UPDATE #2: Tram Life Cycle Cost Analysis

Mr. Barnard -

Thank you for posting this information.

Can you also provide the latest ridership projections? What service hours and service frequency does the operating contract provide?

One aspect of the debate about the tram has involved the question of which alternative modes (electric trolleybus, conventional bus, tunnel/elevator, etc.) might have also served this purpose.

Now that the costs are known, it might be interesting for some folks to calculate and compare per-rider costs and per-passenger-mile costs, etc. for various modes.

Thanks again,
Bob R.

Only $46k/year for alternative service?
How many days of "tram down time" does that cover?

Why is there no provision for liability insurance and no cost of financing?

Yes,

Where is the debt service and the rest of the documentation?

The design competion, land dedicated to the Tram, etc???

How did you get to the 50 life span?

Portlanders ought to stop picking nits with this tram. It's a great idea, it is progressive thinking, and a bargain at twice the price.
Stop thinking small, Portland is doing a great job making a great City.
Keep up the good work!
Former Oregonian in SoCal.

TJ: Portlanders ought to stop picking nits with this tram. It's a great idea, it is progressive thinking, and a bargain at twice the price.
JK:Yeah! Great at twice the $65 per ride!!!

TJ: Stop thinking small, Portland is doing a great job making a great City. Keep up the good work!
JK: Waste like that makes the pentagon look like a bargan.

Thanks
JK

TJ -

Although I am somewhat supportive of the tram, and anyone who has followed recent threads around here knows that I am not a friend of the "nit pickers", I find your post lacking.

For starters, we are already paying "twice the price", more than twice, in fact.

I consider myself a proud progressive, and I for one do not consider large cost overruns in excess of 100% of the original project estimates to be "progressive thinking".

The _idea_ of the tram, to me, is great. (Others strongly disagree on that point!) The implementation of the project, especially the budgeting process, has been, shall we say, less than laudable.

I believe the project should proceed, having come this far, but the problems that the public process and budget process of the tram have highlighted jeopardize other future "progressive" public infrastructure projects.

- Bob R.

Fifty years?? What is the basis for this estimated life of the tram? Is this based on actual experience elsewhere, or just a guess?

Also - isn't there a lot that's been left out of this analysis? Interest? Land? City Staff time? What else is not in this "life cycle cost analysis"?

Why not get an independent analysis? Wouldn't it make the anser more credible?

An independent analysis might be "more credible," but it would also make it more expensive.

We had an independent audit for the sake of credibility re: the construction costs (at a time when they were still increasing and ambiguous), but at this point, paying more for an independent contractor to conduct an analysis of the lifecycle costs seems to me to have minimal benefit and cost too much to have any real merit.

A member of Sam Adam's staff actually wrote that it "costs too much" to conduct an independent analysis of the lifecycle costs?

On the Tram that quadrupled in constructions costs from the first City Council approved "we'll fix it later" budget?

Ironic, isn't it? Can I open a tab, bartender.

Awwww, who cares anyway. The taxpayer's of Portland are just picking up 15% of the tab. Another round of drinks for everybody (two for Homer)!

Nice work, boys.

15% of the tab that probably 90% of Portlanders will NEVER use. EVER.

Sad sad sad. Requisition money from people and then spend it on something they don't need.

Don't get me wrong I support the tram, but not at the cost to those that will never use it. It benifits the 5000 or so that "might" live in the south waterfront and it might last 50 years.

I would NEVER take money from taxpayers for such a contrivance. :(

Besides, I spoke to someone recently, and in fact, Portland is getting screwed. I don't know what the deal is, but aerial trams don't cost fifty million plus to build. They just don't. Someone has screwed the design and financing.

Maybe they're fired by now? Who knows.

blagh.

Who is John Galt?

90% will never use???

Now come on, OSHU needs to grow. Pill hill cannot hold any more growth. If OHSU is still going to provide the STATE with a world-renound public health facility, we need to keep in mind that the cost of the tram will work it's way back to us in the growth of OHSU.

If anyone who rides the 35 bus knows, the #8 to OHSU goes through every 5 minutes, not to mention the traffic jam every day at 5. These people need alternative ways to get to one of the largest employers in the state.

OHSU's contribution to the quality of life in Portland cannot be forgotten. What business would pick-up the % that OHSU has put in for a public transportation system???

Tram is great. I agree those who argue the cost are nit-picking and not seeing the benifit to the state and metro area.

~n

I and may other people would like to know what's going on here.

Did Commissioner Sam instruct Roland to post this reason why a professional life cycle cost was not prepared?

Has Mr. Barnard ever prepared a project life cycle cost before?

Who instructed Mr. Barnard to exclude debt service and other fundamental costs?

Who told Mr. Barnard what to include?

Was there an earlier draft or two?

Who Ok'd the final draft?

Did Mr. Barnard use professional Life Cycle cost estimating software or any other helpful means?

Is Mr. Barnard free to openly discuss his estimate?

Can Mr. Barnard be interviewed by a local journalist?

Can Commissioner Adams office obtain the full life cycle debt service costs?

If a professional company is willing to complete a thorough and complete full life cycle cost for a nominal fee will the city pay for it?

Will it take months to get
any more basic information?

Who keeps track of money spent on SoWa?

Where can one get a list of all SoWa payments to date with names or recipients and what the payment was for?

How many other projects in SoWa are over budget?
What is the current estimated budget overrun?
Where is a genuine SoWa budget to be found?

What is the current TIF interest rate the city is paying? What rate was used in the original 1999 SoWa plan estimates?

Should the city answer these question?

Nick:

OHSU isn't a business; it's a non-profit teaching hospital. If you're a shill, you should know that already (turn to page 2).

Please say you don't care about the rate at which health care costs are growing in the United States, because you want the best health care that money can buy! If you can drive the best, drive a Cadillac.

