This page contains all entries posted to Jack Bog's Blog in February 2009. They are listed from newest to oldest.
January 2009 is the previous archive.
March 2009 is the next archive.
Many more can be found on the main index page or by looking through the archives.
They held a "rally" in front of Portland City Hall today in support of the plan to spend $85 million (or more) in public funds to build a new minor league baseball stadium and a reconstructed "major league" (in name only) soccer stadium. Even by the proponents' own rosy estimates, "about 200" people showed up.
Let's see, that comes to $425,000 per fan. Think they're good for it?
"Taxpayers are being ripped off," Congressman Brad Sherman, a Democrat from California who sits on the House Financial Services Committee, said in a statement. "The only thing worse than nationalizing a bank is to pay for the entire bank and only get one-third of it."
We click on news stories from Portland's Daily Journal of Commerce all the time nowadays, but we never buy a print edition. The other day we stumbled across a discarded hard copy of the paper, which we leafed through with interest, and were a bit surprised at what we found. The collection of articles was thin, but despite the overall downturn of advertising dollars for newsprint, the paper was full of page after page of "legal ads." These are not hawking goods and services, but rather informing the public of some public proceeding, typically a court case, that may affect them.
What was really stunning to someone who never looks at these things was the sheer number of legal ads telling of foreclosure proceedings on real property mortgages -- or to be more exact, the Oregon version of mortgages, known as deeds of trust. Ads like these:
These foreclosure sale notices took up a little over half of the 32-page paper. I don't know if that's just because it was a Tuesday, or whether it's like that every day of the week. Either way, it's a sad sight.
Today in the O there's a story about a new industry that's sprung up around foreclosure on people's homes: "trash-out" firms that clean up properties that defaulting borrowers have abandoned and that banks now unwillingly own. Someone's got to do that job, I guess.
One point made in the story, however, is not true. It states:
Departing owners don't realize, he says, that when they shatter marble counters and break every oak spindle on a staircase, the carnage comes back to haunt them. When a bank writes off a loss on a loan, part of the loss may count as income for the borrower. The greater the loss, the more taxes the borrower must pay on that income.
As a tax guy, I can tell you that's rarely, if ever, the case. The income, if any, that one has on walking away from a home mortgage debt is rarely affected by the value of the property when it is surrendered back to the lender.
In any event, the times are chilling indeed, are they not?
Here's an ominous story about the state of the finances of some pro hoops teams around the country. Aside from making one wonder about the long-term future of that league -- a truly world-class level of competition -- this news also points out the utter absurdity of the plan for Portland to spend nine figures on "major league" soccer.
In connection with the forthcoming burning of $100 million in public funds for new minor league sports facilities in Portland, a thoughtful reader writes:
The other day, I was thinking that you might want to ask [Merritt] Paulson [private owner of the teams] how many season ticket buyers he has already signed up. Strikes me that any prospective owner of a new sports team should be out there bragging about how many season ticket holders he's already got -- plus, of course, the big bucks skybox guys. Because as we all know, no sports operations these days pencil out without the skybox subscriptions.
Indeed. How many rabid fans and local businesses have signed up for spendy tickets to watch the Beavers and the "major league" soccer team, game after game? Shouldn't the proponents of the stadiums deal be out there beating the bushes for such folks before asking the taxpayers to make them two fancy new nests?
O.k., forgive me, I am a little slow on stuff like this. The City of Portland is going to let the Rose Festival Association fix up and use as its new headquarters the abandoned McCall's Restaurant building in Waterfront Park. So far, so good.
But in order to make that happen, the parks bureau has to turn the property over to the water bureau first? What possible business does the water bureau have playing landlord of a restaurant building in a park?
And the water folks have swapped over to the parks folks a couple of acres in Mount Tabor Park, where the city has several drinking water reservoirs. One can only imagine what dastardly plans the "privatizer" types at the parks bureau might have for that property. Maybe someone from Fireman Pele's or Nick the Fish's ample staffs could enlighten us.
A check of the weather on Mount Hood reveals the words "dumping" and "snow." As a consequence, blogging could be light today.
UPDATE, 4:47 p.m.: The meteorological reports were correct. A ton of new snow has fallen and is still coming down. A little on the heavy side, but fine conditions for the not-so-expert cross-country skier. Even the long, faster downhill stretches were eminently do-able.
The report identified several problems in the Dec. 2, 2004, fatal shooting of William T. Grigsby, 24, who was shot by bullets 13 times, hit 22 times with beanbags and Tasered four or five times, after crashing a stolen pickup in Southeast Portland and then running from police.
Although he was unresponsive after numerous shots were fired, officers and supervisors made no effort to provide medical aid, even when one officer noticed that it appeared Grigsby was "bleeding out," the report says. It took about 50 minutes before the bureau's Special Emergency Reaction Team showed up.
Thirty-seven more minutes passed as SERT officers fired less-lethal Sage 37 mm rounds at him, a police dog bit and dragged him, and SERT officers fired two Taser rounds at Grigsby, who hadn't moved for nearly an hour. Medics pronounced him dead at the scene....
The center questioned why the suspect, who had already been shot 13 times and hit 22 times with a beanbag, was Tasered repeatedly by two different sets of officers at different times. The review noted other cases in which wounded suspects were later shot with Tasers.
The center recommends significant restrictions in Taser use and, concerned by the large number of beanbag volleys used against Grigsby, called for a narrower policy on beanbag shotgun use.... The bureau should also strongly advise officers against using more than three standard Taser cycles against anyone, if the third cycle doesn't make contact with the person or is ineffective. The New York Police Department, for example, limits the number of times a Taser may be fired to three, PARC says.
The O got an advance copy of the full report, but us peons will have to wait until later today to read the whole thing.
Back when the Blazers were pretty hopeless, friends in high places would give me free tickets just to see what I'd say about the games on this blog. Now that the bandwagon's rolling again, those opportunities have dried up, but I still remember some things I learned back in my days in the black seats.
Things are sure off to a rocky start with Tri-Met's new westside 'burb trains. The horns are too loud and too frequent; one of the trains isn't working; and the outfit that built it has gone under, so for $7 million per train there's no warranty. What's next? Crime? Accident? Locusts?
Last week's WW followup story to the Sam Adams teen sex scandal and coverup was almost more nauseating than the original revelations themselves. Check out what this fellow reportedly did while on the public payroll as a $50,000-a-year "senior advisor" -- supposedly working for a bureau whose chief says he never got any work out of him, and getting paid out of the public till for what appears to be a college term paper, whose connection to city business was laughable. Now he's getting paid as a "planner" over with Sustainable Susan, studying Peak Oil.
In New Jersey, where I grew up, elected city officials pad the municipal payroll with their little buddies all the time. In New Jersey, elected city officials also go to jail all the time.
Cut up those credit cards... pretty soon... maybe... sort of...
This is an interesting one. As reported here last week, the State of Oregon is going for the gusto in borrowing money this month -- slapping $726 million of new debt onto its balance sheet in less than 30 days, at a time when interest rates for government borrowers are anything but cheap.
And yet right smack dab in the middle of this binge comes this cautionary press release from newly minted State Treasurer Ben Westlund. Passing along the bad news from an outfit called the state Debt Policy Advisory Commission, Westlund reports that the state's ability to borrow money is shrinking, and that the state needs to be extremely cautious in racking up new liabilities:
Members of the commission also urge lawmakers to be cautious about new debt because of uncertainty about the long-term state fiscal picture. Further declines in general fund and Lottery revenue forecasts will reduce future debt capacity – and commission members emphasize that they do not recommend that legislators authorize bonds all the way to the limit.
Doing so could jeopardize Oregon’s credit rating, which helps to determine the interest rates at which Oregon can sell bonds. That rating now stands at AA/Aa2/AA, by Standard & Poor’s, Moody’s Investors Service, and Fitch Investors Service, respectively.
The commission also has recommended more education of policymakers and the public the tradeoffs of public debt, which can be a powerful tool to help aid economic development – but also comes with a long-term cost.
How they can square this wisdom with the current program of going to the well for three quarters of a billion in a single month is really beyond me. Maybe they're pulling our leg.
Our posts of the past week about Tri-Met have gotten a lot of attention, from the internet to the television and from Portland to Seattle. We're a bit surprised that people are pointing to us as a spokesperson for a particular point of view; we're saying things that we thought everybody knows. Namely, that bus service is being decimated in the name of streetcars and light rail, and that Tri-Met is running empty buses out to the boonies in order to suck up payroll and self-employment tax revenue.
