Government not following the rules? What else is new? On top of that they use your money to pay the lawyers to make it very costly to seriously challenge their actions.
As a result there are very few challenges. Basically they use your money to shaft you.

Here in The Dalles Wasco Electric Co-op, a state sanctioned monopoly power company writes their own bylaws and then promptly ignores them. And of course they use ratepayer money to pay lawyers to defend any action they take. Read all about it at http://www.reformwascoelectric.com.

Reminiscent of financing during the dot-com bubble.

Paging Dave Lister, Assn. of Oregon Industries, and all the other gasbags who whine incessantly about the "business climate" in Portland and Oregon:

If the "business community" sues to block these scams, there's a chance of success. But if it's just do-gooder citizens trying to enforce the Constitution ---phhhhhht. And if the "business community" turns a blind eye then we know that they have no problem with this sort of thing, so long as they're getting paid off.

Dear George,
So sorry; don't hold your breath.
The so called "business community" will just go along. Just look at the record for Chamber of Commerce. They are all in cahoots.

Some of you will enjoy this.

A prime example of this problem is what the PDC did in 2005 in SoWa when they paid $6.3 million to Homer Williams for 100 parking spaces in his new Strand condo tower.
Homer set up a "non-profit" which he chairs, to own and manage the 100 spaces.
The PDC loaned the "nonprofit" the $6.3 million who then paid Homer.
The "loan" was written with no guarantees, personal or otherwise, requires repayment only as parking revenue allows and has no defined payment schedule or fixed term for payoff.
It's a sloppy payoff masquerading as a loan which no one will ever be responsible for.

Essentially Mr. Nobody is responsible for paying back the loan whenever, if ever.

By my estimation, parking revenue from the 100 spaces is not even sufficient to pay the interest so the "loan" balance will continually increase and remain on the books forever without anyone held accountable.
That's not all. The PDC borrowed that money it "loaned" to Homer's non-profit. It was borrowed Urban Renewal/TIF funds which the PDC is paying, with interest, from property tax revenue. So schools, and all the other basic services are now paying off this debt from paying off Homer. Special.

The final punch line is this "loan" will likely end up being wiped clean by being buried in the obscurity of some future city council's "consent agenda" vote.
No one will ever know anything about it.

Of course some journlist or a distracted attorney general could take a look at it.

Portland Development Commission
Resolution No. 6229
RiverPlace Parking Garage Acquisition Loan
Adopted by the Commission April 13, 2005

And PERS? How do they invest in light of this provision?

Old timers probably remember when PDC decided to get into the airplane maintenance business through a series of super risky loans.

No points for guessing what happened next ... Let's just say that PDC was walking like Beau Breedlove after visiting the men's room on First Thursday.

All outrage and pessimism aside, what watchdog or oversight party is there to call these cozy government-private relationships for what they are? It smacks of colonial East India Company sorts of arrangements. Has rule of law degraded that far in Oregon? All around the country, too? If that's the widespread perception, no wonder voter turnouts are so low, leaving those in power free to rob the public trust, and the public coffers.

Jack:

I suspect both Ted Wheeler and John Kroger have noted your concern on this matter and one or both of them will contact you shortly.

I have a great deal of respect for the people selected for the board of the new non-profit entity, and I also like and respect a number of business people who are supporting this idea, but in my opinion, it is not a good idea.

Putting aside the constitutional question Jack raises (which I don't know enough about to have an opinion), I think this plan has several pretty serious flaws.

First, the PDC draft "Briefing Paper" that I saw envisions that this fund will make small investments in roughly 20 early-stage companies per year. It will be very difficult for one or two managers to intelligently invest in, and then monitor, this many investments. (This many investments will also require that the fund raise a lot of money beyond the PDC money.)

