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The business case against the CRC

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Written by Linda Baker   
Tuesday, March 26, 2013
BY JOE CORTRIGHT | OP-ED CONTRIBUTOR

03.25.13 Thumbnail BridgeSure, it would be nice to have a newer, fancier bridge connecting Portland and Vancouver, especially if someone else paid for it. But look closely at what’s actually being proposed — a $3.5 billion, 5-mile long, twelve-lane freeway widening project that just happens to cross a river — and you’ll see that there’s a strong business case against the CRC.

BY JOE CORTRIGHT | OP-ED CONTRIBUTOR

crc
Marine Drive looking north to Hayden Island // Courtesy Columbia River Crossing

Sure, it would be nice to have a newer, fancier bridge connecting Portland and Vancouver, especially if someone else paid for it. But look closely at what’s actually being proposed — a $3.5 billion, 5-mile long, twelve-lane freeway widening project that just happens to cross a river — and you’ll see that there’s a strong business case against the CRC.

1.  Financial Risk

Although the CRC was sold as having a $450 million Oregon price tag, everyone should be clear that the state’s financial liability is open-ended and unlimited.  Oregon will be responsible for any shortfalls in revenue from other sources — both the federal government and tolls — and for cost overruns.

This is troubling because the CRC financial plan is based on a series of Pollyanna-like assumptions. It counts on the federal government paying almost 100% of the cost of light rail when it typically pays only half.  Already a key part of the supposed one-third federal contribution has failed to materialize. For years, the CRC financial plan has counted on $400-$500 million in earmarks or discretionary funding for the highway portion of that project. However, the big highway reauthorization bill passed last summer contained nothing for the CRC.

2.  Cost Overruns

The CRC finance plan assumes the project can be delivered for $3.5 billion. However, the project’s history suggests this is wildly optimistic. For years, the engineers pushed an “open-web” design that was eventually pronounced unbuildable.

Despite early Coast Guard warnings, the CRC design team proposed a bridge with insufficient clearance for navigation. Each blunder has added at least a year, and tens of millions to project costs. And this on top of ODOT’s well-documented history of huge cost overruns on major projects, like the Highway 20 project that is more than $200 million over budget.

3.  Displaced businesses

According to the project’s Environmental Impact Statement, bridge construction will dislocate 69 businesses with 916 employees.  More importantly, the bridge’s low fixed span, with 116 feet of clearance, will likely force the closure or relocation of three major marine construction companies — Greenberry, Thompson Metal Fab, and Oregon Iron Works — that make structures too large to fit under the new bridge. Hundreds of well-paid manufacturing jobs hang in the balance.

4.  Job Losses

The bridge will cost jobs in other sectors too. Tolls will take more than $100 million dollars per year out of the pockets of local consumers and businesses, reducing spending in the region by that amount — plus a multiplier effect associated with re-spending.  Money commuters spend on tolls won’t be available to pay the rent, buy food, or spend on services provided by other local businesses. Standard input-output models show a $100 million reduction in spending would be associated with the loss of 750 jobs — and unlike the temporary jobs associated with construction, this job loss would go on indefinitely.

5.  Worsened Traffic Congestion

New traffic projections released by CRC confirm what critics have been saying for years. Tolling the existing I-5 bridges — which will begin in 2016 to help pay for construction — will divert tens of thousands of vehicles each day to I-205 and other routes. Today, about 123,000 vehicles per day use the I-5 bridges.  According to CRC consultants tolling will cause traffic to drop to between 52,000 and 79,000 vehicles per day. 

Where will these vehicles go?  Some will give up the trip altogether, but many will divert to I-205, I-84 or other routes. Diverting of tens of thousands of vehicles per day will produce massive congestion on other, even more important routes —especially time sensitive travel to and from Portland Airport.

This new forecast casts doubt on the need for the project itself. In the most optimistic scenario, by 2030, traffic on the I-5 bridges will barely make it back to the current level of about 130,000 vehicles per day.  So after spending $3.5 billion (or more) to build a new 12-lane, five-mile long freeway, it will carry no more traffic than the current structure.

6.  Failing transportation finance system

One would think that before undertaking the most expensive transportation project in the state’s history, we’d make sure that our transport system is well funded and managed.  Sadly, the opposite is true.  Historically, Oregon has funded road construction on a pay as you go basis.  But in the past decade that has changed. In 2002, just one percent of state highway funds went to debt service; now it is 29 percent, and CRC will likely add more than billion dollars of additional debt.   And because the Legislature didn’t provide any new revenues, repaying CRC borrowing will require cutting other urgent transportation needs or raising future taxes.  This comes at a time when driving is declining, and state gas tax receipts are falling hundreds of millions of dollars below ODOT projections.

If not the CRC, then what? In their quest to sell a mega-bridge, CRC advocates have ignored cheaper, greener alternatives that would produce immediate relief.  Building an arterial bridge to Hayden Island would get local trips off the freeway; the project’s own analysis shows that the current bridges could be seismically retrofitted to the 2,500 year “no-collapse” standard for roughly the same cost as demolishing them.

And we could eliminate traffic snarling bridge lifts by fitting a new lift span to the downstream railroad bridge.

Far from being an economic boon, the CRC is actually bad for business. 

Joe Cortright is an economist with Impresa, Inc.

Editor's Note:  Oregon Business accepts opinion pieces on topics relevant to the state's business community. See op-ed submission guidelines here.

 

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