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:
| Item | Amount |
| 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 |
| Total | $59.7 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.
| Posted at 5:08 AM | Permalink |
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Comments (26)
"The threat to move the Beavers baseball team out of town is now out front and"
Gee, in 1994 when the Beavers left and Bend moved its team here didn't Portland fall in the ocean? Oh snap, that's right we survived without a AAA team.
"city's taxpayers will never get any value out of it."
We might have a lien on it in bankruptcy court.
"If the state won't pay, Paulson says he will"
I thought Paulson said if the stadium is in Lents, he ain't paying?
The basic story is that this $60M to build a stadium is $120M in reality and we'll get stuck with a white elephant when the Beavers can't make the rent payments - or didn't we learn that from PFE 9 years ago?
Posted by Steve | June 2, 2009 6:11 AM
Prepaid rent for years 8-25 is most certainly not a contribution to the construction budget.
Remember all that deferred maintenance at the Memorial Coliseum (the reason it was cheaper to tear it down than fix)? That's what happens when a landlord doesn't establish a realistic maintenance budget and/or permit it to grow with actual needs.
Question: if the Lents Stadium tenant isn't going to pay any rent for 17 years, who's going to pay all the maintenance expenses, utilities, and insurance for years 8-25? Who's going to pay for improvements?
Answer: the City of Portland.
I don't care if Paulson is a regular guy who answer the door barefoot and loves his baby: he doesn't merit a $60 million public subsidy just to expand the facilities for two teams he already owns.
Posted by Mister Tee | June 2, 2009 6:53 AM
Portland is my hometown, but maybe we should take the lead of Omaha on getting things done with some basic Midwestern Common Sense:
New Triple AAA Ball Park for the Omaha Royals was just approved, 8,000 Seats state of the art, designed by DLR... for $25 Million!!!
This on top of a new 28,000 Seat Ball Park for the College World Series Downtown for $100 Million.
I note this not to say "come on Portland, quit dinking around and get something done", more of why can the Omaha build a Triple AAA Ball Park for a team in the same PCL, state of the art, using one of the top Stadium Designers in the World for 40% of the price?
The argument of land prices is bunk.
Portland is going to put this in an existing park.
PDX, you are being scammed.
http://www.omaha.com/index.php?u_page=2798&u_sid=10644660
Speaking of Omaha getting things done, the new Mayor Elect's Chief of Staff was found to have sex with an under age boy of 14 and was fired in Nano Seconds on Monday.
http://www.omaha.com/index.php?u_page=2798&u_sid=10644482
Posted by PDXileinOmaha | June 2, 2009 7:08 AM
Looks like our city leaders may not have done their homework here.
According to a book of Lents history published just last fall, in 1912 the site of the park was originally a county gravel pit. A group of mothers organized to clean up the site so it could be used as a park.
When Lents was annexed into the city of Portland in 1913, residents asked the county to give that property to the city.
Mayor Rushlight made the announcement at City Hall that "Multnomah County Commissioners agreed that as long as the land was used for a public park, they would deed it to Portland. However if it were ever used for other purposes, it would revert back to Multnomah County."
Page 70
Pearl Tea
Historical Stories of Lents, Oregon
1861-1954
Judith Quinlin Bunch and Joyce Quinlin Gray
C 2008 Pearl Tea Publishing
Posted by Tuttle | June 2, 2009 7:23 AM
I can't think of anyone more ill-equipped and dishonest to comment on anything Urban Renewal than the Oregonian editorial board.
Well, other than the city council itself of course.
Every conceavable misrepresentation has been utilized to move forward various Urban Renewal schemes over the past 20 years. Budget estimates, revenue forcasts and visions of benefit and profit quickly fall prey to boondoggle reality without any recognition or consequence for those perpetrating them.
No it's on to the next one as if they've learned something and the next plan makes more sense.
Not hardly. The lies only get bigger.
