Last week’s Sound Transit board retreat included the announcement that the agency is entering a new era, in response to financial pressures coming at its projects from all angles. New CEO Dow Constantine told board members Sound Transit’s direct response to a laundry list of issues that the agency is seeing, from federal uncertainty to increasing costs to declining tax revenues is being called the “enterprise initiative” — and it’s set to impact nearly every corner of the organization.
While the behind-the-scenes moves had been signaled for months, most visibly in the form of potential ways to reduce costs on the West Seattle Link Extension project that could likely be extended to other lines, the annual retreat was the first time they were given a name in public and put on the table.
“Our financial modeling shows that were we to do nothing in the face of these pressures, by the early 2040s we would not be able to both operate and finish building out our system,” Constantine told board members, noting that new projections show the agency will see $2.7 billion fewer dollars in revenue over the next three decades compared to previous estimates. “And if we were to do nothing, then the reality of that eventual financial challenge would begin much sooner to affect our nation-leading credit rating and our ability to bond funds we need to build the system.”
Unlike past financial resets, most recently in 2021 as a response to the Covid-19 pandemic, the enterprise initiative is being described as impacting both the scope and timelines for the major transit projects, but also Sound Transit’s service operations division, and the finance division that’s tasked with determining how to leverage the agency’s revenue. In the past, when faced with financial obstacles, Sound Transit has turned to delaying projects or scaling back the length of planned lines as the primary ways to move forward.
“This is an agency initiative to really rethink the way we plan and we provide board members with the tools to drive the agency forward,” Constantine said. “We want you to have many levers to operate, many dials to turn, rather than the two blunt instruments we always had of scope and schedule.”
“It is holistic. It’s creative. It’s iterative,” Constantine said. “We’re talking about everything across the agency — operations and maintenance and finance — considering everything we are doing in order that we might be able to better deliver and better serve from an internal perspective, process requires ST leadership and staff to bring all of our costs together and really collaborate across various interlocking spheres to inform each other and deliver the best data and information to the board to inform board decisions, instead of throwing on the brakes, instead of paralysis or simply delaying projects and diminishing scope, as we did previously. We are going to look at this program holistically and bring the board information on all of our work from across all of our enterprise.”
After two months on the job as CEO, following a controversial candidate selection process, Constantine is still settling in at the top of the org chart at a place he’s been helping to steer for nearly two decades as a board member. He’s also far from the only newcomer, with some significant turnover at Sound Transit as the agency has overhauled its capital program.
Deputy CEO Terri Mestas, hired last spring to head that program, has been joined by Brad Owen (managing West Seattle and Ballard Link), Michael Morgan (managing East and Federal Way Link along with planned maintenance bases), and Manan Garg (managing Everett and Tacoma Dome Link along with Stride bus rapid transit). They’re tasked with advancing one of the biggest transit expansions at any agency in North America.
“What I’m learning is that in our newly constituted Sound Transit capital program, we have people who are really thinking outside the box,” Constantine said. “People are thinking about how we can do things differently, more creatively, more innovatively, so that we can bring forward common-sense modifications to the plan, so that we can introduce to you newly understood opportunities for innovation that will deliver the system that people want more efficiently with better performance.”
At Thursday’s retreat, the biggest block of time was set aside for board members to break into smaller groups to brainstorm about projects currently in development, with separate tables devoted to the projects in the north, central, east, and south portions of the Sound Transit Regional Transit Authority (RTA) boundaries. Eight of 18 board members have been serving for less than two years. While a casual starting point to get new board members caught up, the exercise started to put some of the issues that the board will be grappling with on the table, quite literally.
One issue that was surfaced several times by King County Councilmember and board vice chair Claudia Balducci was the topic of deferred parking structures. In 2021, the board voted to delay many of the parking structures that it planned to build at future stations considerably, opening them much further down the road than the transit facilities they’re paired with. But Balducci reminded her fellow board members that they had also directed staff to look at alternative ways to provide access to stations that could take the place of parking lots.
Also discussed Thursday was the need for Sound Transit to continue to evolve away from an agency that sees itself primarily focused on the work of transit construction, compared to the other things a transit agency needs to be doing. The Urbanist has already highlighted the need to elevate operations as a major challenge that Constantine will face coming into the role of CEO.
“One of the characteristics of the agency was that it was so much devoted to the capital construction work that capital kind of ran everything, and then everyone else was running alongside to catch up,” Constantine said.
“We need each of these spheres of work or influence within the agency to be equal to one another and working together, to be in sync,” he continued. “For instance, when you build a capital project, you really need to be working with the operations folks to understand what your capital decisions are going to mean for the ultimate operations, and what both of those things mean for folks who are charged with the handover, with the startup, with the testing and the beginning of revenue service, and so we’re working to remake ourselves to be an agency where we are much more integrated between the different disciplines,” he continued.
Right now, 68% of Sound Transit’s annual budget goes toward system expansion, but that number is set to diminish over time as more lines open and they require funding to operate and maintain. By 2040, operations and maintenance funds will become the majority of Sound Transit’s expenditures so focusing simply on capital expenditures won’t actually give the agency the full picture.
The retreat also featured a deep dive on the history of Sound Transit, and the previous financial issues that the agency has dealt with. Spelling out that history, there was a clear sense in the room that Sound Transit is entering a new era, and that everyone needs to get ready.
“All of that history builds up lessons and practices that were important and functional in their time, and we are now in a very different time,” Balducci said. “The idea that we need to be willing to change can be scary, to let go of the way we’ve done things and do things very, very differently. But I think that is absolutely the challenge in front of us, if we’re going to build public trust, if we’re going to deliver on the promises, and if we’re going to sort of meet the moment of where we’re at right now.”
Ryan Packer has been writing for The Urbanist since 2015, and currently reports full-time as Contributing Editor. Their beats are transportation, land use, public space, traffic safety, and obscure community meetings. Packer has also reported for other regional outlets including BikePortland, Seattle Met, and PubliCola. They live in the Capitol Hill neighborhood of Seattle.