The 85% of Tram expenses covered by OHSU, plus the art, leather furniture, rare hardwoods (IN A HOSPITAL!!!) are all OPTIONS that increase the sticker price on your health care Caddy.

Pete Kohler may have recklessly endangered OHSU's fiscal stability right along with the PDC risking the city's.

His commitment of OHSU millions every year for decades towards this boondoggle Tram will hobble funding for all of their core missions.

OHSU employees should probably be up in arms.

Well, not the doctors.
The first SoWa OHSU building is owned by the OHSU doctors group, a 501c3, will pay no business taxes, no property taxes and no TriMet taxes. It will house doctors offices, a clinic, a health club, administration offices and "some research space."

All of which could have been acquired without the insane Tram.

But, it's not just the Tram.

The city is also providing the streets and other infrastructure as they poor millions into SoWa. The 1999 SoWa plan called for $288 million in projects and another $160 million in debt service over the first 20 years with millions more needed to retire the debt and to cover cost overruns.

It may be that the debt service itself is a much larger cost overrun than the Tram or the rest of the project overruns.
If the 1999 plan did not assume rising interest rates it may be that debt service is well on it's way to doubling.
ALL of which will be paid for decades with property taxes desperately needed by basic services general fund budgets.

That's why it is important to maintain updated and complete budgets.

Putting a happy face on this is no substitution for prudent management.

50 years seems like a very short period of time for such a large expenditure. Will fares be accurately priced so that users actually cover the costs for this short period of operation? What happen 2056? Will the tram be replaced with another heavily subsidized and modernized replacement mode? Will one of the tram gondolas be placed on the top of Council Crest as an exhibit of the past like was done with Council Crest trolley car after discontinuing operations in 1949? (The trolley car was removed several years later after much vandalism) Will the other gondola be given or sold to a non-profit group for a club house also like one of the Council Crest trolley cars that became a Boy Scout clubhouse?

If the 50 year life cycle had been publicly aired prior to the decision being made to build the tram, maybe this expensive boondoggle would not have gone forward.

"...paying more for an independent contractor to conduct an analysis of the lifecycle costs seems to me to have minimal benefit and cost too much to have any real merit."

Roland, c'mon buddy, are you kidding me? Outside, independent analysis of a project that has spiraled out of control and that has resulted in some SERIOUS loss of confidence in city officials would have "minimal benefit" and no "real merit"???

That might be one of the most ill-advised statements I've heard out of a Portland city employee.

Sam, please tell me you don't agree with that statement.

That's like a business with back tax problems saying they see no reason to hire a tax professional - they'll just continue doing their taxes themselves.

And if it turns out that you have to revise your LCC analysis because land, staff time, and debt service (among other items) were left out, the resulting increased "loss of face" will probably make you wish you spent a few thousand bucks to get it done independently.

One very huge expense and very careful part of planning the MAX tunnel under the West Hills had to do with emergency escape routes. What is the emergency access plan for the OHSU tram? The four+ hour evacuation of one passenger at a time witnessed at the recent Roosevelt Island Tram breakdown doesn't seem like a particularly well thought out escape system.

Haven't you heard, G?

Our Tram will never get stranded because we have multiple redundancies and superior technology.

Plus, the Portland Fire Bureau has been practicing their repelling, and they say the can handle it.

The voice of the public majority was ignored in greenlighting the Tram.

The subsequent quadrupling of construction costs has never been explained, merely renegotiated with OHSU.

We are afraid the construction budget fiasco will be repeated in the operating, maintenance, and safety costs. This WILL adversely impact future general fund budgets.

If we build a white elephant, we have to feed it and shelter it.

OHSU's web site states that it is ESTIMATED that the City will pay 15% of the Tram's operating costs and OHSU will pay the rest (i.e. 85%).

However, as I understand it, the actual split will be based on future surveys of riders. If it turns out that 60% of the Tram's riders are NOT OHSU staff, patients, visitors, etc. than the City will pay 60% of the Tram's operating costs.

Is my understanding correct or have there been changes in the way the City and OHSU will split the Tram's operating costs?

Bob B.

TESTING 1...2...3...TESTING....

Is this thing working?

Helllooooo? Constituent service on aisle three, please.

"Is this thing working?"

No. That's why it appears they are refusing to answer and that,

They are still covering up the full life cycle cost estimate.

They are still covering up the UR impacts to basic services.

They are still covering up the SoWa budget.

They are still covering up the checks written to OHSU and every other payable in SoWa.

The Impact Reports are required by state law.
The rest is required by fiduciary responsibility.
The PDC can't document half of what it does or a quarter of what it claims.

Who told PDOT's Rob Barnard to exclude debt service and other fundemental components of a life cycle cost estimate?

Who said there is nothing to hide and someone (maybe the FBI) should not be investigating? Just another blue light special at tax payers expense!

We certainly can't expect the City Auditor to refer any concerns to the District Attorney (not unless it pertains to a single woman living in a trailer park).

Bob B. You are correct in your post. The trams continued operation costs will be negotiated based on ridership.

With the city being a good negotiator, they will agree to looking at the first year numbers when the novelty of the tram will create a large percentage of riders being tourists, first time- taxpaying riders wanting to see what they paid for, thrill riders, etc. And since there will be only one so-called OHSU bulding (the health club and some doctor offices) the OHSU ridership portion will be very low.

Guess what, the ridership will not be the 85%-90% projected initially by the experts. The taxpayers will be paying for a good share of the operating, maintenance costs, and overhead based on this "fair" first year analysis. "Linch-pinned" again.

Rob, Roland & Sam:

I've been hoping to see a response from one of you on the issues brought forth on this issue. Some of the comments may have been a bit harsh (mine included?), so maybe I don't blame you for not doing so. Perhaps, though, you could answer one question for me, which I believe will go a long way toward satisfying some of the concerns here.