In the course of following the reaction to our posts, we were reminded that at least one Tri-Met bus driver has his or her own blog on which these issues, among many other things, are being discussed. This blogger also has a "news archive" that contains a post entitled "Destruction of TriMet Bus Service." That about sums it up.
The people who invested in the egregious tomfoolery known as Portland's South Waterfront District are now conceding that their dreams aren't going to come true. Funny, I'm not feeling the tears well up.
The print media are always striving for an eye-catching cover -- the better to attract readers to pick up a newsstand copy of their publication. Here's one that we stumbled across earlier this week. All the readers in our household are finding it irresistible:
The new poodle poop park in Portland's SoWhat District is about to break ground. The construction budget is north of $2 million, which when added to the $7 million that the city paid for the land, lots more for planning, and heaven knows how much more they've hidden here and there, it's no doubt a eight-figure hit for two blocks' worth of not much. Go by streetcar!
We've been knocking the U.S. attorney for Oregon, Karen Immergut, as being too sleepy a watchdog. But here's a story that shows her office getting it done: The former director of the Port of Astoria has personally pleaded guilty to an environmental crime in connection with the dumping of dredge spoils into the Columbia River in 2005.
Remember the 2003 state law that committed state tax dollars to building a major league baseball stadium in Portland? It was quite a dramatic story -- the proposal failing at first but then passing. The whole deal was on track until it came time for the baseball proponents to get the city to commit to its part of the funding. David Kahn, speaking for the sports types, was supposed to woo then-Mayor Vera Katz and the rest of the City Council into enacting all sorts of local taxes and fees to pay off part of the bonds that would finance construction, but he didn't get the job done before time ran out on Katz's administration. Her replacement, Tom "Grampy" Potter, killed the stadium deal immediately upon his arrival.
Well, Grampy's gone, Vera's creepy understudy has got the city's reins, and the major league baseball folks have quieted down. So now the taxpayers are going to blow about half as much money as they would have on big league baseball, but on more minor league baseball and something that calls itself "major league" soccer. The faction pushing to have taxpayers build one new stadium and radically revamp another for these teams is now seeking to commandeer the 2003 state law, which although never used remains on the books. State Reps. David Hunt and Tobias Read have introduced a bill that would substitute professional soccer for professional baseball as the beneficiary of that state largesse. A first hearing on the switcheroo proposal is set for Tuesday.
I supported the baseball stadium bill -- I still think it would be great to have genuine major league baseball in Portland someday -- but there's a big difference between that and what passes for "high-level" pro soccer in the United States. More importantly, it ain't 2003 any more.
The soccer stadiums proposal is a raw deal for taxpayers, for the benefit of a rich, rich man, at a time when we're closing schools early and can't fix the potholes. Hunt, Read, and anyone else who plays along ought to have their heads examined, and they ought to be held accountable come next election (when Hunt might be angling for governor). (Co-sponsors are Representatives Scott Bruun, Chris Edwards, Arnie Roblan, and Mike Schaufler, and Senators Richard Devlin, Rod Monroe, and Frank Morse, apparently all "at the request of Portland Timbers.")
At this point, the right thing to do would be to repeal the baseball financing statute, not expand it.
By the way, is anyone paying lobbyists to push this bill in Salem? If the city weren't, I'd be surprised. The Paulson family gets you coming and going.
In discussing the fiscal calamity that the City of Portland's massive debt load seems likely to cause eventually, we have been referring to it in a shorthand way as a "municipal bankruptcy." Our thought has been that when the monthly payments on the city's debts become too great for it to pay -- and with huge pension obligations on top of too many bonds outstanding, that day will almost certainly come -- the city would do what Vallejo, California is doing, declare bankruptcy under the federal bankruptcy laws. There is a chapter of the bankruptcy code specifically designed for local governments -- Chapter 9 -- and we have surmised that the city will eventually wind up in a Chapter 9 proceeding.
Bankruptcy can be a good thing for a troubled debtor -- just ask the Pacific Northwest religious order of Jesuit priests, who this week invoked bankruptcy to dissuade priestly sex abuse victims from pursuing down to the last dollar their damage claims against the order. In a bankruptcy, the people who are owed money get paid something, but the payout is usually a day late and many dollars short. An honest debtor gets to walk away from part of what it owes, and quite often it gets to continue operations. Some or all of the creditors wind up grinding their teeth -- just ask the pilots of an airline that went bankrupt how they made out on the pensions they had earned before the bankruptcy.
Anyway, a legal-beagle reader out there has been pestering us for a little while now to stop talking about Portland declaring bankruptcy, because, he says, Oregon municipalities aren't allowed to invoke bankruptcy protection. The other day, he wrote us and said:
Last time I looked, Oregon cities were not eligible for Chapter 9. Bankruptcy law says that if state courts can't adjust the debts of cities, neither can federal courts. An Oregon Supreme Court case from the last big depression said state courts can't adjust city debts; it violates separation of powers.
But who knows what the current Supreme Court would say?
We have never considered the prospect of an insolvent debtor not being able to declare bankruptcy and rearrange its debts. Bankruptcy has always been explained to us as a necessary evil, because without it various creditors would be foreclosing and seizing assets left and right, making it impossible for the debtor to continue operating and ever get back on its feet. The ensuing chaos would be unfair to the creditors as a whole as well as to the debtor and its owners. There are no debtor's prisons in the United States, but without bankruptcy, it has been suggested, bad things can happen to everyone surrounding an insolvent borrower.
If our reader's right and Oregon cities can't go bankrupt, what will happen if Portland's obligations to pay pensions and bonds make it impossible to run basic services at even a minimal level? With the state's constitutional property tax limitations in place, the city can't raise property taxes above a certain level to keep everything going. Will it simply shut down current operations, and use all property tax collections to pay police retirements and debt service on bonds? Which of those creditors would have priority? And if people aren't getting municipal services, how long will they keep paying their property taxes?
It would be an interesting scenario, to be sure.
So, is the reader correct about this? To our eye, untrained in bankruptcy law and not all that expert on the Oregon Constitution, he may or may not be. The case to which he is probably referring is Enterprise v. State, a 1937 decision involving that picturesque city in the northeastern corner of Oregon. The 1933 Legislature had set up a system whereby a city in default on its debts had to submit to court appointment of an "administrator," who would have broad powers over the defaulting city's operations with the goal of getting the creditors paid off. The state's high court ruled that it would be unconstitutional to force a city's elected governing body to subject itself to that level of interference with its authority. The Supreme Court wrote:
While the administrator's duties are confined to management of the fiscal affairs of the city, his power is, nevertheless, great. He possesses the sole authority to sign its checks, warrants, etc. He possesses a veto power over its contracts. While he has no authority to discharge an elective official, he, nevertheless, has the power to fix the salary of such individual as well as authority to hire, discharge and fix the salaries of all other city employees....
It has been held too many times to require the citation of authority that the power of taxation is a legislative power -- not a function of the judiciary. Likewise, the power to fix the salaries of municipal officers, and to effect municipal contracts is entirely foreign to the judicial branch of our government. Yet this statute undertakes to clothe an officer of the courts with power to be subtracted from municipal officers and to install him in an office which may very truthfully be termed municipal dictator. By appeal from his rulings all of the quarrels of the council chamber concerning legislative and administrative affairs would be transferred to the courtroom. It would become the city hall....
I know I have called for Portland Mayor Creepy to step down, but now I see that we may be better off with him hanging in there to avoid the unemployment line. From today's Ostory on the lingering scent of scandal:
It has stymied Adams' ability to revive the idea of a proposed convention center hotel and to press his wish for fewer traffic lanes on a new Interstate 5 bridge over the Columbia River, Bragdon said....
The convention center hotel was "on life support" even before Adams took it on, Bragdon acknowledged, but added: "With the scandal, it's harder. He had a better chance before the scandal than after the scandal. These deals take a lot of time and attention and trust."
If it takes having a supreme embarrassment in the mayor's office to bring about some fiscal responsibility in this town, I say I'm with Sam.
During the Presidential campaign, we noted that then-Vice Presidential candidate Sarah Palin had not properly reported as taxable income the expense reimbursements she had received from the State of Alaska, where she is governor, for "travel" by her and her family members. (Some of the expenses were incurred for periods when she was staying in her own home.) We also pointed out that the state had violated its own policies in not withholding income tax on those reimbursements.
Now from Anchorage comes the news that the state has acknowledged the error of its ways. Palin and her husband will now have to pay back taxes on the reimbursements, plus interest, just as we said they must.
