The U.S. Department of Transportation shouldn’t let Seattle sit on $7.4 million in transit grants the city failed to spend on streetcar extensions along First Avenue and on Broadway, a new audit says.

Federal sleuths also criticized the city’s former Lander Street Bridge budget in Sodo, along with cash-flow paperwork in smaller federally aided projects.

The USDOT’s “oversight is not sufficient to ensure the city of Seattle meets requirements for managing federal transportation funds,” the Office of Inspector General found in its Feb. 1 report.

As a result of their dive into local spending, the auditors divined a broader message for the Biden era, that federal staff must keep a closer eye on the dollars they distribute:

“Each year, DOT awards billions in grants supporting State and local transportation projects — and the Department must now also oversee $766 billion in additional funding provided for COVID-19 relief and infrastructure investment.”

The inspector general’s audit was spurred by citizen complaints to a hotline in 2019. The previous year, then-Mayor Jenny Durkan suspended Central City Connector streetcar construction along First Avenue, amid rising estimates for operating costs.


Yet the corridor, loaded with offices, housing and tourist sites, maintains a “High” rating and a $75 million pledge in the Federal Transit Administration’s capital grants list. New SDOT Director Greg Spotts has nicknamed it the “Culture Connector.”

Downtown streetcar

There’s still no date to build the streetcar, even though preliminary engineering began in 2014. The audit says a $3.8 million federal payment “could have been put to better use,” because those dollars were inactive for more than five years.

According to USDOT guidance, idle projects must be reviewed by the FTA after one year for “de-obligation,” in which case the state can switch money to another transit project in the Seattle area. The FTA replied it didn’t intend to do so because Seattle is still reviewing the downtown streetcar, and there’s no legal deadline to cancel FTA support, the audit says.

A similar situation occurred on Capitol Hill, where Seattle abandoned $8.5 million in federal aid for a canceled north Broadway extension of the First Hill Streetcar. The FTA redirected $4.9 million, but another $3.6 million remains “unused for over 6 years instead of being put to better use on more immediate projects,” the audit says.

Seattle DOT doesn’t agree with the finding that $7.4 million in federal money would be better spent elsewhere, spokesperson Ethan Bergerson said this week.

Spotts is promoting his streetcar vision publicly. He talked about it with the Downtown Seattle Association, and even toured the route in the fall with an FTA executive. However, the City Council has been divided over the project for years, while in 2023 at least four members won’t seek re-election, including streetcar opponent Lisa Herbold of West Seattle. Its political future remains unclear.


The 1.3-mile downtown connector would link the South Lake Union line’s endpoint near Westlake Station to the First Hill line’s terminus in Pioneer Square. The project, which needs reengineering, is undergoing an early design stage in 2023. Even after federal grants, it faces a $93 million funding gap to cover the $286 million cost estimate, the city’s six-year capital plan says.

More trackway, 10 new railcars and downtown growth are projected to add 20,100 daily streetcar riders by 2035, an FTA description says. Last year the South Lake Union and First Hill streetcars carried an average 3,000 daily passengers, which is still below the 5,100 pre-pandemic clientele.

Larry Penner, a former FTA program manager in New York City, said if he were overseeing the Seattle region, he’d compel the city to produce a specific recovery schedule and cash flow plan or forfeit FTA’s entire $75 million streetcar pledge.

When the FTA puts its credibility on the line to assist new routes, all levels of government have a moral and legal obligation to spend dollars for public benefit, preferably within a year or two, he said.

“Too many people think federal money is funny money with no strings attached,” Penner said in an interview.

In response to the audit, a federal official agreed to notify Washington state that the $3.6 million in unused Broadway streetcar funds should be spent on other transit needs.


Lander Street Bridge

Seattle DOT’s new overpass, across regional train tracks in Sodo, was built for $53 million instead of the budgeted $140 million, the audit reveals.

Ordinarily a savings of more than half would sound like great news for the public. SDOT took steps to corral its costs, for instance, by narrowing the road width to avoid real estate purchases and more concrete. The span opened Oct. 7, 2020, with four lanes plus a walk-bike trail.

But the inspector general views the smaller numbers as a symptom of lax management.

Seattle’s estimate should have been reduced sooner, and it caused Uncle Sam to overcontribute, they say. The $140 million number, devised in 2008, lingered through 2016 when $55 million federal funds were granted because SDOT “did not fully support its cost estimate,” the report said.

In the end, SDOT rebated $21 million to the Federal Railroad Administration. But national taxpayers wound up subsidizing 68% of Seattle’s new bridge, rather than a more normal share of 39%.

Other unspent funds became available for city work that voters approved in a past SDOT property-tax levy, including bus lanes and bike routes, Bergerson said.


Eric Strauch, a city project manager, said the city listed high contingencies until late in the project because of risky construction, such as boring 180-foot-deep column shafts into weak Sodo soils.

Missing signatures

Auditors questioned $10.7 million within 10 highway and transit grants, saying the city produced inadequate documentation. In four of 444 records examined, change orders totaling $540,825, including one involving lead paint removal, lacked signatures by a city capital program director.

Bergerson replied that these anomalies involved old methods from 2014 to 2019. SDOT generally concurs with audit suggestions, and the city revamped its internal financial controls to better fit federal tracking processes, he said.

Still flowing

Penner, the New York expert, raised a concern echoing what transit boosters voiced in the 2010s: If Seattle doesn’t build the First Avenue streetcar, the feds might be unwilling to ship money here in the future.

For now, there’s no evidence to support such fears.

Crosstown agency Sound Transit is accepting FTA money ahead of schedule, while Washington Sens. Patty Murray and Maria Cantwell continually seek to grow the infrastructure pie.

As for Seattle projects, Bergerson points out that since 2019, the city has received $60 million in federal aid for Madison Street bus-rapid transit construction, $38 million to repair the cracked West Seattle Bridge and $26 million for street safety improvements.