Hmmmm - I think this thing has the whiff of Goldman-Sachs, no?

Jack,
More hard evidence of your value to the community. Don't take the bait about a radio show.

For me, the bit about finding new "mechanisms" to attract private investors is a pretty big, warm smoking gun. What else could they offer besides equity or a slice of revenue? Naming rights, perhaps?

Can some one translate this for me?

Finally, we are encouraging the West Coast to think more about who we can compete in a Pacific Rim economy as a competitive region.

Run by a "non-profit entity"? That's a major red flag right there. Think Portland Streetcar Inc., or Energy Trust of Oregon, or Climate Trust.

In essence, this will be a subunit of government, with much less accountability.

Looks like a way of spending more money on "infrastructure" while getting around pesky votes, bond covenants, etc.

Public agencies can get money, and acquire future financial obligations, without having to jump through the usual hoops associated with those obligations.

Next time our masters want to built something like the Oregon Sustainability Center, wouldn't it be nice to be able to avoid a vote in the legislature on it, while still obligating the State?

"Run by a "non-profit entity"?"

Class A office space, Baby! Class A office space!

"If the financiers are going to be "partners," doesn't that necessarily mean that they will be co-owners of the assets of the "partnership"?"

When you buy a house, the bank doesn't co-own your house, but they do have a lien. Ultimately, the "financiers" are where the money to pay for all these improvements is at.

I guess I don't have a problem with trying to streamline the process for less sophisticated local govt.

My issue still is going to be the local govts getting greedy and mortgaging public projects to the hilt so they can spend it now and then stick our kids with the debt. I don't think this does anything to slow that.

So Wheeler is going to run a non-profit, and gee, during what hours of the week will this "charity" take place? It seems he's occupied 40hrs to fulfill his elected responsibilities, so what a nice guy to take on this extra philanthropic effort for the "benefit" of whom exactly? Well that's another topic, but I must applaud the treasurer for doing this outside of working hours as of course he knows that the citizens of this state don't allow it's employees to donate their tax dollars.

"and financial support from the Rockefeller Foundation"

The same foundation that has done more to steer wealth and policy in favor of the few than just about any other.

No thanks.

Wheeler is either another sucker of the big boys or getting a cut of the action some how.

I made a Wordle out of the WCX website.

Yes, I'm weird.

"When you buy a house, the bank doesn't co-own your house, but they do have a lien."

Rather disingenous; the bank owns a stream of revenue from the house. That's why they carry it as an asset.

And they have a right to take the real asset if that stream dries up. In fact it's the best of both worlds for the bank; ownership of the revenue from the asset while the liabilities associated with it - e.g., getting sued if someone slips and falls on the property - are on your shoulders. Banker high five!

Thinking any private interest in "public" infrastructure would not involve them "owning" some/all of it beggars belief.

Thinking any private interest in "public" infrastructure would not involve them "owning" some/all of it beggars belief.

No, it doesn't. Look at the recent lease of the Indiana Toll Road. The state retains ownership of the asset, while a private lessee purchases the right to operate it for a fixed length of time.

"Rather disingenous; the bank owns a stream of revenue from the house. That's why they carry it as an asset."

Sigh. As a creditor, the bank carries your debt as an financial asset. The bank has no ownership interest in your house, they have security interest in your house.

If you default, then the bank may attempt to repossess your house. But don't be confused here, "repossess" is a misnomer, because it's unlikely that the bank ever possessed your home in the first place (unless you originally purchased a real estate owned house).

"Thinking any private interest in "public" infrastructure would not involve them "owning" some/all of it beggars belief."

Could you please explain how municipal bonds work? Do they no involve "private interest," or do they not involve "public infrastructure?"

MJ,

You ever met a t[r]oll operator? They sure *think* they own the bridge!

Once again... I will chime in.... Fluoride... so who is the public?.... the idiots we have sitting in City Hall? And if these idiots we have sitting in City Hall don't want PUBLIC INPUT... whatever... Just call it an emergency or use the tried and true fear tactic... May Be E-Coli

And they have a right to take the real asset if that stream dries up.

