Portland Tram “on Budget”

The myth-making has already begun. The Oregonian reports today about Portland city employee Rob Bernard, which it describes as the man “most responsible for opening” Portland’s new aerial trams “on schedule and on budget.”

On what budget? As Jim Karlock documents, the tram went more than 500 percent over the original projected cost, and its operating costs are at least 250 percent over projections. I’d like to have a budget like that!

The tram was first proposed in 1998, when now-disgraced former Mayor Neil Goldschmidt sat on the board of Oregon Health Sciences University (OHSU), which runs one of three hospitals on “pill hill” in southwest Portland. At the bottom of the hill, two-thirds of a mile away, was some waterfront land owned by two of Goldschmidt’s clients, the Zidells and the Schnitzers. They had proposed to build a low-rise housing development on the land, which they had once used as steel recycling yards.

Instead, Goldschmidt began pushing the idea of high-rise housing and offices on the Zidell/Schnitzer land, with a connection to the hospitals on pill hill. Another Goldschmidt client, Homer Williams, would build the high rises. Residents of the working-class residential neighborhood between the hospitals and the waterfront strongly opposed the project which would block their views, but they did not have the clout to fight Goldschmidt.

Goldschmidt presented this as in keeping with Portland’s goal of becoming a compact city. Up to then, however, that goal had mostly been met with low- and mid-rise developments: row houses and four- to five-story apartments. Many high rises in western Europe, which Portland often said it was trying to emulate, had turned into slums occupied mainly by emigrant workers, while increasing numbers of native Europeans lived in suburban single-family homes not unlike American sprawl.
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But as the most powerful man in Oregon, Goldschmidt could easily overcome any concerns. He warned that OHSU would move its entire campus to suburban Hillsboro if it could not find more office space just a few minutes away from the hospital. That meant that the waterfront high rises had to be connected to the hospital by an aerial tram.

As Karlock documents, the original numbers tossed around for the cost of the tram were $3 to $5 million. By the time the tram was first presented to the city council for a formal vote, city planners (none of whom had any experience with aerial trams) had increased projected costs to $15.5 million. Yet, as the Oregonian noted three years later in a front-page story, planners already knew (but did not tell the city council) that the costs would go much higher.

And they did: The final cost turned out to be somewhere around $57 million. Other subsidies to the South Waterfront development, including an extension of the 7-mile-per-hour streetcar, are somewhere north of $200 million.

As the debate was dying down over all of these costs, Portland city Commissioner Sam Adams announced, out of the blue, that “success of the South Waterfront development district depends on the construction” of a light-rail line that will cost at least $550 million. Due to inadequate roads, close to 40 percent of rush-hour trips (and 30 percent of non-rush-hour trips) in the South Waterfront area had to take transit — an impossible goal considering that transit only carries about 30 percent of downtown Portland employees to work. Obviously, a 7-mph streetcar and a $4-per-trip aerial tram will not meet the goal.

In the end, it isn’t about transit or compact cities. It is about a giant real-estate scam aimed at making Neil Goldschmidt’s clients rich at everyone else’s expense. As a Tampa, Florida writer observed several years ago, that’s really what rail transit is about: real estate. That was true in the streetcar era, and it remains true today — the difference being that in the streetcar era, the real estate paid for the streetcars, while today taxpayers subsidize both.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

12 Responses to Portland Tram “on Budget”

  1. JimKarlock says:

    I just can’t wait for that $1/2 billion toy train on top of the $1/2 billion ($220 Million + interest) that they already admit to (OK, they admit to the $220 Mil, I added the interest). Plus the 500% cost over-runs. (Portland’s Big Dig in the making.)

    I wonder if mass tranist will really get those yuppies – the ones in the million dollar condos – out of their BMWs and onto the toy train next to the drug dealers? Sounds plausable to city planners, but I’m not sure they have it right.

    Thanks
    JK

  2. Throughout history transit systems have been subsidized by government. The reason they have been subdisized is that government correctly sees that the benefits in terms of mobility and other advantages outweigh the costs. The Roman Roads were built with taxes because they provided military mobility, quicker communications, and huge advantages to commerce. The 19th Century rarilroad construction boom was financed with large governmental subsidies, many of them obtained through unsavory methods – but clearly provided even greater economic benefits from the settlement of new lands, increase in personal mobility, and expansion of commerce. Once automobiles were invented, government started pouring money into facilities for them – only later in their development did they pay for themselves through the gas tax and tolls. Government’s decision to do so was clearly correct.

    As for the tram, the Sunday Oregonian on January 21 (not apparently available on line) provides the best argument for it – it will spur a large growth in the OHSU health care complex, with thousands of new high-paying jobs and multiplier effects. The hated and despised (by ideologues and cranks) Randy Gragg provides a compelling argument for why we should expect and look forward to this result. Thus, the economic benefits to the city are expected to be much greater than the costs of the tram – or even the costs of teh streetcar line to serve South Waterfront as well. The overall costs, both to OHSU and the city, of the alternative – a move of the OHSU campus to Hillsboro, would be much greater.