In other news, the Palin grandchild who was mysteriously hidden from public view for seven weeks since his birth over Christmas week has at last been wheeled out before the loving camera lens of Fox News. So now there are two babies, one of which is supposed to be Palin's own biological child. We remain unconvinced of the latter proposition, but best wishes to the entire family, wherever they may have come from.
Fireman Randy: Paulson stadium money will fall from sky
When it comes to telling stories that are too good to be true, you can't beat the crew pushing Portland's impending stadiums scam. For those not familiar with this one, let's recap to set the scene. It's a Sunday doubleheader of government waste. We're going to spend $100 million or so of public money to build not one but two new stadiums for minor league sports: a brand new stadium for minor league baseball (a chronically underperforming institution that we already have), and a radical reconfiguration of PGE Park for a slightly higher version than we currently have of U.S. professional soccer, which calls itself "major league" but by any realistic international standard is a cut above bush.
This while we all teeter on the edge of a depression, mind you.
The first whopper that the proponents of the stadiums deal tried to sell the city's taxpayers, last summer, was that the bonds that paid for the most recent re-do of the old Civic Stadium (in 2001) were almost paid off. That was a well documented lie, for which neither an explanation nor an apology has ever been offered.
Now that at least one member of the somewhat demoralized City Council has signaled that he is coming to his senses about the ludicrously bad timing of this boondoggle, another tall tale is apparently needed to save the day. And in the Trib yesterday, we got it, all right, with Commissioner Randy "Pele" Leonard doing the damage:
Leonard assures that city or state tax monies wouldn’t be used for the stadium construction projects, despite what opponents have continued to suggest.
O.k., let's see, Pinocchio. Little Lord Paulson and his unnamed partners are offering no private money for the construction -- none. So that means all the construction funds will be public funds. Maybe I am missing something, but aren't most public funds ultimately tax revenues? Certainly there isn't going to be enough rent from these facilities to pay down high eight figures of debt at the interest rates they're charging these days. The debt service would be many millions of dollars a year -- not to mention the $27 million we're still in the hole for for the last go-'round at Civic Stadium.
If there aren't going to be any city or state "tax monies" involved, then besides rent, that leaves handouts from the feds, the county, or Metro. We haven't heard a peep from any of them about volunteering to pay the $85 million (the liars' budget estimate) for these two pork projects, have we? And if they're not going to be paying, then who is?
I guess if the city borrows all the money from Paulson's uncles at Merrill Linchpin and pays it back later, that's not "city tax monies" in Randyspeak. Perhaps the good fireman would like to clarify his remarks by presenting some serious financial projections, or otherwise leave the future fibs to Paulson and his hired p.r. guy, Don "the Don" Mazziotti.
Meanwhile, it's pretty clear what the game plan is here. The city will slap together some sort of half-baked "commitment" in the next few weeks -- enough to get the bush league soccer commissioner in New York to turn off the car wash machine for a half hour and declare with great fanfare sometime this spring that yes! Yes! You lucky devils in Portland, Are-a-gone, you! You! Are going to get! A "major league" soccer franchise! Just like in Harrison, New Jersey! There'll be some big rally or other in downtown Portland -- maybe the Pink Martini guy will sing a song, the mayor will French kiss the team mascot -- and from that point on The Franchise will be held up as some priceless asset that we just can't afford to let go of.
Shortly thereafter, some architect desperate for work will produce a few drawings of the new stadiums, both of which will be pronounced super duper triple-LEED sustainable, with bioswales, windmills, and a methane recycling system for the chili dog stand. At which point Portland Monthly will interrupt its repetitive listings of the top 100 plastic surgeons in Portland long enough to endorse the deal, and Randy Gragg of Spaced magazine will gush about the zinc-clad beauty of the design, with a sneer toward the people who will pay for it. The Oregonian will continue its Pulitzer-worthy coverage with headlines like "Portlanders say they want new stadiums, but also worry about food riots."
By this time, the city will have run out on the QT and blown a bunch of money on consultants, planners, finance weasels, etc. (Already the city has hired a consultant, supposedly to check Paulson's projections. Gee, I hope it isn't the group that Vera and Sam the Tram hired to go over the numbers on the last, disastrous PGE Park deal.) Pretty soon, Fireman Randy will stand up and announce, "We've spent millions on this -- it's too late to turn back now!" It'll be the same straight-faced spoof as in his notorious Adrian Chen video, except that no one will laugh at the end.
They'll draft up some kind of contract in which it looks like a Paulson shell company is on the hook for part of the debt; there'll be a ticket tax and a hot dog wrapper surcharge; the state will give up the income taxes on the soccer players' salaries, yada yada yada. But the city will wind up guaranteeing tens of millions, just as it did on the private theater company's debt for the Armory deal. And in the end, the taxpayers will wind up footing the bill when the soccer league, The Franchise, or both, inevitably fold up the tent and go under. This is what is known as a "public-private partnership."
Amanda Fritz will then preach to us that, speaking as a psychiatric nurse with decades of experience, she thinks we need to forgive Paulson. Hoffman Construction or some other denizens of the Arlington Club will have banked a nice multi-million-dollar profit on the project, which will keep the downtown business set from raising too much of a stink about it. Somewhere in there, there ought to be a commission for the Portland Family of Funds (Don Mazziotti, board member). All told, another small step for City Hall, another giant leap toward Chapter 9. Go by streetcar!
If a car full of gang-bangers at Portland's Lloyd Center mistakes you for a rival gang member and shoots to kill you, leaving a bullet in the lining of the jacket you are wearing, does that make you a "bystander"?
It looks as though the condo bunker that was set to crowd out all light and air on the corner of NE 15th and Hancock here in Portland has been scrapped. Rather than chop one story off the building, which would have made it palatable to the city, the developer has thrown in the towel. The property's now listed for sale.
Given the state of the economy, the Irvington land use crew who fought this monstrosity tooth and nail deserve a thank-you card from the real estate sharpie with the dollar signs in his eyes, and from his partners. Now if only someone can come forward and spruce up what's there, leaving the grass, the trees, and the sky.
An alert reader writes to tell us that in addition to all the announced service changes that have Portlanders shaking their heads, Tri-Met is also quietly planning at least one other. Apparently the Number 10 bus, which runs down NE 33rd Avenue and Broadway on its way downtown, is going to terminate at the Rose Quarter. And so now one will have to make a transfer just to get from, say, Grant High School to downtown.
We just got our car tuned up yesterday. Good thing -- it appears we'll be using it more in the near future.
Meanwhile, we've read some grousing about how Tri-Met's comment process insulates its board of directors from the outraged riding public. As a public service, we've tried to dig up some e-mail addresses for the Tri-Met directors so that readers can express their views to the transit agency's leadership more directly. We're not sure whether these addresses are any good, but they are worth a try (just click on the names) if you are interested. If they don't work, you may want to try the format "LastnameF@trimet.org," where "F" is the person's first initial. That's what we had to go with on several of these:
Those Pearl District handouts are really for the poor
Interesting "news story" in the O about the lawsuit that's got Portland's "urban renewal" excesses in check, at least temporarily. The headline and the lead paragraph make clear that the O thinks these legal actions are bad, bad, bad. They "have stalled efforts to help homeless people and create a new employment district downtown." What -- no references to "the children"?
The fact of the matter is that Portland, led by Opie Sten but aided and abetted by Fireman Randy, Mayor Creepy, and Big Pipe Saltzman, has been abusing the urban renewal laws, insisting that places like the Pearl District are "blighted" so that more public funds can be handed out to the favored developers that are turning the city into Fake New York. "[T]hey took the River District hostage and poor people are paying the price," Nick the Fish is complaining. If worthy projects suffer as a result of the mere enforcement of the laws as written, there is no one to blame but the city commissioners themselves. And besides, the coming Post Office boondoggle is likely to be another pile of worthless junk, anyway.
After several days' delay for no apparent reason, the State of Oregon has released the final pricing numbers on that $229 million of new loans that it took out last week. The yields on the bonds ranged from 1.29% on $7.2 million of double-tax-exempt payable in May 2010, to 5.435% on $435,000 of federally taxable, state-exempt bonds due in 2023.
As noted here last week, long-term double-tax-exempt issues bore some hefty yields. $16 million due in 2029 (20 years from now) will pay 5%; $19.1 million due in 2033 (24 years from now) will yield 5.125%; and $21.5 million due in 2039 (30 years from now) will yield 5.27%. Quite a nice return for the fat cats -- and not so good news for future taxpayers.
