If the citizens of Portland continue to enable the EPA fraud on our drinking water system to continue, added costs similar to this are what you can look forward to very soon.

Treating our water for a public health problem that does not exist makes no sense. We've had enough of this fiscal foolishness and waste.

We tend to blame our leadership here in Portland for being at the mercy of Wall Street bankers, and our people have fallen for the same sort of gimmicks, shiny objects, and fuzzy math as elsewhere. But not many places have rewarded one of the main culprits. That's where Portland officials get laughed at on shows like Democracy Now - for the Henry Paulson situation.

Indeed, if the reports of a near fist fight between Henry Paulson and Barney Frank are true, we put up hardly any resistance to the guy at all.

But it's the world versus the bankers now - because the bankers are the creators of money in the form of debt and then more debt to deal with that. That's what I didn't get before: Money doesn't come from governments as much as it comes from banks - at a price. And that's why they are in control.

A system this flawed requires very noble men and women with integrity and ethics to make it work.
It turns out, "It's a Wonderful Life" was just a propaganda film. There are no George Baileys running the banking business. It's all Henry Potters. Wow, Henry Potter - Henry Paulson. They even SOUND alike.

This could be a generational thing too. There was a real man named Jimmy Stewart. I saw him myself come out of a stage door in London. But those World War 2 veterans are fading fast, and they didn't fight in Europe so that Henry Paulson, and bankers here and abroad, could trash America.

What about the new financial bill? Won't that help? The great Matt Taibbi compared it to, "The Old Man and the Sea" - the bill started out large and mighty but by the time the fish came ashore it was down to bare bones.

The practices that lead to the big crash are basically still in place and the 5 or 6 biggest banks are still operating with impunity, knowing that if they get in trouble we will have to rescue them (again), unless we collapse first. They are still gambling wildly and they are still too big to fail. Wall Street won.

Matt was asked why the banks would continue on a path that could destroy society as we know it, and apparently, they just can't help themselves - it's a combination of their greed supported by the politicians and their need for contributions. That's what's locking us into a death glide with no apparent escape - (short of something very dramatic like a revolution - not that I'm recommending anything.)

Oh well. At least we'll have an improved sewer system when it's time to flush Portland down the drain.

$12,360,000 a year divided by 500K people = $50/year for each person here. Or probably $150/household (3 people/house?)

Get ready for another $20 on your sewer bill each month.

Too bad they couldn't have been setting aside reserves for the last 50 years. This wouldn't be an issue then.

"If the citizens of Portland continue to enable the EPA fraud on our drinking water system to continue"

Why? That's the excuse PWB used to raise water rates 30% in the past two years - and they haven't even done anything besides study the issue. Wait until they really have to do something.

Being 3,000 miles away and having no knowledge of the particulars, it seems to me that borrowing to build/improve sewer systems is the rational way to do it. The reason is that the benefits will accrue in the future, so charging the future recipients of the benefits the amount necessary to pay interest and amortize the debt sounds correct.

Setting up a reserve fund means charging current users for benefits that will accrue to future users. I am happy to pay to treat my own waste, but let future generations pay to treat their waste.

Am I missing something?

3000 miles?

You're missing $12 million to $20 million of interest. And it's not as if they get a clean Willamette. Even after all the improvements, it will still be a cesspool.

I rest my case!

$12,360,000 a year divided by 500K people = $50/year for each person here. Or probably $150/household (3 people/house?)

That's just the interest. We also have to pay off $412 million of principal over 25 years.

Jack, you really don't expect kiddie council and the planners to be bother by the realities of math and money do you? I mean those are trivial compared to the work that must be done to improve things... /*snark mode off */

"I am happy to pay to treat my own waste, but let future generations pay to treat their waste.

Am I missing something?"

In normal investment properties, banks will make owner set aside a portion of income for reserves for capital expenditures that will happen.

CoP should realiz that maybe after, say, 100 yrs, some o the systme may beed replacing. Rather than wait until something blows up they could have a small savings acct instead of p!ssing away money on every pet roject that comes along.