I'd like to learn what the reasoning was for excluding debt service costs, land costs, etc from the life cycle cost. Without those costs included, the analysis seems flawed and not credible. You may have a very valid reason for excluding those, so I welcome the opportunity to be educated as to what that may be.

Thanks,

Larry

Mr. Barnard -

Thank you for providing answers today to the questions posted in the comments.

I hope that this level of interaction and responses can be continued in the future. I know that it can be frustrating to readers of several of the discussions here when staff does not appear to reply or interact after the initial day or initial flurry of comments.

I know that there can be a certain level of hostility in the comments as well, so I appreciate that you came back and provided answers (perhaps a bit basic, but answers nonetheless) to these questions.

Please keep up the level of interaction and encourage your colleagues to participate as well. If these kinds of staff-public conversations can be increased and the level of detail increased as well, perhaps a good deal of the perceived animosity between the public and city bureaus can be reduced.

- Bob R.

A few items which remain outstanding include:

Cost of liability insurance?

Status of FHWA Airspace Lease?

Was Doppelmayr made aware of your annual operating plan (4,450 hours/year) when they projected a 50 year useful life? How long is their warranty in force?

Don't mention the paraffin oil to the FWHA: they hate it when anything (besides water) drips onto interstate freeways.

Also: PDOT should include the effects of wind when they project the likely path of falling oil droplets. It won't all fall neatly onto the sidewalks unless there is no wind.

Aren't these the same group that told us this would originally cost $15M to build? Why would anyone believe them now?

We may have got rid of a few people, but I still think the attitude to justify this project at any cost still exists.

"Each piece of their metal is hand formed by Swiss craftsmen who came out of retirement to build this cabin" I can hardly wait to see what replacement parts will cost on this thing.

Steve Schopp asked: Where is the debt service and the rest of the documentation?

Rob Barnard: Cost for debt service is not borne by the tram operating costs. The debt service costs are carried by the private funders of the Local Improvement District, the Tax Increment Financing and Oregon Health Sciences University.

Steve's reply: Why did you mix operating costs with debt service in your answer? Of course debt service is not part of operating costs. Debt service is part of any full life cycle cost. What are you pulling here? You know darn well cost for debt service is borne by the Urban Renewal, Tax Increment Financing, which is paying the city's share. That debt service will devour millions in TIF dollars. The remaining debt service (LID) should not under any circumstances be withheld from the life cycle cost estimate.

Yes I know "Information on financing costs for each type of debt revenue resource is available from the Portland Development Commission and OHSU."

Why is it being withheld from public view including from the South Waterfront Urban Renewal Citizen Advisory Committee and their Budget sub-committee? Why the cat and mouse, hide and go seek game?

Steve Schopp: [Cost of] the design competition, land dedicated to the Tram, etc???

Rob Barnard: The entire tram is within the public right-of-way; the project did not have to pay for right of way costs.

Steve's reply: No the "project did not pay for it, the city provided the land and that is a cost and part of any full life cycle cost.

Rob Barnard: Interest is paid for by OHSU, private property owners or as part if Tax Increment Expenses;

Steve's reply: Interest from "Tax Increment Expenses" is city property tax money and part of the life cycle cost. MIllions inTram interest will be paid with the same TIF property taxes the city's share of constcution is paid with.

Rob Barnard: I am a member of the Office of Transportation committee that developed standards for how to generate and use Life Cycle Costs analysis for the Bureau. We will have an outside consultant review my work.

Steve's reply: Your standards are not fundementally sound. You have mischaracterized "debt service" in order to exclude it. I can only assume you were instructed to do so as part of the continued effort to withhold all SoWa debt service costs from public consideration.

I'll state again, for the multiple time on this blog, the original SoWa 1999 plan anticipated $160 million in TIF debt service costs during the first 20 years of the plan and millions more to retire the TIF debt. That's before the runaway projects cost overruns and rising interest rates.

All of which will be paid with property taxes diverted from basic services general fund budgets just prior to those tax dollars arriving in those cash strapped taxing jurisdictions.

You've straw maned debt service by stating "it's not part of operating costs" and suggested it's not a cost because TIF pays it.

That should not be acceptable to anyone.

Rob Barnard: Commissioner Adams has asked for an outside consultant to review my life cycle cost analysis.

Steve's reply: Can I pick the consultant?

Steve asked: Has Mr. Barnard ever prepared a project life cycle cost before?

Rob Barnard: Yes, I am a member of the Office of Transportation committee that developed standards for how to generate and use Life Cycle Costs analysis for the Bureau.

Steve's reply: I asked if you have ever prepared one. Why would you need to "develop standards"? They are readily available in the industry with professionals and businesses preparing them every day? Again I must assume you wanted standards which eliminated fundamental components such as debt service and land costs. Some standards.

Steve Schopp: Was there an earlier draft or two? Who Ok'd the final draft?

Rob Barnard: The final draft was reviewed by the Director of the Bureau of Transportation Engineering and Development and now the public.

Steve's reply: was there an earlier draft with debt service included? Were you ever provided the debt service numbers?

Rob Barnard: Custom software was not used.

Rob Barnard: The debt service on the LID is shown as $691,035 on Ordinance 179297; PDC should have estimates for debt service on the TIFF bonds.

Steve's reply: The LID is being used to finance all of OHSU's share of $38 million. The LID debt service will be many millions more.

Rob Barnard: Again, Commissioner Adams asked that an outside firm review my analysis.

Will the city release the record of money spent on SoWa?

Will the city provide a list of all SoWa payments to date with names or recipients and what the payment was for?

& a list of other projects in SoWa are over budget?

& the current estimated budget overrun?

& a genuine SoWa budget ?