Ah, but why stop there? The state has announced that it will be borrowing another $147 million in a couple of weeks for college dorms and instructional facilities, and another $350 million the week after that for road and bridge modernization. That will make $726 million in new borrowing in less than a month -- quite a credit card bender.
Meanwhile, here's a story that confirms the sometimes shadowy nature of public finance. Money gets borrowed for a specified purpose, but then sits around unspent. That could never happen around Portland -- could it?
While Portland buzzes about impending Tri-Met service cuts to this part of town and that, a reader writes in to remind us that a good number of the transit agency's routing decisions have to do with extending its tentacles around local businesses to exact its dreaded payroll and self-employment taxes, which just increased to a record-high 0.6718 percent of wages or self-employment income. When the payroll tax was first enacted, it applied to any employer in the tri-county area -- Multnomah, Clackamas, and Washington -- but many businesses complained that they got no benefit out of their tax dollars. It was pointed out that the summit of Mount Hood was in the Tri-Met taxing district, and there was no bus up there.
The state changed the rules so that nowadays, the Tri-Met territory includes only two components: (1) all territory located within the boundaries of the Metropolitan Service District, and (2) any territory located within 2½ miles of a bus or train route. If you look at the Tri-Met service map and compare it to the Metro district map, you see a few bus routes that run waaaaaay out into the boonies, even beyond where Metro has jurisdiction. Check out that beauty in the southeast running all the way down to Estacada, for example -- I believe it's the 31. On either side of that bus line -- including on the other side of the Clackamas River -- Tri-Met gets payroll and self-employment taxes for 2½ miles.
And so when it comes time to cancel bus lines, you know for darn sure a few lines that they won't be cutting, no matter how wimpy the ridership. As our reader tells it:
Attached is part of the bus schedule for the Number 84 bus that comes within two blocks of my home. If I were to use this bus to catch MAX to go downtown everyday, I would have to catch it at 5:37am and return at either 3:15pm or 6:20pm. There is no service on the weekend.
I would like to say, I have never seen anyone ride this bus, but the truth is, I have never even seen the bus in my area. If any route should be cut, this one stands out to me.
I think the only reason Tri-Met keeps this line is to extend the Tri-Met boundary to catch some additional payroll tax for the businesses in my area. Since I work out of my home, I am within the range of the boundary and have to pay the self-employment tax to Tri-Met. Actually, I would still have to pay the tax even it this particular line were to go away, since the Number 80 bus has a stop about a mile away....
I should let you know that I am a frequent MAX rider. I usually drive to the Gresham park-and-ride stop where a gentlemen about my age was severely beaten last summer. For the most part, I have not had many problems on MAX except for the all too common rude language and the music you can almost hear (but not quite) from the iPods.
Buffalo plane crash may not have been due solely to ice
... 26 seconds before the recordings were stopped by the impact, a warning alerted the crew that the plane might lose lift and fall out of the sky. An automatic system tried to push the nose down to gain airspeed, and yet the nose climbed to 31 degrees, far steeper than the steepest normal climb. Suddenly, the nose plunged to a down angle of 45 degrees, almost like a fighter plane breaking off to dive. Then it rolled right, beyond 90 degrees, all the way to 106 degrees....
[T]he crew had turned on the plane’s sophisticated de-icing system shortly after leaving Newark airport on the flight to Buffalo, long before the crash.
The upcoming cuts to service on Tri-Met are a drag. The 33 Fremont is among the lines that are going to die off completely. As a Fremont rider since the days of the old 41, I'll miss it -- although it hasn't been nearly as useful as it used to be once they insisted on looping it around on Russell.
Anyway, a reader wrote me other day asking how the transit agency could be cutting service when it's more popular, and more people are depending on it, than ever. The answer is simple: Tri-Met loses money on every passenger. It's paid for by payroll taxes and self-employment taxes imposed on everyone who works within a certain distance from a bus line. When unemployment goes up, Tri-Met's revenue goes down, and it can't afford to do what it did when employment figures were healthy.
The current funk brings into sharp focus a different question: How can we be talking about massive new investments in streetcars and light rail trains when we won't have the money to operate them? As we've noted here and elsewhere before, Uncle Sam likes to hand out money to build these things, but it never offers a penny to operate them. Streetcars down MLK and Chávez, and light rail to Milwaukie, sound cool, until you realize that they mean cancelling perfectly good old bus lines like the 33.
At the risk of sounding like the right-wing transit haters, go ahead and make the cuts if you must, but put the pipedreams on hold at the same time. This is no time to be building shiny toys, even with magic stimulus money.
The argument that if newspapers go bust there will be nobody covering city hall is true. It’s also true that corruption will rise, legislation will more easily be captured by vested interests and voter turnout will fall.
As for the nature of the bailout, President Obama pointed to Sweden's resolution of its bank crisis as a solution. ''They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again,'' he told ABC News on Tuesday. ''So you'd think looking at it, Sweden looks like a good model.''
Mr. Obama then suggested that it wouldn't work in the United States, partly for cultural reasons. But a broad range of experts believe that some variation of nationalization is the only way to revive the banks quickly without squandering vast amounts of taxpayer dollars. Even the managing director of the International Monetary Fund suggested that Washington think of the Swedish model.
America's horror of ''nationalization'' could be defused by handing out shares to all American households. President Bush used to talk about building an ''ownership society.'' Well, giving shares in big banks to all American households would be a terrific way to do that.
For many Americans, it would be the first time they directly owned stock -- and, finally, something good could come from the banking Bust Bowl of 2009.
Bad news arrived in the mail for some Oregon National Guard troops recently. They had been on a mission escorting Dick Cheney's old company, KBR, which was inspecting oil facilities for the Pentagon in Iraq a while back. The soldiers are learning now that they were likely exposed to carcinogenic chemicals while the KBR guys, who reportedly knew about the hazards, wore protective gear.
The ill-fated Waterfront Pearl condo monstrosity north of the Broadway Bridge is reportedly in foreclosure. Last summer, the builder, Hoffman Construction, slapped construction liens on the two condo towers. Now comes the news that one of the two main construction lenders is in court seeking foreclosure. A reader writes:
Saw this in [yesterday's] Daily Journal of Commerce... thought you might be interested....
MACQUARIE BANK LIMITED vs WATERFRONT PEARL LIMITED PARTNERSHIP and GRANCORP HOLDINGS LLC et al, Judicial foreclosure of deed of trust. Relief sought: $18,434,000.
Plaintiffs attorney: Matthew A. Goldberg. Case No. AO902-01727
To developer Paul Mayer from Vancouver, B.C., we say farewell, and please tell all your condo-building buddies how it went in Portland.
Given his embarrassment when the creepy mayor of Portland recently returned to City Hall after his scandal-imposed exile, only to find himself locked out, you might have thought they would word this a little differently.
Fish on Paulson stadiums deal: The timing doesn't seem right
Portland Commissioner Nick "the" Fish has responded to our post from the other day about the insanity of spending $100 million on baseball and soccer stadiums while the wheels are coming off the city's finances. He writes:
I'm a big soccer fan. As a proud soccer dad, I regularly attend University of Portland Pilots soccer games with my daughter. I think Major League Soccer would be a great fit for Portland.
Given the current state of the economy, however, I am concerned that Mr. Paulson's proposal relies on substantial public investment ($85 million dollars), including revenue bonds and tax increment financing.
In these tough times, when many Portlanders are facing home foreclosures and job loss, I believe the City needs to focus on maintaining basic services and taking care of our most vulnerable citizens.
I'm also concerned about potentially negative impacts of a new stadium on the livability of the Lents neighborhood. The proposed baseball stadium would require as many as 3,000 parking spaces and displace community amenities, including sports fields for baseball, football, softball and volleyball, as well as picnic areas and a covered concert space. The current proposal does not adequately address replacement of these essential community resources.
Sports franchises have not always enjoyed a stellar track record here in Portland. Despite optimistic revenue projections, the last PGE Park owner defaulted on its payments to the City. As a result, the City is still paying off $28 million in debt on the 2001 renovations.
I am eager to find a way to bring a new business like Major League Soccer to Portland. However, I am not yet convinced that now is the right time to invest scarce public dollars in new stadiums.
I see that Portland's "Street Renaming Historian Panel" is meeting this morning. This is the group that's going to report to the City Council on whether the streets that are proposed to be renamed after César Chávez have such historic significance that their existing names shouldn't be changed. They are Grand Avenue, East 39th, and Broadway.
