amanda photo Looking for the Amanda for Portland 2008 campaign site? Click HERE Amanda is a Registered Nurse, mother of three, and community leader in Portland, Oregon. She was the first candidate ever to qualify for Portland's Public Campaign Financing in her run for City Council in 2006, and first again in 2008. All photographs on the blog are by Steve Fritz (Amanda's husband), unless otherwise noted. navigationNavigationFavorite links:***************** Coalition for a Livable Future
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Who paid/pays for the tram in South Waterfront?Submitted by Amanda Fritz on July 30, 2007 - 1:07pm.
This is the first in a series, aiming to post concise, clear information about who pays for what in Portland projects. See previous post for a summary of the main components of the South Waterfront district improvements, and Willamette Week's list of who paid for them. Note: the initial posts are my best effort at documenting information from on-line sources, in the amount of time that should reasonably be expected to produce results. I will be updating the main article, based on corrections received. Please cite sources. I will note times of revisions at the top of each post. I won't be drawing any conclusions about whether levels of public subsidies are appropriate. I believe Portlanders are thoughtful people who can make that determination independently - IF we have accurate information on which to base our decisions. The goal of the series is merely to provide that information, as best I can gather it. My main conclusion is that Portlanders shouldn't have to work so hard, to find out what our government is spending our money on. Updated 8/1/07 22:07 - see below first table of cost-shares 
Updated 8/1/07 22:07:
As noted in a comment on a previous post, some of the "property owners" are public entities - TriMet, the State of Oregon, and the Portland Development Commission. That's us. They pay their assessments for the tram with money from taxpayers. I would like to know, and will post if anyone can give me, the breakdown of the tram costs to the "South Waterfront Property Owners" that actually come from public entities rather than private property owners. Those costs should be re-designated to note the use of public money. "Tax increment funds" are generally considered "new money". It's argued the taxes in the district wouldn't have been generated but for the urban renewal district and its improvements. That is true to some extent. But there is also an assessment for urban renewal on the annual property tax bills of every Portlander. For many of us, it's several hundred dollars per year. I'd like to know how much of the "Tax Increment Funds" is really "new money", and what proportion of it is from taxpayers outside the district. Anyone? Update 8/1/07 22:45:
These numbers don't add up to the $2.4 million estimate, but that and the components are all from different sources so it's hard to know which are incorrect. Paid tram ridership will be key. It costs $4 round trip, $100 annual pass, good on both the tram and Streetcar. TriMet annual/monthly passes, OHSU tags provide exemption from payment. It will be interesting to hear reports after the summer, to see if tourists paid for tram rides in significant numbers. So if I'm counting right,
So if I'm counting right, the worst-case scenario is that the City is paying less than a quarter of capital costs for the tram, and less than 20% of the ongoing required maintenance.
Viewed that way, sounds like a deal.
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...sounds like a deal.
A deal for OHSU, yes. For Portland taxpayers? Not so much.
We regular citizens get.... what, exactly, for our $239,280 annually?
With the housing crisis in Portland's working class neighborhoods and our crumbling streets, it seems like misplaced budget priorities for Portland to be offering up infrastructure subsidies like this to a self-sufficient quasi-public operation like OHSU or a high-end condo developer like Homer Williams.
As I said at the outset of this series, each Portlander will make his/her own decision on whether the level of public subsidy is appropriate. Opinions will likely differ.
Looking at the numbers, I'm most concerned about OHSU's share of the operating expenses. Their $40 million in capital costs likely came all or mostly from the Oregon Opportunity funds authorized by Measure 11 in 2002. Since voters approved that expenditure, it doesn't seem reasonable to question it. But I wonder how their annual operating cost of $1.3m compares with what it would have cost to expand shuttle bus capacity and/or regular TriMet service. I found a post on Commissioner Sam's blog which estimated (in 2002) over $2m/year for shuttle service between the two campuses, which doesn't seem credible to me - but maybe I'm wrong.
Perhaps $1.3m can be considered a drop in OHSU's bucket, with an annual operating budget of $1.8 billion, but it's still a significant line item in an organization that's supposed to be spending its money on health care, education, and research, rather than transportation.
Himself, I think the answer to your question of what we get for the City of Portland subsidy may partly depend on the numbers for paid rides over the summer. If, as many hoped, the tram is one more attraction on the tourist circuit, and out-of-towners help pay the annual operating costs, then I think we're getting some return for that investment. Otherwise, I agree, it's mainly public subsidy for OHSU.... which was a core value chosen by the City Council in the North Macadam plan.
