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This page contains a single entry from the blog posted on June 5, 2012 8:23 AM. The previous post in this blog was That menacing street punk with the pit bull deserves your smile. The next post in this blog is Portland planners eye I-5 Rose Quarter hell. Many more can be found on the main index page or by looking through the archives.



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Tuesday, June 5, 2012

Party's over in SoWhat District

The citizens window dressing committee on Portland's failed SoWhat District met last week, and reports are that the car-hating head of the Portland Development Commission, Patrick "Cars Are Evil" Quinton, showed up. According to our spies, Quinton told the advisory group that there is no more money for the many projects that were supposed to be added to SoWhat to make it more of a neighborhood and less of a concrete jungle.

This budget document would seem to bear that out. It shows the PDC borrowing another $19.5 million over the next year, and blowing that and more on the Mystery Train to Milwaukie ($10 million) and so-called "affordable veterans housing" ($11.4 million). After that, the debt spigot gets turned off. "The era of TIF [tax increment financing] is over," Quinton reportedly said.

But not before a last gasp at Portland State and Lincoln High School, of course. Quinton reportedly told the committee that 60% of the 144-acre new "education urban renewal" district is PSU. With other public property, at least 70% of the property in the gerrymandered "blight" zone is not subject to property tax. If this is the case, 30% of the property will have to provide the increased property taxes to repay $169 million in "urban renewal" debt over the 28-year life of the plan. Sounds like an enormous bust waiting to happen.

Back to the SoWhat budget, it also shows millions of dollars of short-term debt being taken out every year, presumably on the city's backroom "letters of credit." A lot of that money's probably going to pay overhead at the PDC and the city's shaky new housing bureau. Borrowing to pay basic administrative costs, of course, is a sign of extraordinary financial weakness.

In the end, Quinton told the committee that SoWhat was a success. Given the 5,000 to 10,000 biotech jobs it was supposed to produce for Portland, none of which ever materialized, it's been a success only for the condo developers who have eaten well off the public dime. But Quinton has a story to tell. Maybe next year he'll be telling it to students at his new employer, the PSU Patronage Center.

Comments (17)

Maybe we should relax about the missing bio-tech jobs. All it really did was change the SoWhat District from science to science fiction:

Avatar had the Floating Mountains of Pandora. We have the Floating Condos of Portlandia.

"If this is the case, 30% of the property will have to provide the increased property taxes to repay $169 million in "urban renewal" debt over the 28-year life of the plan."

I don't understand that either. Also, if you read what the district is planning to contribute to PSU, it amounts to a small fraction of the costs of the specific projects PSU has it earmarked for. UR will pay for a couple million of a $50 million building, for instance. It's not nothing, but it isn't much of the total budget.

The $19 million payoff to the County just to get them to agree to the deal is nearly twice the proposed $10 million benefit to PSU.

I have to conclude that this entire effort is primarily about the Lincoln High School site. Before long we'll start learning what powerful special interests were pushing that (primary) part of this scheme.

"The era of TIF is over."

I'm really curious what is meant by that. Was he just talking about SoWa? The City doesn't seem to be slowing down on using TIF.

Edna St. Vincent Millay and the City of Portland are of a single mind in one respect: "Safe upon the solid rock the ugly houses stand: Come and see my shining palace built upon the sand!"

It's starting to look like City Hall has become a big ATM for PSU.

How'd that happen?

The way I see it, prospective TIF bondholders would be wise to worry about not getting paid, because of the obvious flaw of relying on a high ratio of exempt vs taxable properties to repay bonds, or because, regardless of any general fund backstop, there simply might not be enough money anywhere to repay the bonds when they mature. I wouldn't enjoy watching the bondholder trustee negotiate how much money I'll lose when the issuer tries to skirt its obligations in municipal bankruptcy. So, surely the market for TIF bonds isn't what it used to be. Also, if I'm the underwriter, I'd view long term TIF bonds issued under these circumstances as ticking time bombs. When the bondholders don't get paid, I'm going to be brought into the mix, because so many of the issuer's representations in the prospecti are misleading. Likewise, if I'm an insurer or reinsurer, I'd try to charge as much premium for these risks and others without killing the offering, because I'd figure that I'd personally be long gone when the house of cards falls. Nevertheless, all these things increase the cost to issue the debt, which increases the likelihood of default and lessens any benefits of TIF bonds in the first place. That's how I see it, but I'd like to hear what the experts think.

because I'd figure that I'd personally be long gone when the house of cards falls

Isn't that generally how Portland government has been operating for a while now?

I just got Bill McDonalds joke. Good one.

