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Thursday, June 4, 2009

Funky math with Mark Larabee

Oregonian reporter Mark Larabee doesn't read this blog, or perhaps he lacks good reading comprehension. He keeps writing that the current Paulson stadiums proposal involves having the city take on a $51 million share of project costs. Apparently by this he's counting only the $42.3 million in urban renewal bonds and $8.7 million in Spectator Facilities Fund monies going into the deal.

Larabee neglects to take into account in any way the 18-year rent and tax holiday that the Paulson sports teams would get after the two new stadiums are built and are operated for seven years. In Larabee's world, that does not amount to a city contribution or liability worth counting, at all. But in the real world, the Paulsons are valuing it at approximately $17.5 million. It's essentially money that the city will be borrowing from the Paulsons, and paying back with free rent and tax forgiveness in future years. Think of it this way: If the city didn't give the Paulsons the rent and tax holiday, the Paulsons would put up $17.5 million less. It's really just a construction loan taken out by the city from you-know-who.

Larabee also does not take into account the fact that the plan calls for $4 million of tax-exempt bonds that the city would issue if the Paulsons can find a lawyer to say the bonds are legal. If you add that, plus the value of the rent and tax holiday to the city's contribution, we're up to $72.5 million from the city.

Larabee also neglects to mention the estimated $5 million in state income taxes that would be turned over to pay the stadiums' construction bonds. If that comes through, it could bring the public contribution to the stadium construction up to $77.5 million. Even without the tax-exempt bonds and the state funding, we're up to $68.5 million in public money.

The whole construction budget, at least at the current lying stage of things, is $85 million. By this math, Paulson could get out as cheaply as $7.5 million into the buildings.

If the costs overrun the budget, the deal calls for the Paulsons to pay the overruns. But anyone who makes such a guarantee will want control over the construction. How the city could legally turn that control over to a private party remains to be seen.

But hey, in the meantime, let's get the numbers straight. The city's real contribution to the stadiums' construction will be more than $51 million -- far more.

Comments (21)

The A-Engrossed version of House Bill 2531 establishes a $15 million cap for incremental tax revenues destined for the Major League Stadium Fund for a 30-year period. However, there have been two recent House Revenue Committee work sessions, including one scheduled for yesterday. Can't wait to see the B-Engrossed bill.

Good observations. I myself was wondering how pre-paying rent constitutes investment.

That's par for the course in portland politics. Lets not let facts get in the way of our decisions. Has any major "improvement" ever penned out dollar-wise before they went forward? Max, Streetcar, etc., etc.

Jack, maybe you know more on how the remaining costs of $28M, and it's debt costs for PGE Park is being handled. This should be figured in the true costs of this proposed "deal".

Capturing state income tax is not free money. I have no idea where this idea comes from. The taxes people working for teams would pay to the state comes primarily from the spending by fans, who in turn would have spent the same money elsewhere had the stadium not been built. It is money out of the state tax system. Not new dollars.
Taken to the extreme, what if all of us got such a break. My company could get our income taxes recaptured and used to pay for our rent. Fred Meyer could use the many millions its workers pay to Oregon and have it plowed back into store infrastructure. What would the state have left to pay foster parents, run its schools, etc??

Imagine all that capital going to improve schools and parks that are being neglected.

maybe you know more on how the remaining costs of $28M, and it's debt costs for PGE Park is being handled. This should be figured in the true costs of this proposed "deal".

The Paulsons' attitude toward that is that the prior remodeling wasn't their deal, and so paying off those bonds is strictly the city's problem.

"Paulsons' attitude" is one thing, but simple accounting practices is another. What is the arrangement with Paulsons if they are the major tenants of PGE Park, that reconfiguration will drastically limit the uses just for their enterprise?

One would think that Sam and Randy could tell us how the $28 Million old debt will be paid off with Paulsons' proposal. It isn't "chump change". I would even include other costs of PGE Park, like taxpayers paying an extra $3 dollars an hour to make "living wages" for Paulsons employees.

These things add up and could fill a pothole or two and keep 50 police patrolling the streets.