& the current TIF interest rate the city is paying? & the rate used in the original 1999 SoWa plan estimates?

Rob Barnard: Portland Development Commissioner would be the agency to ask.

Steve's reply: So none of the Commissioners themselves have never seen any of this information? And can't provide it?

The problem is the PDC makes things up, misleads the public and withholds critical information. It's not by accident.

It should be abundantly obvious to those paying attention that the agencies and city management do not want the public knowing too much.

http://www.oregonlive.com/search/index.ssf?/base/
news/1149562526170720.xml?oregonian?lcfp&coll=7&
thispage=2

"the audit found that the commission relies on murky data to measure its economic development and publishes some information that might be misleading to the public."

"audit last year found that the agency hadn't followed its own rules in awarding contracts to private companies"

"the agency lacks complete data and clear goals to link investments to community desires"

"the audit found that the figures are not based on actual numbers but on the staff's best judgment"

"the data lacked any source documents to support the estimates" the audit said.

"The audit also found that the agency publishes some information based on initial estimates not actual results. The differences were "not clearly disclosed . . . and would likely mislead readers," the audit said.

"The commission lists more than 200 performance indicators. But many don't meet criteria for good measure, and only a few are consistently reported with data."

Beth -

Since you posted those quotes from the recent Oregonian article, and this is Commissioner Adams' blog, I think it is on-topic to quote a couple of other things from the very same article:

"The new audit comes at an important time. The City Council must decide in the next two years whether to extend three of its six central city urban-renewal districts. And Commissioners Sam Adams, Randy Leonard and Erik Sten, a council majority, haven't been shy about expressing displeasure about everything from the agency's lack of interest in renewable energies to too much autonomy during negotiations over the South Waterfront to sharing too little information about a lawsuit over construction wages."

"The council has taken the unusual step of hosting three work sessions in nine days -- ending Wednesday -- to make sure the development commission and the council share the same goals."

Plus, those audits your quotes refer to were done by city auditors... Things at the PDC may be murky, but there is starting to be more scrutiny and a bit more accountability. I encourage the city commissioners to continue to look into PDC issues and consider possible reforms.

The article also notes that the urban renewal areas managed by the PDC are largely a success.

- Bob R.

Bob,

I'm not sure what your message is.

How does one avoid the substance of the quotes I posted and then buy into the PDC claims of that renewal areas managed by the PDC are "largely a success"?

Read the quotes again then explain why anyone should believe the PDC.

From what I have read here alone, this Life Cycle estimate is disturbing and further demonstrates the city agency's willingness to use inappropriate, misleading and unreliable methods.

Methods which are largely dishonest.

Beth -

My comment has two separate messages:

1. The very audit you were quoting from also found that PDC urban renewal districts are successful: "City Auditor Gary Blackmer's office found that growth in wages and property values within five urban-renewal districts jumped at more than twice the rate of the rest of Portland."

2. The same article mentions that Commissioner Adams is among those looking into stricter accountability from the PDC. My point is that this is a good opportunity for those who might otherwise disagree with Mr. Adams to engage and encourage policy improvement, rather than simply to complain.

- Bob R.

"Strict accountability". Bob? According the the article, Sam, Eric and Randy are more interested in appeasing unions and pushing an environmental agenda instead of scrutinizing URDs, TIF and the PDC's ineptitude.

And wasn't Blackmer partly responsible for the failed VOE program? Forgive me if I'm skeptical of his analysis and/or opinions.

Chris -

If you are skeptical about Mr. Blackmer's audit, are you also skeptical about his conclusions which are critical of PDC, or just skeptical of the the stuff that doesn't fit your view?

- Bob R.

Bob,

Who do you think you are with your condescension. I read the article.

The article made it clear with:

"the agency publishes some information based on initial estimates not actual results,,and mislead readers"

that their claims are dishonest and unreliable.

And who are you to judge whether people are "engaging and encouraging" or complaining"

Many people have been engaging and encouraging disclosure on these matters for years and months only to be ignored or repeatedly mislead.

Stick to the substance and stay away from your rude behavior.

So... I need to double check on this, but I believe that there was a mistatement in the debt service answer provided. Instead of the "Cost for debt service is not borne by the tram operating costs," I believe that it should have read that the "Cost for debt service is not borne by the CITY."

Also,

I spoke with one of the city's Debt Managment experts who explained to me why debt service costs do not apply to the tram lifecycle cost analysis.

The short answer is that when you calculate the net present value of bonds that are taken out over a long period of time, the debt service is already included as a part of that bond's "net present value."

Here is his email:

"Roland:

You have received questions as to why debt service costs are not separately identified in the life cycle cost analysis for the tram project. The answer lies in the conversion of debt service costs over the life of the bonds (nominal dollars) into present day dollars (present value).

In calculating the present value of a stream of debt service payments, the common financial practice is to discount the annual debt service at the interest rate on the bonds. Therefore, if one calculates the present value of a stream of debt service payments over 20 years (or 50 years), the answer comes back to the original capital cost, in this case $8.5 million (tax increment funded component). Therefore, it appears that the analysis prepared by Rob Barnard is handling the capital cost component of the analysis appropriately. There is no need to separately identify debt service costs as the present value of those costs would yield the same $8.5 million shown in the analysis. In fact, to add debt service costs to the capital costs already shown in the analysis would result in a double count, resulting in a substantial overstatement of project costs.

Eric Johansen"

Beth -

My words: "My point is that this is a good opportunity for those who might otherwise disagree with Mr. Adams to engage and encourage policy improvement, rather than simply to complain."

Your reply: "Who do you think you are with your condescension." and "Stick to the substance and stay away from your rude behavior."

Who is being rude?

- Bob R.

Roland -

Thank you for the clarification on the debt service cost issue.

