OREGON CITY, Ore. — The project to widen and seismically strengthen the Interstate 205 Abernethy Bridge is facing a 10-month delay and a cost increase that pushes the grand total to $815 million, with more overruns possible by the time construction wraps. Oregon Department of Transportation officials delivered the bad news at the Oregon Transportation Commission's Dec. 4 meeting.
Strapped for cash following the cancellation of the regional tolling, ODOT has turned to bonding to plug the Abernethy project's widening budget gap, a strategy that will eat into the agency's capacity to take on other planned maintenance projects in the coming years as debt payments take up a larger share of the budget.
The latest $72 million price hike is for "Phase 1A," which focuses on the bridge itself. It's the first part of a broader plan to widen the surrounding 7-mile stretch of the freeway. The rest of Phase 1 focuses on segments close to the bridge, while Phase 2 focuses on a longer segment to the west. The $815 million estimate is for all of Phase 1; Phase 1A is $672 million.
This isn't the first time the project has seen a major cost spike — in fact, it isn't even the first time this year. OTC granted another request from ODOT back in May to add $85.2 million in funding for Phase 1A after the agency said supply chain issues and new structural engineering challenges had emerged once work got underway.
"This is the largest project that ODOT's undertaken in 50 years," ODOT urban mobility office director Brendan Finn said at the Dec. 4 meeting. "The last biggest project was the Glenn Jackson Bridge... things happen during these types of projects, especially when you're retrofitting a 60-year-old bridge."
Phase 1A was originally pegged at $375 million in 2021, but contractor bids all came in higher due to inflation and rising steel prices. ODOT and contractor Kiewit negotiated a price that set the Phase 1A cost at $495 million, and OTC authorized another $120 million to cover the difference. Another cost increase of about $20 million followed in November 2023.
The latest increase stems from what ODOT described as a dispute with Kiewit, which the agency resolved last month. The deal adds another 307 days to the project's construction timeline, pushing the end date out from late 2025 to Fall 2026, with most of the $72 million increase covering the cost of the 10 additional months of work.
Accepting the delay and funding increase would "settle all disputes and outstanding financial claims to date and reset the project," ODOT Director Kris Strickler wrote in a Nov. 20 letter to the commissioners. OTC approved the plan and the funding increase at the Dec. 4 meeting — but even the new $815 million total might not be the end of it.
"I will note that we asterisked that," ODOT Assistant Director for Revenue and Finance Travis Brouwer told the commissioners. "That total cost does not include pricing of those risks that Mr. Finn mentioned that we have on the risk register. There are additional costs that may be coming in, so we can't say conclusively that $815 million is the final total cost for Abernethy. It is the cost as of today."
Taking out tolls takes toll
The I-205 expansion is one of several major planned or in-progress Portland-area projects that ODOT collectively refers to as the "Urban Mobility Strategy," which also includes the Interstate Bridge Replacement, the Rose Quarter expansion, the widening of Highway 217 and the Boone Bridge replacement.
The centerpiece of the Urban Mobility Strategy was a plan to implement tolls along I-205 and Interstate 5 throughout the Portland area, both as a congestion management tool and to help fund the other projects. The tolls were authorized by the Oregon Legislature in 2017 as part of a major transportation package.
Everything after Phase 1A of the I-205 project was intended to be covered by tolls, which would have started along the project corridor in late 2024, a few years ahead of the rest of the regional tolls. But the wheels began to come off the plan last year when Gov. Tina Kotek first ordered a pause on all tolling until 2026 and then canceled the toll plan altogether in March.
Kotek's initial delay prompted ODOT to shelve Phase 2 of the I-205 project and just focus on finishing Phase 1, since it was already underway. The situation left Abernethy in a sort of tug-of-war with the planned Rose Quarter project over a limited pot of about $560 million in funding from the 2017 transportation package.
