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This page contains a single entry from the blog posted on January 31, 2006 12:20 AM. The previous post in this blog was Amy to blogosphere: Get a life. The next post in this blog is Is Vicki out?. Many more can be found on the main index page or by looking through the archives.

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Tuesday, January 31, 2006

Feed your head

Where does it say that the City of Portland has to build OHSU an aerial tram [rim shot] or else pay huge bucks in damages? Does the rise and fall of the Swiss franc really have anything to do with the huge cost overruns on the project? Why will pay to operate the thing? Is the City Council out of its mind?

In seeking to answer these and other fascinating questions about the Gonzo Gondola, inquiring minds have been asking Commissioner Sam "the Tram" Adams to see the original documents by which this boondoggle became law. To his credit, Adams posted some of them on the web, but he complained that the complete set was so thick that he couldn't do them all.

Now a wonderfully pesky local tax gadfly, Jim Karlock, has borrowed the whole stack from Adams and posted the incriminating papers himself. If you're ready to step through the looking glass, here's where to start. Please report back on what you find digging around in there.

UPDATE, 12:30 p.m.: So far, based on a half-day's reading, no one has found the place where the city commits to deliver the tram by a set date. And readers have complained that a key document -- the Construction Fuinding Agreement -- has not been produced.

Comments (32)

To see the whole picture, you'll probably also have to check out the SoWhat Central District Development Agreement, in all its glory, here.

If somebody can point me to where these documents say the city must deliver the tram by X date or pay, I'd be grateful.

Isn't "aerial tram" redundant? By definition the thing kinda whizzes along several stories above the ground...

It appears that none of the ordinances or agreements state that the city is responsible for any damages if the tram project is cancelled. I read through the documents you provided in the links and found nothing even hinting at it.

It's out there somewhere.

I think I found a reference to the right document.

The Development Agreement (tinyurl.com/bt5kq) identifies a Construction Funding Agreement that "shall detail the means and procedures for PDC, PDOT and OHSU to periodically and timely pay their respective shares of the cost of constructing the
Tram, and funding shall be available for such construction."

The 7th Amendment to the Development Agreement (tinyurl.com/92kgc) notes that the Construction Funding Agreement was begun in April 2004 and completed in May 2005.

But where oh where is that perfidious Construction Funding Agreement? It's simply nowhere to be found!

Digging through the Development Agreement yielded some other (off-topic) tidbits that are discussed at garagewine.blogspot.com.

The limit would be much like that for the obligation to make payments on revenue bonds as described in Kane v. Goldschmidt, where a judge could not order payment but the obligor would have to guage the negative consequences upon bond ratings from not paying.

That is, the limit is just the willingness of folks to "trust" the city on future deals. It is thus, by definition, in the realm of the whimsical exercise of future arbitrary power and thereby exclusive of any reliance on anything remotely identifiable as the Rule of Law. The law, rather, spells this limit out with unmistakable clarity.

The electors can always choose to disincorporate a city, which must necessarily imply the lesser included power to change any and all spending decisions in the very next budgetary cycle; inclusive of every single revenue stream that is arguably dedicated to cover any revenue bond. The same could be accomplished with equal force of law via an initiative. Homer cannot change this fact, but he can hope, I suppose. The OHSU Medical Group has less of a grip than even revenue bond buyers have through their affiliation with the officially recognized bond rating outfits. Nothing can dictate that a future vote, not yet taken, must go a certain way; lest that would convert our right to vote into property that is alienable from the electors.

Is there some hard collateral that has been pledged? Like the tram itself, where on eBay it might sell at a discount just like the tarp to cover a water reservoir.

The same wiggle room applies also to all disparity in taxation for purposes of all urban renewal zones. A court could clearly accept an argument that in the interest of uniformity of taxation that preferential taxation is incompatible with the Oregon Constitution. Or rather from an alternative procedural posture, if we wiped the slate clean in the interest of uniformity then no prior beneficiary of a special privilege or immunity could effectively object in court on the grounds of a contract, but for a pledge of hard assets in which case the inquiry turns to criminality in such prior public policy choices.

There is no shortage of tools in the lawyer's toolbox, only perhaps a shortage of will.

And a shortage of cash :). NO TRAM TO OHSU, such as remains of it, is still exploring the idea of reviving its suit against the city, since we got bounced on ripeness grounds, not on the merits of the cause.

