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This page contains a single entry from the blog posted on June 9, 2008 8:46 AM. The previous post in this blog was Leaving work behind. The next post in this blog is Portland bond rating up a notch. Many more can be found on the main index page or by looking through the archives.

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Monday, June 9, 2008

Wheels coming off in SoWhat

Here's another sure sign of impending financial doom in the folly-filled wasteland known as Portland's South Waterfront (SoWhat) district. Now the Portland Development Commission is asking the city to hustle up a two-year extension of the "temporary" line of credit that it took out from Bank of America to pay for the SoWhat streetcar. There's currently about $5.9 million outstanding on that line of credit, and the money that the PDC hoped to have to pay it off when it expires this Sunday(!) hasn't materialized. Apparently the funds were supposed to come from two parcels of land in the RiverPlace area that haven't sold.

The official report to the PDC commissioners, who are scheduled to approve the extension request on Wednesday, describes the situation this way:

Office of Management and Finance (OMF) have prepared an ordinance for City Council which will authorize OMF staff to negotiate with Bank of America for a two year extension to the maturity date of the Line of Credit which currently expires on June 15, 2008. The extension is required since the originally anticipated source of repayment (sale of Parcel 3 and/or Parcel 8 in the North Macadam URA) is not expected until at next fiscal year at the earliest. To expedite repayment of the Line of Credit, repayment will occur from $1 million in available cash balances and any unencumbered property sale proceeds for North Macadam URA in FY 2008-09 and FY 2009-10 including Block 49, Parcel 3 and/or Parcel 8, depending on timing and amount of the transactions....

If the proposed two-year extension is approved and the entire outstanding balance of the Streetcar Line of Credit is not paid, interest will continue to accrue on the current outstanding balance on the Line of Credit. The higher payoff balance will require a greater amount of resources from the eventual sale of property (Block 49, Parcel 3 and/or Parcel 8). The budget and five-year forecast will need to be adjusted to reflect the timing of the property sales and anticipated payoff amount of the Line of Credit....

There is a potential that the properties being used to secure the Line of Credit will not sell to private parties in the two year extension period. This will result in the need to identify an alternate source of repayment for the Line of Credit from North Macadam URA’s available resources.

Of course, the PDC isn't the only one asking for extensions from banks over SoWhat. The condo developers down there have also been unable to pay their loans when due, and they too have been seeking revised payment schedules from their lenders. You have to wonder when the banks are going to see the handwriting on the wall and pull the plug on the whole misguided adventure.

Comments (21)

Memory fails me. Can you give some background on Sam Adams's role in SoWa?

He was Vera Katz's "economic development" expert...




Bwahahahaha!

I was sitting here doing my monthly bills when I saw that my Bank of America credit card balance of $337.00 was now overdue. I had hoped to have a big garage sale by now to pay this outstanding balance by now, but solid buyers have been hard to find lately. My old stuff is not really worth very much anyway. I have enlisted the help of WMF (Wife for Manganging Finances) to negotiate with B Of A for a two year extension. Wish us luck and thanks to Portland for another good idea.

Gibby

Bank of America already has it's hands full with the consequences of the Countrywide purchase. CEO Ken Lewis has been trying hard to put lipstick on this pig of a deal on Wall Street.

Uh, Mr Bojack sir, they do have a plan - this is the reason they are selling the parking meters . . .

Is Charles Wesely Rhodes getting his counsultant fees paid in future commissary credit? Is he getting a bonus for recon work ?

the reason they are selling the parking meters

They're not really selling them. They're going to sell them and lease them back -- which is just another way of borrowing against them.

City Hall is putting the entire city into hock, big time. Now they can't pay their bills and are asking for extensions. It won't be long before a big hole opens up somewhere -- one too big for them to talk around.

When you hear the word "visionary", put your hand on your wallet, and back slowly out of the room.

But you see, Jack, Portland is different. I'm sure that Sam Adams is borrowing against those million new residents he expects to show up any day now, and his backup plan is probably to have assistants go down to the grocery store to buy lots and lots of lottery tickets if those millions of new chefs and groovy retail salespeople don't show. It's going to be years before anyone pulls the plug on that Innsmouth West mess, because any day now everything's going to turn around. You'll see: the same idea worked for Cleveland and Pittsburgh, too.

Don, if you are serious with your question on what Sam had to do with SoWhat, here are some quickies:

Sam has almost 16 years of meetings, voting, staff advisement, policy wonk reports serving with Katz and as commissioner on SoWhat.

Sam is commissioner of PDOT responsible
for the tram, two trolley extensions, all infrastructure building in SoWhat.

Sam is commissioner responsible for the Gibb St. pedestrian/bike bridge.

Sam is responsible for all street, freeway ramp, transportation portals (3) throughout SoWhat.

Sam is responsible for the future Milwaukie Light Rail through SoWhat

And all of these projects totaling over $480 Million of taxpayer dollars $90M (spent and $390M obligated)are mostly under Sam's authority.

He's like Bush, he's responsible for everything.

In case that last sentence was meant to be sarcasm, I would agree that you can't blame ONLY Sam Adams for what has already gone wrong in that district, but I see no reason to cut him any slack when he apparently has no desire to stop the bleeding now (and continues to promote it as a "successful" development and a model for other areas of town). That sounds a lot like the current Bush approach to the war to me.

Mike, I don't think that last sentence was sarcasm. I think Lee is serious that Sam has great responsiblity in the whole development of that neighborhood (as Mayor Katz's key staff, as Commissioner, and soon as Mayor) - particularly the expensive public infrastructure.

Lee, I was serious. Many thanks for the details.

"They're going to sell them and lease them back"

Correct, I forgot to mention the leaseback part of it. My issue is that with all of this pushing cash to the limit, pet projects and topline employee benes are going to be the last things cut.

I am expecting more non-essentials like road repair and anything outside of downtown to get ignored totally.

The O has a take on the story, here. It's all due to the economic downturn, folks. The "planning" was all perfect. Really.

This is all part of the impending Homer Williams implosion. Note how he's all over every angle of this, and how taxpayers are holding his ever-growing, foul-smelling bag. "Urban pioneer," my eye.

It's all due to the economic downturn,
JK: Planning without planning for a downturn is bad planning. Yep, typical Portland planning.

Thanks

Is it possible to get a copy of Homer's latest financials or tax returns? He must have to submit this stuff to do business with the city right? So, at that point it becomes public info. Am I right?


Can we stop calling it SoWhat and start calling it SamWhat? It's a shame he avoided a run off by just 2%, because the crows are coming home to roost and in a few months people are really going to start thinking differently about how City Hall has wrecklessly spent our money for the last 12 years.

Yeah, the "planning" was perfect if the only assumption in your economic forecast was endless prosperity and good times that last forever. Brilliant planning. Way to go Vera, Sam, Randy, Jim, Eric, Tom, Dan, Gretchen, and Gary.

is it too early to start the recall?

They just had the recall and we lost.

Jack, I just read that Oregonian article, and I'm now even more scared. If hotel business is down "just a bit", this means that it's going to be crashing next year, as most conferences and business meetings are scheduled months or years in advance, and they're generally set on a play-or-pay basis. This doesn't mean that people are going to cancel out on previous plans for a business conference: it just means that they'll go through with it this year and then decide not to do so next year. Watch a significant decrease in hotel business starting around August, especially when HR reps go to schedule and find out how expensive plane tickets are going to be.


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