Will Fish go for the stadiums deal?
I remember when Nick Fish ran for Portland City Council in 2004. He had the election won, but after he landed a couple of big endorsements, he got complacent, and he let Sam the Tram Adams team up with Opie Sten and steal the seat away from him. Next thing you knew, the Tramster was mayor.
One of the memories from the 2004 race is Fish's television ad. He was shown standing in front of PGE Park, complaining to the camera that the extremely expensive renovation of that stadium for minor league baseball, undertaken with borrowed money at taxpayer risk and expense, was wasteful. If elected, he said, he would not let boondoggles like that one happen again.
It looks as though we'll get a chance to see whether he was telling the truth or not. As reported here yesterday, his colleagues on the present council, especially Sam and Fireman Randy, are getting ready to borrow tens of millions of dollars -- $75 million is the figure they're currently throwing around, in the first, "liars' budget" stage of the planning -- to redo PGE Park yet again. This time, it would accommodate professional soccer. The borrowed money would also be used to build a new stadium for professional minor league baseball in Lents Park, all at the behest of Merritt Paulson, the zillionaire son of Bush's Treasury secretary, who showed up out of nowhere with a fat wallet and bought the local soccer and minor league baseball teams around 16 months ago.
It's insanity. At last report, the city still owed something like $29 million on bonds issued from the last PGE Park renovation, in 2001, and a cloud has been cast over its ability to repay them partly out of county car rental taxes, which was the original promise to the lenders. As discussed here, state attorneys have questioned whether it is legally permissible to repay the bonds out of those fees. If it turns out it isn't, the city will have to find some other source of repayment -- most likely property taxes. The bonds bear interest at rates ranging from 6.5 percent to 7 percent a year; about half the $29 million of existing debt will be hanging around until 2018, and the whole bond issue won't be paid off until 2021.
In pitching the latest idea, Fireman Randy has declared that the city can just go to the bottomless well of municipal debt for the money to fix up and build the stadium for the private soccer and baseball teams:
Mayor-elect Sam Adams, currently a city commissioner, has said he won't support dipping into Portland's basic operating budget to pay for either soccer or baseball. But he and Leonard -- who's taking the lead on the issue with Adams' blessing -- have said they'd be willing to use the city's stellar credit rating to borrow the money for construction.The whole "stellar credit rating" assertion is puzzling to me, and it's a shame (but not surprising) that the O would report it as fact. The city's credit rating is certainly good, maybe even very good, but it is not excellent.
The city lists the ratings of all of its bonds here. It has about $100 million of "Aaa" bonds outstanding -- that's the highest rating. But that's $100 million out of nearly $3 billion in outstanding debt (not counting unfunded police and fire pension liability, another $2 billion). All the other bond issues of the City of Portland carry lower ratings. The old PGE Park bonds have a rating of Aa1, which would be very good but not excellent. Some of the city's recent "urban renewal" bonds are at the Aa3 level, which is the low end of very good; other "urban renewal" bonds come in at A3, which would be considered good but not very good. Some of the city's bonds would have even lower ratings were it not for bond insurance, which used to guarantee an Aaa rating but now gets you up only to an Aa3, which is very good bordering on good.
The city's credit rating certainly does not allow it to borrow at low interest rates. Most recently, when the city has borrowed money for various "urban renewal" schemes, it has paid interest rates of about 6 percent. It seems highly likely that any bonds issued for new pro sports stadium projects would require the city to pay interest of about that amount. Six percent of $75 million is $4.5 million. That's a lot of money, and it's just the interest for one year.
Especially when you think that a large chunk of the debt is going to make PGE Park a soccer venue. That game is gaining in popularity, but it is no means a sure thing that a Portland franchise will necessarily succeed. Indeed, it is not a safe bet that the entire league won't go under at some point long before any new bonds were paid off.
"Major league soccer," although sounding like a contradiction in terms to some of us, is no doubt a worthy thing. And the city should let the team's owner renovate PGE and build the Beavers another stadium somewhere if he has the desire and the wherewithal to do so. But not with public money. And not in a public park.
I've already speculated here that Fish has been sucked into the craziness that permeates Portland City Hall these days. If he votes for this proposal, that will be confirmed beyond a doubt.
UPDATE, 2:44 p.m.: Dwight Jaynes gives his usual thoughtful and well informed take on the proposal here.