The Oregon Department of Transportation (ODOT) is in dire financial trouble. The Oregon Legislature’s failure to pass a transportation funding package this session has left the agency financially adrift, forced to lay off hundreds of workers and cut critical services across the state.
Still, ODOT leaders say they plan to move ahead with its $2.1 billion Rose Quarter plan, which would expand and cap a stretch of I-5 through central Portland. But their financial path forward is murky. ODOT’s money woes are compounded by political and legal troubles, making the situation even more complicated for the agency.
The I-5 Rose Quarter expansion has been in the works since 2017, and it’s been a rollercoaster ride ever since, with wide swings in political support and financial resources for the plan. The freeway expansion project has faced public criticism for its environmental impacts and rising price tag. Current estimates put the plan at more than four times the project’s 2017 budget. Still, ODOT has pushed it forward.
One major turning point for ODOT came when Albina Vision Trust–an organization that seeks to rebuild lower Albina and provide economic opportunities for Black Portlanders–signed onto the Rose Quarter plan—with stipulations.
Albina Vision Trust’s support was predicated on ODOT agreeing to build freeway caps over I-5 through the Rose Quarter, reconnecting bisected streets and creating buildable real estate for housing and commercial development. Once the beating heart of Portland’s Black community, lower Albina—which overlaps with the project area—was cut in half by I-5 construction and other urban renewal projects in the second half of the 20th century.
Albina Vision Trust’s partnership with ODOT on the Rose Quarter plan garnered local political support for the project and secured the agency nearly half a billion dollars in federal funding from the Biden administration. The department planned to begin initial construction on the project starting this summer, and said they were poised for a more substantial groundbreaking in 2027.
Now, thanks to the Trump administration’s funding clawbacks, ODOT is unlikely to see most of that federal award. Without a local source of revenue, its plans to expand I-5 and reconnect the Albina neighborhood are less certain than ever.
Critics of the freeway expansion have urged ODOT to consider capping I-5 without substantially widening the freeway, which could significantly cut project costs. So far, many advocates for Albina neighborhood reconnection haven’t considered that to be a realistic path forward. Leaders from Albina Vision Trust emphasize a broad, long-term vision for the future of the neighborhood, and say their plan goes beyond just the I-5 caps.
“The work we do will unfold across decades. There will be highs and lows,” JT Flowers, Albina Vision Trust’s government affairs director, told the Mercury. “That doesn’t mean the work stops moving forward. This is eight acres of a 94-acre vision for us.”
Still, they want to see the Rose Quarter project come to fruition. And on that front, the future is quite unclear.
One big, beautiful funding fiasco
In March 2024, ODOT was riding high. That month, the agency announced it would be the recipient of $450 million from the US Department of Transportation’s Reconnecting Communities pilot program—the largest grant of its kind—to fund the freeway caps over the Rose Quarter. (Despite the nature of the award, ODOT planned to use most of the money for the freeway expansion, promising the caps would come later.)
Enter President Trump’s spending bill (known to many as the “One Big Beautiful Bill Act,” or OBBA), which passed Congress earlier this month through the budget reconciliation process. Among the bill’s many provisions is one that sets out to rescind funds from the Reconnecting Communities program, which was established through President Biden’s 2021 infrastructure bill.
Many people suspected a federal rollback of the program was inevitable under a second Trump administration, but ODOT leaders have previously kept the faith, at least publicly. Now, their message is different.
In a statement to the Mercury, ODOT spokesperson Kevin Glenn said the federal spending bill “appears to eliminate federal grant funding” from the Reconnecting Communities program. As the department has only been obligated $37.5 million of the $450 million award, this likely means ODOT will lose the majority of its grant funding for the Rose Quarter project.
Still, Glenn said the agency is undeterred.
“ODOT is committed to this project,” he said. “The federal spending bill just passed, and we are analyzing it to understand its impacts.”
