- All figures cited are in U.S. dollars.
The initial budget for the tram, published in November 2002, was $15.5 million dollars.[1] This figure did not include "soft costs", and the tram's designer would later describe this figure as "political".[2]; nonetheless this figure is frequently cited by tram critics as the baseline figure for cost analysis. The planned sources for the US $15.5 million included a direct US$4 million cash contribution from OHSU, $9.5 from local improvement districts set up to fund tram construction, of which OHSU's share was $4.8 million, and US$2 million from the city of Portland, via the Portland Development Commission. Other property owners in the South Waterfront Local Improvement District would pay the remaining $3.7 million.
In April 2004, the second public review was held, to present the projects recommendations prior to a May review by the city council. The costs by then were estimated to be $28.5 million; this figure included soft costs such as architect's fees and project management costs. The City's share at that time was $3.5 million.[1];
In April 2005, the price was readjusted again to $40 million,[1] with a construction delay of six months. Higher steel costs, a weakening dollar, and engineering modifications were blamed for these changes.
By October, The Oregonian was reporting that steel costs had led to bids pushing the project's price (with contingency funds) to $45 million. The increased cost was expected to be met through South Waterfront urban renewal contributions which would have otherwise been spent on streets and parks.
In January 2006, Portland city commissioner Sam Adams, who was overseeing the project for the city, undertook several actions in response to the spiraling costs. The executive director of PATI was ousted by Commissioner Adams[3], and a month-long independent audit and risk assessment was undertaken. Its results were published February 1, 2006, at a point where construction was over a third complete.[4] The audit revealed that OHSU managers knew that the tram would cost well in excess of the original $15.5 million figure as early as 2003, but had withheld that information from city leaders. As a result, the City of Portland threatened to withdraw funding from the tram mid-construction, which would have essentially scuttled the project. OHSU protested vigorously, threatening a lawsuit should the tram be cancelled, and claiming the city was responsible for making up any budget shortfall.[5] Negotiations between the city, OHSU, and the contractors ensued, with a revised funding plan and budget being agreed upon in April 2006, by a 3-2 vote of the city council.[6] This revised funding plan required concessions from all parties involved, and called for a final budget of $57 million, with contributions from the City to be $8.5 million, or nearly 15% of the overall budget.[7]. This final budget was met.
While complimenting the tram as "a dramatic, one-of-a-kind facility that will become a Portland landmark," the report noted the design was difficult to construct, requiring the tall, thin, complex tower and the tall, heavily loaded upper terminal to be built within very tight tolerances. Special risks cited include:
- An extremely restricted site for construction of the upper terminal.
- A complex, European mechanical/electrical system with a sophisticated U.S. steel structure and infrastructure—the integration of the two has technical challenges and risks from conflicts between the two business cultures and management procedures.
- The need to install tramway cables over an interstate highway and state highways.
The audit/risk assessment increased the estimate of the final project cost to $55 million, which includes a $5 million contingency fund. This amount is after a $457,000 lower station shelter was eliminated.
According to commissioner Adams, who inherited responsibility for the project after planning had already begun, a cheaper alternative, which would have changed the tower's designs to a lattice style used in electrical transmission towers, was not considered because the result would look like an "ugly ski lift at a bad ski resort"[8] and leave the city with what Adams called an "ugly postcard" that could last 100 years.
- ^ a b c "Portland Aerial Tram Project Funding History" (PDF). Sam Adams. Retrieved 2006-11-15.
- ^ The One True b!X (11 January2003). "Tram Designer To Show Design Concepts, Calls Budget Estimate 'Political'". Portland Communique. Retrieved 2007-03-12.
{{cite news}}: Check date values in:|date=(help) - ^ "Resignation letter" (PDF). 2006-01-20.
- ^ Frank, Ryan (February 2, 2006). "Tram goes up again". The Oregonian.
- ^ "OHSU Insists City Continue Tram Construction". OHSU. 2004-04-06. Retrieved 2007-10-19.
- ^ "Backgrounder Q & A On Tram Financing Package". OHSU. 2006-04-20.
- ^ "Exhibit A: Final Portland Aerial Tram Funding Plan" (PDF). Portland City Commisioner Sam Adams. 2004-04-20. Retrieved 2007-10-19.
- ^ Adams, Sam. "Sam Adams's blog". Retrieved 2006-11-15.