Unfortunatley it appears hopeless to stop as lavishly compensated agency elites and unaccountable politicians use full time tax funded staff and resources to convince the Oregonian, et al, what a good job they are doing.
Posted by Ben | June 2, 2009 8:06 AM
There is a difference between this and other giveaways to the wealthy and powerful.
Yes, the numbers usually are a joke, and yes, the Oregonian usually sides with the rich and powerful - all the while wondering why the citizens aren't flocking to buy it anymore.
But this is being done against a backdrop of economic misery. People who've never been homeless are becoming homeless. Children who were looked after with various programs are being tossed out of the system. There is misery on a scale we're not used to, and it could get worse. A lot worse.
Against this backdrop our politicians and their Oregonian PR firm are stepping up to help a rich man - the son of one of the Bush administration officials who helped blow up the economic universe while running a big Wall Street investment firm.
Why stop here? Why not give Dick Cheney's daughter some money and Alberto Gonzales's kids too? What? You say it's not fair to blame the kids for Dad? Sorry, but this deal is Goldman Sachs - this deal is Dad. This deal doesn't happen unless Wall Street cronies are involved. The same ones that caused so much of the financial misery that our politicians are currently ignoring.
Of course, we're supposed to be thrilled about our great new image with soccer, but what's really happening to our image with this?
Wait 'til the rest of the country hears that - after everything that went on with TARP, etc...- we just got played by the Paulson family. What about the damage to our image from that?
Oh, you can make the numbers say what you want - you just change them later with an apology and an assurance that it will never, ever happen again. That's a road we've been down many times.
But when you do something like this during these years, you venture into the area of morally wrong, and that's a whole different road.
Yes, this has a lot of the elements of a typical Portland scam. But this time it's worse. This time it's worse because the times are worse.
Posted by Bill McDonald | June 2, 2009 9:16 AM
If I may be so bold as to summarize the opposition, this deal is untimely, unworkable, uneconomic and unconscionable.
Feel free to add other "uns".
Posted by A Hopeful | June 2, 2009 9:30 AM
Watch out: Paulson or somebody else (the City, METRO, etc.) will tempt Multnomah County politicians with an offer to buy the Lents Park deed reversion rights -- if they haven't already.
Has anybody here actually read that deed? Is there such a provision in the deed or sales agreement?
Posted by Mojo | June 2, 2009 9:36 AM
Soccer is people kicking the hell out of a ball. Baseball, same difference using a club instead of a kick. And this is Paulson, SB Randy and Sam, the scam, kicking the people of Portland in the balls and wallets together.
Everyone wins except the one's paying the bill...Citizen taxpayer.
Posted by KISS | June 2, 2009 9:53 AM
It's hard to believe that it should cost $120 million to upgrade Portland from what the Timbers are now to "major league" soccer. Stupider things are rarely done -- even in Portland.
Posted by Jack Bog | June 2, 2009 10:38 AM
Now Clark County is the boogey man here? Where exactly are they going to put it? We (folks on the Alaska side of the river) should have learned a HUGE lesson when we built that amphitheater a) in the middle of nowhere and b) with zero thought to how traffic would work. A new baseball stadium is NOT coming to Clark County. We don't want to pay for it and we don't want to deal with the hassle that comes with it.
Go fish, Randy.
Posted by Chris Snethen | June 2, 2009 10:40 AM
Should we amend the recall countdown to also include Leonard? What a hot-headed, arrogant SOB!
These guys are taking the city into a completely unnecessary bind that is likely to leave us SCREWED for a really long time.
Posted by rw | June 2, 2009 10:41 AM
Did you notice how The Oregonian framed the story?
"City Hall politics may foul up deal for Lents Park stadium" the headline says. Isn't that completely backward? All the various forms of this deal have been "City Hall politics" ... secret negotiations and agreements, misleading and downright fictional numbers, all for a project that the majority of people don't think should be paid for by taxpayers.