If the deed of trust you negotiated said that, I yes. I'd assume, and as above, the there'd be something to prevent foreclosure of a public property.

"Could you please explain how municipal bonds work? Do they no involve "private interest," or do they not involve "public infrastructure?""

General obligation bonds are an example of the type of old school financing that this group will circumvent with ‘innovative’ financing. I imagine you know how they work, with the significant part being that they are not linked directly to the asset/project being funded; the buyer has a call on the “full faith and credit” of whoever issues them, not on a specific asset. Of course they involve private interest, but that private interest is held at arms length from what the money is actually spent on.

So having answered the question here’s a couple for you: since current financing methods (the full faith and credit of the taxing entity) don’t attract enough interest from investors to get the job done, what else besides ownership could be offered as collateral for investors? Until that’s answered with something other than gobbledygook about “partnerships” why would a thinking person assume that these financial innovations would simply mimic what already exists?

"Look at the recent lease of the Indiana Toll Road. The state retains ownership of the asset, while a private lessee purchases the right to operate it for a fixed length of time."

That fixed length of time is 75 years. Along with the right to raise rates every year. Woohoo!

But you're right, they don't own it. The state does, ie, the people. The people simply can't determine what the tolls will be on it for that time (and probably other significant "owenership" type decisions, the devil's in the details).

But the people "own" it...

As Humpty said "When I use a word it means just what I choose it to mean—neither more nor less."

Performance baased partnership is pretty much textbook for an ownership interest. That's basically what you buy into when you trade for a share of stock.

"General obligation bonds are an example of the type of old school financing that this group will circumvent with ‘innovative’ financing."

That's why GOs are lower yield than project specific bonds - Which means they cost more.

This isn't going to fix game-playing by local govt as I mentioned above.

"since current financing methods (the full faith and credit of the taxing entity) don’t attract enough interest from investors to get the job done, what else besides ownership could be offered as collateral for investors?"

Get real - How do you think CoP keeps doing the wraps and selling the bonds for junk projects they do?

That's the one problem with the Bernanke approach - The market is awash in money chasing these bonds, its just the average guy doesn't get access to it - Even if he's responsible for the debt incurred.

This is the kind of thing I think Wheeler is talking about:

http://www.metroplanning.org/news-events/article/6378

They call it a "value capture mechanism". It's a pretty sweet deal for the private partners. For $28.5 million the construction company wins a $125 million no-bid contract and an 85 year development land lease on 120 acres in exchange for building 1.4 miles of track, two stations and an overpass. They also have a right to renew the lease at market rate for another 14 years.

So I guess Wheeler is right because the public is just giving up it's property for 99 years to the private company as opposed to handing over the title.

EB,

"[N]ot linked directly to the asset" means "unsecured."

I'll join the crowd here, and admit that I am unfamiliar with the phrase "performance-based partnership." But I don't think it necessarily implies joint ownership of assets, as used in the statutory definition of "partnership."

"What else besides ownership could be offered as collateral for investors?"

I see your question, and raise you a question. What is the difference, in your mind, between "collateral" and "ownership." I see collateral as one kind of security, something held in trust or escrow to guarantee payment of a debt. If I ask to borrow 5 dollars, and you say sure, but only if you can hold my tricycle, then that is collateral. I don't think that gives you a current or future ownership interest in the tricycle. Even if I default, you may only have the legal right to liquidate the tricycle in order to recoup your initial investment, depending on our agreement.

"these financial innovations would simply mimic what already exists?"

Because financing public projects is currently a fairly closed system. Buying municipal bonds is not straightforward, like buying stocks on an open exchange. Maybe it's not offering new products to old investors, maybe its offering old products to new investors?