I hope you can also address some of the issues that others here feel remain unaddressed. In Mr. Barnard's answers, he referred reads to the PDC and OHSU in a few specific cases.

While it is entirely proper to refer people to the agency directly responsible for certain information, in this case due to the strong skepticism voiced by a number of people in the audience here regarding the PDC, if you have access to any public information supplied to you by them which may shed light on these matters, I hope you and others can arrange to post it here.

- Bob R.

Bob-

Let me look into that for you. I will certainly try to post the information, though I am not immediately sure where I can get the data being requested other than from PDC...

Let me poke around and see what I can find. I will definitely post anything I come across.

Rob and Roland: It is not correct to exlude financing costs and land costs in developing the TLCC, especially in regards to general TLCC industry

practice.

Excluding land is over a $4M mistake multiplied by the 50 year life cycle you have used.

The east terminal site is two city block lengths of right-of-way, plus the portion in the State of Oregon's Macadam Ave. r.o.w. These parcels of land are taxpayers land that have land value. When government bodies give land for a use that is primarily used by OHSU, there should be compensation, or at least the land value should be in the TLCC because the land could have been sold to a private developer (like street vacations are routinely done).

These parcels when considered on a square foot basis of land comparable to other recent sales in NM, and considering discounts and additives to determine their value could easily achieve $4M in value. Block 49 sold for $5M with toxic costs. The city paid over $7.2M for the park block in NM and still has toxic site costs to boot.

Was the reason that a committee had to be formed in PDOT, to study how PDOT would perform TLCC's, to find a "policy means" of excluding several normal factors like land costs and financing (debt service)?

Jerry -

Aren't you talking about a potential opportunity cost here, rather than an actual cost?

To include the public ROW land as a cost, wouldn't it require the assumption that this land absolutely would have been sold off for private use instead?

To explain what I mean, let me use an analogy:

Suppose I own a vacant lot next to my house. My neighbor also has a lot with a garden but cannot reach it easily from his own street frontage. My neighbor comes to me and says "If you grant me an easement, I'll pay 85% of the cost of paving a driveway across that lot so that I can reach my back yard, and you can use the driveway occasionally for better access to your own property."

Suppose further that I agree, because 15% of the paving costs of the driveway gives me additional access that I think I will find useful now and then.

It sounds to me that you are arguing that when considering the costs, I shouldn't just consider the 15% paving cost, but also the fact that I could have sold the vacant lot to someone else for a lot more money, is that right? But what if I had no intention of ever selling the land? Is it still part of the life cycle cost of the new driveway?

Furthermore (to stretch the analogy really thin), suppose I see this not just as a transportation opportunity but also as a way of building a better relationship to my neighbor, who has done great things for the neighborhood.

- Bob R.

Sam, Eric, Rob, Roland and Bob,

Now the story is

"Cost for debt service is not borne by the city"????

or

It's "already figured in the capital costs"????

Here's the easy version everyone can understand.

The Tram project will costs $57.

The money is borrowed by way of TIF and a LID.

It will be paid back over approximatley 25 years at some interest rate but assume it's 4%.

During the life of the financing the LID partners and TIF(city) will have paid around $90 million to retire the project debt.

That's $33 million in debt service costs above and beyond ALL other costs which you have not included in the life cycle cost estimate.

Are you wanting people to believe the city doesn't pay interest on Tax Increment Financing?

Or that LID partners don't pay interest?

The ONLY conclusion one can make from this is is the city and OHSU do not want the public to know the magnitude of resources they have committed, long term, to the Tram.

It should be very easy to provide the financing costs of not only the Tram but all other projects as well.

Unfortunatley we have officials claiming ("clarifying") that there are none.

WHAT THE TRAM REPRESENTS TO ME.

The Oregonian reported that OHSU, certain public officials, and associated developers knew of the escalating cost of the Tram and never reported it to City council. Instead, they continued to insist the cost was $15.5 million when they knew it was not possible to build for that price.

Commissioner Leonard, on April 12th, 2006, reported the same findings, in addition to naming some of those responsible for the false and material misrepresentation to City Council in order to obtain taxpayer funding for a pet project.

Yet, City Council has taken no action to seek return of those funds obtained for the Tram based on those false statements. They haven't even opened an investigation to recoup the more than $8.5 million Commissioner Leonard states taxpayers are contributing to the tram.

Not doing so leads me to believe City Council now condones the formulation of public policy based on false and material misrepresentation and will use our taxpayer funds to implement such policy.

The tram tower, now in view, will always remind me that our City Council will accept lies to disburse our monies. And that, more than anything, else disappoints and saddens me. It does not bode well for future public/private endeavors.

Jerry and Steve Schopp:

I impressed that Sam and his team have been very upfront about all this tram stuff. They even posted the LID debt costs that you have ignored to mention in your posts.

Your turn: Quit with the spew of rhetorical-only smarty-pants comments all the time: put up or shut up. Post us an analogous life cycle cost analysis that includes land and debt?

Yvonne

The Shadow:

I just saw your blog while posting mine. If I recall correctly, the Oregonian named the lying tram and hospital staffers in February, 2006.

Yvonne

Yvonne,

"""They even posted the LID debt costs that you have ignored to mention in your posts"""

No such posting has occurred here or

anywhere else I know of.

Not for LID or TIF.

The only place I have yet to see Debt Service is in the original 1999 SoWa plan which shows $160 million for the first 20 years.

Instead we get false information such as:

"Cost for debt service is not borne by the city".

Patently false as TIF taxes can only be used to pay debt along with the interest. Which the city obviously pays, big time.

And we get also get:

"Information on financing costs for each type of debt revenue resource is available from the Portland Development Commission and OHSU."

No, it is not available.

If it was available the SoWa URAC (citizen advisory committee and their budget subcommittee) would have obtained it years or months ago after repeatedly requesting it from the PDC.

