CRC: A Toxic Mortgage, and a Half-Billion Dollar Hole

Evan Manvel

Luckily, Oregon and Washington have these people called Treasurers, who take responsibility for making sure states don’t bankrupt ourselves in our rush to bend under political pressure.

For years, backers of the CRC highway mega-project have been playing a spin game. They’ve designed an enormously expensive five-mile-long highway expansion project with six highway interchanges, including one costing around $600 million. They’ve cloaked the highway expansion effort by calling it a bridge and the project the Columbia River Crossing, even though the river crossing is a small portion of the cost (more than half of which is highway interchanges), and about an eighth of the length of the project.

Despite this cynical maneuvering, CRC backers aren’t able to escape basic math and this fact: money doesn’t grow on trees. At about $4,000 per family in the region, the project is the most expensive public works project in the region’s history. At the end of the day, someone has to be responsible for the billions.

While blowing through $130 million of taxpayer money, project managers have told themselves a story: roughly one-third of the nearly $4 billion cost would come from the federal government, one-third from the states, and one-third from tolling (the $4 billion estimate may well be another fantasy).

All three of these pots of money are highly suspect. U.S. House Transportation Chair John Mica is pushing to cut federal transportation funding by a third. Neither the Oregon nor the Washington legislature has contributed their share of the project, beset by maintenance costs and other projects, as well as having healthy skepticism about the CRC fantasy. And perhaps the weakest link -- though admittedly the competition is fierce? Tolls.

Luckily, Oregon and Washington have these people called Treasurers, who take responsibility for making sure states don’t bankrupt ourselves in our rush to bend under political pressure.

Today Oregon Treasurer Ted Wheeler released a damning report. From the Willamette Week:

"Key assumptions in the traffic and toll revenue forecast used in the 2008 [Draft Environmental Impact Statement] are now outdated," Wheeler's report says. "The combined impact of of Washington State Treasurer McIntire's requirement that CRC adopt a more conservative toll bond debt structure and the potential toll revenue reduction of 15 percent to 25 percent is a $468 [million] to $598 million reduction in projected CRC funding resources."

Get that? A half-billion dollar hole.

What does Washington State Treasurer Jim McIntire have to say about the current CRC financing plan? The Oregonian’s Jeff Manning is on the case, with a devastating article today:

McIntire compared the debt structure to the worst sort of toxic mortgage from the housing boom. The loans turned disastrous for the banks, the borrowers and the U.S. economy when millions of homeowners couldn't keep up with the onerous loan terms and defaulted.

Let’s be clear: the tolling financing is a balloon payment, predicated on ever-increasing traffic and toll levels. Ever-increasing traffic at the projected levels is a falsehood. Ever-increasing tolling rates are a political nightmare.

"I would argue that [the tolling plan is] a pipedream," McIntire said last week. "I think we need to be upfront with people. We need level debt service and level tolls."

We have recent experience with tolling projects. Washington’s 2007 Tacoma Narrows Bridge, funded by tolling, hasn’t been able to keep up. From The Oregonian:

The Washington Transportation Commission has not raised tolls as quickly as forecast, in large part because of local opposition. As a result, the bridge has struggled to maintain the financial reserve mandated by the state.

"The Tacoma Narrows is something that I don't want to see replicated anywhere in Washington State and that includes the bridge between Washington and Oregon," McIntire said.

So, fixing the toxic mortgage, as well as other problematic assumptions in the current plan, will cost several hundreds of millions of dollars. It's hard to know how to put that in perspective. The Sellwood Bridge shortfall? $22 million. The OHSU tram costs, even with all the overruns? $57 million.

Manning’s article also explains how the highway departments have been using traffic models that don’t take tolling into account. The traffic projections deserve their own column, which I hope to get to. For starters, check out this Sightline article demonstrating highway builders will simply ignore the evidence and play in their fantasyland.

It’s long past time for our Governors, members of Congress, and legislators to put the brakes on this run-away project. It’s long past time for The Oregonian’s editorial board to read their own paper’s news articles and pull their support for the bloated, risky highway mega-project.

Hopefully all those folks will heed the wisdom of the state Treasurers, and accept the reality: the money tree has not been found. We shouldn’t sign on to a toxic mortgage. Instead, it’s time for an affordable, responsible solution.

Comments

  • (Show?)

    Spot on Evan. When it comes to the CRC, the Emperor has no Clothes. Whether you call their mistruths "lies" or "fantasies," they are deeply irresponsible. A few of our political leaders are already speaking out against the CRC. The real question is: why won't more join them? Will any of the new crop of Portland City Council/Mayoral candidates? Those running to unseat David Wu?

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    I've been saying for a long time that all the debate over the CRC is just a bunch of piffle -- that there's no money for the project.