Amanda hints at where I think some of the value returns--tourism and as an iconic feature of the City. Scoff if you want, but as a travel destination Oregon is hot right now...and there aren't too many better views-on-demand of the city and surrounding areas than a quick tram ride.
I suppose the other part of the considered benefit would be the idea that failing expansion, OHSU planned to move. I'm not sure it's verifiable that they really did think seriously about leaving the city, but if it really was necessary in order to keep OHSU, then that's a good thing as well.
The idea that OHSU really intended to leave the city was a huge bluff. And that's putting it kindly - another word beginning with the letter B springs to mind. OHSU's employees come from a wide radius, with the current location in the center. That's one reason why so few have moved into South Waterfront condos - we live in Vancouver, Molalla, Estacada, and all parts of the Portland metro region, and we like living where we're currently located. Many of us purchased homes considering how to get to Marquam Hill. Moving to Hillsboro would have meant losing a huge chunk of the workforce - a workforce whose nurses discovered in our strike of 2001 that our skills are highly marketable, scarce, and sought-after.
Besides, can you imagine being a Doernbecher fundraiser, and picking up the phone to call donors to buy a new hospital out there, within a decade of building the new one on Marquam Hill? And telling Mark O. Hatfield his library would be decommissioned? And figuring out how to continue the collaboration with the VA hospital, complete with relatively-new skybridge? Gimme a break. Moving the entire shebang out to Hillsboro was a ludicrous concept that should have been laughed out of the back room where it was doubtless mentioned in hushed tones.
Sam the Tram says $239K a year. Believe it? I'd like to see independently audited final numbers. It's probably closer to $400K. Every year. And that's before the thing starts breaking down, beginning in three years or so.
How many tourists are coming to Portland to ride this thing? Less than 100 a year, I'm sure.
As for the "process" by which this hockey puck was rammed down everybody's throats, its name is Neil Goldschmidt. That and the puppet he had in the mayor's office. The devil and a pretentious dum-dum. Perfect for Homer Williams.
Glad to see that the blogosphere's resident city employee, who drives in from Lake Grove every day, thinks it was a great deal.
what it would have cost to expand shuttle bus capacity
And there's already an existing cost for "shuttle bus" for the one --or more than one-- that takes OHSU employees from their new Schnitzer parking lot to the Tram. And there's supposed to be a shuttle bus "back-up" for the tram in the event it is down for maintenance, or it's too windy to run safely. I don't know that there's a particular or identifiable line-item for that, or if it is included in the tram's "operating costs." I suspect not.
Heading North on I-5, if you pull off at the South Waterfront exit to take the Ross Island Bridge east, there's the "cost" of now having to wait at the new stoplight, instead of driving straight through as in the past. Not to mention the disappearing car lane after the light, where two lanes inexplicably --and without warning-- merge. Gotta wonder how many accidents that has or will cause until the road is redone.
OHSU used to have a parking lot/shuttle bus operating out of some vacant ODOT property in the Central Eastside Industrial District. I have no idea why they stopped using that one, but now it sits unused while there's the opportunity cost of the new Schnitzer parking lot there on "prime" South Waterfront real estate. Then there's the cost to the General Fund/School District/County government of whatever behind-the-scenes shenanigans it was that got the Zidell's property taxes on their 30+ acres of South Waterfront property reduced to just a few thousand dollars a year. All "soft" costs, but real costs nonetheless.
I don't dislike the Tram especially, and marvel myself at the technology and innovative way it connects the hill with the river. But it seems to me the biggest cost of all has been the hit on its credibility the City has taken. I live in a great neighborhood in SE, with well-maintained streets and sidewalks. But if I lived elsewhere, where existing residents are lacking basic fundamental infrastructure, I suspect it would sure leave a bitter taste watching this new development grow up with its costs paid, fundamentally, with other people's money than those that are benefitting.
...and there aren't too many better views-on-demand of the city and surrounding areas than a quick tram ride.
The view is best at the top. No tram required to take it in. There's an even better view at council crest. Mt. Tabor's got a great view, too. The view from the top of the Grotto is decent on a clear day. None of these require such public investment to build and maintain.
As for OHSU leaving, Amanda nailed it. But consider this: If they did move, wouldn't the city gain tax revenue if the land were sold to private developers?
As for the "process" by which this hockey puck was rammed down everybody's throats...
That's an insult to hockey pucks, Jack.
First Amanda, I am so proud of you for doing the math, I knew you had it in you.