It just the mentality of politcians to leverage every bit of revenue on what they want and not on what is needed that messes the whole system up. Then again, like Randy what do they care? They'll have their two pensions and someone else can deal with it while they have their checks sent to Palm Springs.

Ditto to Steve above: Why should the politicians care about all of this debt? They don't because it isn't their money.

They can rack up debt upon debt and when the whole thing is about to crash they simply strap on their golden parachutes and bail out.

I guess, as in many cases, I am having a failure to communicate.

As I understand it, in order to have an operating sewer system for the future an expenditure of $412 million must be made today. The benefits of that expenditure will be realized by inhabitants of the city over the next several decades. Therefore, logic suggests that those beneficiaries should pay the cost of those benefits (I am assuming that the $412 million is a reasonable and legitimate cost) and interest is just another cost because the funds must be expended in the present and are paid back in the future.

It just seems that in this case (as opposed to the situation of borrowing funds to pay operating costs) the policy of borrowing results in charging those who receive the benefits for the cost of those benefits. It is analagous to a business borrowing money for a capital investment and paying interest and principal out of the profits generated by that investment, all in all a sound business principal if indeed it is an economically justified investment.

Borrowing in and of itself is neither good nor evil, it just is. Borrowing to finance consumption is not generally a good practice; borrowing to finance investment can be a good practice. If borrowing is used for investing where the future benefits are greater than the costs, including interest, then it can be a good thing. The issue here, it would seem to me, is not the borrowing, it is the decision to invest the $412 million. If that is a good decision, borrowing would appear to be the proper way to finance it.

Responding with platitudes and generalizations tells me you know not of what you speak! I'm glad you are 3000 miles away. I'd hate to have you here. You might even decide running city council is right up your ally.

Sid, your proposal is the adult way to do things, but there are some flies in the ointment --

1) The idea that people in the future should pay for benefits that accrue in the future (public goods like infrastructure) is nice, but it tends to presume that, at the same time, people in the present aren't shoving a lot of negative benefits off on those same people. But with pollution and resource stripping, that's exactly what we're doing -- we're having a big party today and plundering resources (including the atmosphere and oceans) and shoving those costs onto the future rather than paying as we go . . .

If we want to operate a pay-go system to justify making them pay for future benefits, don't we have to do our part and start paying for the things WE enjoy now?

2) The other big problem is that debt-financed building carries an implicit assumption that we (the populace) will be richer in the future than we are today -- that's a pretty bad assumption now, for a host of reasons.

When the continent was sparse in people and abundant in natural resources, you could bet on us being richer every generation. But now we're rich in people and sparse -- and getting sparser fast -- on the fundamental elements of wealth creation. That means that we'll be lucky -- very lucky -- if we can even hold our own compared to prior generations.

All that said, I don't criticize spending $400M on systems for protecting water and public health when people are proposing to flush multi-billions down the drain on a Columbia River megabridge that, if it's ever built at all, will do nothing to ameliorate congestion and would likely arrive when the consequences of our decline are making driving a much less central part of our lives.

George, the megabridge isn't there for us drivers. It's to ameliorate a bottleneck on the Pan American Highway for truckers who otherwise would not drive it.

I'm not for it at all.

So far as "adult", the adult thing to do is to take back ownership of the monetary system. As constituted today, most all over the world, the banks hold all the cards, can loan more than they can cover, then devalue the currency and the inevitable recession hits when a run on the banks happens.

George

I strongly agree with your first point. Our generation and several generations before us have plundered the environment in such a manner that we have pushed huge cleanup costs to future generations. I am always amazed by those who speak so fervently about the need to balance budgets and not push debt onto future generations but are more than willing to pursue damaging environmental policies which push clean up costs onto future generations.

There is no question that as responsible people we should pay all of the clean up costs for current environmental problems and we have no right to pass those costs onto the future.

