County were absorbed by eliminating some bells and whistles at the station: removing down escalators, shrinking the platform size and using a different concrete. Sound Transit may be able to do the same with the Federal Way Link extension, he says.

In the meantime, Johnson warns, this could become an issue with other projects in the region's big $5-billion expansion plans, which were approved by voters in 2016. The plancalls for adding 62 miles of light rail across three counties. The Federal Way Link is the second project to come in over budget since the tax hike was passed less than two years ago.

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