Today's confab is supposed to be about "process and procedures" for the study. At last report, the members of the group, chosen by Mayor McShame himself, were Willamette law prof Gil Carrasco; Oregon National Guard general Mike Caldwell; and Kathy Fuerstenau, president of the Cully Neighborhood Association. Apparently none of the three are historians in their own rights, but they will be advised by a group of professional historians.
As we've mentioned here earlier, the folks who are pushing for a Chávez Boulevard have gamed the system by refusing to come out and say which street they want to rename. By keeping three different streets in play until late in the process, they're giving the inevitable opposition that much less time to get up in arms and organized, the way the angry neighbors did when they beat down an earlier proposal to rename Interstate Avenue after Chávez.
Since the city's rules allow only one application to be considered each year, the question arises whether there are currently three Chávez applications pending, which would be illegal, or only one. The city attorney says it's only one; no one has challenged the process so far, and so the beat goes on.
It's been 3½ months since the renaming proponents submitted their signed petitions to the city. How long are they going to wait before they finally let us know which street they are actually going to target? Will the matter get all the way to the City Council with all three streets still in the running, and the council can then pick one of the three? Perhaps today's meeting will shed some further light on this.
Those $220-million-plus of State of Oregon bonds that we wrote about the other day have sold, and State Treasurer Ben Westlund is crowing about what a success the sale was. But some of the interest rates that the state is going to have to pay seem pretty hefty:
The orders from Oregon "retail" buyers sought various maturities and yields, based on the duration of the debt. Those range from one to 30 years, with yields ranging from 1.68 percent for certificates of participation maturing in 2011 to 5.27 percent for COPs maturing in 2039.
Since most of the bonds are double-tax-exempt -- interest isn't taxable for state or federal income tax purposes -- a 5.27% interest rate on a 30-year loan is high. Assuming that an investor's combined tax rate is 35%, that's the equivalent of an interest rate of 8.11% paid on a taxable bond.
Westlund's office isn't disclosing anything more about the yields for a few more days, but while we cool our heels waiting for the numbers that the Merrill Lynch types already have, we have this to ponder:
The next opportunity to invest in State of Oregon bonds will come in the week of March 2, when $147 million in general obligation bonds will be issued to pay for higher education projects....
The Legislature and Gov. Ted Kulongoski last week approved a $175 million "Go Oregon" stimulus package, which will pay for deferred maintenance projects. The bond offering this week includes $91.5 million of the stimulus pricetag.
In addition to that new package, the State is already scheduled to sell roughly $1 billion in several bond sales this winter and spring for projects approved by legislators in 2007 and 2008, including $58 million for a new statewide emergency communications system, $34.8 million to fund a portion the new state mental hospital in Salem, and $350 million for road and bridge improvements.
The remaining $83.5 million of the stimulus package will piggyback on those other sales.
I see that Portland's men's room mayor has resurrected his website from his commissioner days. Good. May the state investigators who are checking into his conduct for crimes find it a fruitful source of information.
While the collective nervous breakdown known as Mayor Sam Adams continues to plague Portland, the anonymous committee that claims to be running the beginnings of a grass-roots recall campaign against him has been making some waves. The other day they sent around a press release trying to put Commissioner Amanda Fritz, an unabashed apologist for Creepy Sam, on the spot. Since the taxpayers of Portland spent hundreds of thousands of dollars on her two City Council campaigns, the group said, the least Fritz could do would be to put a vote of confidence-or-no-confidence in the mayor before the City Council. Presumably this would open the door for more public testimony on why our sad leader should be forcibly removed from the office he stole by lying.
People are starting to get tired of this "anonymous committee" nonsense. Even folks like I, who want nothing more than to rid our local government of Adams and his ilk, think it's about time to get serious about who is really going to lead the charge against the teeny-bopping mayor when the opportunity for a recall officially opens on July 1. And more importantly, it's time to figure out who is going to pay for it. Websites are cheap, and anonymous blogs are even cheaper. Neither will accomplish the fumigation of Sam the Scam.
In the last day or so, at least two names have floated to the surface from the anonymous recall committee. One is Jasun Wurster, identified as a computer consultant and a spokesman for the recall group. Another spokesperson is Ally Powell, identified as "a Portland Community College student and single mother of three." I admire Wurster and Powell's initiative, but if that and a Facebook page is all they've got by the time summer gets here, the Adams dark ages are going to last a full four years, and perhaps even beyond.
To wrest his ill-gotten office from Adams is going to take money, and lots of it. He'll be bankrolled against any recall effort by some powerful moneyed interests. There are a number of folks who will defend him to the death simply because he's gay. He'll also be able to spend the next six months cutting deals with unions and developers who might be persuaded to help him monetarily in defending himself. Even the Sho Dozono downtown business set may be hesitant to throw dollars into a recall campaign against Creepy, because they may figure out that they'll get more favors out of a weakened Adams than they would from a stronger replacement. Certainly the reappearance of guys like Don Mazziotti, Bill Scott, and Jim Francesconi on the City Hall scene indicate that the smell of public money has not lost its attraction to members of the meta-Goldschmidt machine.
And so if Portland wants to cure itself of Sam-ism, some prominent people, with money in hand, are going to have to step up at some point soon. Although nothing official can happen until July 1, one would think that serious players would need to get together starting no later than the first of April to start a serious organizational and fundraising effort. Until then, anyone who thinks a viable recall effort is currently under way would be engaged in self-deception. If anything, the anonymous committee may at this point be doing more harm than good.
I write you because you're the only one on the Portland City Council with a lick of common sense or credibility left. Nick, we read this, and we read this -- published the same day. What kind of mushrooms are they serving in City Hall?
If that's all there is, my friend, then let's keep dancing
Well, Obama's version of the bank bailout is going over on the same lead-balloon-like trajectory as Henry Paulson's. The Dow is down well below 8,000, and the 7,000 bottom I had been thinking about may be optimistic. We could wind up at half that.
It's not hard to see why. Everybody knows that the latest Washington "stimulus" product will only postpone, and not avoid, serious fiscal calamity for America, if not the world. It's full of all sorts of tax giveaways that aren't going to help much. Big tax credits for buying a house or a new car. Loosening up of a goodly number of rules that were designed to prohibit corporate accounting shenanigans -- now the shenanigans wil be formally recognized. A $300 check to everybody on Social Security. The welfare lines are growing and our infrastructure is crumbling, and this is the best we can do?
And of course, more hundreds of billions of federal dollars for banks that deserve to fail, and many of whom eventually will. More refusal to acknowledge that the country's financial underpinnings are resting on sand. "Don't actually write down that stinkbomb portfolio -- just walk around it." More insistence that private interests and their CEOs make money every time future taxpayers' bank accounts are raided. More going along with the captains of industry and finance, who can't let go of their Lear jets and houses in the Hamptons.
It's time for the Democrats to start acting like Democrats. Maybe we shouldn't nationalize the banks and set up a new army of uniformed Works Progress Administration road-building crews. But we need to do something a lot more like that, and a lot less like Paulson World. Unfortunately, the Clintonistas who have re-established themselves at the helm aren't a whole lot different from the Paulson people. And so we continue to hemorrhage money with no real rhyme or reason.
I'm a Democrat, and anything is better than Bush and McCain, but pardon me if I don't really want to have a house party to rally behind this.
Interesting piece in the Times the other day about the effects of the collapse of the real estate market on the assets of Sam Zell's gigantic old Equity Office Properties empire, which included some properties in the Portland area. Blackstone Group bought them all in 2007, and flipped quite a few of them quickly before times got really hard.
Now the San Francisco real estate firm Shorenstein Properties is holding some of the bag; it bought 46 Equity Office buildings in the Portland area from Blackstone. Things are apparently worse in other parts of the empire, but even on Kruse Way in Lake Oswego, vacancy rates are rising as a brand new Shorenstein building is getting set to come on line. Not the best of timing, one would think.
Meanwhile, down in the state capital, we have a new state treasurer, and he's heading right out to the usual underwriter suspects to peddle around $229 million of bonds this week. The state will be borrowing some of the money on a 30-year term. Most of the loan will bear interest that is tax-exempt for both state and federal income tax purposes, but a small portion of the interest will be taxable for federal purposes only. For what it's worth, and that ain't much, the state expects that Moody’s, Standard & Poor’s and Fitch Ratings will assign ratings of Aa3, AA-, and AA-, respectively, to the bonds.
The official bond sales document is here, and it comes from the state's debt management gurus, whose main page is here. Scrolling down the first page of the bond document, it sure makes you feel secure to see that Merrill Lynch name there, doesn't it?