Snards, regarding "TIF is over", Patrick Quinton was referring to all of Portland's URA's-now 18. He was acknowledging the political winds of what is happening in the outlying areas and the city, and the decimation of property tax dollars coming into URAs.

His comments made things look bleak, and they are. He even said "PDC is running out of money", and "political climate of URAs are challenging".

Consider Jack's post of SoWhat's "Five Year Forecast". It's a hard 2 page document to decipher. When PDC's budget expert Faye Brown was asked about this spread sheet, "Where's the TIF dollars coming into South Waterfront", she referred to "Resources"-"Property Income and "Short Term Debt" combined lines as the TIF dollars. Essentially the TIF dollars are borrowed dollars. The debt service on the approximately $200 Million of the $290 Million max TIF dollars that can be spent is exceeding property tax TIF revenue.

SoWhat is broke. But Quinton went on to say that "South Waterfront is a success". Then PDC Lisa Abuaf went on to say (paraphrase) "We need to do a better job of telling the success story of South Waterfront".

Quinton described the Education URA as a Partnership of PSU, PDC, CoP, PPS, Multnomah Co. and OHSU. SoWhat's 417 acres comprises with over 50% of the land off the property tax rolls due to public/non-profit ownership. That is one reason it is broke, little contribution to even pay the debt service nor the principal on $290 Million.

So, how can the Education URA, comprising 60%, probably 70% public/non-profit ownership, pay down its $169 Million debt by 2041? And how can Multnomah Co. Jeff Cogan argue that the $19 Million to co-share some space in a building be a good deal when Multnomah Co. will lose $69 Million by this Education URA? League of Women Voters tried hard to convey this message to no avail.

Roger Gertenrich (S.Waterfront resident) made a good point about the negatives of the Education URA. He said that helping PSU higher education focus is taking money away from 1 thru 12 grade schools (particularly PPS's $69 Million)that prepare students so they may be able to take college courses. The cart is ahead of the horse again. Quinton responded that PPS is only harmed by $5 Million due to the Education URA. A major discrepancy.

"The era of TIF [tax increment financing] is over," Quinton reportedly said.

I remember somewhere around 2004 - 2005 (little hazy on exact year) sitting in a PDC sponsored PSU class on urban renewal. It was conducted by Don Mazziotti and he uttered virtually the same words.

And how can Multnomah Co. Jeff Cogan argue that the $19 Million to co-share some space in a building be a good deal when Multnomah Co. will lose $69 Million by this Education URA?

..."because I'd figure that I'd personally be long gone when the house of cards falls"...

What are the chances the Oregonian will end up covering this story?

Probably about as likely as it was for the Oregonian to cover the Clackamas Sheriffs' call for the County Commissioners to terminate their $25million commitment to PMLR. That was a major revelation when it appeared in this blog eight days ago, but we've only heard crickets from the Oregonian since then (even the Portland Trib made passing reference to it in an online story).

Is the problem that they so resent getting scooped by a hobbyist-blogger that they treat his revelations as unnewsworthy or is it because the Oregonian willfully ingored all of the financial malfeasance while it was being hatched?

"The era of TIF [tax increment financing] is over,"

I have thought of this as similar to the end of the era of the gold rush, with the elected officials assuring that certain nuggets still left go to a few. That is why the tentacles are searching elsewhere. The agenda might not be too welcome in other areas. That may be why Charlie Hales found out that the economic picture ain't too good out there, so he wants back in a "secure" position. He doesn't deserve it after all the negatives he did here.
Hales motto might be "Ask not what you can do for your city, but what your city can do for you." Can't depend on Jefferson either. As was mentioned in an earlier post, both represent certain factions to continue the agenda.

Thanks for that detail Jerry. Very interesting.

"That is one reason it is broke, little contribution to even pay the debt service nor the principal on $290 Million."

One can sit down with a spreadsheet and project these TIF revenues out. It's inexusable that this should catch the PDC by surprise. It isn't necessarily elementary school math, but an agency like the PDC should count the number of employees on staff who can make and review these projections in the double digits.

Their problem is that as soon as they create a new urban renewal district, they rush out and borrow all the money they can against their new TIF credit limit. While these districts last 20+ years, they're out of money to spend in less than 10.

Snards, thanks for the thanks.

You're right about the malfeasance germinating from new urban renewal areas. What many times happens are these new borrowing PDC opportunities have these funds "loaned" or hidden in accounting tricks for other under-funded PDC UR areas. Or even more tricky to detect, is how these funds from one URA is used for administrative costs of another URA.

