Portland debt series takes a breather
Over the past couple of weeks, we've been digging each weekday morning into another aspect of the huge long-term debt that's being racked up by the City of Portland. There's a lot to think about in what we've reported so far, and while we've still got more in the works, this seems like a good time to knock off writing for a time and keep researching.
Goaded by readers who insist that we compare Portland's debt to that of other cities, we're now checking into the situation in Seattle. Not that it's all that relevant -- I don't see how some other municipality's decisionmaking should be judged any better or worse than ours -- but we heard from at least a couple of different commenters that the Portland numbers are not meaningful to them without something to compare them to.
Fine and dandy.
Alas, there's not as much openness with the public documents on the internet in the Emerald City as there is down here in Portland, and it's going to take a while to get to the level of detail we have achieved for the Rose City. A little preliminary sleuthing, however, indicates that the debt burden per capita up there is going to be lower -- much lower -- than the $7,842 that's weighing each of us down here in Portland. More on that later.
Before moving off the debt topic, we'd like to use this post as a placeholder for links to the various writings that we've generated in the series so far. Here's the list, to which we'll add in the future as we write more:
1. Portland: A city deep in hock (9/28/07).In the meantime, just remember a simple executive summary: $4.4 billion of debt, and rising five times as fast as the population.2. Grampy's payday loan (10/1/07).
3. These numbers crunch you (10/2/07).
4. The saddle's about to get heavier (10/3/07).
5. Buying white elephants on time (10/4/07).
6. Drop in the bucket (10/5/07).
7. City of Portland debt update (10/8/07).
8. City of Portland debt is rising faster than condo towers (10/9/07).
9. While City of Portland's debt rises, its tax levy falls (10/10/07).
UPDATE, 4/15/08, 2:08 a.m.:
Additions to the series:
10. Portland tax levy appears back on the rise (10/12/07).11. Portland vs. Seattle city debt: It's not even close (10/15/07).
12. Portland Debt-O-Meter: New and improved! (10/29/07).
13. Take it to the limit one more time (11/6/07).
14. Portland population growth continues to slow (11/19/07).
15. Where's the new PDC debt? (12/4/07).
16. Portland debt clock ratchets back slightly (12/28/07).
17. How to borrow $277 million from B of A, very quietly (2/1/08).
18. Bond market and bond insurance implosions can't be helping Portland (2/14/08).
19. Portland to put another mid-nine figures on plastic (2/15/08).
20. Has Portland's credit card expired? (2/16/08).
21. Back over $2 billion (2/22/08).
22. Like I've been saying... (2/23/08).
23. City of Portland to borrow $750 million in April (3/24/08).
24. Portland sewer debt climbs 21.63% over 13 months (3/25/08).
25. Portland bond sale still behind a curtain (4/1/08).
26. Sold (4/3/08).
27. City of Portland bond refinancing put off (4/14/08).
UPDATE, 4/15, 2:27 a.m.: Given that this will be a topic of continuing interest to us, we've created a separate blog category for it. This way, the computer will do the work of keeping the list of series links current. For the complete list, go here.
Comments (14)
Alas, there's not as much openness with the public documents on the internet in the Emerald City as there is down here in Portland
Wow, it must be really bad in Seattle, considering how much digging is required to find out this information in Portland.
Thank you for posting this series, Jack. Excellent work. Portlanders may come to different conclusions after reading the numbers, but everyone should have easier access to the facts. And the Council should consider input from citizens on the level and length of indebtedness, every cycle before the specific projects in the Budget are discussed. Deciding how much to pay in interest should be part of the cost-benefit analysis when making other decisions.
Posted by Amanda Fritz | October 11, 2007 7:23 AM
I think the line "Portland: The City Deep in Hock" is bumper sticker like material. It conveys the message why some in the glitzy downtown area may be feeling so good while the rest of us worry about how much we're going to have to fork over in higher taxes in future years. Most Portlanders don't benefit all that much from the escalating spending by the local governments but are on the hook for the future bills.
Posted by Bob Clark | October 11, 2007 8:48 AM
Nice shot Bob,
It could replace the current slogan
"Portland, The City That Works" to
"Portland, The City That Hocks"
Posted by Ben | October 11, 2007 8:53 AM
Jack,
I don't want to goad you into more extraneous work than you've already taken on, but this series of posts is great. Perhaps you ought to submit them to the local rags as a series of guest editorials. Really excellent work.
Posted by Jud | October 11, 2007 8:55 AM
Jack,
I was one of the commenters, but let me add to Amanda's comment. Kudos to you for raising the profile on this issue. I just wish I had an enterprising thesis student this year who could do the comparative analysis!
