New smoke and mirrors on Paulson stadiums deal
According to this morning's O, a new financial deal has been worked out for building a new minor league baseball stadium in Lents Park and remodeling PGE Park for "major league" (by U.S. standards) soccer. The total construction tab at this latest liars' budget stage is now $85 million.
The O story pulls out all the stops to make Little Lord Paulson, owner of the sports teams, look good, and to put the screws to City Commissioner Dan Saltzman, who's doing his usual hemming and hawing act before committing to another financial fiasco reminiscent of the OHSU aerial tram. The threat to move the Beavers baseball team out of town is now out front and center, just as OHSU's threats to move to Hillsboro greased the skids for the tram. (Then they actually moved to Florida.) Saltzman will give in again -- he always does.
The way the O describes who's paying for what in the new financial deal would be puzzling if it weren't infuriating. The way they throw the numbers around is awfully misleading -- an apparent case of journalistic malpractice, actually.
According to the story, the city puts up $51 million while Paulson puts up $69 million. That assertion is outrageous. Back up with me, folks. Let's add up the public money in the deal. Start with the amounts that no one in their right mind would consider anything else but taxpayers' contributions:
|Spectator Facilities Fund and reserve account||$8.7 million|
|Urban renewal dollars||$42 million|
|State taxes on players' salaries||$5 million|
|Tax-exempt bonds||$4 million|
Resolving every doubt in his favor, therefore, Paulson's contribution to the cash needed for the construction is around $25.3 million. He also pays $35 million for the "major league" soccer franchise, but of course, that franchise is his property, he's already committed to buy it, and the city's taxpayers will never get any value out of it.
So let's take a look at that $25.3 million chip-in. It's interesting. Paulson will prepay $17.5 million of rent and taxes up front, but after seven years of operating the new stadiums, he'll get an 18-year rent and tax holiday:
Instead of paying rent and a 7 percent ticket tax for 25 years to cover city-backed loans, Paulson would make rent and ticket tax payments for the first seven years. He would also immediately put $17.5 million in cash into the construction projects, which would be applied to his rent and ticket taxes for years eight through 25.Rent- and tax-free use of two major city facilities for 18 years? Wow. And so is that $17.5 million of cash he's going to put up really a contribution to the construction, or just a loan? And when he isn't paying rent or taxes starting in year 8, what's going to pay off the $50 million to $60 million of city bonds that are going to be sold on Wall Street? The sudden surge in property values in Lents? Give us a break.
The O also counts as a Paulson contribution $5 million that he says he'll get the state to pay. If the state won't pay, Paulson says he will -- but if the state does pay, how is that a Paulson contribution?
Regardless of the spin coming from the city's troubled daily newspaper, Paulson is not putting $69 million into the stadiums deal -- at least not the way today's story describes it. By a much more reasonable count, he's putting up $7.5 million cash, lending the city $17.5 million, betting that he can squeeze $5 million of stimulus money out of Salem, and perhaps agreeing to pay construction cost overruns (in exchange for which he will no doubt run the construction).
Other than that, he's buying a "major league" soccer franchise for $35 million, on which he thinks he and his dad are going to make a killing. As Art Linkletter used to tell us, kids say the darnedest things.