Posted by Al in SE PDX | June 2, 2009 10:48 AM
McDonald is not the only one who gets mad when writing about the pilfering done by the Paulson's.
Just a few short months ago over at: http://cody.blogs.foxbusiness.com/2008/11/07/codys-weekend-vittles-treasury-paulsons-company-is-begging-portlands-working-class-taxpayers-for-millions-to-make-his-sons-pro-soccer-team-a-good-investment-oh-and-somebody-rescue-lobos-b/
November 7, 2008 2:27PM
Weekend Vittles: Treasury Paulson’s Company Is Begging Portland’s Working Class Taxpayers For Millions To Make It a Good Investment; Oh, and Somebody Rescue Lobo’s Brother!
By Cody Willard
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Homegrown
Rock to the rhythm and bop to the beat of the radio
You ain’t got the slang but you’ve got the face to play the roll
You can play with me — “Fans” by Kings of Leon
Here’s what will be eating away at my brain all weekend –
* Do I even have to comment on this one?
Seeking Help to Bring an MLS Team to Portland
New York Times, United States - 14 hours ago
Merritt Paulson, the son of Treasury Secretary Henry M. Paulson Jr., wants to bring an MLS expansion team to Portland, Ore. By RICHARD SANDOMIR
–
I mean, you guys know how I feel about incredibly rich, well-connected sports team owners who beg the public for money and below-market-rate loans on the working class taxpayers’ backs. But this one is oh, so, much worse…juicier…infuriating…This is the son of the single most powerful, well-connected person on the planet - Hank Putin, nay, Paulson, himself — and he’s begging taxpayers to provide below market loans in hopes that they might someday make it back in tax revenue that might somehow trickle down from this billionaire’s son back to the local government which then would supposedly do right be the working class taxpayers’ back and give projects and employment back to the taxpayer’s neighbor. Oh, it gets better. Hank owns 20% of the company doing the begging!
I repeat — HANK PAULSON’S COMPANY IS BEGGING WORKING CLASS TAXPAYERS FOR AT LEAST $85 MILLION IN LOANS DURING THE VERY DOWNTURN THAT HE SAYS WILL BE SO BAD THAT HE NEEDED ABSOLUTE CONTROL OF OUR MONETARY AND BANKING SYSTEMS.
Feeling better about the outlook for economy and the credit crisis now? No, not so much?
I can’t stop my leg from shaking as I type this. My hands too. I can’t fathom that Hank Paulson’s got the nerve to do this. I must have something wrong here, right? Right?! Hello, is this thing working???
-
* Nice rally today. Hope you took off the shorts and or are just on the sidelines for now. Wait for the next fat pitch of a huge rally or huge sell off. More pitches to come, that’s for sure.
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* Though I’ve heard of ‘em I’d never heard of a song by Kings of Leon until I discovered the Kings of Leon this week on an iPod lent to me by an Icelandic friend. I’m addicted to the song “Fans“. Listened to it twenty times this week. The crossed guitars and thumping baseline remind me of another most-played song on my iPod — “Why Can’t I Touch It?” by the Buzzcocks.
Listening to this song now as I type this paragraph and I’m not so upset at the fact that Hank Paulson’s company is begging taxpayers in Portland for tens of millions right now for a stadium for him and his little son, Merritt, who is so cutely named after his grandfather. Okay, I’m shaking again. Breath.
Those rainy days they ain’t so bad when you’re the King, the King they wanna see
Posted by Sheila | June 2, 2009 12:06 PM
Who's going to pay for improvements?
An excellent question. Back during the "broken financial model" era, the Blazers were squawking about how the Rose Garden needed major reonvations. At the time, the building was barely a decade old. The same thing will happen here. The stadium will need to be renovated in 2020. and right it's needed, there will be zero income from the building's prime tenant to pay for it. What then? Who pays and how?
Oh, and how long is the lease? Is it at least as long as the bonds? It better be.
