Other shoe about to drop in Portland bond game
A couple of years back, I figured out a cute maneuver that Portland City Hall uses to prevent the public from challenging the many long-term loans that it takes out for wasteful "urban renewal" projects. The City Council authorizes the issuance of "interim" financing for the projects long before anyone can figure out what the projects are all about. There are only the vaguest of plans, if any, at that point, and so the public has nothing concrete to object to.
Step 2, the city runs out and borrows the money from a friendly banker like Bank of America on an "interim" line of credit that extends for several years -- usually five years. There are currently a couple of hundred million dollars in such IOU's floating around from the City of Portland.
Step 3, the "urban renewal" bureaucracy blows the money, with a healthy chunk going toward said bureaucracy's pay and benefits.
Step 4, after the money's all gone, the City Council authorizes the permanent financing for the project. At this point, it's way too late to turn back -- the money's already been spent, and whatever was supposed to be bought and built has already been bought and built (and maybe even given away on the City Hall friends and family plan by this time). Would the public now challenge the long-term bond issue? What, and throw the city into a major default on the line of credit?
Presto -- "urban renewal" bonds without a meaningful opportunity at a voter challenge.
You can see Step 4 in action in the next few months, as the city goes to the bond well for $44 million plus to pay off some of the "interim" debt on the financial black hole known as the SoWhat District. Everything down there has now conclusively tanked, but only now is the city getting around to taking out the mortgage to buy the place. This is where the voters theoretically get their chance to say no, I think. But if they do so, the city's in default on the $44 million line of credit with nowhere else to get the money. That cold, hard thing you feel pressed to your temple is the barrel of a gun.
I can't imagine what the terms of those bonds are going to be, or the interest rates. The condos in the ludicrous towers are being auctioned off in fire sales for less than half the grossly inflated projected prices they started out at, and the jobs that were supposed to be created down there were all smoke and mirrors from OHSU to get its office building and infernal aerial tram [rim shot]. If the city's going to ask to borrow money based solely on the future growth of the so-far-badly-failed neighborhood, any rational lender group is going to laugh. That leaves only the city's general fund as the collateral -- and that's already running dry.
Maybe they'll pay for SoWhat out of your water and sewer bills. Don't laugh.