This bill, which authorizes Oregon State bonds to fund construction of the Columbia River Crossing could be voted on by the Oregon House as early as today, and the State Senate later this week. Our correspondent Joe Cortright has been reading closely:
Analysis of HB 2800A48 Comments
Prepared by Joe Cortright
February 24, 2013
HB 2800A gives ODOT wide latitude to issue bonds without a long-term financial plan in place.
This is still the classic Robert Moses strategy of doing anything to get the project started. ODOT can issue $450 million in bonds backed directly by the highway fund, plus an essentially unlimited amount of bonds backed by toll revenues and federal grants (and backed further by pledges of state highway funds and future federal grants) to get the CRC project started. The treasurer is only given authority to require that ODOT has a financial plan for “the initial phase” of the project.
So under this version of the bill, ODOT can issue an enormous amount of debt, start a portion of the project, and leave it to some later time to figure out how to pay for finishing the project. There is no requirement that the federal government provide the full $850 million the CRC is counting on, or that Washington appropriate or allocate $450 million, and there is no mention of the $400 million in FHWA funding that the CRC has counted on. There is no requirement that the Investment Grade Analysis (due in December 2013) show that tolls will produce any specific dollar amount of funds, much less than $1.3 billion the project’s financial plan assumes. These are toothless triggers.
- allows ODOT to pledge future highway funds and federal grants as security on toll bonds, so that if tolls are under-realized, these funds will be tapped.
- allows Washington to “commit” only the amount required to get FTA approval for the transit portion of the project; this could be much less than $450 million
- allows ODOT to issue bonds based only on FTA submitting an application to Congress–not the commitment of any specific dollar amount of funds.
- does not eliminate the sections authorizing of ODOT to buy land and build highways Washington State, the effect of which is to enable ODOT to evade constitutional restrictions on spending gas tax funds on transit.
- HB 2800A’s $3.4 billion cost limitation is meaningless: As the Oregonian’s “Truth o Meter” observed on February 20, 2013, it is legally unenforceable and ODOT will not walk away from a partly-completed project.
Section by Section Analysis
New Subsection 3: Revised Bond Limit
Second sentence: says intent of Legislature is to “pledge . . . with other security”–Coupled with the unamended provisions in Section 13 that allow a pledge of state highway funds and future federal grants, this again gives a loophole.
Subsection (4) (a) State of Washington Contribution
Still no dollar amount listed
Washington needs only contribute an amount needed to satisfy FTA There are no “requirements” of the finance section in the FEIS. If you mean $450 million, why not say $450 million?
Subsection (4)(b) Federal Transit Administration
Essentially no change: DOT submits an application for $850 million; It should be that Congress or DOT sign or approve a FFGA that commits the feds to $850 million
New Subsection (4)(c) Investment Grade Analysis
No dollar amount is specified. The project finance plan assumes $1.3 billion. The IGA should show that tolling will not produce nearly that amount, and the project would still go forward.
New Subsection (4)(d) Approved Financing Plan
This only requires the Treasurer to find that there is enough money for the “initial phase of the project,” as described in the Full Funding Grant Agreement. Since the FFGA has not been created yet, this is completely ambiguous. This allows ODOT to define the initial phase to just be a small portion of the project, and leave un-analyzed and un-funded the amounts necessary to complete the project.
Here’s what serious “sideboards” or “triggers” would look like:
- Require specific dollar amounts as minimums from the FTA ($850 million), FHWA ($400 million), State of Washington ($450 million), net proceeds of toll bonds demonstrated by the Investment Grade Analysis ($1.3 billion). These are the amounts specified in the CRC finance plan. If they are not obtained, the State of Oregon is liable for the shortfall.
- Require the committed amounts to be legally obligated–not just “applied for” or “committed”–neither of these terms binds anyone to actually provide the money.
- Require a financial plan for the entire project, and not just the amount needed for some vague and un-defined “initial phase”. Once you start the project you will be obligated to finish it–with state money. A financial plan for part of the project is not a financial plan at all.
- There needs to be a specific provision for stating who will pay for cost overruns. ODOT averages 200% cost overruns on its largest projects; Megaproject bridges average 33% cost overruns. There is no provision in the CRC finance plan or this bill saying how cost overruns will be paid for. This should be addressed now.