The price of ODOT’s trouble plagued Rose Quarter project has quadrupled to $1.9 billion, and the agency has no way to pay for it, because it spent the money the Legislature provided in 2017 on another project.  And agency staff is telling the state Transportation Commission there’s nothing that can be done to consider modifying the project or reducing its cost because they’ve gotten to a “pens down” moment.

At the same time it’s saying “pens down”, the agency is also asking for two more years and another $40 to $60 million to get the project to a level of just “30 percent” design.

ODOT is claiming “pens down” even after it has just revealed a new interchange flyover design that hasn’t gotten public review, city approval or inclusion in required federal environmental documents.

Even though the agency has no money to pay for the Rose Quarter, and hasn’t studied tolling, ODOT insists on moving forward as if $1.9 billion will magically appear, a strategy that can be fairly called “extend and pretend.”

The Rose Quarter debacle illustrates the incompetence and dysfunction of ODOT:  costs can only increase, and the only solution is getting more money for bloated projects.

Newly appointed OTC Commissioner Jeff Baker got his bureaucratic baptism at the June 28 special meeting of the Oregon Transportation Commission.

The Commission was called into a special meeting to review the dire budget situation confronting ODOT’s “Urban Mobility Program”—a multi-billion dollar collection of highway expansion projects proposed for the Portland area.  In May, Governor Tina Kotek announced a delay in tolling plans until no earlier than 2026, and directed ODOT to present a new financial plan.

The key element of that plan was an acknowledgement that ODOT’s revenues were shrinking even as the cost of its projects was growing.  The plan called for effectively cancelling the I-205 Phase 2 project, and indefinitely shelving the I-5 Boone Bridge.  But the big hole in the budget is the exploding cost of the 1.5 mile I-5 Rose Quarter project in Portland.  The Rose Quarter project faces a $1.75 billion funding shortfall, and as we reported earlier, ODOT’s strategy is “extend and pretend:”  keep spending. money on project planning and hope someone will magically find the needed cash.  ODOT’s staff told the commission that was essentially their only option.  But is it?

Pens down, Commissioner Baker

Yes, the cost of the Rose Quarter project just ballooned to $1.9 billion—more than four times the estimate that ODOT gave the legislature when this project was approved in 2017, but according to ODOT staff, now its simply too late to do anything to reduce the costs or modify the scope of the project.  That’s what Urban Mobility Office Director Brendan Finn told newly appointed Oregon Transportation Commissioner Jeff Baker at the June 28 meeting.

Baker asked whether, in light of revenue shortfalls, scope creep and cost overruns, the OTC had an obligation to ask whether it was sensible to move forward. (A longer transcript is below):

I’m just curious about governance.. . . what happens when we get scope creep when we get inflation that reaches a certain magnitude?  At what point do we have an obligation to go back and and relook at decisions that we’ve made in the past—whether it be 205 or or whether it be a Rose Quarter or anything else that that we’ve got coming on—because obviously, this is a it’s important, but it’s becoming increasingly expensive.  And it appears that we’re not done yet in terms of defining what the overall scope of the project is.

Brendan Finn shut that down:

This is the design that we are taking through the environmental process. This is the design that we are seeking federal approval on. I think we’ve come to a “pens down” moment.

Never mind that there’s no actual money for the project.  Never mind that the project is years away from construction, even if the money can be found. Changing the scope of the project is simply an inadmissible question.

Who’s in charge:  The commission or its staff?

Finn’s “pens down” assertion that nothing can be changed is problematic on many of levels.

First, and most importantly, who decides when it’s time to put “pens down?”  Finn works for the Oregon Transportation Commission, not vice-versa.  If the Commission decides it doesn’t want to move forward with the $1.9 billion design, ODOT staff can’t do so.  It is a “governance” issue, exactly as Commissioner Baker framed it.  Nothing in statute authorizes staff to make “all-or-nothing” ultimatums to the commission.  Arguably, asking questions about this project (and others) is exactly the Commission’s responsibility, a point we made when the project’s price tag jumped to nearly $800 million in 2019.

Second, the truth is, ODOT hasn’t put its pen down:  the agency  is very much in the business of re-designing this project, even as it made this presentation to the commission.  It just unveiled a new “flyover ramp” which hasn’t been reviewed or approved by any local or federal partners (See below).  In addition, ODOT’s own presentation concedes the project it will take another two years and an additional $40 to $60 million to get the project to a level of 30 percent designed.  There’s lots ›of ink yet to be spilled on this project.  Apparently, ODOT has made little progress on Rose Quarter design:  Almost two years ago, in September 2021, Brendan Finn told OPB:

Well, the project is still pretty much in its infancy, it’s only being at 15 percent design.