    I think I said once it's like a couple of homeless guys arguing over whether they'd prefer the Ferrari or the Lamborghini.

    I do think it's long past time to stop "planning" a project that no one can afford to build.

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    Well, all those millions spent on "planning" (although it's really been more like public relations, paper pushing and wishful thinking), are in somebodies' pockets. The checks have been cashed and cleared the banks. Notably none of those millions of dollars are in the bank accounts of the construction workers whose woeful situation is the main reason used by otherwise sensible liberals like Kitzhaber to support this insane boondoggle.

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    Commuters (and commuting) is a problem for everyone, not just those seeking to stop the CRC. It would be great if everyone who lives here in Clark County could work in Clark County and avoid traveling to Oregon, but I don't see that happening in the foreseeable future. Our various economic development groups and local governments are working hard to encourage Oregon (and other) employers to relocate to the Washington side of the river so that our citizens have more local jobs available without commuting. The Ports of Vancouver, Kalama and Ridgefield have successfully recruited a few hundred jobs to come here from Oregon over the past year or two, but it will take some very large employers (or hundreds of smaller employers) to create jobs for the hundred thousand plus folks who now drive to Oregon every day.

    • (Show?)

      Imagine if just a fraction of this big money we're talking about was spent on business development and job creation in Vancouver, instead of on elaborate tangles of on-ramps and off-ramps, and on a river-spanning freeway designed mainly to get people out of Vancouver (and back again).

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    Evan, thanks for keeping us focused on the realities of the CRC. It's a boondoogle, and a waste of perfectly good public spending dollars, and one that is keeping us from focusing on more important priorities. It's also giving "government" a bad name.

  • (Show?)

    Great article, Evan.

    "Let’s be clear: the tolling financing is a balloon payment, predicated on ever-increasing traffic and toll levels. Ever-increasing traffic at the projected levels is a falsehood. Ever-increasing tolling rates are a political nightmare."

    And if the traffic could somehow be made to increase to such a degree that it would cover the tolling shortfall, that would probably be its own sort of nightmare.

    "The Washington Transportation Commission has not raised tolls as quickly as forecast, in large part because of local opposition."

    And local opposition matters. A mayoral candidate ran and won in Vancouver on a "no-tolls" platform. It seems like, if tolling was to be implemented, some future candidate could be expected to run a very successful campaign on a "tear down the tollbooths" platform.

    Random question: Does anyone know how much money the CRC intended to have spent at this point? Did they plan on spending $130 million by July 2011? Because if their estimates haven't proven accurate so far, it might provide further clues as to the soundness of their long-term financial planning.

    • (Show?)

      Did they plan on spending $130 million by July 2011? Because if their estimates haven't proven accurate so far, it might provide further clues as to the soundness of their long-term financial planning.

      And that is a very good question.

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    I agree that CRC is becoming egregiously expensive and your article is very relevant. However, I'm wondering why I've never seen anything on this website about the enormous costs of other projects in Portland. What about Milwaukee Light Rail, which will cost upwards of $260 million PER MILE, and $1.4 billion overall? How is spending so much on that project justified but CRC isn't?

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      Because, in the future, an electrically-powered rail system will be a whole lot more useful than multiple lanes of concrete for petroleum-powered cars and trucks.

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        That is ignoring the fact that highways are used for far more than individuals transporting themselves from one place to another. What about truck traffic, or those for whom rail transport is extremely inconvenient or impractical. Additionally, why aren't more economical options, such as bus rapid transit (roughly $250,000 per mile) being considered?

    • (Show?)

      Chris, I can't speak to the relative merit of a LRT line (though I can point out that it's per-mile cost has nothing on the CRC's which at 4.4 miles in length works out to something like $818 million per mile if you trust the CRC's $3.6 billion estimate), mainly because I'm not overly familiar with LRT issues.

      But I do know is that it was a rejection of a major freeway - the Mount Hood Freeway in the seventies - in favor of our current light rail system that was a big part of what made Portland's reputation as a livable place that makes relatively smart transportation choices.

      So LRT's feel-good place in our history probably lets it get by with less examination.

      Personally, while I don't much use LRT, I think it's part of what makes Portland a great place, and I don't mind seeing tax dollars go toward it. Even if it costs more than it might otherwise, it's still something I'd like to see happen in the region.

      Whereas the CRC, with the way it promises to plug a mass of LA-style freeway development into Portland and Vancouver's urban cores, jam more car traffic into Portland, and bypass the Portland region's Urban Growth Boundary, it just seems like it's not only too expensive, but a really bad idea to boot.

      So the way I see it, it's the difference between an expensive good idea, and an expensive bad idea.

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