In a July 14 statement, Portland Mayor Keith Wilson confirmed the Trump administration pulled back the $450 million grant. Wilson said he supported Albina Vision Trust as they “explore their options amidst this potentially painful setback in our reimagining of the Rose Quarter.” Wilson also pointed out that the Rose Quarter project isn’t the only federal investment that may be slashed, as the Trump administration is “poised to disrupt years of promising development across Portland as part of a larger federal campaign” against local DEI programs. Right now, Portland leaders are weighing whether to comply with Trump’s anti-DEI campaign or potentially lose nearly $400 million in federal grants, on top of the Rose Quarter funding.
In March, Metro Council voted to support ODOT’s Rose Quarter plan, approving $250 million in additional funding for the project. But the planning council’s approval contained the stipulation that if the Reconnecting Communities funding was clawed back, ODOT would need to return to Metro for further action. Members of the Oregon Transportation Commission (OTC), the body in charge of state transportation policy, have also expressed concern about the Rose Quarter project’s rising cost estimates.
At a May meeting, OTC Commissioner Alicia Chapman predicted the price of the project could increase from roughly $2.1 billion to $2.5 billion, a result of inflation and tariffs. She stressed the need for a realistic funding plan.
“We need to have a [realistic] plan to fund it,” Chapman, who has supported the project during her time on the OTC, said. “We keep doing these optimistic estimates, and then we’re delaying the actual project, which is only making it go up more.”
With concerns about losing federal funding, all eyes were on the Oregon Legislature, which was expected to pass a major transportation bill in the 2025 legislative session. State transportation officials hoped legislators would include enough dedicated revenue to get the project done.
“We need to go to the Legislature and say, we’re going to fund this, because you’ve made this a priority,” Chapman said at the May OTC meeting. “We’ve committed to our partners. We’re starting construction. They’re hiring people, they’re turning down other work.”
Those hopes would be short-lived.
The transportation package
Late on the evening of June 27, the Oregon Legislature wrapped up its 2025 regular session without passing a long-anticipated transportation package. Their failure to get a bill over the finish line comes with major implications for the state’s transportation system. One immediate impact has been massive job losses: ODOT leaders are currently tasked with carrying out the “largest layoff in the history of Oregon.” According to Governor Tina Kotek, nearly 500 employees received layoff notices on July 7, and more than 200 more jobs are at immediate risk. Another round of layoffs could be necessary early next year, if the Legislature doesn’t pass a spending bill in the meantime.
ODOT’s financial woes aren’t new. They’re also not entirely unique. Increasing extreme weather events, fueled by the climate crisis, have taken a major toll on the country’s aging infrastructure, and state funding hasn’t always been able to keep up.
But Oregon faces distinct challenges, too. Without a sales tax—particularly one targeting big-ticket automobile purchases—the state is left to rely primarily on revenue from the Oregon gas tax, which has declined in recent years and isn’t set up to match inflation. When compared to other Western states, Oregon charges the least in taxes for light-duty vehicle use. The state taxes drivers about half of what Utah charges, and less than a third of what people in Washington pay.
The transportation package first proposed by Democrats on the Joint Transportation Committee, HB 2025, set out to address those funding challenges and then some. HB 2025 would have raised about $2 billion a year for transportation services by increasing the gas tax and indexing it to inflation, implementing a 1 percent vehicle excise tax, and raising the state payroll tax to fund transit services.
Plus, the bill would’ve tossed ODOT some money for megaprojects like the I-5 Rose Quarter expansion, signaling legislative support for the project.
At the May OTC meeting, Albina Vision Trust’s Flowers expressed his support for a transportation package that would enable the “delivery of a full project.”
“It’s really important to us as stakeholders, but also to our state, that we see a financing package that comes together that will allow us to deliver on a full project, including the completion of the covers,” Flowers said.
