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Inflated costs for first phase of highway widening financed through House Bill 3055 funds

PMG FILE PHOTO: LESLIE PUGMIRE HOLE - Abernethy Bridge spans Interstate 205 between Oregon City and West Linn.The Oregon Transportation Commission on Friday, April 29, approved $120 million to fund unanticipated cost increases in the first phase of construction on Interstate 205 designed to address safety and congestion issues.

Construction is slated to begin this summer on Phase 1A of the I-205 Improvements Project, which the Oregon Department of Transportation says will provide Oregonians with "safer, more reliable access to work and critical services, even after an earthquake or other major disaster."

Contractor bids for widening the Abernethy Bridge between Oregon City and West Linn, and for a new sound wall near Exit 9 and new roundabout at the Highway 43 interchange, came in "significantly" higher than expected according to transportation officials.

Phase 1A will be financed partially with funds approved through House Bill 3055 in the 2021 Legislative Session, increasing ODOT's short-term borrowing cap to $600 million and "allowing ODOT to take out short-term debt that will be repaid by toll revenue or the proceeds of bonds," pending the conclusion of a federally required environmental assessment about I-205 tolling, per ODOT officials.

"To address the repayment of the short-term borrowing, the Oregon State Legislature has identified future toll revenue as the primary source of funding for this project and directed ODOT to develop a toll program for the I-5 and I-205 corridors," ODOT officials said.

"The process to implement a toll program is lengthy and it will take several years before any revenues are available to finance the project in total. Tolling is currently being evaluated under the National Environmental Policy Act (NEPA) process. The earliest tolling could be implemented is late 2024, and toll revenue will not be available until that time," officials continued.

ODOT says it initially plans to fund the series of I-205 projects with a combination of bonding on $30 million previously provided by HB 2017, cash reserves and short-term borrowing before tolling revenues are available.

An initial bid of $512 million, submitted by contractor Kiewit Infrastructure West Co., came in $137 million above the initial $375 million total cost programmed in ODOT's 2021-2024 Statewide Transportation Improvement Program, department officials say.

"The primary reason for the higher than anticipated bids are the escalation of the steel and high performance concrete unit prices," ODOT officials report, citing deep soil mixing as an additional cost driver.

Following the cost review period in March, ODOT's Urban Mobility Office negotiated Kiewit Infrastructure's bid down to $495 million due to factors including "reallocation of risk," as well as deferral of deep soil mixing and constructing two sign structures.

The total increase of $120 million will be programmed into the 2021-2024 STIP following unanimous approval from the commission during a special meeting at 9 a.m. on Friday. ODOT officials say they will update the commission on Phase 1A every six months as the project progresses.


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