The original proposal called for the $18.5 million to be financed by TIF bonds, so is this better or not?

Also, The O reported on Saturday that the Mayor listed the following possible options for the $15 million shortfall: creation of a westside urban renewal district; cutting construction costs; creating new development fees around the stadiums and taxing bars and restaurants near the stadiums.

Maybe this makes sense if (from the borrower's POV) if you anticipate hyperinflation somewhere down the road.

With the amount of money being printed and pumped into the economy under the guise of "stimulus", it's only a matter of time before inflation kicks in. If it goes unchecked, then long term fixed rate debt will seem like a smart investment.

Municipal debt could be the next bubble. Once most major cities are as upside down as the federal gov't (and an increasing number of states), the only way to bail them out will be to debase our currency by printing enough to continue the "stimulus".

The US is separating into savers and spenders. As long as the spenders (either party) run the government, the savers don't have much of a chance.

"No interest -- no payments 'til 2034!" This is how you sell bad mattresses to people on welfare.

I love this part:

allowing the City to tap into this resource.

Sam Adams sees a credit card as a "resource" to "tap into." This is why he personally went bankrupt, and why the city will join those ranks at some point.

When reading about our council, why does the phrase "dumb as a sack of hammers" always come to mind?

Fascinating. Every time we turn around a new option unfolds - all without any public hearings.

I don't think we are close the truth. All the way from where the baseball stadium was going to be (Lents?) to who is paying what to how much a franchise fee is. This is all eerily familiar to how Vera crafted the PFE deal, you'd think Randy would remember how he got jerked around on that one.

Meanwhile, they are going overtime to throw this together while potholes grow and water rates are going up 16%. Its amazing what local govt can get away with in this town.

"Furthermore, this $18.5 million does not impact any of the money that has been reserved for other projects in the Oregon Convention Center Urban Renewal Area."

I really, really do not understand this statement. Couldn't the 18.5 mil be used for other projects in the convention center URA? even if they weren't designated yet?

Seriously, can someone explain what on earth this means? was there really 18.5 million sitting around waiting for some big crazy development project?

Also it makes no sense that one pile of money would "impact" another pile of money. Is this supposed to mean using the 18.5 mil does not impact the already existing approved projects going on in the Convent. Center URA?

In all seriousness, if someone can explain this statement I would like to further my knowledge of how URAs work. I really do not get it right now, apparently.

On the zero-coupons, that is an interesting twist since your right, you'd get a big balloon at the front ($18.5M) from the creditors to Paulson), then at the end of the term you'd owe the future value.

So if I do $18,500,000 = PV, 6% = Rate, Term = 30 years, 0 = PMT, then after 30 years, FV = $106M.

So, who is on the hook for those bonds once Paulson leaves town? (You can probably guess that one since there is only one group that is always on the hook - the taxpayers) Somehow, he'll get CoP to be the recourse for these ZCBs.

I still don't think we are anywhere close to being told the truth on this deal. God, I wish Al Gore would write a finance book so that Randy would read it.

Any smart buyer of these bonds would put a stipulation in the contract allowing them to recall the full amount plus interest of what they lent at anytime of their choosing prior to the maturation of the bond.

Otherwise, what is the guarantee that the City of Portland will in a financial position to pay back the full cost plus all of the compounded interest come 2034?

"Any smart buyer of these bonds would put a stipulation in the contract allowing them to recall the full amount plus interest of what they lent"

You mean make them callable? My assumption is that Paulson will not pay $0.01 until these are due in 2040 (or whenever.) If he defaults (say in Year 2 of MLS in Portland) and these are callable, then I bet your he'll put mice-type stating the stadium improvements he paid for as collateral and then it reverts to CoP to pay them.

Randy and Sam are dumb enough to go for this. They want this deal so bad with no cash up front, they'll sign anything and claim its a victory. Kind of like the guy with a $40K income buying a Porsche for nothing down.

Of course, CoP will set aside reserves for this eventuality like the they did for sewers or infrastructure. Well, maybe not so much.

And like they did for police and fire pensions. Well, maybe not at all.

"Also, The O reported on Saturday that the Mayor listed the following possible options for the $15 million shortfall: ... and taxing bars and restaurants near the stadiums."

I wonder how the bars and restaurants near PGE Park like the idea of the Beavers moving away ... and taking their 72 home-game crowds with them.
Oh, I forgot, we'll all make that up with the bars and restaurants near the new baseball park ... once they're built.

"Fascinating. Every time we turn around a new option unfolds - all without any public hearings."

Well, Sam wrote it in an email to some voter. Does that count as public?