Second, for any of the investments to ever produce a liquidity event, they will almost certainly need follow-on investment. This will also be time-consuming for the managers, and there are not a lot of local sources for such investment. In my own view, it is very unlikely a fund like this will produce an interesting financial return (though I'm sure there others who would disagree with me on that.)

Third, the "Briefing Paper" envisions that other governmental and private investors will join the fund, and it will be as large as $5 million. Even if this is true, the economics of a $5 million fund are very problematic. The usual 2% management fee would produce $100,000, which would have to cover compansation for the fund managers and fund expenses. I don't think an experienced group will take that deal. I think it will be very tough to craft a compensation arrangement that will be fair to the managers and fair to PDC and the other investors.

Fourth, the motivation of the PDC appears very clearly to be "job creation", not return on the investment. In order to attract private investors, the fund will have to promise that it will be run to maximize return. I don't think the two goals are really compatable.

I think there are some very sincere people running with this, but in my view, it's a bad idea.

Bob Wiggins
Mount Hood Equity Partners

"sincere people"
Yeah right...sincerely interested in fattening up their bank accounts with tax payer money!
Why don't we just call this what it really is: A scam, crooked to the core; and it should be stopped NOW!

Note that the PDC business and industry manager, Patrick Quinton, is the former PDC project manager for SoWa. Is that noteworthy?

If I'm reading Bob Wiggins' comment correctly, he's basically saying that it's going to be hard to keep track of the PDC's money with so many small investments, and even if the money isn't wasted or misappropriated, the end result will be to prop up startups that have no chance to make it to the next stage of development. Is that about right? I think Bob is being diplomatic about this bad idea, which has consequences beyond wasted taxes and possible graft.

Like bioengineering seed crops, we tinker with startup economics at our peril. The most obvious problem to me is that when we throw taxpayer money at startups, even with the noble goal of improving our economy, we create companies that only survive when they're subsidized, so the only way to sustain any jobs they generate is to sustain the flow of public money to them.

Even worse, although subsidized startups are flawed from the start because they require perpetual subsidies, while they exist, they put real competitive pressure on non-subsidized startups that actually have a chance at long-term success. How many non-subsidized startups would have succeeded without subsidized competition, but will fail with it?

Along the same lines, how many potentially successful startups will be lured down the path towards ultimate competitive failure by accepting the crackpipe of public money? I can see it now: their CEOs wandering the halls of new local government buildings sputtering neo-verdant-sustainababble...

Of course, the mustard on this crap sandwich is that the money the PDC spreads around comes out of the pockets of consumers, so instead of the market selecting good companies, we get a committee that can't possibly improve on the wisdom of the marketplace.

...It's a big hot lunch in the opaque brown paper bag of unconstitutionality.

I would rather see the Army of Neil G. take 10% of our taxes than see it run through this kind of destructive farce.

Yawn, I am not saying that it's difficult to keep track of PDC's money from an accounting sense, just that it is asking a lot of a manager to make 20 thoughtful, careful investments a year in start-ups, and then adequately represent the investors' interests in those businesses after the investments. Just for reference, I am the sole manager of my fund, and I've been able to make one investment a year. Maybe someone could do 2 or even 3, but not 20. If you're doing your job right, you're reviewing dozens of possible deals for every investment you actually make.

Portland Native, I'm pretty sure the 5 member board will not be compensated. I don't think anyone will be "fattening their bank account" on this deal. But I still think it's a bad idea.

It's so easy to take shots at any hometown newspaper, but once again, it initiated the attention that a story like this one deserves.

PERS is deemed to be "independent" so as to escape the application that constitutional prohibition, and the losses by PERS members from their investments (not the state's investments) are supposed to be borne by the PERS members. (That is, until some self described expert like Mr. MacPherson got that all mixed up in his head, and thought the state must give an unearned -- and therefore illegal -- gift of 8+ billion dollars.) The state supreme court had previously said that the state could not be compelled to give that money, to cover investment loss.