Needless to say, that didn’t happen in Salem this spring. Even if HB 2025 became law, the bill didn’t put aside enough to fund the Rose Quarter project in its entirety. But even a small investment in the project could have given ODOT some leverage to ask for more money in the future.
To Joe Cortright, an economist and longtime critic of the Rose Quarter project, ODOT’s legislative strategy is cynical.
“ODOT will do and say anything to get a project started,” Cortright, who is also a co-founder of the group No More Freeways, told the Mercury. “Once they get it started, then they can insist on being given the full amount, no matter what it costs.”
It remains to be seen if legislators will embrace funding the I-5 Rose Quarter project in the future, especially as federal funding dries up.
Lawsuits fueling the fire
As it turns out, funding problems aren’t the only thing causing ODOT grief. In recent years, Portland climate and transportation safety activists have filed multiple lawsuits opposing the I-5 Rose Quarter project. One legal complaint in particular, filed last year by five Portland advocacy groups, now appears to be making an impact.
The lawsuit alleges the Rose Quarter plan doesn’t comply with climate or clean air standards laid out in the city of Portland’s 2035 Comprehensive Plan or Metro’s Regional Transportation Plan. Among the alleged examples of noncompliance is ODOT’s failure to consider congestion pricing, a form of tolling, on I-5 in the project area, despite city policy requirements.
Last week, ODOT formally withdrew its finding that the I-5 Rose Quarter project was compatible with the city of Portland’s 2035 Comprehensive Plan. Plaintiffs see this as a win.
“ODOT’s withdrawal affirms what No More Freeways and our allies have known all along: this proposal to double the width of the Rose Quarter Freeway through the Albina neighborhood is not in line with Portland’s policies, laws or values,” Chris Smith, co-founder of plaintiff group No More Freeways, said in a press release.
ODOT’s next steps in this legal challenge are unknown. No More Freeways is also part of a pending federal lawsuit that challenges the Federal Highway Administration’s approval of the I-5 plan, which could also prove to be a thorn in the department’s side.
The vision for Albina
Without sufficient funding to carry out the Rose Quarter project the way ODOT and Albina Vision Trust envisioned, it’s unclear which portions, if any, might still get constructed. In the meantime, Albina Vision Trust has other work to do.
Because the I-5 Rose Quarter project has been center stage for so long, Albina Vision Trust leaders say the organization’s other work has been overlooked. After two years of construction on Albina One, a 94-unit affordable housing development on North Broadway and Flint Avenue, the first tenants will begin moving in this summer. The building is AVT’s first housing development that will prioritize displaced or longtime residents of North and Northeast Portland, but not the last. Flowers said AVT is set to close on the Paramount apartment complex, located next door to Albina One, allowing them to convert those 66 units into affordable housing, too.
“Our explicit priority is to make sure the district is affordable in a realistic way for working class families as we continue redeveloping it, and as the property value of everything in that area continues to go through the roof,” Flowers told the Mercury. “[We will make sure] the folks who get pushed out of neighborhoods when they start to beautify and develop are the communities that are most firmly anchored and rooted in [the Albina district.]”
AVT is also set to take over the current Portland Public Schools headquarters just west of the Albina One and Paramount buildings, which will free up an additional 10.5 acres of land for their housing and commercial development plans. And Flowers pointed out the Oregon Legislature did take some helpful action this session. Thanks to Senate Bill 1182, which Governor Kotek signed into law last month, AVT will have first dibs on the land created by the I-5 Rose Quarter freeway caps.
Of course, it requires the caps to actually be built to have real meaning, but Flowers thinks SB 1182’s passage “signals a long-term commitment from our state to deliver this project in a real way.”
“I think when we zoom out and look at things from a fuller perspective, we still feel quite optimistic about everything going on right now,” Flowers said. “This optimism isn’t rooted in a sense of naivete. It’s rooted in a sense of resilience, of belief and confidence in the multi-decade, community-led development of a district that we have fought so long to call home again.”