When I have the time, I would be very interested in poring over those documents -- thank you very much, Jim Karlock, for posting them, and thank you Jack for directing us to them.

Yes indeed good work by Jim Karlock. Perhaps Adams will help out Jim with a city grant for his work. Or how about a PDC consultant fee?

Having the easy access Jim provided may help the PDC staff bone up.
That way they can go to the next Urband Renewal Advisroy Committee meeting and tell the panel they were wrong in the two previous meetings when they said the swiss franc exchange rate contributed to the rising cost of the Tram [rim shot].

Additional funding should be made avaialable to Karlock and others who are doing the job of paid city staff.

Bravo, Mr. Karlock.

Jack,
This is a great service, and I'm grateful that the intellectuals who visit your site are on the case.
As for me, I have now discovered - by looking at these papers - a second great name for a musical group. First there was the Vital Linchpins, and now there is another:
Ladies and Gentlemen, I give you the Zone D Band.

What I've always wondered is: why a tram? Would it really make it easier for people at OHSU? Are they really going to be running up and down the hill all day? Does that make any sense? I mean wouldn't it take like a half hour out of your day to use it? Doesn't seem like an effective use of any one's time except as a commute from your Condo Penthouse to your office back to your Penthouse.

Or is the tram (rimshot) really just a straw dog...to keep our attention off the real scam of the SoWhat development and the sweetheart deals for the very powerful families who own the land?

Just wondering...

Oh man... what is everyone going to do with themselves once this thing gets resolved? It seems like a borderline obsession for a few folks.

Guys... it's too easy to beat this dying horse. Your passion and investigative prowess is needed elsewhere.

I will never blame anyone for passionately speaking out about one issue or another, but there seems to be a lot plaguing the NW, Oregon, and the nation at-large. Pick and choose your battles, I guess. So... since you guys have this one covered, maybe I'll start fretting about our inept state legislature. Or the countless, moneyed Sizemore clones who work tirelessly to undermine our tax and land-use system, at the expense of everything we love about Oregon. Battles where billions may be at stake each YEAR, not just $30M overruns.

I don't mean to rain on the parade, but there's a bigger downpour on the next street.

TK:

"...countless, moneyed Sizemore clones who work tirelessly to undermine our tax and land-use system, at the expense of everything we love about Oregon."

This can be shortened to "Sizemorons".

BTW, the Swiss Franc has only been seriously devalued once since its introduction in 1850, and that was during the depression. It is the dollar that has gone as limp and wriggly as Dubya's handshake over the last six years.

Eureka!

Beginning with p. 751 of the Karlock papers is the Intergovernmental Agreement (IGA) between the City and OHSU. This IGA is the "Construction Funding Agreement" (p. 753). Under the IGA:

- PDC is obligated to contribute up to $3.5 million to the Tram project.

- The budget for the Tram is $40 million.

The IGA references the Development Agreement (DA). The DA states that PDC is in default of the DA if it breaches any the DA's provisions. The other parties to the DA may recover from PDC "all monetary damages (except for punitive or exemplary damages) and pursue all other remedies allowed at law or in equity arising out of, or related to, or caused by the uncured default."

My take is that PDC is on the hook for only $3.5 million it committed in the DA and the IGA. They don't need to pull the plug, but OHSU & Co. shouldn't expect a penny more from the City or PDC.

Garage, we're being told that the city's obligation is much more than that. Somewhere it supposedly says that the city must in fact cause the tram to be up and operational by a certain date, or else pay damages to OHSU. If that's not true, the public is being gravely misled.

Let me make it simple.... The public IS being gravely mislead.

What are the penalties if OHSU defaults?

What are the penalties if PATI defaults?

I suspect that when the tram construction is not on schedule, there will be finger-pointing of the Boss Tweed level.

In my opinion, if there was really something in writing that proved there was no turning back, the Council would have brought it out weeks ago just to shut everybody up. Instead there was a bunch of quotes saying it was a done deal – virtually unstoppable without paying catastrophic penalties – but the written part proving that was not brought to our attention. So it’s time for the pro-tram officials to prove they haven’t been misleading the public. I bet they can’t.

TK:

The horse ain't dead yet, but I suspect that folks here intend to keep kicking it until it is.

"""""""The horse ain't dead yet, but I suspect that folks here intend to keep kicking it until it is.""""""

