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This page contains a single entry from the blog posted on October 6, 2008 9:38 AM. The previous post in this blog was Palin per diems: State didn't follow its normal policies. The next post in this blog is How Disney creeps me out. Many more can be found on the main index page or by looking through the archives.

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Monday, October 6, 2008

Is the end near for City of Portland credit card finance?

If it's one thing we've learned in studying the finances of the City of Portland over the last year, it's that for many years, the place has pretty much run on borrowed money. The city borrows for so many things, it's hard to keep track of all the bond issues. Short-term debt. Long-term debt. Interim debt. General obligation debt. Limited tax revenue debt. It goes on and on. And there are all sorts of crazy repayment schedules on these bonds, which usually make "refunding" bonds (refinancing) a routine option. Our current estimate is that the municipal government has long-term debt and "interim" financing currently outstanding to the tune of $2.9 billion (that's with a "b"). Much of that has been incurred with Masters of the Universe like Goldman Sachs holding the city commissioners' hands and telling them how smart and good-looking they are.

Such days are apparently over. In today's Trib comes the truly alarming news that the city's not even sure it will be able to borrow the money to finish fixing up the earthquake retrofit on fire headquarters -- at least not until the financial markets improve. And if it can't find the money for that essential public function, you've got to wonder how it will be able to finish the "big pipe" sewer revamping, pay for the crazy east side streetcar system, or undertake any number of other projects that were scheduled to be paid for with borrowed money. New Sellwood Bridge? You're dreaming -- better buy a canoe.

If, like we, you're not expecting the financial markets to improve substantially any time soon, then you'll want a front row seat as the chickens come home to roost at City Hall. Meanwhile, any talk of a new baseball stadium, the Burnside-Couch "couplet," Pearl District North, the new David Douglas school, and all the other debt-financed junk that the city fathers have been fantasizing about ought to be laughed out of the building.

Comments (13)

Don't worry, we have Sam Adams, he has
- An impeccable financial background (oops, forgot he declared bankruptcy)
- Best education (opps, forgot he dropped out of college)
- On the job training (oops, forgot he learned all of his shove0it-thru the process technique from Vera)

Don't forget we have the Oregonian to deliver daily doses of complete BS just as they did today in pushing Urban Renewal for the Beaverton Round.
The Oregonian has been so much a part of the multi decade fiascos around here they'll never alter their stories. They'll simply lecture us that more of the same is needed because they have been right all along,,,, about everything. Just as they did today with the Round.
Whether it's the Round, Convention Center Hotel or SoWa and the PDC in general the Oregonian gets it wrong and promotes the horrific policies which lead to this soaring local debt and the fiscal madness we are watching.
The idea that Beaverton needs Urban Renewal to make the Round work is a perfect demonstration of the paper's near insane level of misunderstanding and misinformation. And it's no accident. The O staff, from the front page to the op-ed innards, has had ample opportunity to grasp the real circumstances and alter they coverage and advise. They have not and the twisted coverage and advise they continue to distribute plays an enormous role in getting more of the same as well as protecting public officials from every being held accountable.

It isn't just PDX' credit card habit thats about to blow up.


By 31 March '09 there will be a melt down in derivative securities based upon credit card debt, parallel and analogous
to the mortgage drrivatives. It'll be a major meltdown, and require another trillion dollars in bailouts.

Time for a "small" tax increase to finance all of Sam's toys.

More good news:

The lack of easy money will force speculators to pull back. Real estate has already dropped. Now the price of oil is dropping (around $90 today.) What commodities are next? Our cost of living is starting to drop.

Remember the panicked Portlanders that said oil will never be below $100 again? Turns out to be just another paranoid fantasy of the constantly panicked crowd. Better yet - the smart growth crowd loses another excuse to shove density down our throats. Turns out that the USA has more oil than the Saudis, we just have to drill here, drill now.

