Collateral damage
While on the subject of Steve Duin rants, he's also launched two at Blazers owner Paul Allen on account of the latter's placing his Portland real estate company, the Oregon Arena Corp., in Chapter 11 bankruptcy. Duin chides the billionaire for playing deadbeat on the mortgage on the Rose Garden arena -- a mortgage held by a large teachers' and college professors' pension fund. (The same sentiment was voiced here a couple of months ago.)
Duin overlooked the latest scoop on this debacle, though -- the part where Portland taxpayers take one in the shorts. It turns out that, as part of the bankruptcy, Allen's company may wind up walking away from its contractual obligation to operate the city-owned Memorial Coliseum. The Coliseum, which hosts lesser events and has run seriously in the red ever since the Rose Garden opened next door, could conceivably be handed back to the city to operate. There it would join the city's money-bleeding PGE Park and the chronically empty (but heavily mortgaged and taxpayer-financed) Convention Center for the historic Trifecta of Bad Economic Development Deals, engineered by our illustrious mayor and her former economic development aide.
A decade ago, when Allen originally got the deal from the city that allowed him to build the Rose Garden, many questioned whether he was getting too sweet a deal. One answer to the critics was, "At least he'll run the Coliseum for us."
Well, now he could well be walking away from that commitment, too. "The rich are different from you and me." Thank heaven.
| Posted at 10:45 PM | Permalink |
|
Comments (4)
Is there ANY way the city can fight this in court? It seems unworldly that the Vera would let this go without a fight....Then again (and sadly), maybe not.
Posted by Scott-in-Japan | April 25, 2004 11:09 PM
Remedy? There is a structural problem inherent to almost all economic development proposals. Politically connect beneficiaries obtain immediate rewards while the guarantors, with speculative obligations, are not called upon until ten or twenty years later. This is a huge lag time to recognize a failed financial design.
Mr. Allen could be viewed, in one perspective, as a hapless participant. The politicians advocating construction, with immediate rewards to a constituency, used Paul Allen’s wealth as a distraction. The supposed future benefits, to the public at large, of the existence of new public facilities is just the happy-face on the analysis that spends huge unrecoverable borrowed dollars today.
It is almost impossible to win an argument about speculative future failure (to be paid by someone else or even the next generation) when there are arguments about the immediate and targeted list of winners from construction today.
Sadly, the remedy is more of the same – in even higher amounts. The economists (what I call politically correct economists) cannot snap out of their circular reasoning favoring borrowing or they will go broke because they will no longer have paying clients.
If we could go back and recover the money from the original contractors of the Rose Garden then we could get back to square one.
I think those contractors have moved on the building 2 billion dollars worth of roads and are also building tens of millions of dollars worth of public housing with dollars that the State Treasurer has eagerly borrowed on their behalf (oops I mean on our behalf). The public housing ownership documents are conveniently allowed to be used as collateral in Oregon commercial banks at ninety percent of face value for purposes of doing more of the same. The network of beneficiaries represents the Oregon economy. Would you really want to be a party to destroying Oregon’s economy?
Posted by ron | April 26, 2004 10:10 AM
I'm not looking for a remedy, or even looking at the issue itself.
I'm just struck that in the same country where the old woman at McDonald's gets a pay-off for spilling coffee on herself - no one is even *trying* to get the city out from this mistake. For all of the protestors in PDX, I hear a lot of silence on this.
Posted by Scott-in-Japan | April 27, 2004 5:59 AM
OH BUT YOU DON'T MIND HAVING A BASKETBALL TEAM DO YOU? GIVE ME A BREAK YOU SOCIALIST WHINERS.
Posted by My Name | June 10, 2004 9:13 PM