A News Summary of the Extremely Costly, Risky CRC

Evan Manvel

I’ve written a several articles about the CRC highway mega-project mess. Here’s a summary of the last two months of news about this extremely costly, risky boondoggle.

June 1: Relies on Faulty Assumptions and Claims, and Won’t Fix the Traffic Problem

On June 1st, the Willamette Week reported the project won’t solve congestion, it will be a huge financial risk because I-5 traffic levels have flat-lined, there are scads of higher safety priorities, and we have no clear plan to pay for the it.

“The state’s own records show [the mega-project] relies on faulty assumptions and won’t fix the traffic problem…

“The agency’s data show there are more than two dozen I-5 bridges in Oregon in worse shape than the Interstate Bridge, including the Marquam Bridge...

“Another claim CRC backers like to make is the number of crashes on either side of the Interstate Bridge. They often exaggerate here as well.”

June 15: Overstates Job Creation by a Factor of Ten

The Willamette Week reported project backers have been overstating the number of jobs the project would create by more than a factor of ten. Instead of 20,000 jobs, the project is projected to create 1907, or about one job for every $2 million spent.

“Kitzhaber is exaggerating by 10 times the number of jobs potentially created by project, known as the CRC. That’s according to the project’s own reports, as well as the state’s methods for tallying jobs…

“It’s not the first time that leaders from Oregon and Washington have made shaky claims to justify the project. The major reasons backers cite for building the CRC are disproved by the project’s own documents.”

June 21: Three CRC Parking Garages Cost $158 to $176 Million

The Columbian noted the project includes $158 to $176 million for three parking garages, which doesn’t include the cost of property acquisition. At around $60,000 per space, these garages are significantly beyond standard costs. (Aside: Sellwood Bridge shortfall? $22 million)

July 9: Consultant Gravy Train; "Air of Disarray"

The Oregonian covered questionable windfalls for far-away consultants:

“It must have been irksome for the CRC to pay for a critique that at times was scathing and only added to the air of disarray that had enveloped the project. But pay it did, handsomely. [German consultant] Hopf and two co-workers got nearly $83,000 for the equivalent of eight weeks of work… The CRC didn't flinch at his $200-per-hour rate. No one inside the CRC apparently asked whether someone closer to home, perhaps one of the 15 others already on the panel, offered comparable skills.

July 14: Outlook for Transportation Funding “Grim”

From The Portland Business Journal:

“A Metro director told area transportation officials Thursday that the outlook for federal roads and transit funding is ‘grim.’ Andy Cotugno, Metro’s planning director, made the remarks in a presentation on the Federal Transportation Funding and Authorization bill. The proposal, presented by Florida Republican Rep. John Mica, calls for a 34 percent spending cut, from $51.5 billion during fiscal year 2011 to $34.2 billion. Oregon’s share is expected to fall from $479 million to $316 million.”

July 18: Financial Oversight Questionable

The Columbian reported the project has not been regularly tracking its spending to know whether it is on schedule or on budget.

“One problem: The CRC doesn’t track all of its spending under one roof. The Washington and Oregon departments of transportation, the two lead agencies that distribute money to the project, keep separate financial accounts…

“We will start to develop a regular, reliable source of reporting that helps answer those sorts of questions: Are we managing our scope, schedule and budget?” [Project Director Nancy] Boyd said….

July 19: Traffic Models Not Equipped for Tolling – Overproject by 400,000 Jobs

The Oregonian reported the project has been relying on models that cannot predict the impacts of tolling on traffic volumes, and therefore the expected revenue from tolls.

“ODOT documents have surfaced in which three of CRC’s largest contractors question traffic forecast models used by the project. Their findings are unambiguous: The introduction of tolled roads and bridges adds a wrinkle that Oregon travel forecasting models aren’t equipped to deal with…. The CRC has not taken steps to perform new traffic modeling.”

Here’s what project consultants David Evans, Stantec, and Parsons Brinkerhoff said:

“Existing models are not able to determine how travelers would change their mode, route, travel time, or destination in response to tolling/pricing.”

Contrast that with what staff told Metro in June:

“Analysis conducted for the CRC project using the regional traffic forecasting model to assess the impact of various tolls on total traffic and diversion to I-205. The Tolling Study Report had three principal conclusions about diversion: For most of the I-5 only toll scenarios, the majority of diverse would not change their travel patterns…”

July 20: Project Didn’t Look at Past 15-20 Years, Assumed $1.30 Gas

The Columbian reported on more problems with the traffic projections:

“Robert Bain of London-based RB Consult LTD, a former Standard & Poor’s ratings analyst who has published widely on problems with the traffic and toll forecasting process, said traffic volumes have been flattening off over the past 15 to 20 years, before the recession.

“Bain said that Metro failed to look at historical trends and instead ran with ever-increasing job and traffic increases, leaving key questions unanswered.”

From The Oregonian:

“CRC opponents have often accused the project of using bogus traffic numbers. Until now, the CRC has stood by its projections.”

The Willamette Week:

“The CRC had relied on an old model using 1994 data [when gas cost $1.10 or $1.30], the consultants noted, the model didn’t consider soaring gas-price increases since 2005, part of the reason traffic is down in the I-5 corridor and nationwide.”

July 20: Project Plan Has a $468 million to $598 Million Financial Hole

Because of the inflated traffic projections and the need to restructure the project’s proposed toll financing plan, which the Washington State Treasurer equated to “a toxic mortgage,” Oregon Treasurer Ted Wheeler released a report on July 20th finding the project has a $468 million to $598 million dollar financial hole.

The Willamette Week coverage:

“The takeaway from two consultants Wheeler hired to review the CRC's projections—the cost assumptions seem reasonable but traffic and toll revenue projections are wildly optimistic…

“First… CRC traffic projections… are simply wrong…

“A second major finding came from the consulting firm C & M Associates… Metro's population and employment growth projections, which are also underlying the tolling revenue projections, are vastly more optimistic than two independent estimates.

“The differences in employment—which drives traffic—are huge. Metro projects that the number of jobs in the region will increase from 1,032,200 in 2005 to 1,691,900 in 2030, a growth of 64 percent.

“Both Moody's and Global Insight say the growth will be less than half that amount—a difference of 400,000 jobs.”

From The Oregonian:

“The CRC is using outdated, inflated traffic projections and a tolling plan that incorporated an unacceptably risky debt service structure, according to the Oregon Treasury analysis. Insert more realistic toll revenue numbers and a more conservative bond repayment schedule, the analysis concludes, and the CRC's anticipated pot of $3 billion-plus shrinks by between $468 million and $598 million.”

July 21: Officials Misconstruing Consultant Reports

The Willamette Week had the story:

“For years now, Oregon’s leaders have assured taxpayers that plans for a new interstate bridge across the Columbia River were financially solid. The bridge would in large part pay for itself, they said, by charging tolls to cover the debt necessary to build the $3.6 billion project... State officials have known for a long time, however, those statements weren’t true...

“Officials still aren’t being straight with Oregonians about why the numbers were so wrong. After Wheeler briefed him last week, Gov. John Kitzhaber blamed the $600 million miscalculation in the CRC plan on the bad economy...

“Not so, Wheeler’s experts say: Evidence shows the traffic estimates missed a drop in use of the I-5 bridge that started long before the economy went sour.”

One is left to wonder - if this is just two months, what will we learn tomorrow?

By Evan Manvel Aug. 05, 2011