Jack I didn't think my comments were condescending. Sorry you took them that way. That wasn't my intention and I apologize if your feathers were ruffled. I was responding to your post, which I believe to be inaccurate, then I stuck around to answer questions from folks. I mistakenly thought that would be desirable to people. I'll refrain from commenting here in the future but encourage people to remember that I remain available through other forums to answer questions about this or any other issue. I can be followed/reached on FB and Twitter as well.

As someone who has been making mortgage payments for a long time I am finally beginning to think of myself as a homeowner because I have more equity in the house than the bank does but until I reached that point I always thought of myself as owning a debt not an asset and that is a sobering concept. Maybe that is the problem with some people they have an unrealistic concept of what their true worth is. You're worth what you own, not what you owe. Ted/Ted Wheeler you are coming across as condescending as well as pompous and sanctimonious.

Oh, here's what "performance-based partnerships" are:

From Mr. Wheeler: "[P]erformance based means government can terminate its payments to any private sector partner for failure to perform at any point in the development cycle. No lock-in agreements. Performance standards are established by contractual agreement."

That sounds quite the opposite of ownership interests and legal partnerships....

"I'll refrain from commenting here in the future * * * ."

That's too bad. I'm pretty new to reading this blog, but I think it's pretty cool, and pretty brave, that public officials to comment (albeit rarely) here. It's not an easy forum.

Ted Wheeler here - not Ted - I agree it's an increasingly rare thing to have an open and viable forum with elected officials that's easily accessible. And that's a loss. Frankly I like to participate and be available to hear people's ideas, answer questions and shape better ideas. I have no monopoly on the truth or the best solutions, but I'm not content to just vent about the status quo. I'm trying to address many of the issues I read about here. I don't mind dissenting opinions. When I hear something that makes sense I'm not too proud to change my mind or alter course. But it's Jack's forum - not mine. He's done a great thing by building this blog, but If I can't be here and have an honest disagreement and generate a productive discussion without provoking a ten paragraph tirade or having people go on a tear about something unrelated (or hurl petty insults) then what's the point? If you want to help shape this thing then lets do it. Serious ideas welcome. Specifics are helpful. People who are knowledgeable about infra projects are especially welcome. My email: Ted.wheeler@ost.state.or.us.

What does public ownership "really" mean when private controls rates, decisions and the whole ball and wax, yet can say the public still owns it??

There is too much of this public/private business going on, and I am concerned that Oregon is initiating this, but not surprised, as many elected officials here haven't really been on our side, have they?

Something is really amiss when our "green" area is having to deal with possibly losing water assets and rights, coal trains proposed to be coming through and Hayden Island at risk for being paved over, etc. and the debt, the enormous debt. In my opinion, our public interest and livability are not the concern of those steering the ship here and the ship is now moving further off course, now on to "bigger" ventures, and more removed from the people.

As far as Wheeler staying away from this blog now, some officials as in city council prefer to hear only a three minute testimony, no back and forth questions and answers leading to any real in depth discussions. I do hand it to him for coming on and would invite him to continue the discussion. Open dialogue is rare.

If I can't be here and have an honest disagreement and generate a productive discussion without provoking a ten paragraph tirade or having people go on a tear about something unrelated (or hurl petty insults) then what's the point?

Ted, please. It's not about you personally, or me personally, or the people who want to write nasty comments or post off-topic. If you don't want to post here, fine. But don't lay that off on someone else.

If you ever do want to lay out the specifics of your "innovative" new structures, I'm all ears. But you've got a lot of ducks to line up first before you come clean on what you're talking about, don't you? You and CH2M Hill. Yuck.

Jack agreed. Lots more work to do. It's an idea that I think has promise but we are a long way from declaring victory. Thx

Ted, you're spending all sorts of time and money on this, and you're telling me you don't know what the "innovative financing mechanisms" are yet? You'll tell us later? That kind of stuff may get you past some kid reporters and the editors at the O, but I just can't buy that. I think you and CH2M know exactly what you're going to propose, but you won't show your cards yet, because you're going to blow tons of smoke first and hope you can distract people.

