That be some spendy money
The City of Portland has "priced" that $66.6 million of "urban renewal" debt that it's loading on this week for the so-called "South Park Blocks" district. And the numbers we've been given by the city's debt manager are pretty sobering:
Yields on the $34.58 million taxable Series A maturing 2009 to 2019 ranged from 4.032% to 6.081%. The true interest cost (TIC) was 6.003%.Wow, look at that "Series A." We're now borrowing tens of millions on a routine basis for "urban renewal" at an interest rate of 6 percent. Back in April, the city got a similar interest rate -- 6.0278 percent -- on another $50.6 million of taxable "urban renewal" bonds it sold to gussy up another part of downtown (including the county courthouse, supposedly).Yields on the $32.02 million tax-exempt Series B bonds maturing from 2019 to 2024 ranged from 4.30% to 4.63%. TIC was 4.618%.
Combined TIC of 5.156%.
The latest round of borrowing is 11-year money, and to our untrained eye, 6 percent interest does not seem like much of a bargain for that sort of debt. Six percent of $34.58 million is $2.07 million of interest a year. Given that the city hasn't identified all of the projects that the money's going to be spent on, and given that these projects typically include hefty overhead charges by the Portland Development Commission, it looks like the city may essentially be using a credit card to meet the PDC payroll.
But hey, this money stuff is all so boring, and besides, Bush is dragging our children into financial hell even faster than Sam and Randy, so we shouldn't worry about this, right? Go by streetcar!
| Posted at 6:47 AM | Permalink |
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Comments (10)
"We're now borrowing tens of millions on a routine basis for "urban renewal" at an interest rate of 6 percent."
You know those checks from your VISA that you can use to pay your other VISA? That's all this is. So slowly we dig a deeper and deeper hole.
With financial geniuses like Randy ( give me 31 yrs of prop tax increases and I'll fix PFDR), Sam (I gotta have it no matter what it costs), Saltzman (how can I get my eng buddies a contract to build reservoir lids) we are doomed.
I don't think Fish or Amanda will be any different either, so we just keep on going until the city hits a wall.
Can't we get anybody with some experience or even a college degree in any kind of finance to make decisions on CoP $2.4B budget? Probably never.
Posted by Steve | July 3, 2008 8:30 AM
"Given that the city hasn't identified all of the projects that the money's going to be spent on"
That's a real crime. Not a dime of urban renewal money should be borrowed unless for specific identified projects which have been vetted thoroughly by the Commission. Now they're just borrowing for the heck of it.
Jack, do you get the sense that the "debt manager" you speak to at the city is concerned about debt levels, or does he remain agnostic?
Posted by Deeds | July 3, 2008 9:34 AM
Given the hundreds of billions spent to further destabilize the Middle East and send our boys to their doom, money like this, $4 billion for CRC, $1.4 billion for light rail, etc etc - all of it is chump change by comparison!
Posted by Unit | July 3, 2008 2:03 PM
Given the hundreds of billions spent to further destabilize the Middle East
Bush can just print more money. Portland has to collect it, from you and me.
Posted by Jack Bog | July 3, 2008 3:06 PM
do you get the sense that the "debt manager" you speak to at the city is concerned about debt levels, or does he remain agnostic?
Eric Johansen is quite helpful and responsive on the facts about the various borrowings. I have never asked him to comment on the prudence of the city's debt levels and plans, but I suspect he would not comment if I did.
The policy decisions here are being made by a retired cop; a retired fire union guy; a couple of lifetime City Hall employees (one an engineer, the other barely finished college); and a new guy, a lawyer, who just replaced another fellow who also never had a real job. None of them has any background in finance.
Scary.
Posted by Jack Bog | July 3, 2008 3:47 PM
None of them has any background in fiduciary responsibility either.
Which leaves the hopelessly lacking in integrity as well.
Scary and insulting.
Posted by Hal | July 3, 2008 7:44 PM
"Given the hundreds of billions spent to further destabilize the Middle East and send our boys to their doom"
Love the reasoning - one dumb idea desrves another.
I understand how we keep electing the same chumps in this town now.
Posted by Steve | July 4, 2008 7:38 AM
An old song comes back: "...Another day older and deeper in debt..."
Posted by Don | July 4, 2008 8:43 AM
$32.02 million in Series B bonds!
Is our credit rating that bad or have we always been municipal junk?
Posted by David Smoot | July 8, 2008 5:26 PM
The bonds are not rated B -- that's just a label on one of the two series of bonds issued at the same time. The bonds were rated Aa3, I believe.
Posted by Jack Bog | July 8, 2008 5:48 PM