The cost of the Interstate Bridge Replacement (IBR) is going up:  But we won’t tell you how much . . . And we’re not going to tell you until a year from now, after the 2025 Legislature adjourns

In January, 2024, IBR official publicly acknowledged that their 13 month-old cost estimate of up to $7.5 billion was wrong, and promised a new estimate “later this summer.” 

It’s now summer, and IBR officials are now saying their new estimate won’t be done for another year “about this time next year” (June 2025).

IBR officials are keeping secret the new higher cost until after the Oregon and Washington Legislatures meet.  ODOT has specifically excluded any mention of additional funding for the IBR project from its presentations to legislative committees contemplating a new finance plan for ODOT for the 2025 session.

ODOT is touting a newly announced $1.5 billion federal grant for the project.  But the project’s price tag is rising faster than it is finding money to pay for the bridge.  And Oregon and Washington will be holding the bag for any cost increases or toll revenues shortfalls.

A delayed project is hiding a higher price tag

As we’ve pointed out, the project is two years behind the schedule announced when it was re-started in 2020, and is falling further behind.  The cost of the project has ballooned from a maximum of $4.8 billion in 2020, to as much as $7.5 billion in 2022.  Earlier this year, IBR officials revealed the price tag would be even higher, and promised to reveal a new estimate in the summer of 2024.  But now, this plainly isn’t going to happen.

At a June 13 Community Advisory Committee meeting, project director Greg Johnson conceded the IBR’s budget was going up again, but that it would now be summer of 2025 before they would reveal the actual price tag:

. . . it will probably be around this time next year that we will have that final process completed with a more rigorous and up to date number for overall construction costs.

A chronology of cost estimates

No one should place much credence on IBR cost estimates:  they always go up.

November 2020 Initial cost estimate $3.3 to $4.8 billion

May 2022:  City Observatory predicts costs will rise to $5-$7 billion.  As Willamette Week reported, our City Observatory prediction—made in May, 2022, seven months before the IBR estimates were released—that the cost of the IBR would balloon to between $5 to $7 billion was spot on, and slightly conservative.

December 2022, new cost estimate $5 to $7.5 billion.  And in December 2022, IBR offiicials confidently assured alarmed legislators that they would prevent future cost increases thanks to WSDOT’s “CEVP” process designed to manage risks.  City Observatory filed a public records request for that CEVP, and in January 2023, IBR officials claimed that “no records exist” of any CEVP work.

January, 2024: IBR Director Greg Johnson says “costs are going up.  We are going to be reissuing an overall program estimate probably later this summer.”

June 2024:  IBR testifies it will do another cost estimate “about this time next year”. Greg Johnson, in comments to the IBR’s community advisory group.

. . . it was our plan to to go into another what’s called a CEVP cost validation, estimating process that that looks at risk and evaluates and puts a cost to to risk. And so the last time we did this, which was two years ago, we came up with the range between five and seven and a half billion. And that seven and a half billion was the worst case scenario at that time. But once again, as we have seen, the outpacing of inflation rates beyond what anybody was expecting in the construction industry, those numbers are going higher. We are seeing it across the nation on large construction projects, so we expect that number to be higher. We were going to start another CEVP process on the heels of getting the draft supplemental document done. But now, as that has been pushed, we are pushing that CEVP to understand what we are building. So we will probably it will probably be around this time next year that we will have that final process completed with a more rigorous and up to date number for overall construction costs.

June 2025:  Next cost estimate:  Likely $9 billion or more.

Lying and concealing cost increases

The IBR is the single largest highway project in Oregon history, and will severely tax the managerial and financial capabilities of the Oregon Department of Transportation.  Even as Governor Kotek says ODOT faces “catastrophic funding challenges” the need for additional funding for the IBR project is also consistently omitted from ODOT’s lengthy financial presentation.  Oregon Department of Transportation has been participating in hearings around the state on its financial condition, and its presentations never make any mention of the state’s liability for these cost increases for the IBR.  By postponing the next cost estimate until the summer of 2025, ODOT is concealing this information from the Legislature as it debates a major transportation measure.

This process is a classic example of what Bengt Flyvbjerg diplomatically calls “strategic misrepresentation”—what we would more colloquially call lying:  in this case, low-balling the cost estimate to get the project started and get an initial commitment of funds, and then jacking up the price tag when its “too late” to consider anything different.