If you're talking about sale and leaseback of street lights and water systems, you can expect a lot of pushback. But as I say, when you're ready to show your cards, you've been called. In the meantime, your slick pitch will get you nowhere with me.

And another thing: Why in the name of God are you making moves to lump Oregon's credit in with California's? They're bankrupt already, whereas Oregon may have a decade to go before PERS and "urban renewal" cause the collapse.

This may score you points with the unions, the bankers, and the Hoffman Construction types on your way to the governorship, but it's not good stewardship of public money.

Jack,
If you ever need company walking down that dark alley, call me. I'll be there.

the eTrade baby turns his head, the camera zooms in and the baby says: Ted.....? Teeedddddd?
Fade to black.

Wheeler appears to be oblivious to the so many instances that have caused people being justifiably suspicious and cynical.

Time after time some boondoggle or program was purposefully walked out with the same kind of phony misrepresenting rhetoric only to have it go exactly how critics warned.

Time after time politicians with their bureaucrats and pals at CH2M Hill, Bechtel, Trammel Crow, Hoffman etc. have been busy putting plans together behind the scenes.

But often known by the public but poorly reported on by our press.

So people have every reason to suspect,

"They're up to something an they won't tell us what's going on".

Mr. Wheeler, this may be news to you but you sir are only a politician. No more no less.

You are not a financier, CEO, investment banker or anything else you imagine yourself to be.

In Oregon there's a cesspool of conflict of interest and dysfunction that runs rampant throughout the many layers of state and local government.

Any signs of new schemes and mission creep coming from the same people who continue to tout things like Tax Increment Financing as a "valuable tool" should be viewed as red flags while assuming the worst.

That's where we are.
There is this thing called credibility that has been exhausted by many of the staus quo people you align with.

Your donation to the Charlotte Lehan campaign is exhibit A.

If you want to BE something special then you should consider doing something special.

Like ditching the "status quo" repulsive gang this blog has so thoroughly chronicled as the deceitful cabal and wholesale failure they are.

And finally, lose the typical excuse of inability to have an "honest disagreement and productive discussion" becausue of others.

You sound like Randy Leonard and a bunch of the same kind of saps who have hidden behind that charade for years.

You could go a long way to avoiding the "hurled petty insults" if you FIRST earned some cred.

It's unfortunate that so many of your kind demand it along with respect when you have earned neither.

CH2M Hill has been on retainer with the PWB for decades as evidenced by review of volumes of public records(FOIA requests). Through CH2M Hill's/MWH global's(PWB) Infrastructure Master Plan contract and CH2M Hill work on the PWB/ MWH Regional Transmission and Storage Strategy (RTSS), CH2M Hill and their partner, MWH global outlined their plans for decades of projects for CH2M Hill and their corporate partners.
Through this same contract CH2M Hill (MWH global)also outlined strategies for usurping ownership of Portland's Bull Run water system to regional ownership through an Intergovernmental Agreement (no public vote). These entities could then transfer control to CH2M Hill or other to design, build, operate, maintain the entire water system.

This is privatization. Just as corporate operation of the Wilsonville Willamette river water treatment plant is a form of privatization.

Many remember that CH2M Hill held a local workshop on privatizing water systems a decade ago at the same time CH2M Hill held a string of PWB and regional contracts with their partner corporation MWH global.

PWB has been issuing bonds every year to finance CH2M Hill (MWH global) projects raising water bills to the highest in the nation the last two fiscal years. CH2M Hill is home to PWB's #1 revolving-door consultant, Joe Glicker who has been continuously on retainer since he left the Water Bureau in 1994 after the City had to pay out on a Glicker caused lawsuit ( Glicker attacked a respected scientist,Dr. Larson).

