Cha-ching! City of Portland borrows $112.8 million over two weeks
After a hiatus of several months, the City of Portland has gone back to its credit card ways, with two new bond issues, totaling $112.8 million, issued between March 10 and March 23. Of this amount, $82.8 million was borrowed by the city for the water bureau, and the other $30 million was for central east side "urban renewal." City Hall has a new "debt manager," B. Jonas Biery -- the last person in that position, Eric Johansen, has been moved to city treasurer -- and the new guy has dug right in, putting the city further into hock. That's Jonas's job.
The money was not borrowed cheaply. The water bonds will bear interest at various rates as high as 4.86% for 25-year debt, and there's a killer 6.25% interest rate being charged on some 10-year "urban renewal" money. Ouch. Although the water bonds, secured by a first lien on the city's water supply, got the highest rating, Aaa, from Moody's, the "urban renewal" bonds, which are payable only out of rising property taxes in the central eastside "urban renewal" district, rated an anemic A2 -- five notches down from Aaa.
What will all this new borrowed money be spent on, you ask? It's pretty hard to tell exactly from the bond sales documents. The money borrowed through the water bonds, we're told, will "finance a portion of the costs of the Capital Improvement Program." But that "program" is loosely defined as any one of a myriad of activities that have something to do with water:
So yeah, it's $82.8 million, and it will be spent on whatever -- water, o.k.? You got a problem with that?
With the $30 million of central eastside "urban renewal" bonds, you get a bigger clue from the offering document what the money's for. But the real capper: It's already been spent! The city already borrowed it long ago under one of its shadowy lines of credit (probably with its favorite bank buddies, Bank of America) and burned it on this:
The new bonds are just to pay down the lines of credit with a permanent loan.
Elsewhere in the document, we get to see what some of the area "urban renewal" projects were: the Eastbank Esplanade, the inane eastside streetcar, the infernal Burnside-Couch "couplet," and handouts to folks like Tazo Tea, the Oregon Ballet Theater, Rodda Paint, Hooper Detox, and the S.D. Deacon construction company. About $5 million was spent on creating housing.
When the city draws on its backroom lines of credit, there's no public disclosure whatsoever of how much is being borrowed, or for what purpose. Then the balances on the lines of credit sit and fester for years (earning interest for B of A or its ilk) before the city starts paying the money back. It's hard to tell from the sketchy bond document, but is it possible that we haven't even started paying back the money borrowed for the Eastbank Esplanade, which if you haven't noticed has already started coming apart in places?
And looking at the list of beneficiaries of city largesse, it becomes clear that quite a few private pockets have been lined. The fact that interest on $15.6 million of the debt is not tax-exempt shows that there was a substantial private benefit. Ain't that the Portland "urban renewal" way? Go by streetcar, people! Our kids will pay for it, if they can ever find a job around here.
| Posted at 9:45 AM | Permalink |
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Comments (20)
Things for sharing this tidbit Jack... Hopefully some change will come in 2012.
Posted by Benjamin Kerensa | March 29, 2011 10:30 AM
Unreal, just beyond belief.
BTW it's GO BY RAPID STREETCAR now!
Posted by al m | March 29, 2011 10:35 AM
The fact that interest on $15.6 million of the debt is not tax-exempt shows that there was a substantial private benefit.
How, Jack? I would think tax-exempt interest would be beneficial, but what do I know!
Posted by Starbuck | March 29, 2011 10:35 AM
Each one of these water expenditures can be explained away by Shaff's corporate engineer good buddy, who will receive most of the financial benefit from these unneeded projects. This is what you get when unscrupulous people run the water bureau. All of this while going through the motions of doing nothing but waste time. None of these projects are beneficial to ratepayer. Alternative solutions are available....if you're not dishonest. Does someone have the number for Coldwell Banker Realty?
Posted by Jimmy McMillan | March 29, 2011 11:08 AM
...GO BY RAPID STREETCAR now!
More like Rabid Streetcar around here.
Elected officials especially Blumenauer and City Council "smitten and bitten" totally!
Posted by clinamen | March 29, 2011 11:19 AM
"loosely defined as any one of a myriad of activities that have something to do with water"
Which in Portland can mean literally anything. I'm seriously considering just not paying my next water bill.
It's going to be sad to leave Portland. There is so much I love about it. Used to be a great blue collar city. Now it's a boutique playground for people who don't understand, or don't have to care, what a budget is.
