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Thursday, August 19, 2010

Unanswered questions about the Vestas deal

Yesterday's drama over the planned relocation of Vestas's U.S. headquarters to a renovated warehouse in the Pearl District is certainly worth more attention than our initial reaction, which we posted here. As we read around on the proposed deal, several additional angles have come to light.

First, we have this odd assertion by the mayor about the sweetheart interest-free loan that the city is making to the Danish company:

The city will give the company a 15-year, interest-free loan for $8.105 million. The company is expected to repay the loan within five years, Adams said.
What a load! If Vestas really has a 15-year interest-free loan, no legal strings attached, there's no way on this earth that its management is going to pay that money back in a third that time. If they did, they'd be breaching their overarching duties to their shareholders -- to maximize share value. The chance of an early repayment seem to be slim to none.

It's sort of like the mayor's crazy assertion that Portland is the "green capital" of America. How many other mayors in the country are blowing that one out their tubas? Wherever it may be, the center of sustainable moolah ain't the Rose City.

Then there's the whole set of questions that swirl around the details of financing the $66 million "green" renovation project. This story indicates that Gerding Edlen Development, which bought the building in November 2007 for $15 million, is going to be leasing the property to Vestas, and subleasing a small part of it back. Supposedly this is going to "revitalize" the office rental market in town. Really? Vestas and Edlen are going to be vacating quite a bit of office space when they move into their new digs -- how do lateral moves "revitalize" the local market?

But more importantly, what are the terms of the lease between Edlen and Vestas going to be? If Vestas goes broke, who'll be left holding the bag for the giant construction debt? I'll bet you it isn't going to be Edlen. I'll bet the city's in this deal up to its eyeballs, through the Portland Development Commission, and somehow a huge truckload of downside risk is going to wind up on Portland's taxpayers. The devil is no doubt in details that the public has yet to see.

Comments (20)


The financial aspects of this deal give me painful stomach cramps, but I do have one piece of anecdotal evidence that people other than Mayor Adams do think of Portland as the "green capital" of the country.

I was at Salesforce.com's annual show in San Francisco last fall, which is called Dreamforce. This is a business event that has absolutely nothing to do with Portland or things "green" (other than money). They keynoter was Mayor Newsome of San Francisco. In his speech, he made a specific reference to Portland and said that San Francisco's goal was to be thought of as even greener than Portland.

I think there is some truth to Portland's reputation as a really "green" city. The issue is at what cost the city has developed that reputation. If you have to dodge flying bullets and gaping potholes to ride your bike to the unemploymentr office, maybe the fact that you pass some LEED certified buildings on the way just isn't all that comforting.

Bob Wiggins

Visiting a doctor recently I learned from him about the subsidies for wind farms. His accountant had told him he should buy in and get a bunch of free money too. Now the Tramster has found a new way to give a huge subsidy to an industry that sells us part time power. Like my sailboat, it only works when the wind blows.

The idea that Portland truly subscribes to being a "green" city is laughable...only when it serves their purpose. If King Tut Leonard has his way our truly "sustainable" Bull Run water system will turn into second rate water quality has-been. Wasting electricity for unneeded treatment and putting us at risk from mercury and broken bulbs does not seem green. All for a public health problem that does not exist, until PWB comes up with another (non) "event" to fear monger. The system now should get a Platinum LEED award including the open reservoirs.

In the fog of my old brain, I remember reading about how the build up of Oregon wind farms got out of hand and cost the state a lot more then anticipated. Is this related?

Our friends used to ridicule us for only allowing ourselves to live in a very narrow geographic area of unincorporated Washington county a stones throw to the Multnomah/Portland county/city line. Since then, three of those couples have joined us out here just to be as far from the corruption as one can get without really leaving the "city". We still are affected by much of the spillover (ala Metro etc.), but I go to bed at night knowing I'm not being involuntarily sucked into much of Portland's morasses as this one.

It does seem as though 'elected' city leaders behave as though they expect some sort of local Berlin Wall to be completed any day now with some locally issued legal tender about to go into circulation.

Makes me wonder if the CRC isn't being deliberately stalled as a sort of filibuster to keep it from ever happening.

Perhaps the "green" designation is solely for the city, county, and METRO governments' seemingly limitless propensity for handing-out money to questionable causes/developers!

"If Vestas really has a 15-year interest-free loan, so legal strings attached, there's no way on this earth that its management is going to pay that money back in a third that time."

Sorry, I'd look on the other end of the spectrum, if Vestas goes bust in 2 years what sort of recourse do we (CoP taxpayers) get?

"If Vestas goes broke, who'll be left holding the bag for the giant construction debt?"

