Opinion: Bankrupt – A $3.5 billion Rose Quarter Freeway widening project

Joe Cortright argues ODOT's Rose Quarter project has grown from a $450M approval to a $3.5B estimate, with a $2B funding gap. — Joe Cortright argues ODOT’s Rose Quarter project has grown from a $450M approval to a $3.5B estimate, with a $2B funding gap. File photo

🎧 ODOT’s Rose Quarter: A $3.5B Highway Fiasco

Joe Cortright says the only one more expensive is the I-5 Interstate Bridge Project, which will cost $3 billion per mile

The Oregon Department of Transportation’s systematic mismanagement and deception have turned Portland’s I-5 Rose Quarter freeway widening project into a fiscal black hole.

Highest cost project in the US: At $3.5 billion for a 1.5-mile stretch, the Rose Quarter project now costs roughly $2.3 billion per mile — making it the second most expensive highway project in the United States, behind only the nearby $15 billion Interstate Bridge Replacement ($3 billion/mile).
Seven-fold cost increase: Since the Oregon Legislature approved an initial $450 million allocation in 2017, ODOT’s cost estimates have ballooned seven-fold to $3.5 billion, resulting in a current $2 billion funding gap.
Deceptive accounting. ODOT low-balled initial cost estimates to sell the project, never got legislative approval for cost increases, relied on over-optimistic revenue assumptions, commenced construction with a huge funding gap, and rather than facing reality, has been playing “extend and pretend” as costs exploded and revenue evaporated.
The “driving stakes” strategy: By breaking ground on a tiny fragment (“Phase 1A”)–with more than $1.5 billion unfunded–ODOT used classic Robert Moses tactics to force political officials into providing further funding.
ODOT is effectively insolvent: ODOT’s long-running reign of error is bankrupting the agency. Due almost entirely to persistent and growing megaproject cost overruns costing billions, ODOT is now functionally insolvent, even as it confronts a $200 million operating deficit
Overspending to create land: Promised caps meant to heal the Albina neighborhood work out to an absurd $400 million to $800 million per acre of buildable land—roughly 100 to 200 times the market price for adjacent properties.

Joe Cortright

On a per mile basis, it’s one of the two most expensive highway projects in the nation. The project is about 1.5 miles long, and will cost about $3.5 billion (according to the new estimate), or about $2.3 billion per mile. (The only one more expensive is the I-5 Interstate Bridge Project, which will cost $3 billion per mile).

In 2017, the Oregon Legislature naively approved ODOT’s request for $450 million to widen I-5 at the Rose Quarter. According to the latest estimates, the project cost has now exploded almost eight-fold to $3.5 billion.

With no sense of irony, ODOT released the new $3.5 billion price tag barely 60 days after the Department briefed the Oregon Transportation Commission about its liability for “major projects” and stated the total cost of the Rose Quarter was a mere $2.2 billion. As a result of leaving out the $15 billion Interstate Bridge Replacement, and leaving out more than $1 billion of the cost of the Rose Quarter, the report understated Oregon’s liability for highway projects by more than $5 billion.

The agency, which diverted money intended for the project to other priorities (which it has since re-arranged to restore funding) and which spent years blundering through the community involvement process and designing the project–which is vastly wider and larger than needed to add just one auxiliary lane in each direction, as ODOT claims.

The new higher cost of the Rose Quarter project

Carlos Fuentes of The Oregonian broke the story of the new estimate on August 4, 2026. The materials prepared for the August 13 meeting of the Oregon Transportation Commission don’t actually show the entire cost of the project on any slide, preferring instead to break the project into phases (and sub-phases) and to show the cost of individual pieces, rather than the big, bad bottom line. Here’s our summary of their estimate. We’ve also added in $125 million which represents the funds Oregon DOT spent on the project through 2024 before beginning construction (the materials in the ODOT presentation don’t indicate that these planning costs were included in the “phased” construction cost breakout).

