The pungent odor of scam
The Portland Development Commission has really stepped up its developer welfare program lately. Here's a dandy of a story: Instead of lending $745,000 to the Oregon College of Oriental Medicine to earthquake-proof its new Old Town facility (formerly the Globe Hotel), now the PDC is suddenly lending the college $5.5 million for the purchase and renovation of the building. Interest will be between 1% and 2%, and since it's owned by a nonprofit, the building will continue to be property tax-exempt.
Or wait... is it $6.2 million? Guess it depends on who you ask.
Sweet deal for the taxpayers, eh? In a pig's eye. Remember, when the city goes out and borrows money for these "urban renewal" schemes, it pays much higher interest rates, and the IOU's are supposed to get paid off out of property tax revenues. What a joke.
And the developer? Wait for it...
Brad Malsin's Beam Development.
Cha-ching! Merry Christmas, Brad! Don't worry, no matter how screwed up your business plan is, you'll never fail. The grandmas and grandpas of Portland are here to bail you out. Our property tax bills are your paychecks. We love you that much. Really.
Will the alternative medicine school be able to pay back $5.5 million of debt over seven years as scheduled? Even at 1% interest, the payment on that kind of money is around $815,000 a year. The most recent IRS reports for the college show annual net revenues of roughly the following amounts:
To our untrained eye, it doesn't seem to be the world's most secure loan. And yet, the chair of the PDC, a Melvin Mark suit, has the gall to blow this smoke:
Andrews said he hopes the college will pay back its loans sooner than required. That could allow the agency to add more to its proposed $7.6 million subsidy for the Uwajimaya project.Yes, and I hope to hit the Powerball jackpot. I must remember to buy a ticket.
Of course, O reporter Ryan Frank is quick to regurgitate the latest pap from the PDC. He even loads this on the pile:
The Oregon College of Oriental Medicine is part of the city's decades-long effort to revive the frayed Old Town Chinatown district. The city made progress in the past five years, investing $28 million in real estate deals to attract the University of Oregon's Portland campus and the Mercy Corps headquarters, renovate a historic building and build a new home for Portland Saturday Market. The neighborhood, long dominated by drug pushers and the homeless, now includes a mix of young hipsters and middle-aged professionals.Ryan's prose is so much smoother since the lobotomy. (He's the City Hall reporter now; apparently Randy Gragg refused to come back.)
This latest news comes on the heels of the airing of the Vestas headquarters deal over in the Pearl District, which gets more and more shadowy by the week. That one's an $8.1 million loan to a shaky European windmill manufacturer, which will lease its newly renovated offices and spacious parking garage from... wait for it...
An affiliate of Mark Edlen. Another fellow that we Portland taxpayers just can't give enough money to. A walking linchpin, the guy is.
And oh, what a loan his group is getting this time! According to another O reporter, Brad Schmidt:
Though it's not uncommon for PDC to use public money for private development, this loan is unlike any other in the agency's 4-year-old Commercial Property Redevelopment Loan Program. It strays from agency guidelines in several ways:With all this sweet, sweet taxpayer money sloshing around, one word comes to mind:
* The $8,105,000 loan is four times larger than the $2 million maximum established by guidelines for the redevelopment program. Exceptions are allowed, but the loan is by far the largest in the program's history, representing one-third of all funds, according to agency documents.
* The loan is interest-free. Guidelines suggest below-market rates of 3 percent. Of the program's 27 other loans, four totaling $2.5 million were no-interest.
* The term of the loan is 15 years. Guidelines suggest up to 10, and only the Vestas project exceeds that.
* No payments are required until maturity in 15 years. Guidelines call for regular principal and interest payments. Eight other loans have received exceptions, almost always for two years, with the longest deferred for six.
Maybe it's all legal graft, and certainly in Portland it's graft that will never be questioned by law enforcement, but graft nonetheless.
Smile as you pay that unmanageable water and sewer bill, people. Smile while the hipsters and '60s burnouts vote away thousands of your dollars toward new property taxes. Because your money's going to make some real estate sharpies in the West Hills even richer than they already are. And there's not a darn thing you can do about it, except move.
Maybe if you get too stressed about all the nickel-and-diming, you can go in for some acupuncture.