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Friday, March 31, 2006

OHSU lawyers to City: The tram is your problem

It's obvious that there isn't going to be an agreement on who's to pay the cost overruns on the OHSU aerial tram [rim shot]. Here's the latest.

It's been two months now that we've been in this ridiculous limbo, with more than $15 million in funding unaccounted for, and yet the city keeps borrowing and paying contractors. It really, really is way past time to stop work on this white elephant until the money is straightened out. It's a disgrace.

Comments (12)

The laws that drive Local Improvement Districts are clear that the properties that benefit are assessed the cost of that benefit.

You'll find no mention of "caps" in ORS or the City Charter. If the price goes up, well, then the price --and value-- of the improvement goes up. Folks need to deal with it. (Many, many property owners in Local Improvement Districts have faced this reality.)

As the former Local Improvement District administrator, replaced at Vic Rhodes' insistence by Matt Brown...let me suggest we stop playing games, let OHSU accept their responsibility for THEIR project that primarily benefits THEM, and stop trying to bully the City in to ever more unreasonable subsidies.

Want a Tram OHSU? Fine...pay your fair share for it.

It's real simple: invite Stadum and Dr. Kohler up to a private conference room and show them the stop work letters (each marked "hand delivered" for every sub-contractor) all laid out on the table. Now I want you fellows to understand this doesn't have anything to do with that unfunded budget ugliness: this is just about following the rules we all agreed to...

Dear Sir/Madam: it has come to our attention that the Federal Highway Administration and the Oregon Department of Transportation have not yet approved our Airspace Lease agreement. On this basis, we have determined it is in the best interests of all parties to suspend construction until the required Airspace Lease Agreement has been finalized. You are hereby instructed to stop all Tram construction immediately, and forward your invoices for work completed in accordance with your contract and/or sub-contract.

We regret this delay and will keep you informed when and if we decide to resume construction.

At this point in the conversation, Dr. Pete will be reaching for his checkbook and Stadum will be dialing Homer's jacuzzi-phone.


Alice -

I think OHSU would say "see you in court." Way to drive down Portland's bond rating with your strategy.

Bring it on. If the tram is delayed for litigation, the OHSU offices in SoWhat will open with shuttle bus service. The fact that the Kohler-Coaster is a total waste of money will then become more apparent than ever, and the chances of it being completed will be greatly diminished. Eventually the voters of Portland could kill it entirely.

It's now or never. OHSU is blowing smoke. Call their elaborate bluff. They'll pay.

Sirajul: Portland's bond rating is now being considered for a reduction due to all the debt in has assumed, and not addressed in all it's various forms. Beside the tram, North Macadam URAC debts of over $125M, PERS, etc. Portland is not looking good.

OHSU has everything to lose if the Tram is delayed or not completed. They have clearly planned on expedited transit between the old and new campuses: they know the Docs are unlikely to take a bus back and forth.

The City only has to worry about legal costs and damages. If they were able to prove that OHSU knew the original estimate was fraudulent, damages would be a remote possibility.

Alice, as I have posted before, in a three page letter from PATI's CAC from Nov 03 addressed to City Council, it requested the stoppage to the future tram building because of many tram cost overruns. The tram construction began in late summer of 05.

PATI and the CAC has several representative from OHSU. OHSU knew of the "fraudulent" initial estimate and participated in the "fraudulent" selling of the tram and continues to do so.

I hope you are right that "damages would be a remote possibility".

This is all getting to be too much to chew on.

"""Of course the article does still refer to the Tram as the "linchpin"""""

From what I have gathered this last week, in addition to the last three years, it is exceedingly clear that the Tram was, is and will be just the opposite.

One, OHSU does not need the Tram but desperately needs money.

Two, their LID commitments to pay off the Tram will carve away $3.4 million a year for 20 years out of OHSU's budget thereby being an impediment to their operations and expansion.
Three, the Tram's excalating costs and detriment to other routine infrastructure and public improvements make it a hindrance to the SoWa development.

No linchpin and no trigger for the $1.9 billion SoWa of which at least
$600 Million will be paid with public money.

Nothing about SoWa is "on track" as PDC's Bruce Warner claimed.

What a political boondoggle this has become.

For OHSU's part they have for years been trumpeting this SoWa -Tram
as the linchpin to their biotech expansion and salvation.