It doesn't matter now whether or not the city includes Debt Service in their Life Cycle cost estimate.

If under some strange standard they created they don't want to add debt serviced to the life cycle cost estimate fine.

They still must release what the debt service costs are.

They can call it what ever they want.

Unless it is the intention of city leadership to conceal them those costs must and will be released one way or another.

Along with a full accounting of money spent on SoWa et al.

It's quite simple and basic.

Hundreds of millions are being spent and all of it should be accounted for and itemized in spread sheets and budgets for public and committee review.

Without any of the current gapping holes.

My oh my this is something.

http://bojack.org/index.shtml

Posted by PDCmole at June 14, 2006 05:58 PM

As a very disillusioned PDC employee (or former PDC employee, I'm not going to say which), I just have to weigh in and respond to the following:

1.You nailed it Jack - best explanation of the whole flim-flam PDC accounting system I've seen in print, but it assumes PDC makes decisions based on rationality which it does not. Most decisions are political ones either pressured by the private sector (i.e land owners, developers, powerful employers in town) or other public sectors (such as OHSU and Dept of Transportation), or City Council.

2.Comment from Tkrueg, "Perhaps the PDC needs some new blood to strike a better balance..." I wish that would solve it! No, its more like instability and lack of institutional knowledge and that all the good people have either left or don't stick around long enough. In the past 5 years alone PDC has had (including interim staff) 5 executive directors (including City Hall favorite Judy Tuttle who was pulled in as an emergency babysitter after Don Mazziotti was fired, er I mean resigned), 3 deputy or secondary directors (or whatever they call it this season), 4 Finance Directors, 3 Housing Directors, 4 Economic Development Directors, 2 Development Directors, 5 Information Systems Managers), 3 Human Resource Managers, and 3 Commission Chairs. In addition there has been a 37% percent turnover of staff in the past year alone (way to go Warner you are really making things work better!). There is plenty of new blood, but most of them have no clue and leave before anything can really be implemented or solved (such as PDC's problem with financial reporting systems). At the staff level it is sometimes impossible to get things done well because of the learning curve of the decision makers or other high level staff.

3.PDC can't even find half of their documents and data let alone figure out and clearly explain impacts to the public. It is a nightmare trying to get data and information there so its no surprise the numbers look funny -- million dollar financial databases (MITAS system) that is held together with chewing gum and tape that contain incorrect information or are impossible to correctly analyze doto their convoluted data structure, databases spread out all over the place with no central control, lack of records management and document management. Man, it sucks (sucked) as a staff person. Trust me, most of the time PDC is guessing when they provide financial data to consultants the auditor's office.

4.The Commission is made up of many people that have little to NO background in real estate development, government, or economic development. I have personally seen Commissioners miss and gloss over stated risks, financials and recommendations BECAUSE THEY DON'T Understand them

5.PDC was set up in 1958 to do the dirty work of the Mayor and City Council through the ability to condemn property, move quickly on projects outside of public process, and issue bonds to pay for (often pet) projects outside of the City's general fund. Sometimes even if PDC staff recommends NOT doing a deal (such as the Creative Services Center or PGE Park) the mayor or council might dictate otherwise. Also, the mayor is in charge of PDC and really needs to get on it in overseeing the PDC. Really.

6.PDC has an built in conflict of interest built in. PDC is paid for through urban renewal funds, so of course they want to issue as many bonds as possible. It pays for all those fancy new ($85,000 plus) salaries

7. PDC is really top heavy with management, many of whom make over $85,000 dollars a year and many of whom were recently added as new positions. Many of these new positions are really vague and in my experience completely unnecessary. Rochelle Lessner? What the hell does she do? Why does PDC have 4 full time staff to manage 70 PDC owned properties (most of which are vacant)? Why does PDC have a whole bunch of people making over $70,000 a year with management titles that do not manage any staff? We did an informal assessment one day at work and over the past 5 years PDC has increased management to the point where there is one manager for every 5-6 staff.

8. PDC were charted to be implementers NOT planners. Yes, absolutely, problems will arise when PDC is planning for URAs so maybe they shouldn't. Also, Bureau of Planning through comprehensive planning and zoning decisions is just as responsible as PDC ends up having to implement their half crocked plans in the first place. Cascade Station sat empty for 10 years due to bad zoning and a bad PDC deal

9. Idiotic and Corrupt employees. Sorry co-workers. Many PDC staff are really good, competent, and ethical people. But others are either total idiots or just evil. I have seen certain staff flat out lie to the public and others working on projects. There is a reason the Burnside Bridgehead project blew up in PDC's face and that the community hates us (I mean them). Lew Bowers, the manger of the project is a loose cannon (and he still works there!) Ethics training should be mandatory for all staff

10. Untrained staff. PDC has such a pathetic training program for staff. Last year many staff that work on development projects were denied financial training by the upper-chiefs as they felt it was unnecessary. Either hire people with the skills and education or train them before you let them loose on 12 million dollar development projects and the like.

11. Ec-dev department should just go away. They are useless except for some of their lending and grant programs that could be administered by another bureau. Or at least hire a director with some Economic Development education. Bob Alexander? He used to work for a department store before PDC and is now responsible for the Tram project. WTF?

12. Contracting practices are whacked, no doubt about it. That Linda Andrews woman in charge of them is also the same person that thought it would be ok to stay at very expesivethe Benson Hotel on PDC's dime during the office move becuase she didn't want to have to drive home late. Why is she still in charge.

13. The ethicspoint software website that B. Warner implemented (www.ethicspoint.com) for whistleblowing is a joke. Every complaint from staff has been ignored.

Ok, I'm ranting. But pretty upset and sad. PDC has such great potential and has the resources and talent to make the city better. Unfortunately the whole house of cards is now falling down. Maybe next time I'll really start exposing them. Next time I'm naming names and documents.