And the agency has essentially no process for managing or preventing cost increases.  The price of the I-205 Abernethy Bridge has tripled to $750 million; the price of the I-5 Rose Quarter project has quadrupled to $1.9 billion.  And the financial tools that ODOT says it uses to control costs, grandly called the “Cost Estimate Validation Process” (CEVP) do nothing.

As we’ve pointed out before, the CEVP doesn’t so much manage or prevent risks as document how devastating they are when they occur.  In the case of the Columbia River Crossing, the CEVP process failed completely to identify the cost and schedule risk of the Coast Guard’s decision not to agree to a 95′ navigation clearance, which added more than a year and tens of millions of dollars to project’s cost.  In the case of the IBR, just this year, the CEVP process grossly underestimated the likelihood and schedule risk of IBR’s flawed and outdated traffic models, which were thought to add no more than a six month but are now understood to delay the project by as much as 18 months.

Must Read

Denser cities = Less expensive infrastructure.  A new study from New Zealand confirms one of the fundamental intuitions about cities:  Places with higher levels of residential density have lower per capita and per dwelling costs of providing physical infrastructure.  This study looked at the cost of providing roads, water lines and sewers to different neighborhoods in Wellington, and found a strong negative correlation between density and infrastructure cost:  The denser the neighborhood the lower the cost of providing roads, sewers and water.

Local officials pointed out that its far more fiscally prudent to focus growth in more central locations:

The further out we go, the further we have to pave roads and lay pipes, and the greater the cost to local councils, the government, ratepayers and taxpayers both now and especially in the future.  . . . We can achieve greater value for money for our infrastructure investment by prioritising public transport spending that supports compact, high-amenity urban growth . . .]

Cities are a more efficient and affordable way of providing places for people to live.  If we want to reduce the cost of living–and the cost of public services–we should be promoting greater density, not sprawl.

The slow death of outdoor dining?  One of the most dramatic (and rapid) changes induced by the pandemic was the conversion of street space to meeting- and eating places.  Cities around the country allowed restaurants to convert a portion of the street in front of their businesses into covered service areas.  Overnight, we simply chose to shift the use of public space from storing private automobiles to encouraging public interaction.  It was a flowering of “third places.”  But now that’s being unwound.  In New York, the city has begun imposing rules that make it expensive or impossible for businesses to maintain street eateries.   Streetsblog New York reports that only about two dozen businesses appear to be moving forward to get the necessary permits to maintain their street dining options:

New York City is likely to see a steep drop in restaurants offering outdoor dining in roadways after its permanent al fresco program phases out the pandemic-era structures next month — with less than two dozen restaurants, cafes or bars currently lined up to get roadside “streeteries” approved by the Department of Transportation.

The Covid Pandemic taught us that many of the habits and conventions of the past could be quickly changed, often for the better.  It would be a shame if we un-learned the insights about how we could make better use of our streets.

A profound failure to under-estimate “full employment.”  Adam Ozimek has a commentary (on X-twitter) pointing out that the economics profession, as a whole, substantially under-estimated what constituted “full employment.”  In the wake of the Great Recession, economists adopted a view that the overall US economy couldn’t grow very much or very fast due to permanent changes in the labor market.  This “soft bigotry of low expectations” led them to under-estimate how much we could grow, with the result that millions were left unemployed or underemployed, as we failed to grow the economy as much as we might.  The practical experience of the fiscal stimulus in the wake of the Covid pandemic showed that the standard economist’s view of growth potential was understated, that that we could employ many more people–and pay them higher wages.    As Ozimek writes:

Must Read

Induced Demand and Climate Denial.  As we’ve long said, the favorite folk tale of state DOTs and highway boosters is the idea that the primary solution to reducing greenhouse gas emissions is lowering the amount of time cars spend indling in traffic.  If we widening the highway so that cars could just go faster and idle less, then greenhouse gases would go down.  David Zipper, at Vox, refutes writing

The reality is, the idling myth is a big, and disproven lie.

