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Sunday, April 12, 2009

Paulson stadiums bond tab quietly doubles

A few weeks ago Portland Mayor Creepy sent around an e-mail message explaining some of the details of the insane sort-of-deal that he and a slim majority of the City Council has committed to with Little Lord Paulson for his two new publicly financed bush league sports stadiums. He said in part:

With respect to the baseball stadium, the City has agreed to provide $18.5 million in funding. This money will be generated from the sale of zero-coupon bonds. Under current market conditions, the City cannot sell these bonds. The Paulson family has agreed to step in and find a buyer for these bonds, thereby allowing the City to tap into this resource. If the Paulson family fails to find a buyer, then the City can walk away from the deal. Furthermore, this $18.5 million does not impact any of the money that has been reserved for other projects in the Oregon Convention Center Urban Renewal Area.
Today, The New York Post reports that there will need to be $36 million of zero-coupon bonds:
The younger Paulson needs Portland to sell $36 million in zero-coupon taxable bonds to fund a new baseball stadium downtown -- but the market for such debt is dicey.

"We are confident we can navigate the market for the zero-coupons bonds," Paulson told The Post last week. "We're very confident on the financing side."

So which one do you think it is, Portland? The $18.5 million that the mayor talked about or the $36 million reported in the Post?

Me, too.

Comments (28)

Why do they even bother with a liar's budget? Why don't they just say at the outset: "We're going to spend whatever we want and you can't stop us, peons."

It feels like a slap in the face to discover this from the NY Post, of all publications...

So which one do you think it is, Portland?
JK: I'm betting on $100 million after its all done & buried.


I, for one, am shocked - shocked! - at the level of cynicism here.

Weren't you listening when the city council assured us that we've learned from our mistakes and that these deals will never rely on guesstimates again?

Didn't you hear our Mayor talk about his commitment to transparency?

And what about how great Randy was at negotiating this deal or almost deal? Why, at one point, Paulson even stormed out of the room because Randy was so tough!

Here we have all this proof that things are going great and you bring up one little newspaper article and try and paint our council as a bunch of smalltime weasels who got snookered by a rich guy - a rich guy whom they see as a colleague, but who sees them as a concierge.

I tell you, this is sad. Where's the trust? Where's the belief in the basic goodness and wisdom of politicians and their business partners in the private sector?

Is it any wonder people suggest you're grouchy and that your bullying knows no bounds?

a slim majority of the City Council

Jack, you dropped the "y" in "slimy"

Bill, I think "concierge" is way too genteel.

"concierge" = "happy ending"

Or is that too distasteful for a family blog?

Yeah right.

You don't if Mayor Creepy lie?

He could just be a stupid creep.


You don't 'know' if Mayor Creepy lied.

Still not close to the truth. We get about 1cc a week of what is really going to happen.

We can only hope this thing hits full daylight when the recall campaign begins.

$36 million is too low. The City is talking with Cordish about creating the entertainment district in the Rose Quarter. Cordish was one who submitted an adult Disneyland-like proposal for the Centennial Mills project. It was the most expensive at $368 million, much of it public money. Fortunately, they didn't win.

Ultimately, we are looking at hundreds of millions of public dollars for this boondoggle. Too bad people are so taken with a pseudo real pro sports team, and politicos are more interested in saying how hey "brought" a pro team to PDX than interested in managing the city.

If they are talking about $36 million of present value, then they would have to sell about $200 million worth of (face value at maturity) zero coupon bonds if they carry a 9% interest rate and mature in 20 years.

Given the bonds will be used to pay contractors when the work is completed, it unlikely the NYT articles is referring to $36 million at maturity (which would only net about $6.5 million of bond sale proceeds).

So which is it? $18 million of face value? $36 million of face value? Or $36 million in net present value (aka "bond sale proceeds" after paying the selling syndicate), which is actually $200 million dollars at maturity, including 9% interest over 20 years.

Could it be that Paulson's people are smoking the really good stuff now? In a recent meeting, one of Paulson's minions said they expected to draw 800,000 fans a year to the new ballpark in the Rose Quarter. This must be some sort of new math. If they SOLD OUT EVERY ONE of the Beaver's 72 home games in a ballpark of 7,500 to 9,500 seats (as proposed), the total would be 540,000 to 684,000 tickets sold for the year. No wonder the financials for this deal look so good! Is the whole deal premised on this sort of wishful financial thinking? Guess who ends up holding the bag if they are wrong? Anybody remember Portland Family Entertainment? Anybody notice that it's the same cast of characters (Sam, Vera)? Maybe we should start calling this PFE II.

