The ultimate slush fund
The O ran a story on Friday night and Saturday -- when many readers wouldn't see it -- about all the bad loans that the Portland Development Commission has made over the past decade or so. It's quite a list of stinkers. The big one to Judy Shiprack, who's now a Multnomah County Commissioner, really stands out, but there are plenty of others -- $9.6 million in all. That would have bought a lot of gang outreach, or mental health workers, or fixed potholes.
What amazes us is not so much the fact that these loans went bad, but the fact that the city is lending out our hard-earned property tax dollars to so many private businesses, goofball or otherwise, to begin with. Article XI, section 9, of the state constitution states:
No county, city, town or other municipal corporation, by vote of its citizens, or otherwise, shall become a stockholder in any joint company, corporation or association, whatever, or raise money for, or loan its credit to, or in aid of, any such company, corporation or association.
If it meant what it plainly states, the constitution would prevent the city, through the PDC, from handing out money to marginal auto body shops, funeral homes, and barbecue pits to try to make a go of it. It must be that the state courts have interpreted that provision to allow easy dodges. Either that, or nobody's ever challenged transactions like the PDC loans. (Oh, what we'd give for a better-government league, to sue the pants off City Hall when it's needed.)
But leaving the legality of the practice off to one side, for the PDC to have a $158 million "loan portfolio" is a blatant invitation to corruption. Who decides who gets the loans, and who doesn't? What are the criteria? And how many free barbecue buckets, auto wax jobs, bargain weekends at Cannon Beach, and other benefits flow back to the city bureaucrats who make these decisions? If you say none -- human nature doesn't apply at Portland City Hall -- we have an aerial tram we'd like to sell you.
| Posted at 7:47 AM | Permalink |
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Comments (16)
You missed the biggest one - Mark Gardiner's getting Vera to bungle up $35M for PGE Park. Then Gardiner giving up after one year.
See what you have to look forward to if his wife Mary Nolan gets elected?
Posted by Steve | August 8, 2011 7:57 AM
Great post. I wish our candidates for council and mayor would address this. My guess is that they won't.
Posted by Stuart | August 8, 2011 8:00 AM
One other thing, all the new constuction up and down MLK - Most of that is PDC loans (except for the low-income housing which has some PDC money, but at least is servicing the debt).
They just haven't recognized that filling new office space with one-man pizza joints, beauty supply places or coffee shops really isn't sustainable.
Posted by Steve | August 8, 2011 8:10 AM
What?! They gave loans to AUTO body shops?! Horrors! Well, their car-hating new director will put a stop to that post-haste.
Posted by Eric | August 8, 2011 8:22 AM
The PDC is "too big to fail" and is only part of a much wider group of urban renewal entities across the globe. Please, if readers will check out the International Downtown Association web pages for more information, you will understand that this urban renewal is just a ripoff for all the taxpayers world wide.
Honestly! These folks are big and powerful and scary!!!
Posted by portland native | August 8, 2011 8:37 AM
I just want to know what which candidate has the most sexual conquests of teenagers so I know whose most likely to win.
Posted by DANEgerus | August 8, 2011 8:54 AM
It's interesting to read that a legal mind wonders about this question, too. A few years back I stumbled on this part of Oregon's Constitution and even found the argument they use to get around it. What was it? Aww, shoot. It's Monday morning and I'm not feeling like a swim in those toxic waters again.
As I recall it was your typical, shaky loophole thing that clearly violated the spirit of what was intended. My favorite one of these still goes to Justice Scalia who ruled torture was not cruel and unusual punishment because you weren't trying to punish the detainees - you were trying to torture them for information. Ahh, good times.
Ironically, there's even a phrase for it: Tortured logic.
All politicians act alike. George W. Bush and Sam Adams are basically the same guy. They view the law as an impediment to doing what they want, and seek out ways around the restraints on their power, and other ways to fund the whole thing.
A parallel with this PDC scam could be George W. Bush's blurring of religion and state with his nice-sounding argument that churches do a lot of good charity work so why shouldn't they get federal dollars? Suddenly, you had a big fund to direct to the churches you wanted. It was on the road to a theocracy.
As with this part of Oregon's Constitution, there was a pleasant-sounding legal argument that was actually so mean-spirited, it could singe the hair off a rhino's balls. Everyone else just saw the money as a slush fund.
Posted by Bill McDonald | August 8, 2011 8:55 AM
Besides the written-off loans to Shiprack, barbecues and body shops, what also stands out are the written-off loans to the Mercedes/BMW dealership totally close to $400,000. Thanks Jack for reporting this. I'm sure the O will get on this right away since it is all wrapped up for them now. And an in-depth editorial will soon follow saying we need more of these kinds of loans for stimulus.
Posted by lw | August 8, 2011 9:02 AM
There are plenty of cases interpreting that section of the Oregon Constitution, a few over a hundred years ago.
Just search on "No county, city, town or other municipal corporation" (with quotes) at pdxzone dot com (Free limited access for two days with registration.)
Posted by pdxnag | August 8, 2011 9:14 AM
"Why the Law, Dad?"
"It get's us into everything."
"It is the new Priesthood"
John Milton to Kevin Lomax:
The Devil's Advocate
Posted by msmith | August 8, 2011 9:42 AM
What really bugs me is that all the loans and leases I have on my business, I had to sign a person guarantee. If I default, they go after me and take my house and every thing else I won. How did these flakes escape that?
Posted by John Benton | August 8, 2011 11:29 AM
They signed it "Portland Electorate".
Posted by Mr. Grumpy | August 8, 2011 1:19 PM
Shiprack's shrug-of-the-shoulders reaction to her loan-gone-bad was particularly galling.
She said the sale of the commercial space, coupled with property taxes generated by the project, eventually should even out for taxpayers.
Yeah, right.
"This isn't the biggest bailout story of all time, is it?" she said.
And that makes it OK?
Posted by Pete | August 8, 2011 6:07 PM
I love the PDC's Director Quinton's comment..... he blows, $9.6 million of our money and he calls it a "Good performance." Excuse me, I'm going to throw up. I'll take that quote to the grave with me. It's that sad and memorable.
Posted by fred | August 8, 2011 7:22 PM
Let's remember that the money lent was borrowed by the PDC requiring millions more in debt service.
So the loss is probably more than $15 million from the general fund property tax revenue stream.
Plain and simple it is a rip off by reckless, dishonest and incompetent bureaucrats.
Posted by Ben | August 9, 2011 7:21 AM
[I]n the past 19 months PDC has wiped away loads of loans, some of them quite delinquent, to the tune of $6 million.
From write-offs then lay-offs. I think about 20 mid-level employees were dumped to make up for the $6 mil. losses.
Posted by Beth | August 9, 2011 2:12 PM