For those who’ve been following the project, this is just the latest in a long series of escalating costs. ODOT told lawmakers it would cost $450 million in 2017, and have been raising the ante every year or two since. We’ve run out of adjectives to describe the exploding cost of the project. Barely a year later, in 2018, the price had doubled. In 2021, we reported that it had tripled. In 2023, quadrupled. In 2025, up another $200 million. And now, a jump of more than a billion, bringing the total cost of the project to more than seven times the original price tag. One would have to be gullible to believe that if the project goes forward the cost won’t increase even more.

The Rose Quarter, like the now $15 billion Interstate Bridge Replacement Project, and the $815 million I-205 Abernethy Bridge is symptomatic of what we call ODOT’s “reign of error.” Virtually every major construction project for the past two decades has gone 200 percent or more over budget. The Rose Quarter, at a seven-fold increase is just the current record-holder. It’s evidence of deep dysfunction in the Oregon Department of Transportation. As we’ve testified repeatedly to the Oregon Transportation Commission and the Oregon Legislature, it’s a management axiom that you get the behavior you reward. Time and time–and time again–when faced with massive cost overruns, these public officials frown, shrug their shoulders, and give the same people more money to make further mistakes that will cost the public hundreds of millions, and now billions of dollars.

It’s difficult to put these numbers in context. ODOT is famous for downplaying or denying culpability for cost-overruns and forgetting or disappearing their original cost estimates to hide the scale of this problem. It’s hard for ordinary citizens, and even legislators, to put these numbers in perspective. But here’s something that should help: We can now show that these two large ODOT highway projects are now the most expensive highway projects in the country.

Portland: Home of the most expensive freeway projects in the nation

There’s a good case to be made that the Rose Quarter and its nearby boondoggle companion–the Interstate Bridge Project–are, mile-for-mile–now the two most expensive highway projects in the nation. There’s no single, authoritative list of current and planned highway projects, so as a first step, we enlisted the assistance of Google’s Gemini AI to compile a list of what it found to be the most expensive current highway project in each of the 50 states, ranked by millions of dollars per centerline mile of project length (a rough yardstick of project scale). The usual caveats apply about AI-generated content, but at first glance, the list reflects most of the well-known projects underway around the country. (We’ll update the list as we acquire more accurate information, and we invite readers to offer corrections and amplifications).

Based on this crude AI-assisted data compilation, at first glance, it looks like the two Portland area projects are the #1 and #2 most expensive highway projects (per mile) in the nation. The 5-mile long Interstate Bridge Replacement (IBR) clocks in at about $3 billion/mile and the 1.5 mile Rose Quarter at about $2.3 billion/mile. (This chart shows the most expensive project in the top ten states; full data for the remaining states is shown at the end of this commentary).

These data suggest that Oregon is not simply a representative victim of highway cost inflation, but is actively the worst DOT in the nation in managing highway project costs. That conclusion is also consistent with data on construction costs compiled by Yale University’s Zachary Liscow, who found that Oregon’s costs for routine road repairs were about double the national average.

A predictable result of mismanagement and bad faith by ODOT

While the agency likes to paint itself as the helpless victim of rising costs, that’s utterly false. Every step of the way, ODOT has made decisions that have driven up the project’s cost, delayed its progress. Here’s a quick list of their deceptive tactics.

Lowball initial estimates. In 2017, ODOT told the Legislature the Rose Quarter project would cost $450 million–and legislators dutifully set aside just that amount of money in HB 2017, a major transportation package. The agency either knew, or should have known, that its estimate was unrealistically low; less than two years later, they admitted the price tag for exactly the same project scope was almost double ($795 million). Lowballing the quoted price is a classic “bait-and-switch” sales tactic. (And ODOT did the same thing with its other megaprojects, selling the $885 million Abernethy Bridge with a $250 million 2018 “Cost-to-Complete” report, and reviving the $15 billion Interstate Bridge Project based on a 2020 $4.5 billion cost estimate).

Excessive revenue optimism. ODOT represented that the project was somehow a great candidate for federal funding. While it did (temporarily) get a $450 million Biden Administration grant, the bulk of those funds were rescinded by Congress. More ominously, a follow-on request for $750 million in federal funds was denied by the Biden Administration in 2024. ODOT also implied it could use revenue from value pricing (which it only half-heartedly pursued), and which was abandoned by the Governor and repealed by the 2025 Legislature.

