As of Tuesday, December 12, 2017
Replacing the Hood River/White Salmon Interstate Bridge, spanning a federal waterway, connecting two states, and likely costing over $250 million is a complex and risky undertaking. Recent letters to the editor reflect the understandable desire to replace the bridge, and do it quickly. The port shares this objective. But for a project of this complexity and risk, quick must be coupled with smart. Readers should know some of the key steps underway now and the challenges ahead — the “WHATs” of bridge replacement efforts now underway.
• HB 2750 was signed by the governor in August. It conveyed certain new authorities to the port. One is the authority to develop a new bridge through a Public Private Partnership, or “P3.” A P3 allocates project responsibility and risk to a private business. In return, private investors or lenders receive a dedicated, long-term revenue stream. A P3 is primarily a business transaction that results in a revenue-generating asset, here a toll bridge. Private parties may seek to control it for 50-100 years. These deals have worked well in some U.S. communities, and been disastrous in others. The terms of a P3 business transaction are extensive and must be diligently and responsibly negotiated to protect long-term public interest.
• Among others, HB 2750 came with the specific requirement that the port have detailed rules in place, like those governing Oregon Department of Transportation (ODOT), prescribing how P3 proposals will be considered. The port has prepared a draft of these rules and they will be considered for adoption by the port commission, after public hearings, in early 2018. If the port were to consider an unsolicited P3 proposal before adoption of the rules we would violate a specific statutory requirement. And premature consideration of proposal might result in its future disqualification due to objections from future proposers who responsibly submit after the rules are in place. The decision to return a premature proposal unopened fulfilled our obligation to the Oregon legislature and, ironically, may have helped to assure that same proposal is eligible for consideration in the future.
• Whether the replacement bridge is a P3 or not, a lengthy and expensive Final Environmental Impact Statement (FEIS) will be required. The 2017 Transportation Funding Package allocated $5 million to the port for this task. The funding agreement for this allocation is not yet finalized. It must be in place before an engineering firm can be selected and work can begin on the FEIS. Start to finish, the FEIS effort is expected to take about three years. Could it be completed more quickly or at less cost? Not likely. An FEIS is intended to thoroughly examine all operational, societal, and environmental factors of a large project and address its impacts. Its timeframe is dictated by tasks required under federal law. The benefit of a completed FEIS? It results in regulatory clarity and permitting certainty. Importantly, this helps to reduce project risk, likely resulting in more favorable P3 business terms, if that is determined to be the best way forward.
• The port must be adequately staffed to manage the FEIS and assess project financing and delivery alternatives. The right mix of professional expertise must be assembled to responsibly manage the multitude of contracts, public outreach, and administrative steps associated with the FEIS. The hiring process for a dedicated project manager will conclude next month. The port must also have access to the legal and financial expertise required to thoroughly analyze P3 proposals and, potentially, carry out contract negotiations. For such a significant and complex project, a P3 due diligence process might incur up to $2 million in legal costs alone. Such a commitment is necessary to ensure that the public interest is protected.
• The bridge touches two states. An even more extensive legislative effort may be required in Washington to ensure that a replacement project is possible. Projects that impact the state highway system must be approved by the legislature, and specific approval for a P3 project may be necessary. The next realistic opportunity to obtain legislative authorities for this project will be in the 2019 session, regardless of whether the project is publicly or privately funded.
The actions of the 2017 Oregon legislature were essential for a replacement bridge. Receipt of a pre-mature proposal from a private firm is encouraging. And the port now has funding to complete the FEIS and other pre-development steps. The natural inclination is to assume that bridge replacement can occur very soon. It cannot. Every expert we have consulted with counsels a methodical, diligent effort as the best chance for success. Taking this path will result in more project certainty and reduced construction and financing risk. That means a better business transaction under a P3 approach, or lower bids under a publicly-funded model, depending upon the approach chosen.
Finally, the current bridge is owned and managed by the Port of Hood River, a public agency. It will likely not be so in the future. All project steps that will take place over the next few years will occur in a manner that is transparent to the public and with the full participation of local governments and stakeholders on both sides of the river. The decisions made, including future ownership, toll setting authority, and financing responsibilities will have a profound impact on our region for many years. That means communities on both sides of the river need to be part of it.
I am personally available to answer questions, listen to ideas, and explain the many WHATs of this complex project, the best I can, to anyone who is interested. I can be reached via email at email@example.com or phone at 541-386-1138.