Cha-ching! City of Portland borrows $112.8 million over two weeks
After a hiatus of several months, the City of Portland has gone back to its credit card ways, with two new bond issues, totaling $112.8 million, issued between March 10 and March 23. Of this amount, $82.8 million was borrowed by the city for the water bureau, and the other $30 million was for central east side "urban renewal." City Hall has a new "debt manager," B. Jonas Biery -- the last person in that position, Eric Johansen, has been moved to city treasurer -- and the new guy has dug right in, putting the city further into hock. That's Jonas's job.
The money was not borrowed cheaply. The water bonds will bear interest at various rates as high as 4.86% for 25-year debt, and there's a killer 6.25% interest rate being charged on some 10-year "urban renewal" money. Ouch. Although the water bonds, secured by a first lien on the city's water supply, got the highest rating, Aaa, from Moody's, the "urban renewal" bonds, which are payable only out of rising property taxes in the central eastside "urban renewal" district, rated an anemic A2 -- five notches down from Aaa.
What will all this new borrowed money be spent on, you ask? It's pretty hard to tell exactly from the bond sales documents. The money borrowed through the water bonds, we're told, will "finance a portion of the costs of the Capital Improvement Program." But that "program" is loosely defined as any one of a myriad of activities that have something to do with water:
So yeah, it's $82.8 million, and it will be spent on whatever -- water, o.k.? You got a problem with that?
With the $30 million of central eastside "urban renewal" bonds, you get a bigger clue from the offering document what the money's for. But the real capper: It's already been spent! The city already borrowed it long ago under one of its shadowy lines of credit (probably with its favorite bank buddies, Bank of America) and burned it on this:
The new bonds are just to pay down the lines of credit with a permanent loan.
Elsewhere in the document, we get to see what some of the area "urban renewal" projects were: the Eastbank Esplanade, the inane eastside streetcar, the infernal Burnside-Couch "couplet," and handouts to folks like Tazo Tea, the Oregon Ballet Theater, Rodda Paint, Hooper Detox, and the S.D. Deacon construction company. About $5 million was spent on creating housing.
When the city draws on its backroom lines of credit, there's no public disclosure whatsoever of how much is being borrowed, or for what purpose. Then the balances on the lines of credit sit and fester for years (earning interest for B of A or its ilk) before the city starts paying the money back. It's hard to tell from the sketchy bond document, but is it possible that we haven't even started paying back the money borrowed for the Eastbank Esplanade, which if you haven't noticed has already started coming apart in places?
And looking at the list of beneficiaries of city largesse, it becomes clear that quite a few private pockets have been lined. The fact that interest on $15.6 million of the debt is not tax-exempt shows that there was a substantial private benefit. Ain't that the Portland "urban renewal" way? Go by streetcar, people! Our kids will pay for it, if they can ever find a job around here.