Extend and pretend. In the face of ballooning costs and imaginary or evaporating revenues, ODOT simply stuck its head in the sand, and hoped that someday somebody would come up with more money for this “very important project.” This is the classic financial gambit of “extend and pretend“–extend the life of the project, and hope against hope that somehow the money will show up.

Never confirming a legislative commitment to actual costs. At no step along this process did ODOT ever return to the Legislature and ask if they still wanted the project, given its vastly greater costs and the disappearance of hoped for revenue. Instead, ODOT leaders continued to invoke the “commitment” to a much cheaper project that was made years and years earlier by a Legislature with no knowledge of ODOT’s subsequent mismanagement or worsening financial problems.

Driving stakes, selling bonds. Finally, in 2025, ODOT started construction on the project itself, or actually a minuscule fragment of the project, what it called “Phase 1A,” even though it was more than $1.5 billion short of what it needed to build the project. This is the classic Robert Moses strategy of “driving stakes”–doing anything, saying anything, just to get a project started, and then using that partially completed project to pressure political officials to come up with more money. It’s a cynical and irresponsible approach that only serves to worsen Oregon’s transportation funding problems.

Consultant capture. ODOT leans heavily on outside consultants to plan and design these major projects, and as independent outside experts have observed, excessive reliance on consultants creates a classic “principal-agent” problem. Consultants actually make more money when projects grow bigger, become more expensive and take longer. They have no incentive to manage costs or meet deadlines. As we’ve reported, they’ve turned the Interstate Bridge Replacement project into a “forever” program, which having take 20 years to plan–at a cost of nearly $500 million, will generate a further billion dollars in consultant and staff costs over the next twenty years they think it will take to build it. ODOT has paid more than $125 million for consultants on the Rose Quarter project.

Making phony excuses. ODOT offers the laughable proposition that the reason the project continues to grow in cost is because, essentially, they weren’t given even more money, faster. Yet it was they who low-balled the initial cost estimate, repeatedly delayed the project’s planning and scope, never asked the Legislature if it agreed to the new higher price-tag, assumed they would get generous federal funding, and who launched the project with only a tiny fraction of the needed cash in hand. It’s critical to note that ODOT routinely fails to advance projects according to its own schedules, and systematically alters its reports to falsely claim projects are on schedule. ODOT also pointedly and repeatedly refused to look at right-sizing the project to make it more affordable–even after its own international experts said the project was at least 40 feet too wide. Even today, they are continuing with their “extend and pretend” strategy, asking to move ahead with Phase 1B even though the project faces an admitted $2 billion funding hole.

A poor real estate investment

As bad as they are at investing in sensible transportation infrastructure, the Rose Quarter project shows that ODOT is even worse at real estate investment. One rationalization for the project is that it may–if ever completed–include a partial “cover” over the Interstate 5 freeway, which is represented as a way to heal the damage done to the historically Black neighborhood done when the freeway was constructed six decades ago. Some in the community campaigned for “buildable” covers, which combined with the project’s bloated width doubling the freeway from 82 feet to 160 feet, contributes to the project’s excessive cost. It’s highly questionable how widening the road to accommodate more traffic will mitigate the damage done by traffic and auto-dependent uses. Building freeway covers is also the most expensive possible way to acquire buildable land in Northeast Portland. According to ODOT, the covers and adjacent land will provide about 4-8 acres of partially buildable property when the project is completed. At $3.5 billion, that works out to spending about $400 to $800 million per acre for building sites, in an area where land goes for between $80-120 per square foot (for land zoned for 4-6 story buildings), or about $4-5 million per acre, meaning that the project cost per acre of buildable land is roughly 100 to 200 times more expensive that simply buying property in the area. That money would be far better spent on badly needed housing–which has been an allowable source of mitigation for highway projects. And, as the Oregonian pointed out, the central city of Portland has four major redevelopment areas (the NW Broadway corridor, Lloyd Center, OMSI and the remainder of Albina) all land-rich and investment-poor.