That now appears to have been a ruse as OHSU has been pursuing the Hotel business, a commercial/retail/parking operation and they really wanted an "Institute for Excellence in Nursing and the Rural Frontier Delivery Program"

In Fridays Tribune,


OHSU's SoWa manager Mark Williams says,
"""""OHSU agreed to work with the city and South Waterfront property owners to finance new streets, parks and affordable housing units, in addition to
extending the streetcar line and creating a greenway along the river.""""

Huh? What a line of bull. It just keeps getting deeper.
OHSU has not and will not be helping to "finance" any of those things. All these improvements will be paid for with Urban Renewal property taxes as was planned in the beginning. Williams knows this.

"""According to Williams, since the agreements were signed, OHSU has delayed a number of its own projects including the Institute for Excellence in Nursing and the Rural Frontier Delivery Program to focus on helping develop the South Waterfront district""""""

Not a word about the linchpin to biotech from Williams?

This is quite a turn of events. OHSU went from insisting Tram was vital their biotech expansion, to now, they were going along just to help the city and Homer develop SoWa.

A not so funny thing is I can't find anything that shows where OHSU has put any real money into the Tram or SoWa.

They got their Doctor's OHSU Medical Group to build the first building.
They haven't paid one dime for the Tram yet.
Not one dime for any of the SoWa infrastructure.
And no LID payments.

However, in the model of Portland public-pivate partnerships and a total absence of due diligence by the city, OHSU has been paid:

$5 million cash from borrowed TIF funds from the PDC for something labeled "commercializable biotech research space" .

$3 million cash from borrowed TIF funds for reserving 100 parking spaces in a future building OHSU will be building. (the OHSU retail/commercial/parking building)

$3 million cash from borrowed TIF funds for structural upgrades in that future building.

and $3 million TIF cash in matching funds for lobbying for fed funds for that future building.

Additionally OHSU was guaranteed a new 3rd LID of their own to finance that new retail/commercial/parking building when they do build it. OHSU is to become landlords in the retail/commercial/parking business?

OHSU will retain the rental income from the 100 parking spaces the city bought until affordable housing needs them.

They were scheduled to start construction on a Hotel this July.

Who's on the hook if/when OHSU defaults on the LIDs? The city.

Another funny thing is the PDC is considering lowering OHSU's LID interest mark up by 1% because they represent a lower risk.

This all started with the Oregon Opportunity M11 we voted on.
Where did that $500 Million go.
Will OGI moving into part of the first OHSU Med Group building?
Is the existing OGI land sale a liquidation to find cash?
Is OHSU drowning in Red Ink?
Or are they "on track" like the Tram and Sowa?

Wow, Steve, quite a list.

We know Amanda is opposed to the tram, I wonder what Amanda's position is on the rest of the SoWhat now?

Come on Amanda, do you support this project or not? Can you support killing the whole UR district and putting the money into police, fire and schools?


From Tucson.com: their aerial Tram will be located on Mt. Lemmon!

MINUTES, The Pima County Board of Supervisors MEETING DECEMBER 6, 2005

27. Proposal: Award of Contract, Requisition No. 86534 in an amount not to exceed $100,000.00 to HDR Engineering, Inc. (Headquarters: Omaha, NE) for a preliminary (Phase I) feasibility study for a Mt. Lemmon Aerial Tram. Contract is for a one year period with the option to extend for purposes of project completion. If negotiations are unsuccessful, staff requests permission to negotiate with the second ranked firm, Parametrix (Headquarters: Denver, CO).

Mr. Huckelberry stated the Board had the option to continue this item, but the purpose of the feasibility study was to gain additional information for an alternate transportation mode. If approved, the tram would be located in the utility corridor that serves the Mt. Lemmon Community which would minimize impacts and environmental harm.
Supervisor Carroll stated the feasibility study would once and for all determine whether a tram would be reasonable and successful.
On consideration, it was moved by Supervisor Carroll, to continue this item to the Board of Supervisors meeting of January 10, 2006. The motion died for the lack of a second.
It was thereupon moved by Supervisor Elas, seconded by Chair Bronson, to deny Requisition No. 86534. A roll call vote was requested. Upon the roll call vote being taken, the motion carried by a four to zero vote, Supervisor Carroll voting "Nay."

Jerry, you say that the rating agencies are considering reducing Portland's bond rating. Do you have evidence of this?

Good news for Tucson. After more research, it turns out the Pima County Board voted against the feasibility study for the "Mt. Lemmon Tram".

I did think it was interesting that Parametrix was their second choice (I believe PDX hired them). Plus, the wild assed guess for their preliminary estimate was $20 to $40 million.

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