Posted by Chris Snethen | June 2, 2009 12:10 PM
Let's review shall we?
http://thinkingaboutthings.com/?p=3
Posted by Bad Brad | June 2, 2009 12:17 PM
Funny, just today at lunchtime, I went to a discussion of the City's draft plan to combat climate change. Parts of the plan include planting many thousands of trees, convincing residents to take public transportation, reducing hardscapes, etc.
How many trees will be cut down in Lents Park? What's the closest Max line stop, and how many people will even drive to Lents, let alone take public transit?
This stadium plan is the most unsustainable action the City has contemplated in a long time - the incongruity is absurd.
Posted by umpire | June 2, 2009 6:21 PM
I'm starting to see the claim in these stories that Leonard won't support the PGE conversion if the Beavers leave town. I see that as a direct challenge to Saltzman, who wanted to look at the two deals separately.
I wouldn't rule out Saltzman doing the right thing here. If he gives in he can look forward to 2 more years of being bullied, if he steps up he helps establish a majority coalition of adults.
Posted by bjc | June 2, 2009 6:30 PM
I doubt that Saltzman can bear the thought of being known as the commissioner who killed the goose that was going to lay the golden egg. At least that's what I imagine Randy is telling him will happen if he doesn't climb on board. Maybe he won't listen to Randy, and will instead become the hero who saves Portland from catastrophe.
Posted by A Hopeful | June 2, 2009 6:59 PM
Different city, different deal, but has a lot in common with the Lents deal.
http://newsblogs.chicagotribune.com/clout_st/2009/06/ig-report-city-parking-meter-lease-left-money-on-table-and-was-rushed-through-without-enough-scrutin.html
Posted by A Hopeful | June 2, 2009 7:37 PM
Maybe he won't listen to Randy, and will instead become the hero who saves Portland from catastrophe.
All of this week's crap is directed at Saltzman, including Randy's "I'm staking my political career on this." In other words, "Dan, if this is a bomb, I'll take the heat, not you." Saltzman is crazy if he believes that. Charles Lewis, Jim Middaugh, Charlie Hales, the Scone, who knows which Metro clone -- they're all waiting for somebody to screw up and lose their City Council seat. And a lot of people are watching this stadiums deal now.
Posted by Jack Bog | June 2, 2009 8:31 PM
they're all waiting for somebody to screw up and lose their City Council seat
Maybe they are all just waiting to see what happens with the Kroger investigation and the Adams recall effort.
The 400 lb gorilla in the room is Adams. If he goes, so do a lot of deals, liaisons, pacts, promises, back room understandings, etc ( and people) in our fair city.
Posted by haha | June 2, 2009 9:16 PM
Dan - There isn't going to be a golden egg, just a goose egg.
Posted by A Hopeful | June 2, 2009 10:44 PM
Jack:
Got the link to this from a friend who said you'd hit a trifecta for me (The Zero, Saltzman, and this stadium stank). You did. I'd buy you a drink for being so right on.
City council never saw a corporate or rich folks welfare proposal that it couldn't support. I'm surprised Paulson didn't ask for a new house and servants as part of this deal.
As for the Zero, it's not like they ever had much journalist integrity (hiding the priest abuse scandal back in the 80s, firing a reporter who wanted to do a piece on coke dealing at a major auto dealership who was a big advertiser (also 80s), and much more. However, they've elevated their boosterim status to a new high.
Posted by Lucifer's Advocate | June 3, 2009 6:50 AM
Saltzman has proven that he is the biggest Council Tease going. He furrows his brow and plays the devil's advocate and then falls in line when the time comes to vote. Unfortunately I don't see this one playing out any differently however much I would like to.
He's just a boy who can't say no.
Posted by NW Portlander | June 3, 2009 11:41 AM
I can't believe anyone who really cared about the constituents would approve this. I thought NEW JERSEY was messed up. Well, I still do, but this is over the top.
Posted by Lou Orlando | June 3, 2009 5:36 PM