Economist Joe Cortright has prepared a memo to local leaders on the financial risks (PDF, 51K) of the Columbia River Crossing project.
Beyond fundamental questions like where the local match is going to come from, the project may require an unprecedented amount of debt.
But perhaps scariest is the constraints that may be created by assuming that much of this debt will be repaid using tolling revenue. This has interesting implications:
- If peak oil drives gas prices hight enough that there is less traffic across the bridge than projected, toll revenues might not provide the revenue to repay the bonds. If that happens, what other revenue sources would be diverted to repay the bond holders?
- Since the bond holders will have a vested interest in maintaining traffic flow over the crossing, might the bond covenants restrict actions that could reduce traffic – like expanding transit service?
Meanwhile BikePortland is reporting on serious concerns coming from the Portland Planning Commission.
0 responses to “CRC Financing Risks”
Interestingly, I also have been stiffed by the CRC on two info requests.
They seem to have a lot to hide.
Peak Oil is a moving target. Before you flame me, listen:
What Peak Oil was in the 1970s isn’t what Peak Oil is today, because of the improvement of technology. No one was looking to use oil shale or tar sands for petroleum production back then, because it was just too expensive in comparison to drilling and pumping. With today’s improved technology, it’s a feasible production method, and it’s being explored.
Also, if you’re keeping up on all-things-biofuel, the FAA is looking to certify an ethanol-based fuel that doesn’t contain ethanol (read: don’t need to have a flex-fuel certified engine), is 104 octane (read: can be used in piston-fired airplanes, replacing the current 100LL fuel which still uses tetraethyl lead to boost octane because ethanol is a corrosive, and the last place you want an engine being corroded is at 15,000+ feet), and they are using sorghum ethanol (sorghum cane makes six times the ethanol output per acre in comparison to corn).
It’s the Splenda of ethanol – made from it, but doesn’t contain it. Net-zero carbon footprint due to 100% biofuel feedstock. Cheaper than standard gasoline – about $1.80/gal to produce from $1.42/gal ethanol for a total of $3.22/gal pre-tax. It’s more energy-dense – 15% percent more which would directly be a boost in MPG, just the same as how your mileage goes down when they add more ethanol for summer gasoline blends. Oh, and it can be used in the existing internal-combustion fleet without modification, unlike hydrogen, ethanol, methanol, propane, CNG, or hybrid / electric systems.
Sure, oil production may peak someday, but it may just be due to demand for oil reducing because technology marches on, not because all easily exploitable reserves are dwindling.
I’ll stop being optimistic now.
I figure the CRC project should have a lower priority, but must go through this process for eventual replacement. There’s still a lot of resentment in Clark County about light rail, but support will eventually overrule opposition. It’s still not a good idea to force MAX down their throat. I’ve read statements that indicate Clark County development will little more than suburban sprawl housing, supposedly to match Portland’s job market. That should not be encouraged by approving the CRC. I’ve heard there are plans to redevelop Jantzen Beach Center into high-density housing. I don’t know what to think about that, yet, but it’s sure to have an impact on CRC and I-5 traffic computations. I figure the Feds are dangling money to tempt Portland into drinking some cheap wine. “Shay, shureally shum sh-shpeshel whyine-air, buaeaahhh.”
If fuel costs remain high as predicted, it is absolutely unnecessary to dictatorially create tolls for the purpose of reducing the number of motor vehicles using the crossing. Therefore the current politically motivated congestion pricing agenda is as outdated as the $20.00 per barrel price of oil. The local match to pay for the bridge must now have the requirement to be shared by the users of all vehicular modes of transport, each paying for the specific infrastructure used and a proportionate share of the superstructure. After calculating in any motorist fuel taxes that would exclusively be used only for the highway portion of the crossing, a cost per passenger mile separated out for each mode of transport (the cost per motor vehicle mile, per transit passenger mile and per bicyclist mile) should better identify the amount that needs to be charged to each user group.
And for those of you that think that we’ll solve Peak Oil by getting more efficient cars:
The DOE has studied that, and thinks that if we started making much more efficient cars starting about 20 years before the peak, we could survive [read: avoid a depression] the 20 years after the peak. (The study ignores what we do past that, but they can only study so much.)
Given that a lot of people are standing around saying that the oil prices are high because of supply and demand, that kind of sounds like we are past peak already. And, GM and Ford are just starting to close their truck lines to retool them as smaller car lines, so…
Matthew, I don’t know if anyone thinks we will solve peak oil by one single trend. The present price of oil is the result of numerous factors–emanating from both conservative and liberal agendas–and to get past the crunch of demand exceeding supply will, most likely, require a complex remedy.
Some things I have heard and deem as reliable factors: 1. No new refining capacity in US for over twenty years 2. Refusal of OPEC to increase production 3. Recent market demands for large, luxury vehicles (especially compared to the late seventies and eighties) 4. Thwarting of Alaskan oil recovery by diverse PAC groups. 5. Bans on offshore US oil exploration 6. Class-connected snubbing of public bus transit
I saw Barack Obama blaming the high gasoline prices on Bush—how disingenuous!
Absent at least some access to personal vehicles oureconomy will certainly go into depression. I would not hold this as scientific research but the rise of the US as dominant world power occurred in conjunction with the infernal combustion automobile. Before that we were just another also-ran. I think in five years we will have plenty of practical alternatives to choose from. We have had the technology to produce personal–and comfortable–cars that could get 100mpg for decades but nobody has sucessfully pressured the automakers to build them–until now.