These numbers crunch you
Exactly how much long-term debt does the City of Portland currently have outstanding to pay for "urban renewal" projects? It's not an easy number to come by, that's for sure.
The Portland Development Commission, which runs the show on "urban renewal," has an "annual report" posted on the internet that's supposed to cover these things. But it doesn't seem quite "annual," as it covers the fiscal years 2006-07 and 2007-08. When last I checked, that would be two years, which would make this document a biennial report.
Anyway, on the question of the "urban renewal" debt total, the best this document can offer is where the city stood as of June 30, 2006, which is 15 months ago. At that time, as page 5 reveals, there was quite a boatload of indebtedness outstanding. They're not daring enough to add the various rows up, but I've got a calculator, and I can do that. "Indebtedness Issued as of 6/30/06" adds up to $596,806,370.
Let's stop there for a second and ponder this. The city has already borrowed $596 million -- more than $1,000 for every man, woman, and child in the city -- just for "urban renewal." And that's as of 15 months ago. One would think that the number's gone up in the meantime.
And it's about to grow even more. It was recently announced that they're about to add a new $277 million in "interim lines of credit" in the near future for more "urban renewal" hijinx. I don't know why they're going the "interim" borrowing route -- maybe the credit markets are too tight for permanent debt at this point. But that's another $500 a head or so that's about to get loaded onto taxpayers' shoulders.
It gets worse. There's lots more borrowing "capacity" in the pipeline. According to the PDC's table and my calculator, "Indebtedness Remaining as of 6/30/06" adds up to another $1,344,523,248. That's $1.3 billion of debt that the city can run out and incur for "urban renewal," which would amount to nearly $2,400 more of long-term debt for every resident of the city, over and above where it was 15 months ago.
Urban renewal sure is pretty, and it's making some developers, construction companies, and streetcar builders rich, but is it worth putting everyone who lives in Portland $3,400 in hock?
Now, the apologists for this fiscal irresponsibility will jump up and tell you that the bonds that are floated to borrow this money are going to be paid back out of all the increased property taxes that are sure to flow when all the shiny "urban renewal" toys are finally in place. But the city's latest bond sales document -- the "preliminary official statement" that we blogged about last week -- casts some doubt on that assertion.
If you look at the big scorecard of debt on page 13 of the POS (page 25 of the pdf file), you'll see that only about $272 million of the city's urban renewal bonds are "revenue bonds," which could never be collected by the bondholders out of general fund property taxes. Now, remember, the PDC tells us that there are nearly $597 million in "urban renewal" obligations floating around out there. If only $272 million of that amount are "revenue bonds," then the other $325 million must be classified as "bonds paid and/or secured by the general fund."
Which, unless I'm mistaken, means that if it turns out that the property tax pot of gold is not at the end of our "urban renewal" rainbow, all the taxpayers of Portland will get to pay those bonds off. Indeed, in an important sense, we're already paying them. As will be seen on the property tax statements that will arrive in the next couple of weeks, around 20 percent of all property tax collections by the City of Portland already goes to "urban renewal."
Bottom line: When you consider why the city's so far in hock ($4.2 billion and counting), "urban renewal" plays a major role. It's behind only the police and fire pension pit and the continuing sewer debacle as a source of fiscal heartburn for the city's taxpayers. Before we run out and drive all the businesses out of inner southeast to make way for more condo towers and streetcars, maybe we ought to consider putting away the credit cards and taking a breather, for a few years at least.