Taxpayers stay on the hook for Paulson stadium
Back when Little Lord Paulson was pitching the remodel of PGE Park into Jelled-When Field for his soccer team, there was a lot of discussion about where the city's $12 million contribution to the construction bill was going to come from. The official line in the City Council resolution went like this:
The source of repayment of the Bonds is expected to be the revenues and resources of the City’s Spectator Facilities Fund. In addition, the Bonds will be secured by the full faith and credit and Available General Funds of the City. If Spectator Fund revenues and resources are not sufficient to pay the debt service on the bonds, resources of the General Fund may be required to pay debt service.
The city took out a bridge loan to come up with the money, but now it's time to go to the banks and get permanent financing -- a 15-year deal, with interest only for the first 11 years and four big annual balloon payments starting in 2024. The official sales document for the bonds is here.
When you get to the part about how the bonds are going to be paid off, there's a lot of talk about property taxes. The spectator facilities fund is hardly mentioned at all, and it's obviously of minor importance:
The City has pledged its full faith and credit to pay the 2012 Series A Bonds, and the City is obligated to pay the 2012 Series A Bonds from Available General Funds as defined in the Bond Declaration pursuant to which the 2012 Series A Bonds will be issued (the “Bond Declaration”). “Available General Funds” is defined under the Bond Declaration as revenues which are legally available to pay the 2012 Series A Bonds and not prohibited for such use under the charter and ordinances of the City and Oregon laws, and includes all taxes and other legally available general funds of the City. The City is not authorized to levy additional taxes to pay the 2012 Series A Bonds. Certain City revenues credited to the City’s General Fund are legally available to pay the 2012 Series A Bonds. A principal source of these General Fund revenues is the City’s permanent tax rate property tax levy. In FY 2010-11, revenues from that levy (including current and prior year collections) were approximately $192.4 million, after delinquencies....
The 2012 Series A Bonds are expected to be repaid with revenues of the City’s Spectator Facilities Fund. Revenues of the Spectator Facilities Fund are not pledged to the 2012 Series A Bonds.
In other words, the taxpayers of the city are on the hook for this debt, and that's what the bondholders are looking to for repayment. Colors of money, my eye.
Moody's is rating the paper Aa1, and since the cash was spent for the benefit of a private company, interest is not going to be tax-exempt under the federal tax laws. It will interesting to see what kind of interest rate we have to pay. The sale is scheduled for next Thursday.
Also noteworthy: The city's showing long-term debt (not counting pensions) of $3.32 billion -- about $20 million higher than our debt clock projected. And it is planning to borrow another $256 million by the end of the summer -- $152 million for "urban renewal" nonsense, $24 million for the police training facility, and $80 million for additions to the Admiral's grand water empire. By the time the Sam Rands hit the road, the city will be pushing $7 billion in long-term debt. It's nothing short of stunning.