Just last week the PWB increased and extended one of CH2M Hill's many PWB contracts, the Powell Butte tank contract to work on park projects, a caretaker house, park trails extending the contract past the time when the tank will be completed turning their design contract into a 5-year double-the-money contract. Their design/construction oversight contract increased by 45%. This is how it has worked for PWB corporations for decades. A contract is awarded (Council approved) for 1or 2 years then it is subsequently extended and amended time and again with increases in compensation with most of this done behind closed doors. The PWB can increase contracts by 25% without a return to Council.
When contracts are brought back to Council they are brought election week or Christmas week and put on the consent agenda or as emergency ordinances.

All of the details on this "partnership" plan need to be out there upfront for the public to review, if the public is to believe this scheme will truly benefit the public.

Every year Portland ratepayers see their water bills rise to finance debt to serve CH2M Hill and MWH global. There has been no improvement in Bull Run water quality as a result of the decades of overlapping and interconnected consultant "design" contracts awarded to CH2M Hill and MWH global. In fact needed system maintenance such as system-wide flushing did not take place as maintenance is not profitable for the corporations nor is it "fun and exciting".

PWB revolving-door consultant Joe Glicker (then with MWH) was sent to Washington D.C. to craft federal regulations that resulted in contracts to the same consultant with no resulting public health benefit to the rate paying community. By all accounts the flawed LT2 rule created massive debt, caused water bills to rise and provided no measurable public health benefit- documented by PWB water bond documents, independent surveys, and scientific studies such as AwwaRF 3021, and extensive disease surveillance.

When the PWB uses the word "partner", it refers to those to whom ratepayer dollars have been given ( as evidenced by reviewed public record requested documents).

Portland's Bull Run system is fairly simple, minimal treatment, gravity fed, perfectly designed 100 years ago. Technical expertise for maintaining the system is not lacking. What is lacking is comprehensive, truly independent oversight of spending.

A Hibbits survey presented to regional water providers indicated the public prefers system maintenance over new construction.

"What is lacking is comprehensive, truly independent oversight of spending."

That's because these agencies go for decades without any meaningful scrutiny.

IMO every government entity should undergo an independent forensic audit every 5-7 years looking for improprieties.

Call it a regular witch hunt if you want, but that's the only way to deter the certainty of human temptation .

If someone in state government cares about Portland-area people, about protecting us from paying to degrade our water, who would it be? Who in state government would have standing to look into the failure to maintain installed components? Must we call Probe International, as the citizens of other countries have had to do when their leaders sell them out? Can Ted Wheeler really not understand what has been going on here? Must we call and pay that Michigan law firm that works to recover from leaders who reduce value in the public's assets? Will Portland have to join Iceland in repudiating odious debt (which could end up harming retirees, as the bonding entities take their big-deal fees and then sell the paper to unsuspecting retirees, for more fees)? It does seem we will have to go outside the country and outside the state to get the forensic audits we need. Maybe then Matt Taibbi can be cajoled into writing about us.

Thank you for the feedback - I appreciate it. I also understand the frustrations expressed by some here.

Jade Queen,
You described the situation.
We have here what I refer to as the run around.
The elected officials have to know that the Bull Run Water System which includes the reservoirs is the best in the country.
As far as I know, not one has said they would do everything they could to save it, if there is one, speak up!

On one day, several met with Senator Merkley's aid who asked "What can a Senator do?"
and "It is up to the city." Later that day, City Commissioner Fritz said it was now up to the congressional delegation.
Then Senator Merkly sent the LT2 Federal matter back to the state.
This is an evasion of responsibility, shifting responsibility, and in the end, who will be held responsible and accountable?

In my opinion, a web of power wants our system changed into a corporate designed system. There is simply too much of a lock step here to think otherwise. The question is why, are the political careers more important than the health of the community?
I am speaking of the financial health as well, businesses will be leaving and which ones would be coming into our city with the enormous water rates and debt as a result of spending on projects not needed.

Mr. Wheeler, surely you can understand why people have lost faith here and lack of respect for leaders.