Is there really no published source on urban indebtedness? Maybe one of our enterprising local journalists will pick up the story?
Posted by paul g. | October 11, 2007 9:20 AM
Yes to all of the above. Thank you, thank you, thank you!
Posted by Cynthia | October 11, 2007 10:21 AM
"the Council should consider input from citizens on the level and length of indebtedness, every cycle before the specific projects in the Budget are discussed. Deciding how much to pay in interest should be part of the cost-benefit analysis when making other decisions. "
Why might the Business Judgment Rule, applicable to judicial review of private corporate acts, not be suitable to judicial review of government acts?
Posted by pdxnag | October 11, 2007 10:45 AM
Thanks, folks. It's a series that shouldn't have been necessary. Stay tuned.
Posted by Jack Bog | October 11, 2007 11:04 AM
And while all that is going on we have this
"Our aging city"
http://www.oregonlive.com/portland/oregonian/index.ssf?/base/portland_news/119180490569900.xml&coll=7
"100-year-old fire hydrants. Crumbling streets and bridges. An obsolete emergency communications system. And the tab to fix it all -- now at a staggering $650 million -- just keeps growing"
And what's the current priority?
To build a new bridge over the Willammete for a light rail extension.
Posted by Ben | October 11, 2007 11:21 AM
PDXnag: When you have PDC staff saying that "debt service cost is not a part of a project's cost", like they have with the tram and the whole SoWhat and other URAs, then you know we are in trouble. This mindset is throughout city council and other regional governmental bodies. It is nice to have Wheeler of Multnomah Co. and a few others beginning to include the real costs of projects. Thanks Jack, again. I hope Amanda and other candidates begin to talk in real dollar amounts. Sam doesn't.
Posted by Lee | October 11, 2007 12:56 PM
Dear Jack,
You have done an excellent job on this series. I agree that this should be published to a wider audience. Anyone who pays any taxes to the COP needs to know how much they owe.
Posted by Anne Kilkenny | October 11, 2007 2:48 PM
Lee, I tried to argue that with Pension Obligation Bonds the debt service should be paid from the bond proceeds. They are placed in investments that are in some cases as liquid as SPY. I also thought that the bond issuer should obtain a surety bond, paid again from the proceeds, to cover the risk that the dreamed-up prospective gains would not materialize. This could be substituted with an agreement that the bond buyer limit any recovery to the investment fund which holds the bond proceeds for investment. This way the risk of loss from the State Treasurer's insatiable desire to dally in equities (and explodable leverage/hedges?) does not fall on the heads of taxpayers. It would vindicate the notion of "entrustment" as when you drop off a car for repair.
Posted by pdxnag | October 11, 2007 3:27 PM
Looking at Seattle might be interesting, but I wouldn't spend too much time digging for info on just one city. You might have better luck finding a professional organization or interest group that has already done the work for you.
Two options for professional orgs: Government Finance Officers Association (GFOA) and International City/County Management Association (ICMA). Both of these are membership orgs for government finance managers -- so have some grains of salt handy when looking at their stuff. But it still might be a start.
As for interest groups, the anti-tax organizations have almost certainly done some research on local debt from the conservative perspective. And whenever the anti-tax groups publish something, you can be sure there's a liberal group publishing a rebuttal. Perhaps the Urban Institute in DC, or the Brookings Institute?
Someone, somehwere has published a "rule of thumb" for municipal government debt limits. If Portland is above the limit, this could actually become a real issue in the upcoming campaign.
Posted by Miles | October 13, 2007 12:32 AM
Government Finance Officers Association (GFOA) and International City/County Management Association (ICMA)
Their pronouncements would be so suspect, even asking for them would be a waste of time.
Someone, somehwere has published a "rule of thumb" for municipal government debt limits.
Help me find it; I'm not locating it. At 4 percent and 20-year amortization, $4.4 billion takes around $324 million a year to retire. My thumb says that's too high, especially since the entire property tax levy of the city is only $378 million and constitutionally restricted from growing too quickly.
If Portland is above the limit, this could actually become a real issue in the upcoming campaign.
What campaign? Adams and Leonard will waltz in essentially unopposed. I guess Amanda vs. the Streetcar Dude vs. the Floating Bus Dude might spend two minutes on it at the City Club.
The ostriches of Portland are not going to pull their heads out for very long on this one. Fine -- see you all at the bankruptcy.
Posted by Jack Bog | October 13, 2007 1:47 AM