What will it take to decarbonize transportation, which is now the nation’s largest source of greenhouse gases.  There’s a useful new report from the US Department of Transportation that addresses this issue.  While better technology—cleaner cars and cleaner fuel—have their parts to play, the USDOT report makes it clear that technology alone won’t be enough:  We’ve got to redesign and rearrange the places we live so we don’t have to drive as much or as far.  Helpfully, USDOT frames this not as an “eat your peas” admonition, but as furthering the goal of greater convenience:  having more daily destinations close at hand saves time, money and the climate.

Focusing entirely on vehicle electrification without investing in strategies to improve the convenience and efficiency of the transportation system could continue a trend of increased driving and goods movement that undermine the GHG emissions reduction benefits of improved fuel economy and electrification. The U.S. will not be able to decarbonize the transportation sector by midcentury without addressing increased demand for vehicle travel. By providing Americans options to use more efficient modes, such as public transportation and rail, we may slow or reverse VMT growth.

Manufacturing consent, manipulating data, fighting transparency:  All in a days work for your state DOT.  This story from Pennsylvania mirrors the experience of almost everyone whose dealt with a state DOT “public outreach” process.  Here, Pennsylvania DOT (PennDOT) conducted a survey about the I-95 freeway through Philadelphia, and then presented doctored results to claim that the the agency’s preferred option was most highly rated.  Attorney Megan Shannon asked to get the actual survey data, and was initially denied based on the claim that these were “investigative” records under the state’s right to know law. Ultimately PennDOT was forced to release the data, but then only provided a PDF file, rather than the underlying Excel file. And once analyzed, the data showed that the agency twisted the survey results to exaggerate support for its preferred option.

Why do city’s charge so much more for bikes than buses (and cars)?  A Bloomberg story looks at the generally much higher rates that cities charge for bike rentals than for public transit.  While transit rides are generally subsidized to the tune of several dollars per rider, bike rental schemes have far smaller subsidies.  As Bloomberg writes:

The costs come from a confluence of factors. Unlike public transit, which is subsidized by the government, many shared micromobility systems are operated privately or by nonprofits — or rely primarily on private funds. “They set the prices based on how much it costs to run the program,” said Camille Boggan, the program manager who led the NACTO report.

This data highlights a pervasive problem with transportation:  Why are prices so poorly aligned with our policy objectives.  Cites throughout North America essentially give away most of their road space for free for private car parking and use, and yet charge substantial per ride fees for modes (transit and rental bikes) that are safer, more sustainable, which relieve traffic congestion.

What City Observatory Did This Week

The cost of the Interstate Bridge Replacement (IBR) is going up:  But we won’t tell you how much . . . And we’re not going to tell you until a year from now, after the 2025 Legislature adjourns

In January, 2024, IBR official publicly acknowledged that their 13 month-old cost estimate of up to $7.5 billion was wrong, and promised a new estimate “later this summer.”

It’s now summer, and IBR officials are now saying their new estimate won’t be done for another year— “about this time next year” (meaning June 2025).

IBR officials are keeping secret the new higher cost until after the Oregon and Washington Legislatures meet.  ODOT has specifically excluded any mention of additional funding for the IBR project from its presentations to legislative committees contemplating a new finance plan for ODOT for the 2025 session.

ODOT is touting a newly announced $1.5 billion federal grant for the project.  But the project’s price tag is rising faster than it is finding money to pay for the bridge.  And Oregon and Washington will be holding the bag for any cost increases or toll revenues shortfalls.

Must Read

Harris on transportation and climate.  As California Attorney General, Kamala Harris sued San Diego’s regional planning agency over the climate effects of its highway-oriented regional transportation plan.  California’s state level environmental disclosure law—CEQA—requires an analysis of the environmental impacts of major public policies, including San Diego’s long range transportation plan.  In 2012, Harris pushed for greater emphasis on reducing pollution and promoting transit, rather than widening highways.  Her office reported that

The lawsuit contends that the Environmental Impact Report (EIR) prepared for the plan does not adequately address air pollution and climate concerns and prioritizes expanding freeways while delaying public transit projects.

Then-Attorney General Harris is quoted as saying:

“The 3.2 million residents of the San Diego region already suffer from the seventh worst ozone pollution in the country. Spending our transit dollars in the right way today will improve the economy, create sustainable jobs and ensure that future generations do not continue to suffer from heavily polluted air.”