"This is all eerily familiar to how Vera crafted the PFE deal, you'd think Randy would remember how he got jerked around on that one."

I used to think that Randy Leonard had some promise, but now it appears he is happy as long as he is the one doing the jerking (around).

I am sure the investment will be so much more valuable by the time the Crippling Balloon Payment (CBP) is due that it will not be a problem to refinance the loans just before financial disaster. Or something like that.

This is the part of the con that's the cruelest and why Sam should be called Mayor Nottingham. The council looks at a bunch of businesses that are probably barely hanging on and then determines they will suddenly get a huge windfall from a brilliant spending project the council hatches. So a tax on this good fortune is slapped on the businesses. The smoke clears and the numbers don't pan out, but the extra taxes are very real. Welcome to involuntary servitude. You are now working for Merritt Paulson.
Did you hear the tone Sam took during the Arctic blast about the legal responsibility we all had to shovel the city's sidewalks? Then of course, the city brought their approach to the snow which was, "Let's wait 'til it melts."
Same reason - different season.
If Sam had his way we would all be worker bees in a giant government hive.

Steve,

Of course they should be made callable. As for the "mice-type" print at the bottom of the contract placing the responsibility back to the City of Portland...that is a brilliant ace card.

After all, it is Sam Tram and Randy "take me to dinner" Leonard who really want this. Their picture of a sports stadium making Portland a city for "international tourism" due to MLS has yet to be drawn. I doubt it will get to the coloring stage.

Heck, if this recession lasts another year, then hyperinflation will take route when the bailed out banks start putting all that bailout money on the market in order to jump start the economy. By then we will be heading for sports events that cost $500+ a ticket.

I may be wrong, but the 20th century example of the Weimar Republic after WWI is providing clues of what may come.

This time our "reparations" will be to China, not according to the Versailles Treaty.

That "hyperinflation" is already under way to save the whole globalization scheme exemplified by AIG and trillions created by the US Treasury overnight in order to "invest in the infrastructure of the future!"

Yes we can! Yes we can! Like a bunch of fucking mindless, ahistorical drones.

The best part of Adams becoming mayor and getting caught in a lie is this: the public gets to see, in a bright light, just what he's all about.

he's not acting any differently than before he became Mayor--he's just wielding the power like there ain't no tomorrow.

but I suppose that's what you do when you've been "shaken to your core" and are "working harder than ever to win back the people's trust".

and Leonard's very sudden and public silence about Adams'recent shame speaks volumes about the backroom deals being cut. remember what he said last month?

Amanda Fritz's lack of honest-to-god backbone about the matter also speaks volumes, too.

And Fish? he's angling for an eventual Mayoral run. which may not be so bad, in the end.

prediction: the deal will fail, and its failure will be blamed not on the utter foolishness of it, or the dumbness of City Council, but on a minor, wonky, financial issue. it'll happen this fall.

Thought those who appreciate this boondoggle for what it is might want to read a great TomGram about the slow-motion-9/11 going on in NYC

http://www.tomdispatch.com/post/175049/a_second_9_11_in_slow_motion

The problem is that no one knows what the true cost of this project is.

http://www.portlandonline.com/leonard/index.cfm?a=235359&c=27435

"What's the true cost of the financing?

"That's unclear. The city is a year or two away from selling any bonds, and today's volatile market most likely will change, perhaps for the better, by then."

"perhaps for the better?" And if it's "for the worse"?

I got the same form letter e-mail response that alert reader did and found it so upsetting that I closed the e-mail and haven't even looked at it again until this morning.

Most councilmen, reps and senators simply send out a reply acknowledging that they have received your input, appreciate it and thank a constituent for taking the time to write.

Sam (or his office - the e-mail is not signed so it is unclear who it is coming from) has to try to justify and to crow about the deal even though I made it clear in my message that I was not in favor of it. I didn't even mention schools although the Sam e-mail argues that the money couldn't have been used for them . . . a clear sign that nobody bothered to address my questions or actually read my letter.

This message coming out of the mayor's office is badly written and rife with untruths, stretched truths and pie in the sky. The people who voted for this and the Timbers Army they surrounded themselves with at the press conference have such a hard on for MLS at any price that they will tell themselves whatever they need to in order to justify the expense.

And I'm supposed to feel better knowing that the City will be stuck with owning both facilities regardless of what happens? When we are still paying for the last renovation on PGE Park?

Here is the full text:

---
Thank you for expressing your opinion regarding the City of Portland’s
efforts to bring a Major League Soccer team to Portland. On Friday
morning, Major League Soccer announced that Portland had been awarded
a Major League Soccer franchise. Play is scheduled to begin in 2011.

