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Low bids enable more Oregon stimulus projects

(The following story by Peter Wong appeared on the Statesman Journal website on August 15, 2009.)

SALEM, Ore. — Bids for federally supported highway projects have come in low enough that state officials have been able to add money to a dozen projects — including a couple in the Mid-Valley — and budget for replacements of the state-supported trains that run between Eugene and Portland.

The Oregon Transportation Commission committed the entire $234 million that the state received for transportation projects from the federal economic-recovery program that President Obama signed earlier this year.

But the bids for the various projects have come in lower than budgeted in February and March — almost 19 percent below budget at $190 million.

The immediate result is almost $43 million left over from the federal economic-recovery funds for more state transportation needs.

"They're not restricted to highway use, as our own state funds are," said Patrick Cooney, a spokesman for Oregon Department of Transportation.

The commission — the policy-making arm of ODOT — moved in the past two months to spend the unanticipated money.

The commission added $1.3 million for a handful of projects that have cost more than the budgeted estimates — none in the Mid-Valley — and $4.6 million for extra work on other projects, including a couple in the Mid-Valley. For details, see Page 2A.

"The commission put a priority on doing extra work on projects already out there, picking projects that can produce jobs quickly," Cooney said.

Without the projects, "there would be no work out there, and I believe we would be doing nothing," said Sandy Trainor, the president and owner of Kodiak Pacific Construction in Sherwood.

'People are starving'

Although some construction materials are cheaper than they were a few years ago, there's a clear explanation for the low bids.

"People are starving; contractors are trying to keep their core group of people working," Trainor said.

"Contractors, because of the unfortunate sign of the times, are in financial trouble. What they are doing is coming in below cost to get work. I have seen repeatedly that with the bidding we have done over the past eight months, we've had pricing come in as much as 30 percent below my actual costs."

Because of the sagging economy, there is virtually no residential or commercial construction.

Trainor said that while the state benefits from "badly needed" work, contractors cannot sustain employee payrolls and debt service on their equipment with projects bid below cost — and the federal money won't be there next year.

"A year from now, you may see a lot of people out of business," Trainor said.

A new state highway-construction program is scheduled to gear up next year unless opponents fail by Sept. 25 to gather enough petition signatures to force a statewide election on the taxes and fees planned to pay for the program. Cities and counties also will get shares.

Most of the $43 million in state savings went into two other projects.

About $2 million went into further development of the nation's first "solar highway" projects at the junction of Interstate 5 and Interstate 205, about 35 miles north of Salem.

The development now generates about one-third of the electric power required for highway lighting. It is run by a consortium of four Oregon companies, including Moyano Leadership Group of Salem, which is the project manager.

Money for trains

About $35 million will be spent on trains that are run by Amtrak, the federal corporation that operates passenger trains and is partly supported by ODOT between Eugene and Portland.

The current state-funded train service began in 1994. The first Cascades Talgo train — designed in Spain — began service Jan. 4, 1999, and a second train began Oct. 6, 2000. The trains are owned by Washington state, which wants to use them on expanded Amtrak service that it supports between Portland and Vancouver, British Columbia.

"There's not a lot of used equipment out there," said Kelly Taylor, administrator of ODOT's Rail Division.

She said Oregon has to commit the $35 million by Feb. 17, so it cannot wait to join other states that are tapping federal economic-recovery money reserved for passenger-rail improvements. She said Oregon is seeking to join with another state, or with Amtrak itself, to buy the equipment.

The required equipment is lighter than Amtrak uses on its 1,377-mile Coast Starlight route between Los Angeles and Seattle.

In addition to having to replace Washington state's trains with its own, ODOT officials said there's another good reason for Oregon's purchase — to persuade federal officials to award a share of $2.1 billion that the federal economic-recovery program is making available nationally for high-speed rail development.

High-speed rail

"Staff believes that Oregon's position to receive high-speed rail grant funds will be enhanced significantly if continuation of train service south of Portland is assured," ODOT Director Matt Garrett said in a report to the Oregon Transportation Commission.

"Having equipment to replace the equipment Oregon currently leases from Washington will provide that assurance."

The corridor between Eugene and Vancouver, British Columbia, is already designated by Amtrak as a high-speed rail corridor.

Oregon and Washington are seeking federal money together.

Oregon wants to spend money on improvements in rail tracks, which are owned by Union Pacific.

State officials said the improvements would result in increased average speeds and top speeds, improved on-time performance, reduced trip times, and expanded round-trip service between Eugene and Portland from two to six times daily.

"This is another example of the state looking at ways to reduce carbon emissions and encourage alternative transportation methods," Gov. Ted Kulongoski said last month when the state submitted its application.

Monday, August 17, 2009

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