Oregon spends its climate dollars subsidizing car travel.  Bike Portland has a keen analysis of a $197 million federal climate grant awarded to Oregon.  All of the $66 million devoted to reducing transportation emissions goes to subsidizing cars and none of it goes to promoting biking, walking or transit or reducing vehicle miles traveled.  As Bike Portland notes:

I was surprised to see that all the funds awarded to Oregon will be spent on cars. Regardless of how they are powered, state subsidies for cars will increase vehicle miles traveled (VMT), lock more Oregonians into lopsided financial relationships with banks and major corporations who benefit from people who use the most expensive transportation option available, cause more deaths and injuries on our roads, create more traffic bottlenecks, clog neighborhoods with parked cars, and perpetuate highway building and expansions.

Just last year, the Oregon Department of Transportation issued a report saying the state should make it easier for people to buy e-bikes; but then given a sizable federal grant it spent exactly nothing on this climate strategy.

The high cost of inclusionary housing requirements.  Sightline’s Dan Bertholet identifies five fatal flaws that could make inclusionary housing mandates for transit-oriented development a net detriment to housing affordability.  Washington State has been considering legislation to allow more housing to be built in transit-served areas, but politically it has been paired with an inclusionary housing requirement that subverts the purpose of the law:

The inherent problem with unfunded IZ is that its cost impedes the production of housing. It’s a preventative tax on housing when what we need for affordability is far more housing. Sometimes, when market conditions are just right, that tradeoff can be worth it—if it yields some affordable homes and doesn’t reduce the overall supply by much. But in many cases, IZ backfires entirely, thwarting the construction of both market-rate homes and income-restricted homes.

And even seemingly modest inclusionary requirements have profoundly negative effects on housing production and affordability.  Bertholet points to a study of Los Angeles which shows

For every below-market rate home gained through IZ, 4.5 market-rate homes are lost. In other words, creating 1 affordable home through IZ makes the housing shortage 4.5 homes worse than it would have been without IZ.

The political case for inclusionary zoning rests on the idea that one can tax or punish developers and somehow extract funds from them to pay for affordable housing.  By design, nearly all “inclusionary” requirements are un-funded, and even when partially funded, encumber housing development with additional burdens that reduce housing supply and drive up rental prices.

The scary decline of the apartment pipeline.  The good news for housing affordability for the past year or so has been a strong growth in the number of new apartments coming on to the market, blunting rent increases and leading to actual declines in many markets, such as Austin.  But real estate markets operate with a significant lag:  it takes usually a couple of years (and much longer in some cities) between the time a developer seeks permission to build and the time new apartments are leased.  And as Jay Parsons  points out, thats what makes a look down the pipeline rather ominous.

The excess of of apartment completions over new starts reached more than 100,000 in the first half of 2024, the highest gap in half a century.  This almost certainly foretells a big slowdown in apartment growth in the years ahead, and that constrained supply is likely to lead to rental increases in the years ahead.

In the News

StreetsblogUSA quoted Joe Cortright’s comment “Let them drive Tesla’s is not a climate policy” as advice to Vice-President Kamala Harris.

Must Read

The problem with elevators in America.  Market Urbanism’s Stephen Smith has an op-ed in the New York Times opening up a new front in the YIMBY effort  to expand housing supply in the US.  Smith argues that the development of affordable, sustainable multi-family housing in the US is thwarted by two arcane regulatory barriers:  the prohibition on most “single-stair” multi-family buildings, and excessive requirements for elevators.

Elevators may seem like an arcane, even irrelevant factor, but Smith shows how regulatory capture of building standards has led to over-sized and over-priced elevators in the US compared to the rest of the world.  Paradoxically, the high cost of elevators dramatically reduces accessibility because so few multi-story buildings are built with elevators.  And sadly, decisions about crucial policy issues like elevator standards and single-stair prohibitions have been effectively delegated to private, self-interested groups: There never was a conscious, balanced democratic decision.  Smith’s op-ed argues its time that the broader public interest be reflected in these decisions.

Randomness and Cities.  NYU’s Alain Berthaud has an insightful commentary on the economic importance of cities promoting random contacts.  We’ve called this phenomenon “optimal serendipity”–cities through people from different backgrounds and outlooks together in wholly unpredictable ways, which though sometimes fraught with friction, often triggers learning, innovation and improvement.  Berthaud argues: