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This page contains a single entry from the blog posted on July 3, 2008 6:47 AM. The previous post in this blog was "If you want Fluffy back.... The next post in this blog is Bouncing back. Many more can be found on the main index page or by looking through the archives.

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Thursday, July 3, 2008

That be some spendy money

The City of Portland has "priced" that $66.6 million of "urban renewal" debt that it's loading on this week for the so-called "South Park Blocks" district. And the numbers we've been given by the city's debt manager are pretty sobering:

Yields on the $34.58 million taxable Series A maturing 2009 to 2019 ranged from 4.032% to 6.081%. The true interest cost (TIC) was 6.003%.

Yields on the $32.02 million tax-exempt Series B bonds maturing from 2019 to 2024 ranged from 4.30% to 4.63%. TIC was 4.618%.

Combined TIC of 5.156%.

Wow, look at that "Series A." We're now borrowing tens of millions on a routine basis for "urban renewal" at an interest rate of 6 percent. Back in April, the city got a similar interest rate -- 6.0278 percent -- on another $50.6 million of taxable "urban renewal" bonds it sold to gussy up another part of downtown (including the county courthouse, supposedly).

The latest round of borrowing is 11-year money, and to our untrained eye, 6 percent interest does not seem like much of a bargain for that sort of debt. Six percent of $34.58 million is $2.07 million of interest a year. Given that the city hasn't identified all of the projects that the money's going to be spent on, and given that these projects typically include hefty overhead charges by the Portland Development Commission, it looks like the city may essentially be using a credit card to meet the PDC payroll.

But hey, this money stuff is all so boring, and besides, Bush is dragging our children into financial hell even faster than Sam and Randy, so we shouldn't worry about this, right? Go by streetcar!

Comments (10)

"We're now borrowing tens of millions on a routine basis for "urban renewal" at an interest rate of 6 percent."

You know those checks from your VISA that you can use to pay your other VISA? That's all this is. So slowly we dig a deeper and deeper hole.

With financial geniuses like Randy ( give me 31 yrs of prop tax increases and I'll fix PFDR), Sam (I gotta have it no matter what it costs), Saltzman (how can I get my eng buddies a contract to build reservoir lids) we are doomed.

I don't think Fish or Amanda will be any different either, so we just keep on going until the city hits a wall.

Can't we get anybody with some experience or even a college degree in any kind of finance to make decisions on CoP $2.4B budget? Probably never.

"Given that the city hasn't identified all of the projects that the money's going to be spent on"

That's a real crime. Not a dime of urban renewal money should be borrowed unless for specific identified projects which have been vetted thoroughly by the Commission. Now they're just borrowing for the heck of it.

Jack, do you get the sense that the "debt manager" you speak to at the city is concerned about debt levels, or does he remain agnostic?

Given the hundreds of billions spent to further destabilize the Middle East and send our boys to their doom, money like this, $4 billion for CRC, $1.4 billion for light rail, etc etc - all of it is chump change by comparison!

Given the hundreds of billions spent to further destabilize the Middle East

Bush can just print more money. Portland has to collect it, from you and me.

do you get the sense that the "debt manager" you speak to at the city is concerned about debt levels, or does he remain agnostic?

Eric Johansen is quite helpful and responsive on the facts about the various borrowings. I have never asked him to comment on the prudence of the city's debt levels and plans, but I suspect he would not comment if I did.

The policy decisions here are being made by a retired cop; a retired fire union guy; a couple of lifetime City Hall employees (one an engineer, the other barely finished college); and a new guy, a lawyer, who just replaced another fellow who also never had a real job. None of them has any background in finance.

Scary.

None of them has any background in fiduciary responsibility either.

Which leaves the hopelessly lacking in integrity as well.

Scary and insulting.

"Given the hundreds of billions spent to further destabilize the Middle East and send our boys to their doom"

Love the reasoning - one dumb idea desrves another.

I understand how we keep electing the same chumps in this town now.

An old song comes back: "...Another day older and deeper in debt..."

$32.02 million in Series B bonds!
Is our credit rating that bad or have we always been municipal junk?

The bonds are not rated B -- that's just a label on one of the two series of bonds issued at the same time. The bonds were rated Aa3, I believe.

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In Vino Veritas

Robert Mondavi Solaire, Cabernet 2005
Castello Monaci, Liante, Salice Salentino 2006
Ricardo Santos, Malbec 2006
Quinta da Espiga, Tinto 2006
Charles Smith, Holy Cow Merlot 2006
Charles Smith, Boom Boom Syrah 2006
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Santa Rita, Cabernet Reserva 2005
King Estate, Pinot Gris 2007
Gloria, Douro, Tinto 2002
Bogle, Petite Sirah Port, Clarksburg 2005
Cardwell Hill, Pinot Noir 2004
Silkwood, Red Duet Cabernet-Syrah 2004
Portuga, Vinho Branco 2006, 2007
Osborne, Solaz 2004
Santa Rita, Cabernet, Reserva 2005
Penfold's, Koonunga Hill, Shiraz Cabernet 2006
Chateau Ste. Michelle, Cabernet, Indian Wells 2004
Chateau Ste. Michelle, Merlot, Horse Heaven Hills 2004
Hannah Nicole, Red 2004
Penfold's, Koonunga Hill Shiraz Cabernet 2005
Protocolo, Red 2005
Woodbridge, Chardonnay 2006
Portuga, Vinho Branco 2006
Beaulieu, Cabernet, Rutherford 1998
Beaulieu, Cabernet, Rutherford 1996
Kirkland, Roogle Shiraz 2004
Garda, Classico Chiaretto
A to Z, Oregon Pinot Gris 2005
I Giusti & Zanza, Nemorino 2006
Treana, Marsanne-Viognier, Central Coast 2005
Fife, Syrah, "Stanford" 2000
B.R. Cohn, Silver Label Cabernet 2005
Marques de Casa Concha, Cabernet 2005
Santi, Sortesele Pinot Grigio 2006
Al Muvedre, Tinto Joven 2006
Layer Cake, Shiraz 2006
Gritti, Ca' Andrea, Umbria red 2005
Altos de Luzon, Jumilla 2004
Thomas Leithner, Zweigelt 2004
Cain Cuvee NV 3
Chateau Ste. Michelle, Merlot 2003
Meridian, Sauvignon Blanc 2005
Canoe Ridge, Merlot 2003
Paringa, Shiraz 2005
King Estate, Pinot Gris 2005
Canoe Ridge, Merlot 2003
Maculan, Pino & Toi 2005
Kris, Pinot Grigio 2006
Silvan Ridge, Pinot Gris 2006
Fife, Mendocino Syrah, "Stanford" 2000
Castle Rock, Cabernet, Paso Robles 2005
Willakenzie, Pinot Gris 2006
The Show, Cabernet 2005
Essencia Valdemar, Rioja Rose 2006
Chateau Ste. Michelle, Merlot, Horse Heaven Hills 2004
Beaulieu Vineyard. Napa Valley Cabernet 2004
Irony, Cabernet, Napa Valley 2003
Rosenblum, Petite Sirah, Heritage Clones 2005
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Barefoot Chardonnay
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Fetish, The Watcher Shiraz 2004
Gold Note, Fair Play Zinfandel 2005
Chateau Ste. Michelle, Canoe Ridge Estate Cabernet 2003
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Penya Cadiella Vins de Comtat 2003
Kamiak, Cellar Select Red 2003
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Rolf Binder, Barossa Valley Shiraz 2003
Oyster Bay, Sauvignon Blanc 2006
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The Occasional Book

Oscar Hijuelos - Mr. Ives' Christmas
Madeline L'Engle - A Wrinkle in Time
Steven Hart - The Last Three Miles
David Sedaris - Me Talk Pretty One Day
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

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