For a while there, the construction costs were rising at 10% to 15% annually. This was making infrastructure projects incredibly expensive. Competition for cement and construction workers were among the factors driving these cost increases. Sound Transit got one lousy bidder for SeaTac station, and the bid was double their budget! Construction companies had too much work on their hands to bother.
But with the bursting of the housing bubble and the overall slowing of the economy, infrastructure projects should become less expensive. Also, the cost of acquiring land will likely go down. California is set to spend $3 to $4 Billion just buying land for their high speed rail link. How much would that land have cost if it were purchased two years ago, at the height of the California housing bubble?
Point being, these costs should subside in the coming years. Of course, they’re subsiding because the economy is cooling overall, meaning that tax revenues are going to go down. Will Sound Transit suffer a revenue shortfall because of this? Will the decrease in construction costs be more than enough to cancel it out? Hard to say. If anyone has answers to these questions, feel free to drop a line.
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