In effect, ODOT was hoisted by its own petard. It claimed that its plan for a highway cover was a “restorative justice” project to redress the damage its freeway construction did to Portland’s historically Black Albina neighborhood. But its original plan was really just a slightly wider overpass. The local community rebelled against that, and Governor Kate Brown, in an effort to revive the project, empaneled a new design effort which came up with a plan for a slightly larger, and vastly more expensive set of covers. These self-inflicted project delays and scope creep drove the cost of the project still higher.

ODOT has cynically used its feigned concern for the damage its past work did to the neighborhood to garner political support from the Black community. But given ODOT’s staging of the project, it seems likely that the much ballyhooed “covers” will be the very last thing that will be funded and built, even if the project goes forward. ODOT has arranged the project schedule so the highway widening happens first, and the covers have been deferred to the (unfunded) Phase 2 portion of the project.

And ODOT has sold the project as a financial boon to the region, the city and the neighborhood. But paying for the Rose Quarter is likely to be a black hole that absorbs every available dollar that ODOT has to spend in the Portland area–making it nearly impossible to pay for any other local or regional priorities until after the current $2 billion hole is filled. In effect, the Rose Quarter freeway widening will become the City of Portland (and the Metro region’s) “ask” for state and federal funding for the indefinite future.

A DOT in denial

Unsurprisingly, the Oregon Department of Transportation is mired in a profound and worsening fiscal crisis. It announced layoffs last year, after the Oregon Legislature failed, twice to pass a new tax measure to pump more funds into ODOT. The regular session of the legislature adjourned without passing a transportation funding bill; the special session’s attempt to raise gas taxes and vehicle registration fees was resoundingly rejected by voters—83 percent “no” to less than 17 percent “yes”— in a May 2026 referendum.

And now the Governor has convened a “Restoring our Transportation Vision” working group—staffed by ODOT and ODOT-dependent consultants—to ponder the state’s transportation finance situation. While the group has mentioned megaprojects in passing, the effort is still in deep denial about the fundamental reasons for ODOT’s fiscal crisis. It claims that increased fuel efficiency and electric vehicles have cut into revenue, but has utterly failed to own up to literally billions of dollars of cost increases on all of its major projects. As we’ve noted at City Observatory, you can’t fix a problem that you don’t admit you have. ODOT’s financial problems center on the massive cost of a handful of megaprojects, and the agency’s utter inability (or willingness) to manage these costs, something this working group has failed to grapple with in any meaningful fashion.

This massive cost increase comes at a time when ODOT can’t even pay to maintain a reduced level of its most basic services. Just weeks ago, ODOT acknowledged that it faces a $200 million biennial budget deficit, and will likely have to lay off ten percent of its workforce in the coming biennium.

In effect, ODOT is simply insolvent: Its liabilities–particularly the massive unfunded commitments for the I-5 Rose Quarter and Interstate Bridge Replacement project–exceed its stream of revenues. It cannot even maintain the infrastructure it has, and it’s making open-ended commitments to projects that are the most expensive in the nation, even as it has no public support for its current budget. The root cause of these problems has everything to do with megaproject cost explosion and mismanagement, not the relatively trivial changes in the agency’s revenue streams due to fuel efficiency, or even rising construction cost inflation.

This is not something that just happened recently. Bloated costs have been a perennial problem for ODOT projects. More than a decade ago, the influential Oregon Congressman Peter DeFazio, then chair of the House Transportation and Infrastructure Committee, lambasted ODOT for the high cost of the bloated Interstate Bridge Project. Fifteen years ago, he told the media:

“I kept on telling the project to keep the costs down, don’t build a gold-plated project,” a clearly frustrated DeFazio said. “How can you have a $4 billion project? . . . The Columbia River Crossing problem was thrown out to engineers, it wasn’t overseen: they said solve all the problems in this twelve-mile corridor and they did it in a big engineering way, and not in an appropriate way. . . . They let the engineers loose, told them to solve all the region’s infrastructure problems in one fell swoop…

DeFazio was so naive. Since then, of course, the project’s price tag has doubled (to $7.5 billion in 2023) and then doubled again, to $15 billion (late last year).