My gut is that the tenant improvements are being paid for with this 15 yr interest free loan. Same question about recourse applies.

It's all a pretty transparent funnelling of money a la Hank Paulson to AIG to G-S.

Side note - Does PDC have a bottomless bucket of money to dole out? Why aren't they paying for schools or sewers or bike paths or streetcars instead of us dumb taxpayers?

Steve: that's the way TIF works...the increase in taxes is funneled to PDC to operate their scams. The schools, streets, police and other public services are cut while the PDC gets buckets of money to do the "the next big thing" that continues to rip off the taxpayers.

You are right! No one would pay back free money in one third the time, UNLESS you had a guarantee of $45 million more at the same rate in five years.

but I do have one piece of anecdotal evidence that people other than Mayor Adams do think of Portland as the "green capital" of the country.


I've met people back east who think Oregon is a big logging state and we all wear suspenders and checkered shirts, too.

I've met people in the UK who think Portland is part of Seattle.

I've met people in Hawaii who think Portland is the racist redneck capital of the west coast.

Time to grow up, little Portlanders, and start thinking for yourself. Stop defining yourself by "lists" and "rankings" and "this guy at a conference's opinion" and "SustainLane says we're green". It's childish, surreal, and not based on anything other than large, heaping spoonfuls of marketing propoganda.

And cities today love to market themselves. Here's how it works, people:

Step 1: City calls itself "The Greenest City on the Nation".

Step 2: Some people hear it or read it on the Web or in a press release.

Step 3: People (especially freelancers) looking for pieces to write see something that says "City X is the Greenest city in the Nation".

Step 4: Writers look for superficial ways to justify that, so they can write a positive piece that sells. To places and outlets that are far away from City X.

Step 5: City X (and the press in City X) read what's producd in Step 4, and redistribute it as proof that they're considered "The Greenest City in the Nation".

Step 6: People in City X either (a) nod their bobbleheads in agreement, becaause they want to believe that, or (b) people in City X look around, dumbfounded.

Step 7: Repeat Steps 1 through 6 until the lie repeated becomes the "truth".

And cities today love to market themselves

And we all get our power from Bonneville Dam, ride our bicycles to the nearest Streetcar stop, where we enjoy coffee from 7:00 until 9:00 AM, then spend a morning at a park where we all run for the next hour and half, then show up at work for an hour or so where we do nothing but come up with great ideas. Then a lunch for two hours, another hour or so of creative time, another run, then a bike ride home, then we ride light rail back into downtown to take in a play or a soccer game or a Blazers game.

Repeat as needed. Except on Sundays, we hike up the side of Mt. Hood in lieu of church.

Didn't I just read somewhere that the PDC was going to start looking for foreign investors? The city appears to be turning into a shameless tax-funded development corporation.

The word Portland begins with the letter P and so does propaganda.

Dean Carwell: . . .If King Tut Leonard has his way our truly "sustainable" Bull Run water system will turn into second rate water quality has-been. . . The system now should get a Platinum LEED award including the open reservoirs.

Big question for our community to ask?
Why is our bully King Tut Leonard such a lamb when it comes to this EPA LT2 Rule?

Bob Wiggens, it seems that SanFran's Mayor Newsome doesn't correspond with his own Department of the Environment.

Like I posted earlier, several magazines tout SF as the Green Capital, like the Site Solutions magazine. If you read some of the endless magazines, media outputs from all the environmental groups, I've heard the whole gamut of cities as being the Capital: Boston, Houston, Denver, Austin, Seattle, Minneapolis, Chicago....; the best "lists" are endless.

The "lists industry" is a cottage industry that has turned into a conglomerate. Now, I might buy into the listing of Portland as the leader of PR and Lists; and Sam it's founder.

Does anyone have info on how much we have paid to PR our city and for whose benefit this has been?

Geothermal. Unlike wind, it's always on.

I missed the "greenest" part of the article:

"It will occupy 133,258 square feet of office space. The remaining 39,000 square feet is a parking garage."

Even Vestas need parking Sam.

In these turbulent times two words that our governments and corporate media use waaaay too much to provide cover from absolutes and basic responsibility are (a) expected and/or unexpected (b) suggests (as in, this data suggests that blah blah blah).

in 2010: "Vestas is expected to repay the loan"

in 2015: "unexpectedly" Vestas is unable to repay the loan

Maybe they should say that Vestas staying put in Portland suggests that we could be seen as a green city.

WW's Beth Slovic has provided a follow-up on the Vestas giveaway:

Note the persistent commenter Laura, who seems to be yet another identity for the divisive, alleged mayor of Portland.

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