Oregon legislation goes whole hog on highways

HB 3065 would launch a whole new round of freeway boondoggles, and plunge the state into debt to pay for them

The classic Robert Moses scam:  Drive stakes, sell bonds

The Oregon Legislature is considering a bill, HB 3065, which while it sounds technical and innocuous, is really designed to launch a whole series of new freeway expansion mega-projects in the Portland area.  By authorizing the Oregon Department of Transportation to get started on several of these projects, and to finance them by short-term borrowing and bonds, backed with a legal pledge of both future toll revenues and other state and federal transportation funds, the bill mimics a classic scam developed by America’s original highway builder/power broker, Robert Moses, in the 1930s.

If there is a villain in American urbanism, it is Robert Moses, who for decades, guided public investment in New York, a city and state that to today, still bears the deep imprint of his choices, chief among them, the decision to remake much of the region to facilitate the movement of automobiles. Part of his legacy is the toll bridges and a network of highways that slashed through urban neighborhoods—in his words—like a meat-ax.  But there’s another more subtle, but equally enduring element of the Moses legacy:  a pattern of practice followed to this day, in one form or another, by highway departments around the country.

The latest manifestation of Moses’ malignant legacy is in the form of a bill in the Oregon Legislature.  House Bill 3065 proposes to give the Oregon Department of Transportation power start a series of expensive Portland area highway projects, and issue debt to pay for their (unspecified and unlimited costs), and in the process pledge much of the state’s future transportation revenue, including any monies raised from tolls to pay for these projects.  Along the way, the bill undoes most of the positive attributes of road-pricing authorized by the 2017 Oregon Legislature, which specifically mandated value pricing (aka “congestion pricing’ on Portland area freeways.  As we’ve frequently pointed out at City Observatory, and as born out by the experience of cities around the world and in the US, even a modest price charged for peak hour freeway use would likely resolve the region’s congestion problems.  (That conclusion was also echoed by ODOT’s own consultants three years ago).

What we have in HB 3065, however, is something that is a kind of perpetual motion road-building machine. It authorizes ODOT to issue bonds for a series of megaprojects, and to obligate current and future state revenue, including future toll revenues to pay back those bonds.  It’s a kind of “pave now, pay later” strategy that Moses would embrace, and bears two key hallmarks of Moses’ own work:  driving stakes to force funding commitments to ill-defined, open-ended projects, and using bond covenants to block any legislative oversight or repudiation of his future actions.

Moses locked up all the revenue from publicly financed bridges and tunnels, and at a time when public transit was starved for investment, plowed it all back into a steady stream of new road capacity that demolished neighborhoods, furthered sprawl and increased car dependence.  The Oregon Department of Transportation seems determined to take a page out of the Moses playbook with new amendments.

To see how these two patented Moses gimmicks work, we turn the microphone over to his biographer, Robert Caro.

The Power Broker | Robert Caro

Driving Stakes

The key techniques are two-fold:  First, just getting projects started.  Several of these projects (the I-5 Bridge replacement, and the I-5 Boone Bridge), haven’t even completed their planning, so their full costs are unknown.  The second technique is to issue bonds to pay for the project, secured by toll revenues.

Early on, Moses learned the value of starting construction of a highway—driving stakes in the ground—even if he didn’t have all the financing in place, and regardless of whether he knew (or honestly revealed) the actual total cost of the project.  Just getting something started made it almost impossible for legislators or other officials to deny him whatever resources he needed to finish the project.  Caro writes:

Once you did something physically, it was very hard for even a judge to undo it.  If judges, who had to submit themselves to the decision of the electorate only infrequently, were thus hogtied by the physical beginning of a project, how much more so would be public officials who had to stand for re-election year by year? . . . once you physically began a project, there would always be some way found of obtaining the money to complete it. “Once you sink that first stake,” he would often say, “they’ll never make you pull it up.”

And this tactic turned minimizing or hiding the true cost of a project into an indispensable means of getting things moving:

Misleading and underestimating, in fact, might be the only way to get a project started.  . . . Once they had authorized that small initial expenditure and you had spent it, they would not be able to avoid giving you the rest when you asked for it. . . . Once a Legislature gave you money to start  a project, it would be virtually forced to give you the money to finish it.  The stakes you drove should be thin-pointed—wedge-shaped, in fact on the end.  Once you got the end of the wedge for a project into the public treasury, it would be easy to hammer in the rest.  (Caro at 218-219)

Selling Bonds

One of Moses’ key insights was that municipal revenue bonds worked like an alternative, overriding form of government authority, in his case, overriding future legislative control or second thoughts. The contract between bond issuers (like a state agency) and bond buyers can’t be impaired by future legislative changes. A promise to dedicate certain revenues to an agency in a bond indenture can tie them up for years or decades, or as Moses showed, forever.  Bonds, once issued, become a virtually unbreakable contract.  Once ODOT sells bonds backed by the pledges of toll revenue (and other federal and state transportation revenues) the state is permanently, and preemptively committed to giving it all the toll revenue (and in the case of HB 3065, forfeiting other revenue to make up any shortfall).

Caro explains the original structure Moses crafted when he drafted amendments to New York statutes governing bonds issued by his Triborough Bridge Authority.

Legislation can be amended or repealed.  If legislators were in some future year to come to feel that they had been deceived into granting Robert Moses wider powers than they hand intended—the right to keep tolls on a bridge even after the bridge was paid for, for example—they would simply revoke those powers. But a contract cannot be amended or repealed by anyone except the parties to it.  Its obligations could not be impaired by anyone—not even the governing legislature of a sovereign state.  Section Nine, Paragraphs 2 and 4, Clauses a through i, gave Robert Moses the right to embody in Triborough’s bonds all the powers he had been given in the legislation creating Triborough. Therefore, from the moment the bonds were sold (thereby putting into effect the contract they represented) , the powers he had been given in the legislation could be revoked only by the mutual consent of both Moses and the bondholders.  They could not be revoked by the Authority or by the City whose mere instrumentality he was supposed to be.
(Caro, at 629-630)

The combination of these two strategies—driving stakes and selling bonds—is enough to lock the state into an expensive and environmentally destructive freeway building spree.  And once the bill passes, and the bonds are sold, future legislatures will find themselves as powerless to rein in ODOT as New York was to stop the Moses meat ax from hacking through New York City.