Maybe the city can do like the state and declare that the investment decision makers are personally immune from any investment decisions they make (as the state does against any unhappy person AND against any unhappy political subdivision of the state).

The "profit" versus "non-profit" distinction is used as a distraction -- a sand in the face distraction -- from the "government" versus "private" distinction. For example, the reasoning becomes reduced to something like the following: every political campaign is non-profit, and by declaring them non-profit we may fund them (or just some of them selectively) BECAUSE they are not for profit.

I am a non-profit just seeking to survive, can I therefor qualify for investment, as a citizen -- as against Eville Corp. under the equal privileges and immunities clause. (This illustrates substantive "corporate" supremacy over people, but only so long as that private corporation has self-declared to be a non-profit.)

Laws pertaining to government do not exist to enable government action, but to restrict government action. My question is for the city attorney: How superficial must the pretense of a claim of lawful government action be before you assert your state statutory right not to give legal support to elected officials? That is, when do you be a lawyer first, and a hack second. If the city gives away money to a non-profit corporation does this somehow fall outside the very broad definition of "state action"? If not then that action must comply with all the restrictions on government action; non-profitness is not supposed to be a blanket definitional exception to any and all state action.

What happens to the state's money when Solexant goes bankrupt because it can't compete with the cheap solar products coming out of China? The same thing that happened to the money the state invested in the biofuel boom that went bust.

Bob says,
"I am not saying that it's difficult to keep track of PDC's money from an accounting sense,"

Really?

So you have access to say, the PDC SoWa check book ledger?
There's not a single person at the PDC who knows where the millions goes.
Not one elected official has ever seen anything resembling any ledger.

There is no oversight or due diligence, period.

It's management and staff itself watching managemnent and staff and reportng to elected clowns who think the tooth fairy has already checked the numbers and claims.
It's the perfect storm which gurantees dysfunction.

This is idiotic. Do people think Creepy or Randy Leonard et al ever demand proof and check anything? They don't anymore than the TriMet board or PDC commissioners. Never.
Every single report advising approval is taken on it's face.

This is how we got where we are.

Garage Wine -

PDC never did anything with any aircraft maintainance facilities.

That farce was a PERS loan to the entrepreneurs who built the hanger at PDX and could not drum up any business from airlines as a contract maintainance base.

A farce and a bad investment, certainly, but not of the all too common PDC FAILS.

Its important to keep the turds in the correct bureaucrats pockets.

Ben, I think Bob Wiggins is saying that it would not be difficult for PDC to keep accounts for its money. I think he is saying that it would be impossible for a single staffer at PDC or a similar organization to effectively monitor how each of 20 different startups were using the seed money and venture capital that they might get from PDC.

No one has EVER been able to keep track of PDC's check books. The PDC is the expert on obfuscation. Hiding how they spend the tax payers' money is the only thing that PDC does well.
As for fattening the bank accounts of those involved...well no one will ever be able to prove it in a court of law, but I would bet money it happens. Compensation can be manifested in other ways besides cash.
Let's remember that Homer spent time building resorts in the Caribbean for years. If you want to hid money that is one of the places to do it.
You are right Bob, for all sorts of reasons this is just a bad idea.

"this fund will make small investments in roughly 20 early-stage companies per year"

So if they do as well as the average venture capitalist (which I am sure their skill level is not) and then we have PDC leaning on them to fund any bad idea with green or sustainable (which any shyster a la Homer/Edlen will play to their advantage) in the title, this means that we may get a return on 0.001% of that money.

Kiss it good-bye,

I hope all the attorneys in this state or town don't trip over each other as they rush to correct this illegal constitutional infringement. Please, organizations, individuals, there would be monetary and moral support if someone would legally carry the torch. Many are realizing that the time has come, we are at our wits end.

lw:I hope all the attorneys in this state or town don't trip over each other as they rush to correct this illegal constitutional infringement. . .

Who knows better than attorneys how pervasive the corruption is in this state?