As I understand this project, it is basically to treat future waste generation. (If it is to remediate existing waste, then it should be paid for currently.) Not doing a waste treatment project does not make the costs go away, it merely postpones their realiztion.

I am not sure I really understand your second point. It is not a question of wealth or income. If the project itself is justified, it must mean that the future benefits, both tangible and intangible are greater than the costs, so the project is supported and paid for by those benefits. If the benefits are not equal to the costs, then don't do the project and the debt issue goes away. (Yes, I know it is difficult to measure the intangible benefits of environmental projects, but again, if the project has been approved in a democratic process one must assume the overall benefits exceed the cost)

Future generations will generate waste which must be treated, or else they will be pushing huge environmental costs to their future generations. Building a waste treatment facility (again I am assuming the project is desirable) gives them the opportunity to treat the waste efficiently (it is much less expensive to treat waste as it is generated than to clean it up afterwards) and by debt financing it, and servicing the debt by waste water or sewer fees lets them pay for treating the waste they generate.

To reiterate, my only point in all of this is that if the benefits of capital projects, either private or public, accrue to the future and those benefits exceed their cost, then it is reasonable economic and financial policy to use debt financing to develop those projects.

"I am not sure I really understand your second point. It is not a question of wealth or income. If the project itself is justified, it must mean that the future benefits, both tangible and intangible are greater than the costs, so the project is supported and paid for by those benefits. If the benefits are not equal to the costs, then don't do the project and the debt issue goes away. . . ."

The point I was trying to make is that your thinking is absolutely spot-on conventional economics thinking, which presumes that we will have an ever-expanding economy, which permits us to service debt.

All debt relies on the assumption of economic growth because, otherwise, taking on debt means condemning yourself to a reduced ability to consume in the future. In other words, if you thought you would only continue to earn what you earn now for the rest of your life, borrowing means paying more for everything while having less money to meet your future needs.

All our financial and economic systems are predicated on this notion that we can simply keep growing -- using more materials and energy -- indefinitely. Problem is, we have a finite planet and the end of growth appears to be in sight. Thus, we need to take a very, very skeptical look at any debt.

As I said before, a facility for keeping poop out of the water supply is probably one of the investments that should pass muster, unlike aerial trams, condo bunkers, soccer stadiums, etc. But we need to be going in with eyes very wide open to the possibility that the growth era will not return and that, at best, we're going to have to pay for things out of current balances simply to avoid condemning "the future" to an even more dramatic decline ... even though our current (growth-assuming) economic theory would dictate borrowing for infrastructure.

Question: What exactly is this $412 million being used for?

Dollars for sewers as we found out can be used on a broad range of projects.

George- A-S

People haven't died from poop in an open reservoir. People HAVE died from closed reservoirs and bird poop...in Colorado and Missouri.

But you won't hear that from PWB or EPA. Looks like Insider was right.... more EPA fraud.

Whoa, Fred, are you saying that the $412M is for covering reservoirs? I didn't think that had anything to do with this money.

George Anonymuncule Seldes and all,
Take a look for much more information.
(following info from June 28, 2009 entry)

http://friendsofreservoirs.org/

Open reservoirs safely provide drinking water to tens of millions of customers around the nation. New York is seeking a variance for their large Hillview reservoir. There will be no measurable public health benefit resulting from burying Portland’s open reservoirs.

The current costs (capital only) for burial of the open reservoirs as estimated by the PWB are between $400.4 million and $415 million ($800 million with debt service). These costs do no include costs for Mt. Tabor amenities nor for Washington Park amenities. The Water Bureau plans call for retaining the properties at Mt. Tabor and Washington Park for future burial

G-A-S
It was you who brought up paying to keep poop out of water supply. Covering reservoirs does not pass muster.

Anyway, Big Pipe does not provide absolute protection from sewage discharge into Willamette, only a reduction. It's still going to happen.

Fred Young,
Do you have any further information about any plans or discussions by the PWB or others to someday include/blend that Willamette River with our Bull Run drinking water?