Posted by PDCmole at June 14, 2006 05:58 PM

The silence is deafening:

Is there no intention to purchase liability insurance?

Have PDOT/ODOT submitted their FHWA Airspace Lease package to the US Department of Transportation? I'm confident it must be completed before hanging cables.

Did Doppelmayr acknowledge your 4,450 hour/year operating plan when they projected a 50 year useful life?

How long is Doppelmayr's warranty in force?

"Maybe next time I'll really start exposing them. Next time I'm naming names and documents."

Instead of throwing out a bunch of unprovable opinions, with relatively few facts, names and documents are what should have been presented. If you (PDC mole) are truly concerned about the system, than by all means, stand up, expose it and watch it change.

There are few people that seem to be making a living off complaining, but when it comes to taking actions, ie standing up when you have damning information, attending public meetings, and asking the appropriate people the appropriate questions, there becomes a deafening silence.

Yvonne,

You may be correct. The Oregonian article to which I was referring is dated April 2, 2006, entitled "Tram's price tag unrealistic from get-go." It's front page, above the fold.

Regardless of how one feels about the tram, I resent public policy formulated by city council to be based on fraud.

And when discovered, nothing is done about it. Why should we continue to pay taxes if City Council does not exercise their fiduciary responsibility?

After all, this is $8.5 million, maybe more, not just $145,000 of allegedly misused public election funds. Which, by the way, received immediate investigation and action plus fines.

MarkDaMan,

"...asking the appropriate people the appropriate questions, there becomes a deafening silence."

More often than not, that "deafening silence" comes from those who are asked the questions.

Had many of those questions been answered, perhaps we would not be in a position of our city's public policy being based on false and material misrepresentations at taxpayer's expense.

MarkDeMan: Mark, I don't recall meeting/seeing you;

at the North Macadam Committees and sub committee meetings beginning over 12 years ago;,

the Planning Commission, Design Commission, City Council, PATI, PATI CAC, CTLH, PDC Commission, NM URAC, SW Transportation Study Committee, etc. meetings;

Commissioner Adam's PSU presentation/so-called question/answer show-and asking questions;

writing letters to media, sitting for interviews, preparing presentations, taking/making phone calls to all inquiries, answering e-mails, meeting with neighborhood associations/activists;

member of a neighborhood association and all their subcommittees involved with NM, Tram, city-wide issues, member of Mayor task forces/committees, sub committees;

the list goes on.

But maybe I missed you.

Many of us have done the above and more. And some of us have done all the above. Maybe you have, if we ever get to know who you are. But then you may be the same "Mark" as Jack Bodanski identified as a city employee a few weeks back.

Mark, I also don't recall seeing/meeting you in meetings w/Commissioners Leonard or Sten;

or with other interested/commenting groups like League of Women Voters, or City Club, SWNI, SE Uplift, Brooklyn Neighborhood Neighborhood Assn., Buckman Assn., SMILE, REACH, etc.

And most of us never got a dime for our time.

Lee,

Bullseye!!!!

Marty

Thank you for answering most of the questions.

1. Self-Insurance ("go ahead and sue us") means no insurance, unless you are going to establish a legal/claims contingency fund. If you're going to act like an insurance company, you should account like one.

An aerial tram is infinitely more complex than the Benson Bubblers or PGE Park (is PGE Park "self-insured" or did the operator have to provide liability insurance?). Ask Tri-Met about their slip-and-fall claims history per passenger. Heaven forbid you have a fire.

2. I will assume there is no Doppelmayr warranty, since the question was ignored (twice).

3. I believe the 50 year useful life reflects the political neccesity of a larger denominator (if the whole thing needs to be replaced in 25 years, the annual LCCA doubles).

4. The LCCA methodology was designed to compare various modalities/designs IN ADVANCE OF THE SELECTION/FUNDING DECISION. Perhaps we ought to use LCCA in advance of the "Design Competition" next time? Form follows function would have produced a more rational budget. It might have been possible to get a Tram built without forcing those artisanal Swiss Craftsmen out of their retirement home.

The life cycle cost estimate is so shamefully late it really doesn't matter what reinvented model you chose to use.

However, a life cycle cost estimate is supposed to be a collection of ALL things spent, dedicated, committed and relied upon to build and operate a particular facility, project or equipment.

The land has clearly been dedicated to the Tram. And it has value.

With your chosen standards I wonder why you even included OHSU's share of the Tram. You didn't include their LID interest apparently because they pay it.

So why include their principal payments?

I don't know how in the world you can suggest the Tram LID debt service is $691,035.

I don't care what "ordinance" it is shown on.

The LID share of the Tram is $40 some million BORROWED dollars.

To be paid, with interest, by the LID partners over the life of the Local Improvement District. Likely 20 years at least.

Don't put it in the "now-so-late-it's useless" life cycle cost estimate.

But you should at the very least report the darn right amount since people want to know.

Same goes for the TIF debt service.

The city is borrowing their Tram share and will be paying it back, with interest, over at least 25 years and likely many more.

There are 10s of millions in debt service dollars which are directly attributable to the Tram during it's life span.

You don't want to attribute them to the life cycle cost? Fine.

They are still Tram costs.

The greater SoWa TIF will incure enormous debt service costs. Given the cost overruns and rising interest rates debt service alone will likley exceed $200 million.

There's been no update on debt service costs reported since the original 1999 SoWa Plan.

What ever Eric Johanson is talking about makes no sense.

There is no debt service "already shown in the [any] analysis",

and there would be NO "double count"

if it were included in the life cycle cost estimate.

It's either included or it is not.

Currently it's not only excluded but the PDC and other city agencies refuse to tell ANYONE what the debt service costs are.