Posted by Snards | March 29, 2011 11:26 AM
Either you bring the money to the Water Bureau or you bring the Water Bureau to the money. (Apologies to Chinatown)
Posted by LucsAdvo | March 29, 2011 11:33 AM
Jack, in your research on CoP bonds and it's funding of urban renewal, did you come up with any newer info on UR bonds for streets, infrastructure needed for the proposed new OHSU Science Building on SW Moody? OHSU is trying to have taxpayers build all of it's infrastructure on the Schnitzer property on the taxpayer dime, as well as the moving of SW Moody, which part of is already funded by city issued bonds.
Are the ratings A2 for these and are we paying 6.25%? PDC avoids telling the SoWhat URAC any of this kind of information. If they do, it is always way past the time when they might really function as an "advisory" committee.
Posted by Lee | March 29, 2011 12:27 PM
I like the idea of a mass water bill protest.
If we could get 75% or more residents to refuse to pay that bill, we might get some of these bozo's to listen to us.
And for all you light rail supporters, the dream is coming true:
http://www.youtube.com/watch?v=PAHofNhe95U
Posted by AL M | March 29, 2011 12:41 PM
The Oregonian reported about the Portland Water Bureau,
the 80% increase in water rates in five years.
Part 2 of this story now needs to be reported.
What will happen to the quality of our drinking water?
Do the story.
For the children.
Posted by watching for our children | March 29, 2011 12:43 PM
Fascinating - $5M for 190 rental units = $25K per unit to rehab (that's make a nice huge kitchen),
"conversion of an old bank building for the Oregon Ballet Theater" Glad to see Christopher Stowell got some payback for dating Sam Adams.
BTW - When does the $10M to G-E for Vestas show up?
Posted by Steve | March 29, 2011 12:55 PM
I wonder if these people would care?
http://www.transparency-usa.org/
This is what happens when people put too much trust in the guiding hand of 'omnibenevolent leaders' with 'vision'.
Posted by Mr. Grumpy | March 29, 2011 1:34 PM
I heard the Milwaukie Light Rail is being re-designed as a log flume ride to take advantage of this "new" money.
Posted by John Fairplay | March 29, 2011 1:50 PM
Just to let you know how politicians measure their effectiveness:
http://www.oregonlive.com/argus/index.ssf/2011/03/what_us_rep_wu_has_done_for_yo.html
The more they spend, the more "effective" they are.
Posted by Steve | March 29, 2011 2:49 PM
...and if some of the stuff they have got on the table in Salem goes through, they won't have to tell us 10% of what they are telling us now.
Posted by dyspeptic | March 29, 2011 3:41 PM
Interestingly, the private beneficiaries of this largess all appear to be entities with representation (directly, or via parents, subsidiaries, or affiliates) on their respective URACs
This can't possibly be legal, can it?
Calling the "ice cream man"...
Posted by Sal | March 29, 2011 3:42 PM
Interesting to read in the document how few major private sector employers there are in the metro area and what a large percentage of them are health care and health insurance businesses.
Posted by Stuart | March 29, 2011 3:50 PM
"This can't possibly be legal, can it?"
Why soytenly it can be.
It's called Kinetic Racketeering.
Posted by Ben | March 29, 2011 5:05 PM
Part 2 of this story now needs to be reported.
What will happen to the quality of our drinking water?
This is the part of the story that Leonard and Shaff would not want the public to know about.
This is the part of the story that the public definitely should know about.
How about it investigative reporters?
You drink the water too, don't you? Report about those added chemicals and carcinogenic properties that will be added to our drinking water with UV treatment and with reservoirs covered?
Report about the radon in our area that will come into our homes, etc. when the reservoirs are covered?
We need to STOP today on moving forward, do what NY did, ask for a reprieve from the EPA matter, NY got it until 2028 and are asking for another delay until 2034. What is the big hurry Mr. Leonard? Why be such a bully on this and everything you are involved with, yet laying down like a lamb regarding this EPA LT2 rule. Contact NY and learn from them, if you don’t have what it takes to protect our Bull Run Water System and Reservoirs.
Posted by clinamen | March 29, 2011 11:38 PM
Snards:It's going to be sad to leave Portland...
It has also been sad to see it changed in ways, so won’t be leaving our beloved City of Roses, but the City that Works.
Have you thought of where you might consider going to in order to get away from the kind of scene we have had to deal with here?
Posted by clinamen | March 30, 2011 12:42 AM