Gov. John Kitzhaber handed state Treasurer Ted Wheeler a difficult assignment last month: the governor asked Wheeler to perform a quick financial analysis of whether Oregon could go it alone on the Columbia River Crossing project.
Kitzhaber chose that path after Washington lawmakers this summer refused to provide $450 million to help fund the proposed $3.4 billion effort to build a new interstate bridge, extend light rail to Vancouver and rebuild key interchanges on both sides of the bridge.
WW has obtained a confidential internal treasury draft memo (PDF) which attempts to answer Kitzhaber's question before the Sept. 30 deadline he set.
Wheeler's spokesman, James Sinks, says the internal memo is simply an update and that the treasurer's office is still waiting for more information before making a final call.
But it's clear from the memo that the deal is a long shot.
It would require an aggressive legal opinion from the Oregon Department of Justice—effectively saying it's OK to build a bridge into a state that has refused to fund the bridge. It would also depend on the GOP controlled Congress, which is hostile to transit and short of cash, to give Oregon $850 million outright and loan us another $900 million at favorable rates.
Getting Congress on board would be a major feat. So would selling the deal to hostile Washingtonians. There are some tough pills to swallow in the memo. For the deal to work, Clark County would have to accept light rail and the City of Vancouver would have to find a way to pay for light rail operations.
Borrowing requirements would prohibit Washington and Oregon drivers from renewing their drivers' licenses and vehicle registrations if they had unpaid tolls.
And finally, the debt service depends on new tolling analysis that was prepared by Parsons Brinkerhoff, one of the firms that hopes to help build the bridge. In the past, the tolling numbers provided by the project have been highly suspect, as Wheeler's 2011 review found.
Here's a summary from Laura Lockwood-McCall, Wheeler's debt manager (bold by WW):
While critical legal and operational issues remain unresolved as of the date of this memo, an analysis of the basic funding plan based on the cost projections provided by CRC project staff suggests that the revised project is financially viable at current interest rates, even under the most pessimistic toll revenue assumptions, so long as all of the following events occur:
1. The Coast Guard permit is granted by September 30, 2013 – this appears more likely now that all three up - river companies have reached an agreement with CRC on height mitigation costs ($86.4 million will be paid to these companies, once all permits are 3 obtained and the bridge construction contract is awarded, now estimated to occur sometime around FY 2016).
2. An opinion from the Oregon Department of Justice is released stating that it is legal for the State of Oregon to enter into an agreement with the State of Washington to construct bridge, highway and rail improvements within the borders of Washington State.
3. The two states enact the above - mentioned construction agreement as well as an electronic toll enforcement reciprocity agreement that has strong enough toll - setting procedures and enforceability provisions to assure rating agencies, the Federal Government and toll revenue bondholders that the project is financially viable. In particular, this agreement must ensure that both Washington and Oregon drivers will not be allowed to renew their vehicle and/or drivers’ licenses if they fail to pay delinquent tolls, surcharges, and penalties associated with their use of the I - 5 Bridge.
4. The source of annual operating funds to pay for the expanded light rail services into Vancouver, Washington is identified.
5. The State of Oregon retains exclusive control over the setting of tolling rates to ensure financial accountability to both our bondholders and taxpayers.
6. Congress awards an $850 million grant to TriMet for expansion of their light - rail system into Vancouver, Washington in early 2014.
7. The Federal Highway Administration (FHA) awards a $900 million TIFIA loan to the State of Oregon for the revised CRC project by the summer of 2014.