"Anyone" includes the commissions, committees and the public at large.

The city and ALL of it's agencies refuse to show anyone any full accounting for the Tram or SoWa.

100s of millions and there's no accounts, no accounting and no accountability.

Commissioner Sam may be awaiting additional information but so are many people. For months and years for basic information which should be have been readily available all along.

Better get a warrant and have law enforcement get the records.

Roland:

This public land is no longer public. The city gave the land to OSHU, not to itself. It could have been a playground, or a skate park: it's not.

To suggest it has no value because it was given to them without charge is circular logic at its worst.

Similarly, you wrote:

if we (the city) are to be charged for the cost of selling the land, then we should also be credited with the payment for it, as well.

This public land was converted to an estimated 85% private use. If you had agreed to sell it for 85% of fair market value, we could agree that the 15% of public ridership is benefitting from their land gift to OHSU.

Instead, the city treasury received NOTHING in exchange for the gift of land, 85% of which benefits OHSU.

If nothing else, the city owned land might have generated rent as a cell or radio tower. Unless you believe the city would have gifted the land to Verizon or KGON.

Imagine the morning commute. Heading westward across the Marquam Bridge, you see Portland's $60 million-dollar aerial tram rise majestically from the SoWhat district, heading toward Pill Hill. Above I-5, it suddenly explodes in a ball of fire, raining debris over the freeway.

What better target?

And what steps have you folks taken to ensure that such an event will not happen?

Gecko-

I did a little investigating to make sure that my understanding of the ROW situation was correct and here is what I found.

First off, I found out something new to me: that unlike the state, the city does not "own" right of way, per se- we control ROW via easements on the land of what are now for all intents and purposes the adjacent property owners, but who actually legally remain the property owners.

The city maintains easements on such private properties to create the city ROW system for public purposes. If the city ever gives up any of those ROW's, it is not legally allowed to sell them because it never legally owned them. We can use those easement properties for a different (public) use -which is what we are doing in this case- but we are not losing or gaining any revenue or property value in the deal, because we never owned the ROW property to begin with. So the city never actually sells ROW to people, though it will vacate it occasionally, though only for uses that it believes promote a greater public good and provide for the common welfare.

Also, I should point out that unlike what you asserted, the city didn't give or vacate public land to OHSU- it is still publicly "owned" (or controlled) by the City of Portland. And it is still being used for a variety of public purposes (including a new public transit system), even though the tram construction and operations are mostly being paid for by OHSU.

And since we remain in control of the ROW, we can still use the ROW under the tram for other uses like pedestrian access and such, and we plan on doing so. We still control that land (which is as close to owning it as we ever can get), and are not losing any revenue because of it, and are not giving it away to OHSU.

Furthermore, the land Was Never going to be sold to anyone- nor was it currently providing the city with any rents or revenue stream. Thus despite your speculation that the city "could" gain rents from that ROW (which I am not even sure would be legal), no actual revenue production is being foregone now, and no actual revenue will be foregone in the future.

We simply changed the public use of the land - land that still remains city controlled property.

MaxRedline -

What is your argument here? Are you saying that we should not build anything distinctive and prominent because it would therefore be a terrorist target?

If so, that's a fascinating line of reasoning. It could be countered with "Build the tram... if we don't, the terrorists win."

- Bob R.

So, since my last post was lengthy, let me just sum it up here:

THE CITY DID NOT GIVE R.O.W. LAND TO OHSU.

We were never going to sell the land, and never legally could sell the land.

The city will continue using the ROW for other public transportation purposes in addition to the tram.

No circular logic entailed in this: This land represents NO expense to the city in any way at all. The land NEVER changed hands, just public USES.

"This land represents NO expense to the city in any way at all."

It doesn't matter if the city had to buy the land specifically for the Tram.

However it appears that would make a difference to your logic.

Regarding the life cycle cost it's irrelevant whether or not the "land represents NO expense to the city" or that the "land NEVER changed hands".

The land, more so the parcel at the bottom terminal, has been dedicated to the Tram and it's operation.

It's part of the cost just as the cost of a public park would include the land whether or not the city owned it prior to the park or not.

ROW speak is irrelelvant.

No sense wrestling with this anymore though.

The land has value, likely million sand it is occupied by the Tram.

People can decide for themselves if those millions are part of the Tram, cost.

Since you don't even consider debt service a cost your life cycle cost estimate is useless anyway.

If you would just force out of the agencies the information and report the debt service costs in there entirety, people can decide for themselves if those are costs.

Perhaps if the information ever comes out we'll get a good idea who thinks interest is a cost or not.

You win, Roland. No escrow, no transfer of ownership, no gift of land.

Just a permanent easement. Free.

Best case scenario: the Tram is an expensive Park & Ride. Subsequent linchpin development helps to justify the expense. Somebody cures cancer or saves a life thanks to more efficient transportation.

Likely scenario: "the public" had no need for a Tram, and continues to drive to Pill Hill in their cars. The Docs enjoy the most exclusive Park & Ride in the country. Patients still wait in exam rooms for 45 minutes. Parking meter revenues and passenger fares don't cover the operating costs.

Worst case scenario: poor design and lax oversight results in a Tram that is unsafe to operate. Political pressure forces the Operator to "just make do" until injury or catastrophic failure results. "Self-Insurance" risks misunderstood, and result in large cash settlement payments.

Web : I've noticed that there were several posts that were on this string previous to your redesign. Why were they eliminated? They were significant to the discussion. Editorializing? Free Speech? Media Control?

Lee -

What posts do you think are missing?

I've been monitoring and participating in this discussion since the beginning and it's been sitting at "65 comments" for several days, including before the redesign. Your comment was #66. What's missing?

- Bob R.

You have to scroll to the bottom of the page, and click on "Page 2" to see the latest posts.