Examples are funds that were taken from the Pearl and the Central Eastside URAs. Funds have been taken from SoWhat too. Sam took $10 Million in TIF dollars from SoWhat for the Milwaukie Lightrail without any notification to the URAC, nor a vote. Then he took another $10 Million in SoWhat Service Development Charges for MLR, again without a vote. Finally the URAC politely complained but PDC and Sam just ignored it.

It is time for some open processes minimally; and/or legal action.
I wish the League of Women Voters, or some other group(s) took the Education District to LUBA and forward-based on improper notification, misuse of "blight", etc. There's still time before the filing period is past.

Until the legislature does something about legalized thievery in this state, it's probably only going to get worse as the worst of the worst continue to flock to this state and weasel their way into "politics".

How would we on the east bank of the Willamette go about seceding from Portland ?
That may be the only salvation for many of us.

How would we on the east bank of the Willamette go about seceding from Portland

It would be a wonderful day if all of Portland south of I-84, and east of I-205, west of Gresham and north of Johnson Creek, split off and formed a new city.

It would set its boundaries to that of ODOT's property line so it would have no legal responsibility to deal with any problems on the freeway. (And as for I-84, it'd only have one exit and one on-ramp, both eastbound.) It would also exclude the Gateway Transit Center, so any problems on TriMet's property there would be TriMet's problem.

It would be north of Johnson Creek, so the new city wouldn't have to worry about snowplow duty on that wonderful urban sprawl Portland permitted throughout the 1990s on the unstable slopes. It would only have Powell Butte and Kelly Butte - both natural areas and thus no roads to have to plow in the winter.

It would be able to take over the Multnomah County Sheriff's Office as its city hall and police station - well centralized for the city.

And it could easily have the school districts redrawn so that it would fall under a single school district and not be split up amongst PPS, David Douglas, Parkrose, Centennial and Gresham-Barlow. It would also need to redraw the ZIP Codes and have new 970 ZIP Codes assigned so that they aren't mistakenly referred to as "Portland" with its 972 ZIP Codes (like Tigard and Milwaukie, and Cedar Mill).


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In Vino Veritas

Lange, Pinot Gris 2015
Kiona, Lemberger 2014
Willamette Valley, Pinot Gris 2015
Aix, Rosé de Provence 2016
Marchigüe, Cabernet 2013
Inazío Irruzola, Getariako Txakolina Rosé 2015
Maso Canali, Pinot Grigio 2015
Campo Viejo, Rioja Reserva 2011
Kirkland, Côtes de Provence Rosé 2016
Cantele, Salice Salentino Reserva 2013
Whispering Angel, Côtes de Provence Rosé 2013
Avissi, Prosecco
Cleto Charli, Lambrusco di Sorbara Secco, Vecchia Modena
Pique Poul, Rosé 2016
Edmunds St. John, Bone-Jolly Rosé 2016
Stoller, Pinot Noir Rosé 2016
Chehalem, Inox Chardonnay 2015
The Four Graces, Pinot Gris 2015
Gascón, Colosal Red 2013
Cardwell Hill, Pinot Gris 2015
L'Ecole No. 41, Merlot 2013
Della Terra, Anonymus
Willamette Valley, Dijon Clone Chardonnay 2013
Wraith, Cabernet, Eidolon Estate 2012
Januik, Red 2015
Tomassi, Valpolicella, Rafaél, 2014
Sharecropper's Pinot Noir 2013
Helix, Pomatia Red Blend 2013
La Espera, Cabernet 2011
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Villa Antinori, Toscana 2013
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Benton Hill, Pinot Gris 2015
Primarius, Pinot Gris 2015
Januik, Merlot 2013
Napa Cellars, Cabernet 2013
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Beaulieu, Cabernet, Rutherford 2009
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Hedges, Red Mountain 2012
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G3, Cabernet 2013
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Willamette Valley, Rose of Pinot Noir, Whole Clusters 2015
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Ca' del Baio Barbaresco Valgrande 2012
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Lugana, San Benedetto 2014
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King Estate, Pinot Gris 2015
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Jack London - The House of Pride, and Other Tales of Hawaii
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Emma McLaughlin & Nicola Kraus - The Nanny Diaries
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Phil Stanford - The Peyton-Allan Files
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Evelyn Waugh - Brideshead Revisited
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C.S. Lewis - The Magician's Nephew
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William Shakespeare - A Midsummer Night's Dream
Ivan Doig - Bucking the Sun
Penda Diakité - I Lost My Tooth in Africa
Grace Lin - The Year of the Rat
Oscar Hijuelos - Mr. Ives' Christmas
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Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
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Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
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Road Work

Miles run year to date: 5
At this date last year: 3
Total run in 2017: 113
In 2016: 155
In 2015: 271
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In 2013: 257
In 2012: 129
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In 2010: 125
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