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April 29th, 2009 MARK ZUSMAN | News Stories
 

Kill This Deal

Borrowing from Portland to pay Paulson.

     
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IMAGE: Dennis Culver

Lents. Memorial Coliseum. Lents again. It doesn’t really matter.

Mayor Sam Adams and Commissioner Randy Leonard’s current plan to underwrite a new Major League Soccer franchise in Portland is reckless.

On umpteen levels.

It’s mystifying how their scheme, which would spend $65 million in public debt to renovate PGE Park for soccer and build a new stadium for Triple-A baseball, has gotten this far, given its spindly legs.

Frankly, the deal Merritt Paulson cooked up should have died long ago. Yet earlier this month, Adams (along with Leonard and Commissioner Dan Saltzman) green-lighted the project. And while Saltzman is now wavering, and a crucial vote for next week has been postponed, there is still ample momentum behind this maggot pie of a public-private pact, aided by an Oregonian editorial board that, in its best impersonation of a small-town chamber of commerce, has thrust its doughy shoulder behind it.

There are several reasons the Adams-Leonard-Paulson stadiums scheme is foolish—from the $15 million in funding whose source hasn’t even been identified to the dubious ability to sell bonds for the portion that has been identified to the tax-increment money grab that is almost bullying in its nature.

In one additional moment of chutzpah, Paulson said last week that if the baseball stadium ends up in Lents, he’ll want even more help from the city.

The fact Paulson’s proposal has any oxygen left at all has more to do with Adams’ desperate desire to distract attention from his political and potential legal problems (as well as to shore up support with the building unions, who would benefit from stadium construction and would be of real help to Adams in a recall election) than it does with the merits of the project.

Any rational person who looks at the range of real challenges facing the Portland metropolitan area—from the rickety Sellwood Bridge to seriously deteriorating mental health services to reductions in fire and police services to the city’s mounting list of unrepaired potholes—understands the derelict nature of this project. It’s as toxic to our future health and well-being as the assets still residing on the balance sheets of the nation’s zombie banks.

Consider just one piece of the current proposal—the $31 million in proceeds from bonds to be repaid with income from the city’s “spectator fund.” The spectator fund collects ticket taxes and parking dollars from events in the Rose Quarter and at PGE Park. Its debt is backed by the city’s general fund. Should business slack off (if, say, there’s a lockout of NBA players in 2011, as many predict, or if there’s something unforeseen—like fans hop off the Blazers bandwagon were star Brandon Roy to tear a knee ligament helping an old lady cross the street) and the fund were to dry up, the city’s general fund would owe millions.

While Paulson, son of ex-Treasury Secretary and ex-Goldman Sachs CEO Hank Paulson, has said he would backstop some of the debt, he is unwilling to take on all of it.

The use of the spectator fund violates Adams’ earlier pledge that Portland’s general fund would never, ever be tapped for this deal. The city-appointed task force that examined Paulson’s proposal said it, too, could not support any plan that “exposed the general fund to financial risks.”

The idea that Portland is even contemplating mortgaging the general fund based on shaky collateral after the global economy has been destroyed by mortgages backed by shaky collateral is almost funny.

Almost.

Does this mean Portland shouldn’t pursue Major League Soccer? Not necessarily. For one thing, the City Council could tell Major League Soccer (which needs us and Paulson’s $35 million franchise fee more than we need it) that PGE Park will have to accommodate both baseball and soccer, something the league is resisting.

Or, painful as it would be to Portlanders who enjoy a baseball option each summer, Paulson could get out of the baseball business altogether. Even in this economy, he could probably sell his Triple-A baseball team—perhaps to the Texas city reportedly willing to offer him more than he paid for it.

Either way, the city could then afford to help renovate PGE Park for MLS, rather than worry about how to come up with $55 million to build a minor-league baseball stadium. And having a Triple-A team gets us no closer to having a Major League Baseball team, which might, just might, justify that kind of public support.

Adams has never been a details guy. It’s the reason why he—as the chief architect behind then-Mayor Vera Katz’s original deal to renovate PGE Park in 2000—rushed into an arrangement that proved both an embarrassment for the city and a costly mistake.

Everyone sees that now. Except for a few elected officials. And one daily newspaper.

 
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