CRC passed over for $1 billion federal loan
Originally published May 8, 2012 at 4:06 p.m., updated May 8, 2012 at 8:22 p.m.
The Federal Highway Administration passed over the Columbia River Crossing for a much-needed $1 billion loan last week, but not for a lack of federal support for the $3.5 billion project.
Rather, CRC project officials said the reason the feds declined money was due to a lack of support this session from lawmakers in the capital cities of Oregon and Washington. Both states failed to dedicate any of the $450 million each they must ante up before the federal government can legally hand out funding.
Being left off the 2012 list for Transportation Infrastructure Finance and Innovation Act, or TIFIA, money doesn’t spell the end of the project, CRC’s Steve Siegel said. But it does make 2013 a critical year if the CRC is going to succeed.
Oregon and Washington will need to use next year’s legislative sessions to identify funding streams for the CRC, Siegel said. Without the state money to back up an investment grade financial plan, the federal highway and transportation administrations can’t dole out dollars, Siegel told an independent expert review panel studying light rail and bus rapid transit in Vancouver on Tuesday. Siegel is a Portland finance consultant for the CRC.
“That’s a total logical statement: If we don’t get the state money, we’re dead,” Siegel said, validating a frequent analysis by project critic and Portland economist Joe Cortright. “Of course, if every project took that approach, I guess nothing would ever get done.”
But Cortright countered Tuesday that Siegel’s words sound similar to those of a predatory lender — “he isn’t being up front with you about the risks you’re signing up for when you do this deal.”
Cortright noted that the CRC needs $850 million from the Federal Highway Administration for light rail construction, in addition to TIFIA loans. And the CRC is hoping for up to $500 million in discretionary funding from the transportation budget.
“That’s not the way the feds look at it: from their view, the TIFIA loan is instead of at least some, or maybe even all of the grant monies,” Cortright wrote in an email. “A loan instead of a grant blows a big hole in the CRC finance plan.”
He noted that both states will be on the hook for cost overruns associated with construction, and that each state may have a limited borrowing capacity.
“Oregon has gone from spending 1 percent of gas taxes on debt service to 28 percent,” Cortright wrote. “Washington will shortly be spending a stupendous 67 percent of its revenue on debt service. At the same time, revenues are declining. This system is broken and unsustainable.”
Some 26 projects nationwide sent letters of interest to the highway administration, with some $13 billion in TIFIA loan requests; just five were selected to apply for funding.
Siegel downplayed being left off the list: “It’s not a surprise, because we are about a year early.”
The highway administration encouraged the project to apply, in order to appear in the queue for funding, he said.
“The Columbia River Crossing project was not invited to apply for this round of TIFIA funding because of TIFIA’s limited budgetary resources,” Federal Highway Administration spokesman Bill Adams wrote in an email. “The Columbia River Crossing project was well aligned with the TIFIA selection criteria and is a regionally significant project. If Congress significantly increases the budgetary resources available for TIFIA, as proposed in the president’s budget and the House and Senate reauthorization proposals, the department would look to expedite the review of the Columbia River Crossing in the next round of applications.”
Overall, the project is expecting an approximately one-third split of the costs between the federal government, the states and local tolling.
The TIFIA program provides credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance transportation projects of national and regional significance. TIFIA loans figure heavily into a revamped finance package that Oregon Treasurer Ted Wheeler suggested last summer when his office found a nearly $600 million hole in the CRC’s tolling revenue assumptions.
The loans allow for no-interest payments during construction and give up to 35 years for repayment upon project completion. A TIFIA loan of $704 million to $833 million, repaid from Interstate 5 toll revenues, would substantially reduce the need for state-backed general obligation bonds and limit the exposure of each state’s general fund to the project, and add $194 million to $238 million back to that $600 million shortfall, Wheeler said.
However, Wheeler’s report also noted that competition for such loans is ramping up.
Rep. Ann Rivers, R-La Center, attended Tuesday’s expert review panel meeting and expressed extreme frustration with what she said was the group’s thus far “rubber stamp” approach to C-Tran’s plans for high capacity transit, both for light rail as part of the CRC and bus rapid transit on Fourth Plain Boulevard in Vancouver.
The Washington Legislature is paying for $250,000 of the up to $500,000 cost of the review panel, which is required by law before C-Tran may take a sales tax measure for high capacity transit to the voters.
“This is a huge waste of money, and I hope to God C-Tran doesn’t come to me and ask for more money,” Rivers said.
Expert Review Panel Chairman Dennis Hinebaugh told Rivers during a break that there are many divergent opinions about the megaproject, and that he wasn’t there to voice his personal opinion on the CRC.
“I’m here to see if you went through this process legally and fairly,” Hinebaugh said.
The panel appeared largely supportive of the CRC’s planning and public outreach process during presentations Tuesday. Hinebaugh is the transit program director for the Center for Urban Transportation Research at the University of South Florida in Tampa, Fla. Other panel members hail from Texas, Arizona, Massachusetts and Seattle.
The expert review panel resumes today, with the meetings open to the public and held at the Red Cross Building on the Fort Vancouver National Site, 605 Barnes St.
Andrea Damewood: 360-735-4542; http://www.twitter.com/col_cityhall; email@example.com.