Blazer fans will pay for soccer stadium
The Portland City Council approved the broad outlines of the financing for PGE Park Remodel II yesterday. It's the most preposterous deal you've ever seen, and of course it follows that Mayor Creepy and Fireman Randy are bragging about it. Erik Sten is starting to look like a fiscal conservative by comparison.
Anyway, the O had the good sense to put its best money reporter, Ted Sickinger, on the story, and so they've got a pretty decent read on the deal for a change, here. Here's what one gathers:
1. The city will borrow $11.2 million of the $31 million needed for "Phase One" of the renovation. It will take the city more than 25 years to pay the debt off.
2. Little Lord Paulson and his dad will put up the rest, but as part of the deal, they'll get to use PGE Park rent-free from 2017 to 2033. No doubt they'll be able to sell those rights, and so the city is guaranteed to get no rent for that 16 years, from anyone.
3. Most of the city's share of the renovation cost will ultimately be paid for out of ticket taxes and parking fees imposed on those attending Trail Blazer basketball games in the Rose Garden arena, owned by Paul Allen's companies.
4. If the ticket taxes and parking fees dry up or are otherwise insufficient to pay off the $11.2 million of debt, the city's property taxpayers will pay it off.
5. The debt will be extremely risky, and as a result the interest rate will be astronomical -- the O is talking 9 percent, but no one really knows how high it will be. And the bonds will be no-interest, no-payments for eight years. Gee whiz, you can't even get that kind of deal from the gal at Mattress World. Sound goofy? Well, of course it is.
If you borrow $11.2 million at 9 percent and make no payments for eight years, by the time you start making payments, you owe $22.3 million.
And if the documents track what's been discussed in the past, the city will borrow the money from an entity found by the Paulson family, if no better lender comes along. And so the Paulsons will get the city coming and going. They'll get big-time money from the Blazer fans (or property taxpayers) on the bonds, and they'll pocket lots of ticket sales from Timbers fans, with no rent cost for many years.
6. The city will continue to subsidize the wages of the stadium employees.
PGE Park will no longer be suitable for baseball, leaving soccer and football (and maybe the stray outdoor concert or two) as the only uses for the venue. And you can bet that anyone other than the almighty Timbers will have to get their kneepads on and kiss LLP's ring if they want to use that field.
We can't wait until the Paulsons are collecting sub-rent on the stadium from organizations like Portland State and the high school state football championships, and paying nothing to the city. We're all going to feel really good about that. The year 2017 sounds far in the future, but we're closer to it than we are to the beginning of the millennium, and so we'll be seeing that scenario relatively soon.
Amanda Fritz voted no on this one, but sadly, Nick Fish voted yes. We guess Fish figures that since he earned some financial sanity brownie points by helping to crater the Lents baseball stadium aspect of this fiasco, he can play the construction union side at the same time by going for the remodel aspect. That's the kind of political calculation we used to see from Fireman Randy, before he went all Caesar salad on us. We fear the Nickster will soon be completely over on the dark side. But hey, way to go, Amanda. Sorry we ever doubted you.
The only way this deal will die now is if the city can't sell the goofball bonds that it's going to write to finance it. And again, we're confident that the Paulsons will find a friendly party, or even disguise themselves as a lender, to buy that paper, eventually being paid off at an astronomical profit.
Bottom line on the remodel: The Paulsons and their friends get all the upside, and Blazer fans and the taxpayers take a major share of the downside risk, which is substantial. If you were expecting anything different, you haven't been paying attention. It's TARPortland.
And then there will be "Phase Two" of the renovation. Who knows how much LLP will hold us up for then? And 2025 will roll around, and the Blazers will negotiate their new deal. By that time, we'll be at an age where we can just turn down our hearing aid and act as though we don't understand.