But I digress. What will the new money be used for? The biggest single project, at $73.6 million, is a new "wireless interoperability network" for the state police. Next in size are $55.3 million for deferred maintenance at state universities; $34.8 million for a new state psychiatric hospital; $34.6 million for deferred maintenance at a number of state agencies; and $17.1 million for deferred maintenance, a training facility, and design work in the state prisons. The full breakout is on page 20 of the bond sales document.
On a quick run-through, it looks to me as though the state already has $11,368,887,000 of long-term debt outstanding, and that is assuming that the state employees' pensions are all adequately funded. (See page 99.) With this week's new bonds, the debt level will stand at about $11.6 billion. The state's population currently sits somewhere around 3.82 million, and so the state debt load works out to $3,036 per resident.
If you live in Portland, of course, the city's debt per capita is more than three times that much ($9,300 at this writing). But don't forget, for that you get to go by streetcar.
Portland commissioner Nick "the" Fish has a busy day ahead: Mark Edlen and Sustainable Susan at 11, then Bruce Warner at 3:30. There ought to be enough linchpins there to accelerate the city's bankruptcy by six months.
It had been a full day of cross-country skiing -- marathon proportions, by our recent standards -- and when the kids went to bed, I crashed too. It was one of those rare fatigues that wasn't so much drowsiness as physical exhaustion. My legs and arms were pretty well played out, and so feeling the effects of a couple of celebratory ales and a great dinner, I conked out.
After a while, I dreamed that I was lounging in front of a video screen and explaining to a dark-haired woman what a big day I had had on the mountain. And then she was before me -- my father's sister, the one who had died so early. She was young and full of life. I couldn't believe my eyes, and so I opened them really wide and took her in with every bit of concentration I could muster. It was her, all right.
"She didn't die!" I said to myself. "Gosh, I'm going to be so embarrassed in front of the Mrs. I told her that this aunt had died." But I knew that that part of it was going to be all right, because the Mrs. is so good with anything having to do with family, and with all the other things that I can't keep straight.
The aunt and I talked about the fire that had recently destroyed several houses in the old neighborhood. "I know," she told me, "I stood on Mary Ann's back porch." "Did they knock the house down?" I asked, but the two of us got distracted by something else and that part of the conversation petered out.
I gave her a big, long hug. I couldn't get over how beautiful she looked, and how good she felt.
Now, I have been listening to a bunch of Bruce Springsteen's music this week, much of which seems to be about mortality lately, and so it wasn't too surprising that he was in the room, too. I get rock stars in my dreams sometimes. He and my aunt made some conversation while I was busy doing other stuff.
When I joined back into talking with her, I wanted to catch up on so many things, none of which Springsteen would be interested in. When he saw our talk resuming, he made himself busy looking at some art on the wall. By way of apology for turning the subject back to family matters, I told him, "This is an appearance," I told him, "that never comes, no matter how much you want it to."
And with that, the dream got too big for me to keep it going. The light, the buzz were overwhelming. I awoke with a start and found myself crying.
It was not possible to get right back to sleep after this sort of visitation. After a while, our five-year-old made a bathroom stop, and the light from the bathroom shone in on me. I opened my eyes, leaned over to where I could see her, and gave her a wave and a smile, which she returned.
It was at that point that I realized that what I had said to Springsteen wasn't really true. My aunt and the rest of the family do appear to me, every day, in our children. Lucky me.
The other day we got a thick envelope in the mail from the Internal Revenue Service -- always a magic moment at the mailbox -- but it turned out to be nothing too exciting. Just a set of estimated tax forms for quarterly tax payments in 2009, the first of which is due on April 15. Whew.
This would be a nonstory, except that today we got two more envelopes, with two more sets of the exact same forms in them. The IRS is always urging us to help them join the paperless world, but you'd never know it from what the Kansas City Service Center is doing:
Now the mayor of Portland has apparently gone and made the entire commissionersam.com site a password-protected "restricted area." If you're patient, however, you can still peruse parts of it on the Wayback Machine. (Just keep clicking through "Cancel" when prompted.)
As I had the impression that the site was for official city business, conducted during the mayor's former term as a city commissioner, it would be interesting to hear why it has suddenly been made private, and what it's being used for now. It's sad when you have to hide your tracks.
There is so much going on about Sam Adams and his refusal to walk away from his wet dream job and our nightmare. However, there is a solution I just realized. The answer is Nordstrom's. You know how they are renowned for taking everything back, even
merchandise that is labeled JC Penney's? Well then, let's just return ole' Sam to Nordstrom's, and to seal the deal, we won't even ask for a credit on our account.
Forbes has an interesting article up about the threat that public employee pensions pose to all of our financial futures. For folks in Portland, which is currently sporting a $2.4 billion unfunded liability for police and fire pensions alone, it is a sobering read.
UPDATE, 10:40 a.m.: And here's another scary piece on the same subject. Go by streetcar!
I got off Max at PGE Park today, and stopped to grab a Willamette Week. I’m sitting in Coffeehouse NW thinking, WW is so out of touch! This is all old news. Halfway through the paper, I stopped and looked at the date. It was a November issue – the one with the complimentary article about PGE Park and Paulson. Going back home, I found another rack by the park with the same old paper. We are talking a full stack, the plastic band still attached, but papers pulled out of it. They had obviously been stored inside somewhere.
We pay staff people for creeps like Sam Adams to use to hit on teenagers:
In 2005, [Breedlove] worked for a time as an unpaid legislative intern to Rep. Kim Thatcher, a Keizer Republican. He filed papers, answered phones and played the piano for legislators. But even people who worked with him in Thatcher's office don't remember much about him.
While working for Thatcher, he first met Adams. Breedlove says Adams later sent an aide back to collect Breedlove's phone number, and it was Adams who then called looking for him.
"An aide"? A paid city employee working for a city commissioner? Isn't that special?
The p.r. machinery in our state and local government in Portland and Oregon has grown to startling proportions. We have Water Bureau bumper sticker photo contests, official politician blogs of all sorts, and a press release a day from the state attorney general. "Kroger points out to returning Iraq War veteran that his shoelace is untied." Mayor Creepy has several p.r. people, all of whom no doubt have active accounts on jobdango.
Anyway, for the last month or so, the Port of Portland's flacks have been inviting us to "[w]arm up with an espresso while learning about Portland International Airport deicing activities during cold, wintry weather!" All right! Free coffee, and try to think fuzzy, green thoughts about where all those nasty chemicals go after they drip off the 757's. Not the Columbia River or Slough, I'm sure. The chemicals probably disappear without a trace.
We've gotten numerous e-mails about this "open house," and the Mrs. and I even got snail-mail invitations to it. Until today -- the very eve of the free espresso! When, sadly, we learned:
The Port of Portland’s open house scheduled for Thursday, February 5, 2009, on airport deicing activities has been postponed. A draft environmental assessment of proposed deicing system enhancements is currently under review by the Army Corps of Engineers and the Federal Aviation Administration.
The Port apologizes for the inconvenience and will reschedule the open house as soon as possible. Watch the Port of Portland Web site for more details.
Let me tell you, readers, I'm bummed. A winter sports fan, I was so looking forward to a nice hot beverage and a bureaucratic snow job about deicing.
City of Portland housing director Will White has been voted off the island. According to the O today, White is being shipped out in favor of some PDC types who will be taking over his responsibilities:
Under Mayor Sam Adams, the [Housing] Bureau is being reorganized and expanded and will encompass the traditional roles of affordable housing and homelessness while absorbing budget, employees and housing responsibilities from the Portland Development Commission. The PDC has traditionally funded home-ownership programs, constructed mixed-income developments and oversaw the city's tax incentives for affordable housing.
[City Commissioner Nick] Fish said the expanded bureau will not only serve the homeless and working poor, but will help seniors, disabled veterans, first-time home buyers and young families searching for housing in the city core.
The New Jersey newspaper I wrote for as a young man, The Jersey Journal, is threatened with closure again. This time, it sounds pretty real. Past announcements of this sort by the publisher have come with viable escape clauses -- "unless we cut back," "unless employees make concessions" -- but the latest statement sounds like "unless there's a miracle." Condolences to everybody at 30 Journal Square.
Where the bank TARP money is going: Not around here
Yesterday we reported that Umpqua Bank in Portland took $214.2 million of TARP funds from the feds in exchange for preferred stock back on November 14. Alert readers wrote in to say that Umpqua may have essentially been forced to take the TARP money -- it hadn't asked for it, and Hank Paulson was hot for Umpqua to take it. Reports of other banks being pressured into taking TARP handouts are not hard to find.