The next fantasy to crumble will be global warming as the big Wall Street global warming promoter, Lehman Bros., is now out of business. Incidentally, this may tame Al Gore a bit as Lehman Bros. was associated with Al’s mutual fund -- they both hoped to make a killing trading carbon credits. One big money source has vanished with others to follow as donations to the multinational corporations, that grovel for money by scaring people, will see their income stream deteriorate. Lots of big money for this garbage will dry up . (wattsupwiththat.com/2007/10/04/detailed-comments-on-an-inconvenient-truth/)

The future may be brighter than many realize:
* The earth is not going to fry.
* We are not running out of energy.
* Homes may again become affordable.
* Our cost of energy is dropping
* Smart growth may wither away as land prices drop. (High density cannot survive without inflated land pries.)

Whether you are a demo or republican, or who you are blaming for the national and world financial maelstrom, we can look back right here to our own local and state governmental officials and see the causes beyond.

The mindset of PDC, CoP, Multnomah Co., Beaverton, Wilsonville, Metro, etc. using bonds, urban renewal, etc. to finance dreams without reality is just a microcosm of our national and world situation. We need to start here as well as there in correcting our thinking and throw out those that keep dreaming the same.

I don't know, I think the CoP will find a way to fund the streetcar project. It will probably involve reducing "nonessential" services such as the police bureau, the fire department, and parks' maintenance. As you would say, "Go by streetcar!"

Since RE is deflating, someone explain to me how I can go back and get my proerty taxes appealed?

Especially if I bought somehting in the last 3-4 years. That ought to make for interesting times at the ranch.

I've read over the current Portland budget a few times and it appears to me that the city is actually bankrupt. That is, they can't pay for all of their current obligations with just tax revenue, they need borrowed funds to keep the ball rolling.

And it appears that they are running a bit of a Ponzi scheme since they keep borrowing more and more new funds to pay off the older loans.

I'll admit I'm not an expert on city accounting but I am an accountant and I do have a MBA so I'm not totally clueless. Whoever wrote up the budget documents for the city tried to hide as much as possible which is usually the first clue that something isn't kosher in the statements.

It would be interesting to get the straight scoop from someone who is an expert in city financing. I think Portland is either bankrupt, or close to it.

I bet the liberals who have been encouraging this type of thing by voting these trolls into office are wishing they had elected fiscal conservatives about now.

I wish I could find some fiscal conservatives ... the Democratic party may be "Tax and Spend" but its better than the Republican's mantra of "Borrow and Spend" (with the unspoken idea to have Democrats have to raise money to pay for the debts, use it against them in elections, and repeat the process)

I'd agree that Portland is nearing insolvency: it probably would fail the balance sheet test, but (marginally) pass the business test (paying debts as they come due) because of additional borrowing (or "refinancing"). It's going to be a candidate for Chapter 9 soon enough. Probably good thinking on Congress's part, but my read is that you can't force an involuntary bankruptcy on a municipality.

Sorry Chris Coyle and all the people who exclaimed, "Thank God, Sam gets it!" You have to do your homework. You can't act like you knew it all along and get a free pass.

I heard Kurt Shrader on KPOJ this morning saying, "Govt needs to stay out of this and let the market deleverage." What a totally libertarian concept!!! Suddenly, after $2T of abject government intervention failure, Dems are starting to embrace basic fiscal economics.

It's easy to get away with building castles and monuments when money is flowing. Boy King Tut, Nero Cezar, and Peter The Great accomplished that. "Look at my Tram! Look at my SoWhat Towers! Look at my Pearl District!" (no puns intended)

Castles in sand, Mayors Tom, Vera, and Sam. Castles in sand, Commishes Leonard, Saltzman, Sten, etc. You break it, you own it.

"If it keeps on raining, levee is going to break! ...When the levee breaks, got no place to stay. Goin' down, goin' down now."

Chris: The idea of a City going bankrupt is a possible reality. Lots of fiscally challenged cities all over the USA are carefully watching how the City of Vallejo's Bankruptcy case is proceeding through the court system. If the City of Vallejo prevails, lots of those very generous union and public employee contracts will be worth very little.


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