This ain't about "A" horse.

The Tram is being perpetrated exactly the same way as the airport MAX/Cascade Station and the Port of Portland shipyards/drydocks giveaway.

SoWa is far worse than the Tram.

The upcoming convention center hotel, transit mall and 205 light rail will make the Tram seem like child's play.

The tactics and methods utilized by the COP, Port, Metro and TriMet to do what they choose
have momentum with little or no resistance.

Only through the publicizing of their ways and means, as Jim has done, will anything change.

Steve:

Is the increase in 2% for Art a done deal, or is it still awaiting a final vote?

That one really burns my butt. I find it difficult to understand how they could even whisper the idea of spending MO MONEY on plop art in this budgetary environment.

What about THE CHILDREN?

It will be interesting at North Macadam URAC's next meeting if PDC/PDOT staff will address the issues being brought up about the Tram Agreement and its relationship to the NM Agreement. And if the committee itself will discuss these points about the Agreement. Our URAC committees ( 12 for all our Urban Renewal Districts) should be diligent in looking out for the public's interests.

The public should attend the next NM URAC meeting and ask the obvious questions. The tram is just one of several cases where there is a misuse of the intent of Urban Renewal as defined by State Statute.

I now have printed ONE paper copy of the entire 792 page document set.

It is available for someone to borrow if they prefer paper to electronic, but you need to promise to look it over in a day or two so the next person can look at it.

Thanks
JK
(I live in NE Portland)

Hey Lee - great idea. Where can one see a schedule of upcoming meetings?

The ordinances and resolutions all seem to be emergencies so as not to violate a contract, even the August 14, 2003, claim of an emergency due to liability based on an PDC negotiated agreement that was not signed until August 22, 2003. Call it mystical liability.

The document for Ordinance 178675, August 18, 2004, is quite illuminating.

The characterization of the private tram for the private use of the Pill Hill commercial enterprise as a public transportation is the linchpin of lots of deals, private and public. Compare: If Nike built a tram from Beaverton to Nike City, would we call it a "public" transportation project? Could we redeclare the tram as a private transportation project, to conform to the facts?

Could one surmise that the height adjustments granted to non-OHSU-affiliated folks were made only by reason of the temporary and incorrect characterization of the tram as public? Could the OHSU folks seek to claim some benefit to other private folks that was derived from such height adjustments, as they would not have been granted but for the City's temporary tram dealings? This would focus any legal debate to conform to the real private dealings behind the scenes. The role of the City has been that of a passive accommodater (as in a complex private real estate exchange) of such private deals and has been acting sort of like an escrow agent and only in conformance with the private escrow instructions. It would at least be useful to visualize all the affected property owners as going to one private bank to act as an accommodater, quite apart from the City, and then examine the City's actions that would be at variance to that of the power of a private bank accommodater on behalf of purely private parties.

As any one familiar with real estate deals knows, a deal is not done until it is closed, and even then it can sometimes be undone. An initiative, in simplest terms, could declare that the City is prohibited from any further action as the private escrow agent on behalf of the private dealings between and among OHSU and the property owners within the South Waterfront zone. The private parties could then take their spat back to court, just as if the City had never participated, other than to apply general laws in a uniform fashion. The private parties could hardly compel the city, at the outset, to act as their escrow agent against its will, or to object to later refusal by the City to offer further private escrow services.

(I can send CD-ROM with Jim's tram docs to first ten to email request to tramdocs@pdxlawg.us YOU TOO can get tired eyes.)


The international tram design competition mentioned in these docs still makes me wonder of some knucklehead actually wanted to shape the tram like a hand.

New report puts Tram at $55 million

Here is where Schopp got the New Tram Cost:
http://www.pdc.us/pdf/newsroom/breaking-news/tram-docs/pinnell-busch-tram-final-rpt_2-1-06.pdf
Excerpt:
At this time, the best available estimate of the final project cost is $50,000,000, plus a contingency of $5,000,000, for a total of 55,000,000. We believe that the $55,000,000 budget will be adequate, if the recommendations in this report are followed. The budget excludes:
1. The cost for the pedestrian bridge over I-5, the public plaza, and other public improvements underway in North Macadam, which are all separate projects.
2. Unanticipated project delays of more than three weeks past the forecast completion date of December 1, 2006.
3. Possible changes requested by the Tram operator after they are retained. These could include better security at the Lower Station and improved rain and wind protection at both stations.
4. The possible consequences of late completion that affect the use of Building One.