Poking around a little further, we see that the banks' total take on deals like these, as of a week ago, was nearly $194.2 billion (not counting assorted tens of billions going to the auto manufacturers and special friends like AIG, Citigroup, and Bank of America). Leafing through the Treasury Department's many pages of transaction listings, it's hard to find much of that dough making its way to the Pacific Northwest. No doubt that's partly because we have so few serious financial institutions left in these parts any more, but still, when you add up the Oregon, Washington, and Idaho TARP money, it's chump change compared to what's being pumped into other markets. Here is what we've been able to cull from the list:
Umpqua Holdings Corp.
Cascade Financial Corp.
Columbia Banking System, Inc.
Heritage Financial Corp.
Sterling Financial Corp.
Pacific International Bancorp
Intermountain Community Bancorp
Capital Pacific Bancorp
Whidbey Island Bank
Pierce County Bancorp
As of 1/23/09
Bottom line: Less than one-half of 1 percent of the TARP bank bailout dough spent so far has been invested in Pacific Northwest institutions.
Fireman Randy continues to push hard for the soccer stadium boondoggle being foisted on Portland taxpayers by Henry Merritt Paulson III. Randy, a self-confessed poor judge of character, will no doubt say 10 years from now, when the financial disaster is apparent, that Merritt misled him.
Gray Purcell, the Lake Oswego-based builder of such condo abominations as the "Clinton" thing that's now defiling the corner of 26th and Division in Southeast Portland, is in bankruptcy. Word has it that federal tax liens were slapped on its property last week. Does this mean these guys will stop defiling Portland now?
An alert reader who shares our interest in local financial institutions alerted us that the parent company of Umpqua Bank has released year-end financial statements, which reveal that it took $214 million in TARP money in November. The fine print about the money injection reads as follows:
On November 14, 2008, in exchange for an aggregate purchase price of $214.2 million, Umpqua Holdings Corporation issued and sold to the United States Department of the Treasury (U.S. Treasury) pursuant to the TARP Capital Purchase Program the following: (i) 214,181 shares of the Company's newly designated Fixed Rate Cumulative Perpetual Preferred Stock, Series A, no par value per share, with a liquidation preference of $1,000 per share ($214,181,000 liquidation preference in the aggregate) and (ii) a warrant to purchase up to 2,221,795 shares of the Company's common stock, no par value per share, at an exercise price of $14.46 per share, subject to certain anti-dilution and other adjustments. The warrant may be exercised for up to ten years after it was issued.
In connection with the issuance and sale of the Company's securities, the Company entered into a Letter Agreement including the Securities Purchase Agreement - Standard Terms, dated November 14, 2008, with the U.S. Treasury (the "Agreement"). The Agreement contains limitations on the payment of quarterly cash dividends on the Company's common stock in excess of $0.19 per share, and on the Company's ability to repurchase its common stock. The Agreement also grants registration rights to the holders of the Series A Preferred Stock, the Warrant and the common stock to be issued under the Warrant and subjects the Company to executive compensation limitations included in the Emergency Economic Stabilization Act of 2008.
The Series A Preferred Stock will bear cumulative dividends at a rate of 5% per annum for the first five years and 9% per annum thereafter, in each case, applied to the $1,000 per share liquidation preference, but will only be paid when, as and if declared by the Company's board of directors out of funds legally available therefor. The Series A Preferred Stock has no maturity date and ranks senior to our common stock (and on an equivalent basis with the Company's other authorized series of preferred stock, of which no shares are currently outstanding) with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company.
Meanwhile, the statements also reveal some of the details of Umpqua's takeover of the deposits of the failed Bank of Clark County a couple of weeks ago:
On January 16, 2009, the Federal Deposit Insurance Corporation (FDIC) placed the Bank of Clark County, Vancouver, Washington, into receivership. Umpqua Bank assumed the insured non-brokered deposit balances from the FDIC, which totaled $183.9 million, at no premium. In connection with the assumption, Umpqua Bank acquired certain assets totaling $23.2 million, primarily cash and marketable securities, with the difference of $160.9 million representing funds received directly from the FDIC. Through this agreement, Umpqua Bank now operates two additional store locations in Vancouver, Wash. The agreement includes the ability to purchase optional loan pools for up to 30 days following closing. In addition, the FDIC is reimbursing Umpqua Bank for all overhead costs related to the acquired Bank of Clark County operations for 90 days following closing, while Umpqua Bank will pay the FDIC a minimal servicing fee per assumed deposit account.
Putting the two events together, it's clear that even the white knight banks that are being selected to take over the tanked ones need bailout dough. Not a good harbinger.
A reader sent us an image file yesterday that brought back fund memories. Remember when Fireman Randy used to turn in campaign finance reports that were written out by hand? And remember the fall of '03, when he was first running for Portland City Council? Man, that report was full of gifts from all the usual developer suspects.
Including this one:
We'd live the life we'd choose, we'd fight and never lose...
Watching spendthrifts like the City of Portland get in further and further over their heads with debt is depressing, but observing the bond rating agencies that these borrowers hire to evaluate their credit is maddening. Since they get their fees from the borrowers, these agencies have a strong incentive to paint as rosy a picture as possible. Now that the market has been burned, big time, by faulty ratings, it seems that investors aren't following these "expert" shills' opinions too closely these days. As the Times reports today:
The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor’s, the credit rating agency.
The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.
Or to put it another way, the market has figured it out: Don't believe everything that S&P and its ilk tell you.
The Federal Trade Commission is putting on hold its effort to unwind the Whole Foods takeover of Wild Oats, while the two sides discuss a possible out-of-court resolution of the government's antitrust claim against the high-end grocery purveyor.
Attention, FTC: I'm looking for at least a free rotisserie chicken out of this!
We continue our series of quarterly snapshots of the operating results at OnPoint Community Credit Union -- a barometer of the economic times in Portland's neighborhoods. The fourth quarter was, in a word, brutal. The year 2008 ended with the institution's delinquent loans more than four times what they were at the end of 2007.
The whole sad story, as officially reported to the National Credit Union Administration, is in this Excel file. Here are the categories of numbers that we've been following with our untrained eye over the past year or so:
Quarterly increase (decrease)
12-month increase (decrease)
Federal agency securities
Total reportable delinquency - total delinquent loans
Total reportable delinquency - indirect lending
Total outstanding loan balances subject to bankruptcies
Ratio of delinquent loans to total loans (percent)
Ratio of total delinquent loans to net worth (percent)
Delinquent loans are those delinquent for two months or more.
Year-to-date net income for the quarter ended December 31 was $22,568,772, down 14.06% from the same quarter last year ($26,262,488). For the third straight quarter, deposits fell, from $2,221,206,727 to $2,191,035,640 -- a 1.36% drop. Deposits a year earlier were $2,259,994,005, and thus for the year deposits fell 3.05%.
It is a bit of a blogging tradition to announce traffic milestones. We remember the days when we'd do this with every 10,000 unique visits to this blog. Nowadays, we get that many visits every few days, and so we save the self-congratulation for bigger numbers.
Our last big odometer turn, at 2,000,000, came on January 18 of last year. And so it took just over a year to bring in a million unique visits -- it averages out to more than 2,638 unique visits a day. The previous million arrived over 16 months, and the first million showed up over more than four years.
Anyway, many thanks to our readers and commenters for making this such a fulfilling sideline. It was a fun year, at least for us.
It's not just the tax dodging that should have progressives wondering whether Tom Daschle's the right guy to be the nation's "health czar." It's also all the money he's been raking in from the fat cats:
As a politician, Mr. Daschle often struck a populist note, but his financial disclosure report shows that in the last two years, he received $2.1 million from a law firm, Alston & Bird; $2 million in consulting fees from a private equity firm run by a major Democratic fundraiser, Leo Hindery Jr. (which provided him with the car and driver); and at least $220,000 for speeches to health care, pharmaceutical and insurance companies. He also received nearly $100,000 from health-related companies affected by federal regulation.
What did he have to offer for that kind of money, other than influence? Let him stay on with the rich suits, and let's find somebody else for the cabinet.
