The construction cost of Issaquah-Fall City Road (IFC) improvements quietly has gone up by 36%.
Or has it?
The March Sammamish City Newsletter’s page 1 article updating the plans to widen Issaquah-Fall City Road is the following, opening paragraph:
“When 10,000 Klahanie-area residents came into Sammamish last year, the city knew that a big responsibility was going to follow them through the door – a $36 million item known as Issaquah-Fall City Road.”
This figure is not what the City told Klahanie residents and the taxpayers of legacy Sammamish when promoting annexation to Sammamish.
Instead, then-City Manager Ben Yazici and then-Mayor Tom Vance said IFC Road would cost $23m, a reduction from the $38.8m King County priced the road improvements, cited by Issaquah.
Issaquah annexation study
Before Sammamish set up an annexation vote for the greater Klahanie area, Issaquah staged one in February 2014. The process leading to the vote consumed much of 2013. Issaquah’s annexation study included this section:
Yet another issue is the capacity improvement on Issaquah-Fall City Road, which has been needed for many years to accommodate the heavy traffic flow between Issaquah and the Sammamish Plateau. The cost of capacity improvements on the Issaquah-Fall City road segment that is affected by annexation was estimated by the 2012 King County Transportation Needs Report to be $38.8 million. (Emphasis added.)
After the Issaquah vote failed, by a mere 34 votes (following an aggressive Sammamish campaign opposing the annexation to Issaquah), Sammamish pursued its own annexation of Klahanie.
Sammamish purchased the Issaquah annexation study and had the figure in the paragraph above.
Raising the alarm
Sammamish Comment opposed annexation of Klahanie to Issaquah for a whole host of reasons, not the least of which geographically it just didn’t make sense. In February 2014, Klahanie rejected joining Issaquah in a close vote. In April 2015, 86% of those voting favored annexing to Sammamish.
During the intervening time, The Comment raised questions about the cost to Sammamish taxpayers of annexing Klahanie. Top of the list was the estimate by King County it would cost $38.8m to improve IFC Road.
Yazici and Vance and others on the Council dismissed the County estimate. Instead, they said the County had essentially “double counted” some of the work. Sammamish officials lowered the estimate to $23m, a figure The Comment considered ridiculously low.
As it turns out, the figure wasn’t vetted, the current City Manager says. But Yazici and Vance never made that distinction in the campaign to win an affirmative Klahanie annexation vote.
No cost to legacy Sammamish claimed
At the same time, the same officials advanced the story that legacy Sammamish taxpayers wouldn’t have to pay for the IFC Road improvements.
The March 2015 City Newsletter was explicit about the cost of IFC Road improvements:
“Improving that corridor has been on our radar for a long time,” Yazici said, “but the road hasn’t been in our jurisdiction. Fortunately, if the annexation vote is favorable, we’ll be in a position to take positive action.” And the city will be in a position to pay for it, too, thanks to the $1.4m annual surplus from the Klahanie area. “The estimated cost for the initial improvements is $23m,” Yazici said. “If the annexation goes through, we have committed to using $3m of our current reserves for preliminary engineering and permitting costs. But the remaining $20m could be paid for with the new revenue we’d receive from the annexation.”
The city projects that the annual surplus would be more than enough to pay off the debt service on a construction bond for the Issaquah-Fall City Road improvements. “In effect, our current residents would be getting a $23m benefit with an investment of just $3m,” Yazici said. “And, over time, that original investment of $3m would also be offset by the ongoing surplus from the Klahanie area.”
Then Mayor Vance, in his Newsletter message in the May 2015 issue, once again said revenue from Klahanie will pay for improvements:
“In fact, our fiscal analysis indicates that the added revenue from the Klahanie area will exceed our additional service expenditures there by about $1.4m per year. That’s a surplus that will help pay for the new road improvements.”
Reducing the estimate
However, the City’s feasibility study left this question open. The study was made by former Deputy City Manager Pete Butkus, who retired from the City several years earlier.
Butkus’ feasibility study didn’t include capital expenditures, such as IFC Road. (City newsletter, August 2014.) The ability to Klahanie revenue to pay for capital expenditures wasn’t addressed.
Additionally, subsequent Transportation Improvement Plans prepared by the City shifted money from other projects to the IFC Road estimate—thus illustrating another concern persistently raised by The Comment—and just as persistently denied by officials—that legacy Sammamish would suffer if Klahanie was annexed.
Maneuvers to lower the estimated cost of the IFC Road improvements before the annexation vote and shifting funds from other road projects in the TIP smacks of smoke and mirrors in any objective analysis.
Upping the estimate
The March 2017 City Newsletter puts the cost back to $36m, slightly below the County’s estimate of $38.8m.
Sammamish Comment emailed the City Council and current City Manager Lyman Howard for an explanation. The City’s staff, through Howard, provided this:
“I’ve reviewed the two differing, adopted TIP’s and the estimated costs per phase,” a staff member writes. “I reviewed the files and spoke to current and former staff about the difference in the two estimates. Here is what I’ve learned:
”To the best of everyone’s recollection, we utilized the County’s cost estimate on this roadway project at the time it was first included in the City’s TIP. The project was added to the City’s TIP the year prior to the City incorporating that area (2015), which was likely done so that we could get a head start on grant applications for the project. The project was included in the annexation analysis; it appears we did have an engineering firm give review of the planning level cost estimate inherited from King Co. at that time. The estimate was similar to the cost King County provided. Also worth mentioning I had hoped that King County had published this project on the Puget Sound Regional Council’s (PSRC) statewide TIP (STIP) which is updated every two to three years but the project was not on their list when it was in King County’s ownership. All of this leads me to believe that we did not have enough information to change the original amounts provided by King County which is why the costs were left at $14M & $9M.
“In 2015 we committed to updating all of our transportation project cost estimates, which we completed in 2016 and this work was done by DEA. The revised cost estimates, included in our most recent TIP, reflects the work done by DEA.
“The other thing worth mentioning is that this project was identified as an “improvement project” for many years, but little details were known in terms of what the actual improvements would be. After incorporation, our staff dove into the project scoping and were able to include more details to help inform the DEA estimate. These additional details (wetlands, bridges, wall heights etc.) are a significant factor in this project and likely contributed to the increased cost estimate.
“Finally, we also need to recognize that construction inflation was factored into our revised cost estimate. In a normal market, we were factoring in 3-5%. The past two years, we’ve been factoring in closer to 10%.
“As we move forward, we will be using a professional estimator to review our capital project costs every two to three years. This has become especially important considering the hot construction market, which is unlikely to change in the next several years.
Getting from there to here and back again
The obvious question is whether Sammamish engaged in some creative smoke-and-mirrors to lower the cost estimate in advance of the annexation vote (in April 2015) and the City Council elections (the following November), in which Mayor Vance was seeking a second term.
The current mayor, Don Gerend, replied to The Comment:
All I remember is that early numbers were, in my opinion, basically back of the envelop estimates. The design details are now being clarified (such as our decision on culvert versus bridge and the reduction of grade changes). The point is that all of the Sammamish citizens living East of the Issaquah Pine Lake Road intersection dearly feel the congestion crunch and improvements need to happen sooner rather than later.
Howard, the city manager, added the following this week of how the cost forecasts went from $38.8m to $23m and back to $36m.
I can’t answer [the] specific question as we haven’t found the reference to the $38.8 Million figure you quoted. [The] King County Transportation Needs Assessment Report for 2012 [shows] their numbers add up to $37.7 Million, but also includes some ITS [stop light coordination] work down to SR202. We don’t have the details of their estimates from this report to compare in order to compare their scope vs our scope.
According to Public Works, the $23m was an early estimated number without being fully vetted. It certainly didn’t include a bridge. You will recall that we were on a tight timeline to meet the dates necessary for the annexation to take place within the timeline desired by the city as well as the Klahanie residents. There were calls for an even faster timeline.
The current project cost referenced is $36M. This value includes several moving parts; the current design phase which has a 10% construction estimate for phase 1 (design underway so accuracy will increase as design approaches 100%), design engineering, Right of Way acquisition and a draft estimate for the second phase of construction (which would include design costs, likely needed right of way and construction).
Part of our current CIP process is to run a formal engineering estimate on all projects prior to inclusion on the TIP.
We believe the overall cost of $36M as presented is likely a good estimate of the total project costs we are facing.
To clarify the project limits of each phase as outlined in the Klahanie Annexation Study:
- Phase one begins at 242nd Ave SE at the entrance to the Eastridge Church and goes to Klahanie Dr SE. In the annexation study this cost was listed as Project A for $14 million.
- Phase two begins at Klahanie Dr SE and ends just east of the SE Issaquah Beaver Lake Road intersection. In the annexation study this cost was listed as Project B for $9 million.
Both phases may have slightly different project limits than what was preliminarily anticipated.
Can Klahanie pay for IFC Road?
While Vance and Yazici claimed revenues from Klahanie would be sufficient to pay for the improvements to IFC Road, at $23m, what is the ability to pay for a $36m project?
Or will new debt or new taxes be required?