"Larabee neglects to take into account in any way the 18-year rent and tax holiday"

To be fair on the property tax, CoP would own the properties and not pay property tax.

However, they are relying on Paulson to pay rent so CoP can pay back the bonds.

This is the problem I have. Every time Randy gets backed into a corner by saying something less-than-intelligent, he spouts the "Paulson will pay for it" line.

Like maybe Paulson can cure cancer.

No, the tax holiday is on the ticket tax that's supposed to pay off the bonds. I never expected anyone to pay any property tax -- heaven forbid.

"I never expected anyone to pay any property tax"

You're right, thats for the fools that fund these kind of things, like taxpayers.

Jack,in the cost figures, don't forget to include what it would cost for the mandatory replacement of parkland that these goons would be paving over.

The trees alone are worth upwards of a million.

But the park land isn't going to be replaced, is it? How is that "mandatory"?

This link is sort of off-topic but really not, as it's yet another case (as in the present one) of the media doing their level best to shout down "the critics" -- the nattering nabobs of negativism -- and then, years later, admitting that the "gadflies" were right all along, and that what looked like a scam, walked like a scam, and quacked like a scam was -- quelle surprise! -- a scam!

Funny how the punditocracy, particularly at the Big O, steadfastly refuses to review history of projects and predictions when discussing things like the Lents boondoggle. Opposing the punditocracy is like being right about Iraq all along -- someone, the ante for being taken seriously is that you had to have been wrong at the start. If you knew the was was a crock of crap from day 1, you just aren't serious. If you can smell tax scams and sports scams a mile away, you just aren't a serious person -- you're a bitter local blogger or something like that.


typo alert -- "someone, the ante" should be "somehow, the ante"

How about you land use gurus pitching in on this conversation, and related ones in this blog on the subject of these goofy Paulson stadium schemes? Especially the proposed take-over of historic Lents Park.

ORS 197.013 Implementation and enforcement are of statewide concern. -- Implementation and enforcement of acknowledged comprehensive plans and land use regulations are matters of statewide concern.

P.S. -- Lents Park is certainly eligible for listing in the National Register of Historic Places in the U.S. Can you say "federal case" boys & girls?

And add a few more years and other uncertainties to the process.

Hands off Lents Park, Paulson!

Historic designation takes a long time. Fireman Randy will be cutting down trees in September.

Oregon's Land Use Goals

See, among others, Goal 5.

Paulson & Co. shouldn't be able to get any state permits to facilitate the obliteration of Lents Park.

Get lost, Randy.

Jack, You raised another thoughtful point, but I didn't necessarily mean historic designation by the City's internal processes, but rather, by the federal/state agencies from whom CoP/Paulson/Peregrine/Turkey LLC, must obtain permits (e.g., DEP, DOT). Eligibility determination is a threshold process. National Historic Preservation Act, Sec.106 and/or federal transportation act Sec.4f. But certainly, as a federally-approved national historic preservation program delegee, the City has the duty to make the eligibility determination up-front. And that decision can be appealed administratively through the state, and ultimately to the Secretary of the Interior of the U.S. Add at least two more years to the process just for that.

Furthermore, chainsawing those (actual, if not yet designated) heritage trees in Lents Park beforehand -- or any other such alterations of the historic landscape and "traditional cultural property" that Lents Park is -- would be an illegal "anticipatory demolition" under the National Historic Preservation Act, Sec.110. "Anticipatory demolition" violations of the NHPA subject the violator -- in this case the City of Portland -- to severe sanctions, particularly including losing federal grant funds and being barred from obtaining future grants. The City's authority to regulate its own federally-approved historic preservation program would likewise be forfeited.

Such destruction of those trees or any other feature of historic Lents Park would actually have the real potential to cost the City of Portland hundreds and hundreds of millions of dollars.

Hey, Randy & Merritt: instead of trying to build a commercial stadium and parking lot on Lents Park, why don't you go there and fly a kite?

Jack: You are ASSuming that Mark Larabee is a reporter who deals with actual facts. In reality, he's one of the growing number of "journalists" who prefer to deal with opinions of their own and those who employ them. And the newspaper people wonder why their circulation numbers are dropping by the thousands.

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