Third, going forward nothing precludes ODOT (or any other state highway agency) from further “refining” the project when it encounters design problems, cost overruns funding shortfalls or changing circumstances.  The federal partners essentially never force a “pens down” moment.  Take for example one of the Biden Administration’s signature infrastructure projects, the $3 billion expansion of Cincinnati’s Brent Spence Bridge.  There, the state DOTs just lopped off 40 percent of the project (to save costs) years after it had completed environmental reviews.  And the City of Cincinnati is pushing further design changes to eliminate off-ramps and free up 30 acres of land for development.  All this more than six months after the Biden Administration approved $1.6 billion in federal funding for the project.  Nothing in the National Environmental Policy Act or the policy or practices of the Federal Highway Administration (the “federal partners”) locks Oregon into an unaffordable project, or precludes designing a more affordable and environmentally sensible alternative.

Fourth, ODOT can’t get federal environmental approval until it pulls together actual funding for the project.  Federal Highway Administration rules prohibit environmental approvals for projects for which funding hasn’t been demonstrated to be “reasonably available,”—a standard the Rose Quarter is nowhere meeting. As just one indicator, the current Regional Transportation Plan allows for a total budget of $375 million for the Rose Quarter, more than $1.5 billion short of the amount needed to pay for the proejct.

In theory, it might be fair to say, “pens down,” if the project had received federal environmental approval (it hasn’t), has been approved by local governments (they just saw the new flyover design for the first time), and if the money for the project were in hand. None of these things are true. ODOT concedes that even if the money could be found, construction on the main part of the project wouldn’t happen before  2028.

Instead of having a serious conversation about whether we can afford this project and whether its still makes sense, and whether something smaller, more useful and actually affordable would be a better idea is off the table.  Instead, ODOT staff is insisting that we “extend and pretend.”

ODOT is still actively redesigning the Rose Quarter Project

And notice that just the day prior to this meeting—for the very first time—ODOT publicly revealed a new, never-before-seen exit ramp design for the project, one that hasn’t been subjected to any environmental review.

The new design adds a flyover offramp (the orange horseshoe-shaped object) from I-5 southbound that creates an elevated hairpin turn midway over the widened I-5 freeway, before the road joins with the existing I-5 NB offramp at Weidler.  The Urban Mobility Finance Plan is vague on the details, but it doesn’t appear that the current price estimate of $1.9 billion includes this new off-ramp configuration, which also is not part of any existing state or city transportation plan.

As Commissioner Sharon Smith put it at the meeting, ODOT is “out of money.”  The only hope for paying for the Rose Quarter is implementing tolling, but the project’s current environmental analysis explicitly says it will not include congestion pricing because tolls “aren’t reasonably foreseeable.”   ODOT staff are saying the OTC is powerless to consider, or even suggest, that a smaller, more affordable project might be the best way forward, or that perhaps we should first implement congestion pricing, and then see, what, if any, additional capacity is needed.

Appendix:  Partial Transcript, Oregon Transportation Commission, June 28, 2023

OTC Commissioner Jeff Baker:

I apologize for being the new guy, asking some naive question here. So bear with me, As it relates to the Rose Quarter, and again I think we’re all feeling that this is an important project on a whole lot of levels, the cost from time the Commission last looked at this in ‘21 versus the cost we’re looking at today has increased by 30 percent.

And I’m just curious about governance. And what happens when we get scope creep when we get inflation that reaches a certain magnitude at what point do we have an obligation to go back and and relook at decisions that we’ve made in the past whether it be 205 or or whether it be a Rose Quarter or anything else that that we’ve got coming on, because obviously, this is a it’s important but it’s becoming increasingly expensive. And it appears that we’re not done yet in terms of defining what the overall scope of the project is. So do we have a responsibility at this point? Is there governance around really taking a look at this or you know, other entities that have a stake in it the Governor’s office, the Commission, or the Legislature?

Brendan Finn, (Director, ODOT Urban Mobility Office)

Madam Chair, Commissioner Baker, I guess I’d say first, the scope creep topic. Obviously, a lot of these changes in came forward through various discussions, various tables. This is the design that we are taking through the environmental process. This is the design that we are seeking federal approval on. I think we’ve come to a “pens down” moment. And we feel that our partners and the community feel that way too. So this this is what we’re carrying forward. Through, obviously, the iterations that we’ve had the conversations with the Commission, and others, so I guess I want to get out in front of that, Commissioner. This is this is the time where we’re putting the pens down and we’re taking this design forward.

Jeff Baker

Okay, so as I understand it, the design is frozen at this point, it’s pens down, no more changes?

Brendan Finn

Well, I will say that we are going through an environmental process right now. We are working with our federal partners, so I don’t want to get out in front of that. Commissioner, we do need to still look at some of the efforts that we’re going to need to put in to get that approval. They have not signaled that yet. So I guess I want to caveat that, but this is this is the this is the design that we’ve been, that we’re putting forward.

Jeff Baker

Okay. You know, I think it’s important that you know, when we look at any project, there’s constraints. And as we’re wrestling with them today, we’ve got financial constraints. We’ve got time constraints, we’ve got other constraints that go into it. So we need to manage them and not let them get away from us because ultimately, time kills projects and cost kills projects, so we have to be really diligent, especially when there’s something as important as this one to really be on top of our game and, and be sure that we we manage it in such a way that it can reach a really great conclusion.