Seattle Daily Journal of Commerce reporter Marc Stiles recently quoted a source as saying that J.C. Penney has pulled the plug on plans for a store in the Kress Building at Third Avenue and Pike Street in downtown Seattle. Neither J.C. Penney nor the new owner of the Kress would comment on whether the deal is off, Stiles reported. But a local retail specialist said he was surprised about Penney’s lease at Third and Pike, because it struck him as “outrageous” given the scruffy character of the corner. Third and Pike is within a six-block area that, according to an analysis by The Seattle Times, had nearly 1,000 crime incidents over the last year. They included 98 reports of shoplifting, 86 narcotics violations, 83 assaults and 49 robberies. As Stiles noted “Not exactly roll-out-the-welcome-mat numbers for retailers and their customers.”

Do you think retailers are reluctant to locate in that area, or should be? What can be done to make it better?

The Seattle Board of Park Commissioners will hold a public hearing at 7 p.m. Nov. 3 on a proposal to remove a fence that blocks public access to a block-long swatch of Lake Washington shoreline, one block north of Madison Beach park. The meeting will be in the Kenneth R. Bonds Park Board Room, 100 Dexter Ave. N., Seattle, according to a post on the CHS Capitol Hill Seattle Blog. SeattleScape’s Patrick  Doherty has championed the issue here.

This block-long stretch on Lake Washington has been behind a fence for decades.

The New York Times has an interesting article on real estate development in New York’s Bowery. It looks at preservationists efforts to save historic buildings on the “original boulevard of broken dreams.” The story notes that generic glass-and-steel towers, trendy hotels, art galleries and chains like Whole Foods have been chipping away at the street’s character, threatening to make some blocks resemble the sleeker stretches of Avenue of the Americas or Third Avenue in Midtown.

Photo courtesy of Flickr

On the heels of a SeattleScape post by Patrick Doherty, the city of Seattle will consider removing a fence that blocks regular folks’ access to a block-long swatch of Lake Washington shoreline, one block north of the Madison Beach park. Doherty wondered “What’s up with that?” in the SeattleScape post. Now according to a SeattlePI.com post, the city’s Parks Board will take up the issue in December, much to the chagrin of some neighbors in Madison Park.

This block-long stretch on Lake Washington has been behind a fence for decades.

Online news site PubliCola has two interesting posts on crime in Seattle’s Belltown neighborhood and the city’s attempt to address it. What do you think can be done to make Belltown safer?

Google map

On Saturday I speculated on my land use blog about what might happen to the deep bore tunnel if Congress failed to reach agreement on raising the debt ceiling. Well, now they have a deal. But even if they pass the deal (and they may not) trouble might still be ahead for the project because of problems at the federal level. Here is what I was thinking this weekend:

It seems very likely that if the federal government defaults, or even if it gets close and gets its credit score dinged, the tunnel project up for a vote could be in serious financial trouble. The fact is that the project is very dependent on federal money and borrowed money. Federal money might get cut off as the national government struggles to pay its bills without extra borrowed cash, and state and local government would face increased costs as interest rates go up when their credit ratings get downgraded because of the federal cash crunch. Anyway you slice it, the current troubles mean that even if the project comes in on budget, Seattle may get stuck with what the feds can’t pay, and the State, Port, and City share might ballon as their borrowing costs go up, pushing more risk and costs on city taxpayers. Let’s unpack this.

Tunnel supporters feel the debt limit crisis.

Photo credit:mensatic from morguefile.com

From the New York Times Q and A on what the pending debt crisis could mean for local governments:

Q. What could it mean for states and cities?

A. States, still recovering from the downturn, could be hurt in two ways. First, if the federal payments they rely on for everything from Medicaid to highway construction are interrupted, states that are still recovering from the recession could face serious cash-flow problems.

A default by the federal government on its obligations would profoundly affect a lot of people and organizations. But it could affect the tunnel by affecting highway funds allocated for the project. Now, at first, you might think that federal funds are coming, off in the future. But it’s likely that the Congress is going to play this game again later on. The pressure for a two step vote, one now and one next year, makes the possibility that funds both now and and in the future for tunnel construction might get choked off. That’s a de facto overrun even if the tunnel’s costs are as predicted since the revenues won’t be.

I haven’t seen anything that maps out priorities for who gets paid first as federal dollars get scarce with a default. But it’s hard to see the federal government continuing the flow of cash to a deep bore tunnel in Seattle instead of paying for grandma’s social security. Those entitlements are a significant outlay, but so is all the money that will be borrowed by the state, port and city to pay for the tunnel and seawall replacement. Who gets paid first?

State and local governments are already feeling the pressure of decreases in revenues. But could there be a ripple effect on the tunnel created by a default and subsequent downgrade of the federal government’s credit rating? Moody’s is already reviewing local governments and considering downgrading them if the crisis unfolds with a default.

A Moody’s spokesman said such factors as dependency on federal revenues, reliance on capital markets, exposure to overall economic cycles and cash reserves played into which entities are being reviewed. Nationally, the review list includes 162 local governments, 14 housing finance programs and one university.

The story from Minnesota’s Star Tribune goes on to say:

“If the U.S. isn’t AAA credit, that threatens everything,” Schowalter said. “If the U.S., which protects and guides the states’ credit, is decreased that is going to have a ripple effect on the economy that is really profound.”

And more from the New York Times Q and A:

Some states are already feeling the effects. Maryland postponed a bond sale after it was warned that its credit rating would probably be lowered in the event of a federal downgrade. California, which typically issues short-term bonds for cash-flow reasons at this time of year, is working to arrange bank loans instead, citing the market uncertainty. Some state pension funds are worried that a default could erode the value of their investments, which are still recovering from losses during the recession.

How could this affect the tunnel? Well there is a lot of federal and borrowed money in the funding stream for the tunnel. The Washington State Department of Transportation’s website shows that

The viaduct replacement projects have $2.4 billion in committed funding from the state gas tax and federal sources. The Port of Seattle has committed $300 million to the replacement program.

The City of Seattle needs to borrow as much at $235 million to fund the seawall replacement, and the Port of Seattle seems to be leaning towards borrowing for its $300 commitment. Taken together, and not including possible state borrowing, that’s about $535 million in borrowing. Borrowing for the project could reach a billion dollars.

Currently, borrowing for local governments with good credit can be pretty low. But even small increases in interest rates for the city or the port could increase the costs by millions of dollars. A couple of percentage points might not seem like much, but when considered along with choked federal cash, increases in state costs of borrowing and perhaps even higher increases in interest rates the costs could start to multiply.

And don’t for get that the state borrows billions for lots of things, not just highways. If the state’s other borrowing costs go up from the typical 4 to 5 percent up to 6 or 7 percent it could cost the state millions in revenue it doesn’t have.

So put it together: less federal money,  and higher interest rates at the state, local, and port level means less cash and higher costs for borrowing money. That spells real trouble for the tunnel project. The federal government can’t pay it’s bills, the state doesn’t have much money, and the costs of borrowing start to climb as credit ratings get downgraded. All of this ought to heighten the worries of Seattle voters considering the tunnel. With problems with toll revenues, sketchy info on the Port’s commitment, trouble with federal money, and higher borrowing costs, all signs point to higher costs for the tax payers of the city of Seattle.

The tunnel project isn’t just unsustainable and bad for the environment, it’s a public finance Frankenstein, assembled from shaky and flaky funding sources. When the federal government defaults, credit ratings drop, toll revenues fail, there’s only one place to go for the extra cash: Seattle tax payers. This is one exit we shouldn’t take.

Note: I love debt and taxes. Nothing in this post should be construed as debt hawkishness. I am a sweet debt dove.

Do we want to save Metro Transit service, or allow a 17% reduction?

It’s amazing that it’s even a question. This city — riders, car commuters, our economy, sustainability — relies on transit. Yes there’s a cost, $20 per year per vehicle, but bus riders subsidize everyone. Of course we should save Metro.

How do bus riders subsidize everyone? By letting us avoid the astronomical cost of new highway capacity, and reducing traffic so drivers get places faster. By not requiring parking, which when “free” is paid for by all, not just by drivers. By letting businesses congregate in urban districts in ways that wouldn’t function if a larger percentage of people drove, particularly in central Seattle, Downtown Bellevue, etc., where transit usage is heavy. By giving low-wage workers a way to get to work, avoiding a host of social problems and their costs, starting with unemployment, and by giving higher-wage workers a way to live more sustainably.

Even for those able to drive instead of riding Metro, a reduction would generally require them to spend a larger percentage of their incomes on transportation. Much of this would come from discretionary spending, savings, and/or debt, all of which would weigh down the regional economy.

Even people who still ride metro, a reduction might mean longer commute times, with all the disruption that can entail.

Basically, a cut would be the anti-stimulus. For want of $20, an almost imperceptible change in our tax load, we’d hit this city and most of our residents with a flurry of sucker punches.

For those who think oil prices will keep rising, the stakes get even higher. Cities that have decent transit will weather high gas prices much better than cities that don’t.

I hope the County Council will pass the measure with a vote of six. That would save a lot of uncertainty and the cost of a ballot measure. With five from the Council, at least the public would get to vote. The measure would have a good chance — this is a patriotic metro, willing to pay for things that benefit the region and all of us.

Council, please lead!

WSJ Magazine, a publication of the Wall Street Journal, has an interesting article about Amanda Burden, daughter of well-known socialite Babe Paley and director of city planning for New York. The magazine says she is spearheading Mayor Michael Bloomberg’s effort to rezone nearly a quarter of New York City and reclaim the city’s waterfront. Her populist achievements include zoning for new affordable housing in East Harlem, Brookyln and the South Bronx, as well as the massively popular High Line, an abandoned railroad track that has been transformed into a popular tourist destination in the meatpacking neighborhood.

New York City waterfront. Courtesy of photobucket.com