    As an analogy – the initial creation of the Interstate Highway System through major cities provided greater overall benefits than the costs of the neighborhoods destroyed and blighted by its presence. Only when the “next phase” of freeway construction in major cities – exemplified by the Mt. Hood Freeway “Highway to Hell” were proposed, did government realize that the costs of such construction had exceeded the benefits. A lesson that car-lovers like Jim Karlock have yet to absorb.

  3. And, as a followup comment – the use of Neil Goldschmidt’s child molestation to smear Portland’s planning efforts for the past thirty years is, in my opinion, contemptible.

  4. JimKarlock says:

    Urb. Pl. Overlord said: Only when the “next phase” of freeway construction in major cities – exemplified by the Mt. Hood Freeway “Highway to Hell” were proposed, did government realize that the costs of such construction had exceeded the benefits. A lesson that car-lovers like Jim Karlock have yet to absorb.
    JK: On the other hand, planners never seem to consider the costs of their actions. That one is partly responsible for hundreds of millions lost dollars annually:

    will result in a potential loss value of $844 million annually by 2025 – that’s $782 per household — and 6,500 jobs from:http://www.portlandalliance.com/pdf/Congest_Exec_Summary.pdf

    Good idea: make a “nice place” to live that no one can afford to live in, because massive waste was designed in by ignorant planners.

    Thanks
    JK

  5. JimKarlock says:

    Urb. Pl. Overlord said:
    And, as a followup comment – the use of Neil Goldschmidt’s child molestation to smear Portland’s planning efforts for the past thirty years is, in my opinion, contemptible.
    JK: I understand your contempt, Neil was one of the GODs of the planning faith. I suggest finding another GOD. Perhaps the freedom to live where and how people desire. (I do understand that his is tough concept for a planner to follow, but people really do want to be free.)

    And he claimed responsibility for stopping the Mt. Hood fwy and thus is the person responsible for losing millions yearly in congestions as well as the Billion Dollar Boondoggle that the SoWhat is becoming.

    He is also responsible for the $9 million tram that turned out to be $57 million.

    He raped the whole city, not just a child. Neil is contemptable.

    Thanks
    JK

  6. Overlord:

    You are the one to mention the child molestation. All I did was say that Goldschmidt was “disgraced.” As I’ve said before, the significance of this disgrace is that it allowed Portlanders to finally see rail transit for what it really is: a real-estate scam.

    Not all transportation has been subsidized and transportation that is subsidized tends to be less productive than transport that is not. The Interestate Highways were not subsidized (paid for entirely out of user fees) and they have produced far more value than urban transit (which has received hundreds of billions in subsidies in the past forty years).

    Most of the transcontinental railroads that were subsidized in the nineteenth century went bankrupt in the panic of 1893. The Great Northern Railway, a transcontinental that was built without subsidies, did not go bankrupt because it was built to provide transportation, while the subsidized railroads were built to get the subsidies.

    The tram will not “spur” any growth. OHSU clearly said it was going to grow somewhere, just that it might grow in Hillsboro if there were no tram. So all the tram did was create winners (South Waterfront property owners and developers) and losers (Hillsboro property owners). For Homer Williams, the Zidell, and Schnitzer families, the tram is a wonderful investment of other people’s money. For the rest of Portland, it is merely one more boost to their taxes and/or decline in urban services.

  7. johngalt says:

    That “spurs growth” argument is overused. The streetcar, the Max, the tram, etc all suposedly spur that housing development along the lines as if those residents would have lived in cardboard boxes if it weren’t for the boon-doggle.

  8. JimKarlock says:

    johngalt: That “spurs growth” argument is overused. The streetcar, the Max, the tram, etc all suposedly spur that housing development along the lines as if those residents would have lived in cardboard boxes if it weren’t for the boon-doggle.
    JK: Be sure to see: http://www.DebunkingPortland.com/Transit/LightRailDevelopment.htm

    Thanks
    JK

  9. JimKarlock says:

    What is really contemptible is the average planner’s contempt for what people want.

    For instance 75-85% of the region voted against increasing density in the Portland area. But the planners ignored them and are continuing the densification of Portland

    See http://www.DebunkingPortland.com/Smart/MetroDensityVote.htm

    Thanks
    JK

  10. johngalt says:

    Those are pretty old quotes Jim…

  11. Dan says:

    Meanwhile:

    Visonary, aesthetic, non-money-grubbing folk are just fine with the tram.

    DS

  12. the highwayman says:

    At one time there were close to 120 miles of tram lines in Portland.

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