A number of constituents have raised concerns about the sources of
funding for this deal. I want to take this opportunity to clear up
some misconceptions. First, this deal will not impact the City of
Portland’s ability to provide basic programs and services. The terms
of this deal protect the City’s General Fund.

Second, in addition to private funding from Merritt Paulson and his
family, this deal calls for the City to provide some funding to help
pay for renovations to PGE Park and the construction of a new AAA
baseball stadium. The City — not Merritt Paulson — will own these
facilities. Merritt Paulson and his sports teams must pay the City
rent, ticket tax revenue, etc. for the privilege of using these
facilities for at least twenty-five years. Moreover, if Major League
Soccer collapses or if Merritt Paulson fails to sell a single ticket
for baseball or soccer, his family has personally guaranteed payments
to the City for at least 25 years. Furthermore, Merritt Paulson must
keep both teams in Portland for at least 25 years.

Third, the City plans to use some urban renewal funds to help pay for
the new stadiums. While the State’s public schools are challenged in
these difficult times, state law precludes the use of urban renewal
funds to support public school operations. Multnomah County is heavily
dependent upon state funding for its operations, which means that the
County has been negatively impacted by the State’s budget shortfall.
Similar to schools, state law prohibits the use of urban renewal funds
for social service operations that are at the core of Multnomah
County’s mission.

With respect to the baseball stadium, the City has agreed to provide
$18.5 million in funding. This money will be generated from the sale
of zero-coupon bonds. Under current market conditions, the City cannot
sell these bonds. The Paulson family has agreed to step in and find a
buyer for these bonds, thereby allowing the City to tap into this
resource. If the Paulson family fails to find a buyer, then the City
can walk away from the deal. Furthermore, this $18.5 million does not
impact any of the money that has been reserved for other projects in
the Oregon Convention Center Urban Renewal Area.

Under the framework agreement, the City must come up with $15 million
to fund renovations to PGE Park. The City is looking at a variety of
funding sources, including the use of a small percentage of the total
funds that will become available to the city with the creation of a
new urban renewal area near downtown. Extensive public process will be
required before a decision to create a new downtown urban renewal area
can be made. This public process will involve participation from the
County, representatives from Portland Public Schools, neighborhood
groups, and a number of other interested parties. The use of urban
renewal funding to pay for PGE Park’s renovations is, however, only
one of many possible sources – both public and private - that the City
is evaluating.

I encourage you to visit my website to learn more about the framework
of the deal and the sources of financing:
http://cts.vresp.com/c/?OfficeofMayorSamAdam/e2cd8ea559/d6080c976d/2c6f025f43/id=234420

Again, thank you for taking the time to express your thoughts on this
project.

Ever wonder what it means when you read "businessman Merritt Paulson?"

Here's Wickipedia's low-down:

--
Paulson graduated from Hamilton College with a B.A. in 1995. He earned his Masters of Business Administration from Harvard Business School. Prior to owning the sports franchises he worked for the National Basketball Association as a senior director of marketing and business development. Paulson also has worked for the cable television channel Home Box Office. He is the son of Henry Merritt "Hank" Paulson Jr., the former United States Secretary of the Treasury. He serves on the board of trustees of the Wildlife Conservation Society. Paulson is married to Heather Mahar Paulson, who appeared on The Amazing Race, season 3, and they reside in Portland. Heather graduated first in her class from Cornell University and cum laude from Harvard Law School. Before moving to Portland, Heather worked as an antitrust lawyer at Wachtell, Lipton, Rosen & Katz[5] and as an analyst at a hedge fund in New York.

In May 2007 Paulson’s investment group Shortstop, LLC purchased the Portland Beavers and the Portland Timbers from California businessman Abe Alizadeh. The purchase made the group the teams' fourth owners since 2001. Paulson’s father is a minority partner in the company. Shortstop is a Delaware organized company.
---

In short, Paulson is not in any other business than the sports franchise business and would probably not be able to sustain these businesses without his father's money and assistance.

I don't know whether to be surprised that he doesn't work for anybody else or not.

here's what's really galling me. Paulson Jr. galavanting around NYC, Leonard gleefully in tow.

meanwhile, Paulson Sr. is doing this:

http://www.rollingstone.com/politics/story/26793903/the_big_takeover/print

and I quote:

Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.

look, folks. the Paulsons have all the money the need. all the power. they're sleazy, power-hungry con artists. Paulson Sr. is helping bankrupt the country, while Paul Jr. is helping to bankrupt the City and its taxpayers.

sound farfetched? you're not paying attention.