$1.3 million would translate to 20-25 FTE or nurses, teachers, librarians, etc, It is a matter of where you want to spend scarce public dollars, especially when as has been pointed out by PDOT we have crumbling roads and other infrastructure and now need a Bond measure to fix it.
First Amanda, I am so proud of you for doing the math, I knew you had it in you
Thanks, Mary. I didn't get yesterday's post up, the next in the series, because in triple-checking the numbers I'd been able to find, I noticed a significant hole I'm checking on. I hope to have it resolved and the post up soon.
Updated 8/1/07: The OHSU site which I cited (hehehe) says OHSU paid $40.2 million of the cost of the tram. But the table published by PDC with the Eighth Amendment to the development plan, shows OHSU paid $13,500,000. PDC still has North Macadam Investors down for $2,500,000 but has the remaining $30,500,000 from a Local Improvement District. Which now that I think of it, makes more sense, due to reports of various other landowners complaining because they believe their tram assessment to be too high based on the absence of benefit to them.
I will amend the post above to reflect this information.
Second update 45 minutes later: This one is a doozy. The Eighth Amendment to the North Macadam development agreement shows a line item of an additional $3,400,000 of Tax Increment Financing money going to an "OHSU-Directed project". A footnote says that "OHSU has elected to apply this funding to their tram obligation". So in fact, the City paid $11,900,000 towards the tram, not $8.5 million as frequently touted. Main post amended again.
A small point...but signing an agreement to pay --as in the Local Improvement Districts and North Macadam Investors additional $2.5 million-- is not quite the same as actually having paid. Sorta like using a credit card to pay for something versus pulling out cash from your wallet. Except, in this case, the City is the one issuing the credit card, so one has to hope the payments due on that card are actually made.
In lowering the surcharge on Local Improvement Districts, for South Waterfront but applicable throughout the city, City staff said there is a low default rate. Is that true?
By "surcharge" I assume you mean the "bump" added to interest rates on LID contracts? The bump rate was lowered for the tram and future projects. I also lowered it, from a historic high, when I managed the LID Construction Fund. And it is true that the delinquency rate is low for contracted accounts. But there is a problem.
The revenues from the "bump" go to the Sinking Fund that sells bonds to fund projects. The sinking fund has been very healthy, and the city has saved money in the past by refinancing debt...but not reducing interest rates for existing accounts, some of which carry interest rates as high as 9+ percent. (My suggestions to lower interest rates for all accounts has never gotten much traction.) Back in 2000 or so we calculated that there was a "surplus" of about $5 million in that fund and growing.
Here's the problem. Contracts are "seasoned" before they are included in bond sales, that is to say the City looks at payment performance. If an account is delinquent when accounts are reviewed for inclusion in a bond sale, they're not included...leaving them in the LID Construction Fund, where there's no "bump" to cover the delinquency. There's a fair amount of bad debt being carried in the LID Construction Fund. It's a little wonky and confusing, but so much money flows in and out of the LID Fund, it's hard to get folks to think this is an issue. But there's an issue of bad debt being carried in the LID Fund.
What's ironic is that despite City "finance policy" to season debt before it's included in a bond sale --which has in recent history meant a lower interest rate-- the tram assessments, the biggest the city has ever done, were included in a "special" bond sale before any payments were ever made. That includes the $2.5 million special assessment for North Macadam Investors, whose interest rate was --inexplicably to me-- set at 6%. With a balloon payment after ten years. Balloon payments? Are we turning into a subprime lender?
Anyway, I'm sure it's all fine and aboveboard and will work out just great. But even as the guy who is collecting this money, I can't always figure out what's going on, and why.
PDC still has North Macadam Investors down for $2,500,000 but has the remaining $30,500,000 from a Local Improvement District.
That $2.5 million is a special, special assessment outside the LID for the Tram. That is not all North Macadam Investors is paying, in fairness to them. They are participants in the LID as well, though they're the only ones who took advantage of the "Substitution of Satisfaction" to "pay" all their assessments with, well, another different assessment, on a single property and not on their condos.
Exhibit K-2 in Exhibits K - V of the Eighth Amendment to the North Macadam Development Agreement says:
Maximum LID Amount: $36,600,000, subject to OHSU's elections pursuant to Section 6.2.2.3.
Maximum, not-to-exceed amount for OHSU, RCI, NMI, Block 39 (not including finance and administrative costs): $32,365,318.
NMI and OHSU agree that such amount shall be allocated between their respective ownerships as follows:
OHSU: $30,831,857
NMI Land: $1,533,461
My post, from cited sources, lists OHSU's contribution at $36,800,000. It's not clear to me where the difference of about $6,000,000 figures in.
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