Managing the city? Randy Leonard, Sam Adams, and others on the council are more interested in slaying their own psychological demons than in managing the city. And with Portland's clueless citizenry, they'll keep slaying their personal demons at public expense for a long, long time to come.

What about this from Bloomberg: "The problem is that Paulson wants the city to sell $65 million of bonds to turn the downtown home of his Portland Beavers minor league baseball team into a soccer stadium that meets major league requirements, and erect a brand new park for the Beavers. " Link: http://www.bloomberg.com/apps/news?pid=20601109&sid=aiY0Dfcik.8s&refer=home

Am I reading this wrong?

The Bloomberg article also mentions the guarantee: "They’re also guaranteeing rent and ticket taxes for 25 years and will pick up construction overruns beyond $2.5 million." Doesn't sound like much of a guarantee to me.

The funding plan presented to the city council in March included:

1. TIF bonds for PGE Park - $15 million (off the table for now, as far as we know)

2. TIF bonds for Baseball Stadium - $18.5 million

3. Spectator Fund bonds - $31 million, with a footnote that this amount might be higher depending on various contingencies

Again, Mayor Creepy and Pele, please show us the signed public document showing that Paulson agrees to cover any cost overruns...

That document will likely be signed this week. Probably drafted by the Paulson lawyers (or Steve Janik, same difference). And in that document, the city will give away the candy store. "We agree to borrow money from your friends on whatever terms they dictate." The silence of the lambs.

We agree to borrow money from your friends on whatever terms they dictate.

Bingo. I was wondering tonight if the Paulsons might just buy the bonds themselves. There aren't a lot of other places out there offering 9% return. It's a brilliant strategy on their part.

Just more LIES from the weasels at City Hall. And isn't it amazing how fast all of this is happening with NO INPUT whatsoever from the voters or public at large?

repeat after me...."78 days and counting"

The Oregonian chimed in with an editorial supporting Mayor Adams today. What could happen is that the minor league baseball stadium will blossom into an even more gigantic project of revitalizing...(or as the Oregonian says "vitalizing") the area.
The Oregonian thinks it's the best and only idea out there so I have another:

Remove your heads from your asses. There's a major recession going on. Take a break from helping millionaires and try some fiscal responsibility for once. Figure out that you don't vitalize areas if there's nothing vital driving them.

I know it's a radical idea but city leaders should step back from these endless spending projects and try governing. Try fixing what we have. Try preparing for a real calamity if this next round of foreclosures triggers the next Great Depression.

The only expenditure I would be for is if the Oregonian editors, Sam, and Randy got counseling.
They have been on a spending bender for many years and the party is over. As Tom Peterson used to say before he went under, "Wake up!"

The movers and shakers and power brokers are telling Adams and company they better keep the cranes busy with construction or this whole place will shut down and they'll get thrown out of office.

This is how it all comes to be. The fat cat developers, Associated General Contractors and the trade unions lay on the pressure and the planners provide the cooked up rationale.
It's easy for them to cast the alternative to the boondoggle parade as a worse outcome for the politicians.
With the pats on the back from the Oregonian and the circle of fans Creepy and Randy feel good about it all.

And they feel like such big shots too.

I think Adams and Randy actually enjoy infuriating the little people. Sort of like adolescents who enjoy teasing the animals.

I have to give credit for this idea to watching George Bush: It dawned on me that he was getting his revenge on us for all the years he had to put up with being himself. He could be sitting back right now - not spinning his legacy or anything like that - but just smirking, watching the economy, and thinking, "You want to mess with George W - well, deal with this."

It's quite possible that there's an element of revenge in Mayor Adams' actions as well as with Randy's and the Oregonian board.

Just a theory, but it does explain the level of fiscal damage they are inflicting. It also explains the lack of caring about what really happens to Portland long-term as long as they get to do their thing now.

Wait a minute. Adams is still in the mayor's office?

Maybe its time to start a groundswell of support for a MLB team.

The most frightening part of these figures is that they are meaningless. Without a clear plan, an idea of what the conditions for the purchase of the bonds will be, or any useful bid process which would best serve the citizens of Portland, "the sky's the limit."

The City might as well sign a paper that says, "We'll pay whatever is necessary" conveniently overlooking the fact that the lender, the facilitator and the recipient of all largesse are, in fact, the same entity.

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