Lugana, San Benedetto 2013
Canoe Ridge, Cabernet, Horse Heaven Hills 2011
Arcangelo, Negroamaro Rosato
Vale do Bomfim, Douro 2012
Portuga, Branco 2013
Taylor Fladgate, Late Bottled Vintage Porto 2009
Pete's Mountain, Pinot Noir, Kristina's Reserve 2010
Rodney Strong, Cabernet, Sonoma 2012
Bookwalter, Subplot No. 28, 2012
Coppola, Sofia, Rose 2014
Kirkland, Napa Cabernet 2012
Trader Joe's Grand Reserve, Napa Meritage 2011
Kramer, Chardonnay Estate 2012
Forlorn Hope, Que Saudade 2013
Ramos, Premium Tinto, Alentejano 2012
Trader Joe's Grand Reserve, Rutherford Cabernet 2012
Bottego Vinaia, Pinot Grigio Trentino 2013
Villa Antinori, Toscana 2011
Pete's Mountain, Elijah's Reserve Cabernet, 2007
Beaulieu, George Latour Cabernet 1998
Januik, Merlot 2011
Torricino, Campania Falanghina 2013
Edmunds St. John, Heart of Gold 2012
Chloe, Pinot Grigio, Valdadige 2013
Edmunds St. John, Bone-Jolly Gamay Noir 2013
Kirkland, Pinot Grigio, Friuli 2013
St. Francis, Red Splash 2011
Rodney Strong, Canernet, Alexander Valley 2011
Erath, Pinot Blanc 2013
Taylor Fladgate, Porto 2007
Portuga, Rose 2013
Domaine Digioia-Royer, Chambolle-Musigny, Vielles Vignes Les Premieres 2008
Locations, F Red Blend
El Perro Verde, Rueda 2013
Chateau Ste. Michelle, Indian Wells Red 2010
Chloe, Pinot Grigio, Valdadige 2013
Edmunds St. John, Bone-Jolly Gamay Noir 2013
Kirkland, Pinot Grigio, Friuli 2013
St. Francis, Red Splash 2011
Rodney Strong, Canernet, Alexander Valley 2011
Erath, Pinot Blanc 2013
Taylor Fladgate, Porto 2007
Portuga, Rose 2013
Domaine Digioia-Royer, Chambolle-Musigny, Vielles Vignes Les Premieres 2008
Locations, F Red Blend
El Perro Verde, Rueda 2013
Chateau Ste. Michelle, Indian Wells Red 2
If You See Kay, Red 2011
Turnbull, Old Bull Red 2010
Cherry Tart, Cherry Pie Pinot Noir 2012
Trader Joe's Grand Reserve Cabernet, Oakville 2012
Benton Lane, Pinot Gris 2012
Campo Viejo, Rioja, Reserva 2008
Haden Fig, Pinot Noir 2012
Pendulum Red 2011
Vina Real, Plata, Crianza Rioja 2009
Edmunds St. John, Bone/Jolly, Gamay Noir Rose 2013
Bookwalter, Subplot No. 26
Ayna, Tempranillo 2011
Pete's Mountain, Pinot Noir, Haley's Block 2010
Apaltagua, Reserva Camenere 2012
Lugana, San Benedetto 2012
Argyle Brut 2007
Wildewood Pinot Gris 2012
Anciano, Tempranillo Reserva 2007
Santa Rita, Reserva Cabernet 2009
Casone, Toscana 2008
Fonseca Porto, Bin No. 27
Louis Jadot, Pouilly-Fuissé 2011
Trader Joe's, Grower's Reserve Pinot Noir 2012
Zenato, Lugana San Benedetto 2012
Vintjs, Cabernet 2010
14 Hands, Hot to Trot White 2012
Rainstorm, Oregon Pinot Gris 2012
Silver Palm, North Coast Cabernet 2011
Andrew Rich, Gewurtztraminer 2008
Rodney Strong, Charlotte's Home Sauvignon Blanc 2012
Canoe Ridge, Pinot Gris, Expedition 2012
Edmunds St. John, Bone-Jolly Gamay Noir Rose 2012
Dark Horse, Big Red Blend No. 01A
Elk Cove, Pinot Noir Rose 2012
Fletcher, Shiraz 2010
Picollo, Gavi 2011
Domaine Eugene Carrel, Jongieux 2012
Eyrie, Pinot Blanc 2010
Atticus, Pinot Noir 2010
Walter Scott, Pinot Noir, Holstein 2011
Shingleback, Cabernet, Davey Estate 2010
Coppola, Sofia Rose 2012
Joel Gott, 851 Cabernet 2010
Pol Roget Reserve Sparkling Wine
Mount Eden Chardonnay, Santa Cruz Mountains 2009
Rombauer Chardonnay, Napa Valley 2011
Beringer, Chardonnay, Napa Reserve 2011
Kim Crawford, Sauvignon Blanc 2011
Schloss Vollrads, Spaetlese Rheingau 2010
Belle Glos, Pinot Noir, Clark & Telephone 2010
WillaKenzie, Pinot Noir, Estate Cuvee 2010
Blackbird Vineyards, Arise, Red 2010
Chauteau de Beaucastel, Chateauneuf-du-Pape 2005
Northstar, Merlot 2008
Feather, Cabernet 2007
Silver Oak, Cabernet, Alexander Valley 2002
Silver Oak, Cabernet, Napa Valley 2002
Trader Joe's, Chardonnay, Grower's Reserve 2012
Silver Palm, Cabernet, North Coast 2010
Shingleback, Cabernet, Davey Estate 2010
E. Guigal, Cotes du Rhone 2009
Santa Margherita, Pinot Grigio 2011
The Occasional Book
Cheryl Strayed - Torch
William Golding - Lord of the Flies
Saul Bellow - Mister Sammler's Planet
Phil Stanford - White House Call Girl
John Kaplan & Jon R. Waltz - The Trial of Jack Ruby
Kent Haruf - Eventide
David Halberstam - Summer of '49
Norman Mailer - The Naked and the Dead
Maria Dermoȗt - The Ten Thousand Things
William Faulkner - As I Lay Dying
Markus Zusak - The Book Thief
Christopher Buckley - Thank You for Smoking
William Shakespeare - Othello
Joseph Conrad - Heart of Darkness
Bill Bryson - A Short History of Nearly Everything
Cheryl Strayed - Tiny Beautiful Things
Sara Varon - Bake Sale
Stephen King - 11/22/63
Paul Goldstein - Errors and Omissions
Mark Twain - A Connecticut Yankee in King Arthur's Court
Steve Martin - Born Standing Up: A Comic's Life
Beverly Cleary - A Girl from Yamhill, a Memoir
Kent Haruf - Plainsong
Hope Larson - A Wrinkle in Time, the Graphic Novel
Rudyard Kipling - Kim
Peter Ames Carlin - Bruce
Fran Cannon Slayton - When the Whistle Blows
Neil Young - Waging Heavy Peace
Mark Bego - Aretha Franklin, the Queen of Soul (2012 ed.)
Jenny Lawson - Let's Pretend This Never Happened
J.D. Salinger - Franny and Zooey
Charles Dickens - A Christmas Carol
Timothy Egan - The Big Burn
Deborah Eisenberg - Transactions in a Foreign Currency
Kurt Vonnegut Jr. - Slaughterhouse Five
Kathryn Lance - Pandora's Genes
Cheryl Strayed - Wild
Fyodor Dostoyevsky - The Brothers Karamazov
Jack London - The House of Pride, and Other Tales of Hawaii
Jack Walker - The Extraordinary Rendition of Vincent Dellamaria
Colum McCann - Let the Great World Spin
Niccolò Machiavelli - The Prince
Harper Lee - To Kill a Mockingbird
Emma McLaughlin & Nicola Kraus - The Nanny Diaries
Brian Selznick - The Invention of Hugo Cabret
Sharon Creech - Walk Two Moons
Keith Richards - Life
F. Sionil Jose - Dusk
Natalie Babbitt - Tuck Everlasting
Justin Halpern - S#*t My Dad Says
Mark Herrmann - The Curmudgeon's Guide to Practicing Law
Barry Glassner - The Gospel of Food
Phil Stanford - The Peyton-Allan Files
Jesse Katz - The Opposite Field
Evelyn Waugh - Brideshead Revisited
J.K. Rowling - Harry Potter and the Sorcerer's Stone
David Sedaris - Holidays on Ice
Donald Miller - A Million Miles in a Thousand Years
Mitch Albom - Have a Little Faith
C.S. Lewis - The Magician's Nephew
F. Scott Fitzgerald - The Great Gatsby
William Shakespeare - A Midsummer Night's Dream
Ivan Doig - Bucking the Sun
Penda Diakité - I Lost My Tooth in Africa
Grace Lin - The Year of the Rat
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
Miles run year to date: 156
At this date last year: 225
Total run in 2014: 401
In 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269