We're sure lucky to have Commissioner Adams hot on the trail of Waste, Fraud, and Abuse.

His campaign blog (commissionersam.com) says:

Upon assuming the responsibility of transportation commissioner in July 2005, Adams consistently has sought to reduce project costs through value engineering. To date, total estimated savings obtained through value engineering are $9,622,389.

Very artful word play: the "estimated savings" have no "start date" and are probably cumulative. Having placed the sentence directly after "...in July 2005" it conveys the impression that $9.6 million worth of savings would not have occured without Sam's timely intervention in July 2005. A sprinkle of plausible deniability (oh no, we weren't trying to take credit for that $9.6 milion). Sure they weren't.

It reminds me of Mr. Castorini, in Moonstruck:

There are three kinds of Tram. There is what you have, which is garbage and you can see where thats gotten you. There is the PDC Tram, which is very good as long as nothing goes wrong. And something always goes wrong. And then there's Sam's Tram, which is the only Tram I'll use. It costs money. It costs money because it saves you money.

It ain't done yet.

Structural steel hasn't even been started yet. The footings are still being prepared. Remember, on most projects of this scale, the cost overruns start _after_ construction begins.

Additionally, since this thing is "scheduled" to be operational in September 2006, the contractor is running 24/7 at the job site. That's gotta be expensive in terms of overtime. I still have my doubts as to whether the completion will be on schedule.

Then, there's the whole operational beginnings, too. How many shutdowns, complete with trapped riders suspended in mid-air will we see? Has the city, or OHSU, funded, staffed and trained the specialized personnel needed to make mid-air rescues?

My bet: If the tram *rimshot* _is_ built, the costs will continue to spiral up...only it will be operational and maintenance costs.

Then, it looks to me that the City has been placed to be the fall guy if anything goes technologically wrong with the entire project. The City DoT is the construction manager, right? They don't have the necessary qualifications to be doing that, right? Result: Oops... something went wrong! IT'S THE CITY'S FAULT!

Not only do we need to not spend more taxpayer dollars on this, we need to remove the city presence entirely from this financial catastrophe waiting to happen.

Godfry:

You couldn't be more right. I was thinking, since OHSU is so proud to have built all their facilities on time and on budget, and the tram [rimshot] is their tram[rimshot], despite its moniker, then why on earth is the City managing the project? They're the least experienced and the smallest stakeholder, monetarily.

At least the Council could claim some level of competence by handing the blueprints over to OHSU. Oh, wait, the campaign's heating up. I'm guessing Weiner/Kaufman will be advising Dan Saltzman to propose just that when he feels he's getting some competition. You heard it here first. Dan Saltzman will begin to talk about turning project responsibility over to OHSU in about two weeks.

They set aside $500k in contingency funds to cover any currency (Swiss Franc) or steel related price changes, based on the $9.938 million dollar Tram Contract. I found no discussion of what would happen if the $500k was exhausted.

Today's WSJ shows the Swiss Franc (CHF)@$1.2853 per USD, so we have actually benefitted from an INCREASE in the value of the USD (one dollar previously "bought" CHF$1.21, but now it will buy CHF$1.29). They included a similar cost adjustment formula on the price of steel (page 9).

Contract 35825 (page 8-9):

The cost of the Work identified in Exhibit A is based on an exchange rate of 1.21 Swiss Francs/US Dollar.

Upon execution of the Agreement by all the parties, the Cost of the Work will be adjusted based on the previous day's closing exchange rate for Swiss Francs/US Dollars, as published in the Wall Street Journal. The Schedule of Values will be updated proportionally to account for any increase or decrease in the Cost of the Work, the decrease shall be added to the Risk/Contingency Allowance (US$500,000). Should the exchange rate calculation result in an increase in the Cost of the Work, the increase shall be deducted from the Risk/Contengency allowance and added to the Cost of the Work.


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Karen Armstrong - The Spiral Staircase
Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
Jonathan Schwartz - All in Good Time
David Sedaris - Dress Your Family in Corduroy and Denim
Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
James McManus - Positively Fifth Street
Jeff Noon - Vurt

Road Work

Miles run year to date: 115
At this date last year: 21
Total run in 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269


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