“Because financing public projects is currently a fairly closed system. Buying municipal bonds is not straightforward, like buying stocks on an open exchange. Maybe it's not offering new products to old investors, maybe its offering old products to new investors?”

I don’t know. (Though I don’t believe it’s too complex to buy munis, especially for the sophisticated investors that they’re trying to attract with the “innovations”.) And that’s the problem. Overlooked in conversations over the last… decades… is that public financing has historically been “vanilla” not only to minimize risk but to keep it transparent. Complexity always reduces transparency, as you’re no longer restricted to the lowest common denominator when it comes to understanding. Dumb as that lowest common denominator is, do you really want your government to NOT be required to explain its financing to at least the low average of its constituency? I don’t. Too easy to be bamboozled by my betters.

The fact that we, a fairly well read and intelligent group, even have to ask these questions about what the financing really means (which are not being answered in a straight forward way), should be a huge red flag! Instead, our betters simply rely on complicated and vague jargon that can be summed up as “Trust us, it’s a better way to do things.” Someone like Jack cuts to the quick and says “privatization” and there’s push back, but not push back that clarifies.

Until there is some clarity this average constituent who’s simply lived long enough to have been bamboozled a couple of times will assume the worst – that the flimflam is here again - and talk and behave accordingly.

Complexity always reduces transparency,...

Complexity causes confusion to the point of those deciding for us having an easier time to maneuver around.

On the water issue alone, how many people know the difference between a variance and a Waiver?

The Citizens for Portland's Water has asked for a Waiver from the LT2 federal rule that would have stopped unnecessary projects and more debt.

The city council will not ask for or even use that word Waiver, they like variance.
Variance is a temporary measure that allows them to keep on their path one way or another. Some citizens may think that the variance is at least some measure of the city working for the public, or towards some compromise such as buying time. In my opinion, time has allowed the PWB to incrementally move along according to their plan. Then there is the complexity for the public to understand, the confusion around the variance, there is the variance requested for the UV treatment plant, a variance for the open reservoirs. Meanwhile does the public know that EPA is now reviewing this very rule? We may not have to comply with certain criteria as our water system is uniquely protected in a federal watershed. Despite that, PWB and council continue to fast track to spend millions rather than be prudent at this time. Then there is the matter of testing, continual testing. As I read earlier polluted areas were required by EPA to do 500 tests a year and our PWB is doing thousands??

Anyway, you get the picture, what I have written about is only a small piece of the puzzle, no wonder the public is left behind, but yes, complexity and confusion does work! Despite that, the public may not "get" what is really going on, but they do get that something is not right and trust has been lost.

Unfortunately, it is not only trust that has been lost, but our finances and the health of our community. By the time this PWB municipality and council are done with us, with their debt swamping, we may very well be on the road to the loss of our water system, our good drinking water and water rights.

Do not forget Hales is coming in and he is for the regional plan. This is a path to privatization. We are closer to losing it all than the public may be aware of. I can tell you the water watchers are very upset and worried about this possible loss of our system and rights. This is very serious.

That fixed length of time is 75 years. Along with the right to raise rates every year. Woohoo!

When the toll road was government-owned, it continually ran deficits because political pressure was exerted to avoid raising tolls for long periods of time. In the meantime, costs continued to increase. This meant that scheduled toll increases needed to be specified in the agreement simply in order to break even, much less to provide any kind of return on investment.

The state DOT also was extremely slow to adopt cost-saving electronic toll collection methods out of deference to the unionized workers who manned the toll booths.

Further, the public owners failed to efficiently price auto and truck traffic in order to reflect their contributions to pavement wear.

But you're right, they don't own it. The state does, ie, the people. The people simply can't determine what the tolls will be on it for that time (and probably other significant "owenership" type decisions, the devil's in the details).

And those "details" are negotiated between the owner and the lessee prior to the transfer of operational responsibility. The details of these agreements cover everything from maximum rates of return the lessee is allowed to earn on the asset to how soon dead animals need to be removed from the roadway after being reported.