The Costly, Risky CRC is Back – Now with Twice the Risk

Evan Manvel

The Costly, Risky CRC is Back – Now with Twice the Risk

Bent Flyvberg's chart explaining cost overruns of mega-projects (link below)

“If somebody had told me it was going to cost $6.4 billion … I wouldn’t have voted for it.” – California State Sen. Mark DeSaulnier (D-Concord), about the Oakland-San Francisco Bay Bridge, which was projected at $2.6 billion - less than the CRC.

Now that Washington has rejected funding for the costly, risky Columbia River Crossing mega-project (CRC), backers are asking Oregon legislators to go it alone.

The plan includes an expensive new highway interchange in Washington state, costing over one hundred million dollars (to State Route 14). There is no source for paying $86 million to Washington businesses unable to move their freight under the new, too low bridge. Add in half of the bridge costs, and Oregon legislators are being asked to spend roughly $700,000,000 in another state.

Washington's rejection of the CRC ruined the backers' messages, and they are now forced to argue we’re better off without the very things they said protected Oregon under the bi-state plan just a few months ago. Backers long cited the bi-state cooperation on the project, Washington's financial contribution, and oversight by WSDOT, which actually has mega-project experience. Governor Kitzhaber said, "this is prudently conditioned upon the state of Washington making their allocation to the project." Apparently, prudence is no longer a priority.

The project is much riskier than before. The risks are many: revenue shortfalls, increased vulnerability to lawsuits, and near-certain cost overruns.

While lobbyists claim they are asking for $450,000,000 in gas tax funds, the ultimate Oregon bill could easily end up being two to five times that much.

First, revenue shortfalls: most Clark County commuters have said they would avoid the tolled bridge by taking the I-205 bridge instead. And nationally, credit agencies are growing wary of tolling projections, which tend to be over-rosy:

In Orange County, California, traffic on the San Joaquín Hills toll road is half what was projected. A recent toll road extension outside of Austin, Texas, is also seeing just half the expected traffic volume... Fitch Ratings, one of the Big Three credit rating agencies, warned investors in June that it was concerned about the [financial stability] of toll roads.

The initial Oregon Treasurer’s office analysis found a range of outcomes, but up to $268,000,000 in revenue shortfall – even before the $86,400,000 in mitigation costs for moving three businesses are included. Meanwhile ODOT says it can't afford basic maintenance and safety projects.

Second, increased vulnerability to lawsuits. The changing plans open up the CRC to even more lawsuits, as project managers claim it’s the same project under federal environmental laws, meaning Oregon is promising the completion of future Washington interchanges, an assumption that is far from certain, given Washington State’s rejection of the CRC, not to mention its transportation debt bubble. Maybe Oregon will simply continue to build Washington highways. The changes also raise uncertainties about how to reliably fund light rail’s operating costs (given the political chaos in Clark County), and how to legally operate light rail in another state.

Third -- and most blatant -- are the risks of cost overruns. One of the most problematic sentences in the recent Treasurer’s office memo read “An analysis of the basic funding plan, based on the cost projections provided by CRC staff...

We know 90% of mega-projects go over budget. On a mega-project the size of the CRC, an average overrun translates into about another $700,000,000 in costs – now shouldered only by Oregon. And that’s an average – the cost overruns could be much higher.

As Willamette Week noted, ODOT is awful at estimating mega-projects, and their recent mega-projects have cost more than twice what they were budgeted for:

”The truth is that ODOT has never taken on a project any where close to the size and complexity of the CRC. And when it has, its record is poor—for example, as the [not yet completed] Highway 20 project near Eddyville which is years behind schedule and will cost more than twice the original $110 million budget.”

The CRC itself is already more than $100 million and 150% over budget, before construction has begun. And the new bill includes $86.4 million to clean up the mess the CRC staff created – in choosing a design of a bridge that’s too low for upstream businesses.

Other recent mega-projects from neighboring states are informative.

The Seattle area is struggling with two mega-projects. The 520 bridge is over budget, and has blown through its contingency funds. While nowhere near complete, WSDOT is already saying overruns could cost taxpayers nearly $400,000,000.

And WSDOT’s Alaskan Way Viaduct project is already behind schedule, with the tunneling machine, supposed to be moving at 6 to 35 feet a day, having moved an entire 24 feet in a month. It’s just being started, but has run into both technical and labor hurdles, as The Seattle Times notes, “Contractors anticipated some difficulty, but the fiberglass caused more trouble than expected.” The project has caused sewage spills and damaged utilities and buildings, leading to this ten-point list of complaints from the City of Seattle, and is forcing the shut down of the 110,000-car-a-day Alaskan Way Viaduct, something backers claimed would never happen during construction.

In California, the Bay Bridge from Oakland to San Francisco was recently completed, taking 24 years. Estimated to cost $2.6 billion, it cost $6.4 billion, meaning a $3.8 BILLION cost overrun.

And of course, even though it opened, in the end, the bridge opened with a temporary fix for the broken rods while the permanent repair, expected to be completed in December, is being installed.

As Oxford University Bent Flyvbjerg, the world’s leading expert on mega-projects wrote:

The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.

He’s responsible for the chart above, and as Sightline’s Clark Williams-Derry notes: “through a combination of over-optimism (delusion) and strategic misrepresentation (deception), planners and boosters tend to low-ball the costs of a big project; and the higher the political stakes, the more likely it is that deception is involved.”

If the extreme costs and risks of this mega-highway expansion project aren’t enough for legislators, perhaps they’ll listen to ten conservation, neighborhood, and public health groups who recently wrote a letter to them. The Coalition for a Livable Future, 1000 Friends of Oregon, Upstream Public Health, the Northeast Coalition of Neighborhoods, and the Bicycle Transportation Alliance, among others, wrote:

“The proposal is contrary to efforts to foster vibrant, sustainable, and walkable communities that help reduce greenhouse gas emissions, air and water pollution, farmland loss, and habitat destruction. The current CRC proposal would result in a net loss in efforts to address the public health, safety, and environmental quality impacts of our transportation system.”

ODOT faces shrinking resources, increasing costs, multi-billion-dollar maintenance backlogs, and no answers to long-term revenue problems – or, for that matter, how to fix the downstream congestion caused by the project.

At the head of the agency, ODOT’s Matt Garrett implores Oregon to change direction because the state has huge funding problems: “this is just a fiscal reality. And it demands we pivot.” And yet with the Oregon-only proposal, CRC backers are asking Oregon to take on an additional $650,000,000 in borrowing, backed by Oregon’s Highway (and General) Fund.

Perhaps we should heed the experience of those who have been here before, and listen to legislators who’ve made the mistakes with mega-projects. Listen to Sen. DeSaulnier above (who comes from a state with vastly more mega-project experience, but still can't get it right), or Washington State Sen. Curtis King, who says of the Washington 520 bridge, “We can't keep continuing to make these kind of mistakes.”

Washington state’s rejection of the CRC opened up the possibility of creating a more affordable, more functional project -- one in line with the region’s values and vision of safe, healthy, vibrant communities. Let's not let that opportunity slip away.

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