The original plan was to split that money between the projects — with the Abernethy portion covering Phase 1A — and later supplement it with tolling revenue, but ODOT announced in 2023 that it would need to move most of the Rose Quarter's share over to Abernethy to keep the project on track, leaving the Rose Quarter in limbo.
After Kotek pulled the plug on tolling entirely, ODOT and OTC made a Hail Mary pass in June: They pledged $250 million in matching funding that would allow ODOT to apply for a $750 million federal INFRA grant for the Rose Quarter. The $250 million would be funded by having the Rose Quarter project reclaim its share of the 2017 funding.
ODOT learned in October that it did not get the INFRA grant, but the agency recommended at the Dec. 4 meeting that the $250 million matching money stay with the Rose Quarter rather than reverting to Abernethy, enabling Rose Quarter project to break ground next summer on at least the first part of the work.
Short end of the STIP
The loss of toll revenue and the Rose Quarter's share of the 2017 funding left Abernethy in a deep financial hole, made worse by the project's rising price tag.
"Right now, we have a project that is under active construction with the I-205 Abernethy Bridge project, that is spending millions of dollars a month," Brouwer said at the June OTC meeting. "And for — almost exactly to the day — three months, we have not had the funding source for that. As the guy who's in charge of keeping the agency in the black, that makes me extremely nervous."
Brouwer and other ODOT officials suggested closing the gap by moving over funding from the Statewide Transportation Improvement Program (STIP), which is Oregon's main fund for transportation capital projects. ODOT told the commissioners they could either take all of the necessary Abernethy funding in one shot or spread the impact out by issuing Highway User Tax Revenue bonds to be paid back from the STIP over 25 years.
"I want to make it very clear that these funds would come from funding sources set aside by the legislature for capital preservation projects, not for (operations and maintenance), so this would in no way impair our ability to operate snowplows, patch potholes, run the agency," Brouwer said at the Dec. 4 meeting. "We have substantial problems in that area, as we know; this would not worsen that problem."
But the plan still has painful drawbacks. The STIP operates on three-year cycles, and taking funding from any cycle necessarily means canceling or delaying some of the other projects already in the queue. If all the Abernethy funding were pulled from the 2024-2027 cycle without using bonding, it would displace nearly every other bridge project.
"Closing the gap solely through deferring projects will be very painful... we had about $600 million in bridge projects that are shown here in this list, and so you could be potentially getting rid of essentially almost all of those bridge projects in this coming STIP," Brouwer said at an OTC meeting in May.
The commissioners settled on a hybrid approach in June, moving over $100 million from the 2024-2027 cycle that would've been spent on repainting the Fremont Bridge, and issuing bonds to cover the rest of the Abernethy gap. The bonds will still require approval from the legislature in the 2025 session.
At the December meeting, the commission voted to add the latest $72 million price increase onto the bond pile, which is now expected to raise about $500 million over the next several years. The full scale of how the bond payments will impact the STIP also began to come into sharper focus, with annual debt service set to rise from around $15 million in the 2024-2027 STIP to $35 million in future cycles.
Other than the Fremont Bridge painting, the list of projects to be bumped from the 2024-2027 STIP is still not final, but ODOT said the five most likely deferrals are a replacement of the North Portland Road bridge over the Columbia Slough, repainting the McLoughlin Boulevard bridge over the Clackamas River and repairs to two Highway 101 bridges near Tillamook and Gold Beach. A program to replace old wooden bridges in Central Oregon could also be cut by $30 million.
Looking further out, the project list for the 2027-2030 STIP hasn't been developed yet, but Brouwer said the total debt service would eat up about $105 million of the $272 million available for bridge projects in that cycle, decreasing the number of projects that make it onto the list in the first place, with similar impacts expected for future cycles.
"Normally we might be able to fund two thirds of them; we'll simply cut the list a little bit shorter," Brouwer said at the Dec. 4 meeting. "So, it'll be basically, debt service will be a line in the program budget, there will be less money available for delivering other projects."