October 30, 2003
Local Citizens' Court Action Reveals City Bonding Boondoggle
PORTLAND - Court documents filed by the City of Portland, on Monday, October 20, 2003, show that the City is in flagrant disregard of the intent of the Oregon State Legislature with regard to the issuance of Revenue Bonds. The City is responding to a suit brought by the Friends of the Reservoirs and other complainants meant to stop the sale of revenue bonds partially intended for the destruction of the historic reservoirs at Mt. Tabor and Washington Parks. In a sworn statement, City Debt Administrator Eric Johansen revealed that since 1/01/2001, the City has authorized the issuance of $1.5 Billion of Revenue Bonds, for unspecified "Public Purposes". A full $1 Billion of that debt has been authorized in just the last 15 months.
Irresponsible financing of public projects by many cities early in the last century contributed to several public bankruptcies, and caused the State of Oregon to limit bonding authority of cities. With the 1992 implementation of URBA (Uniform Revenue Bond Act) the Legislature once again allowed cities to issue Revenue bonds, where the funding source that will repay the bonds is specifically identified prior to their being authorized. An example would be ticket sales and rentals of the Oregon Arena Project being used to repay the $34,000,000 in Revenue Bonds issued to fund that project. The requirement for specifically identifying the purpose of the bonds and the funding source intended to repay them is to allow citizens the right to refer the project to the electorate for a public vote.
When funding for General Obligation Bonds dried up, after the passage of the 'Double Majority' rule (which required a majority of registered voters to approve new bonding, regardless of voter turnout) the City switched to issuing Revenue Bonds. Since 1/1/2001, however, the City has failed to detail both the purpose of the Revenue Bonds, and the revenue source for the repayment of these bonds at the time the authorizing ordinances are passed. Only after the 60-day window for citizens to raise an objection through the use of the referendum petition has closed, have those details been added. This is in complete disregard of Legislative intent.
Citizen representatives have carefully researched and questioned every aspect of the plan to bury the reservoirs at Washington and Mt. Tabor Parks, and have repeatedly questioned the financial soundness of the decision as well as the sources of funding. It was not revealed at any time that water revenue bonds were to be the source of funding for the demolition of the existing reservoirs and their replacement with underground storage tanks.
The amended complaint filed by the Friends of the Reservoirs, Citizens for Safe Affordable Water, and 12 named individuals contends that correct procedures were not followed December 18, 2002 and April 23, 2003 when $200 million and $500 million respectively, in revenue bonds were authorized by the City Council. Although acutely aware of the intense concern of the community in regard to the City's decision to demolish the reservoirs at Mt. Tabor, the City passed Ordinance 177129 on December 18, 2002 without identifying the purpose of those bonds such that a reasonable person could have known that their purpose was related to the water system. The electorate was therefore deprived of its right to consider the question of whether to refer these revenue bonds to a vote of the people.
In the October 20th court filings Eric Johansen reveals that the City now views Revenue Bonds as an unlimited "Blank Check", which the City may use for any purpose it pleases, so long as it is identified as a "Public Purpose."
Trial is set for 9:30 a.m. November 5, 2003 before Judge Litzenberger, Circuit Court, Multnomah County Courthouse, 1021 S.W. 4th Ave., Portland, Oregon.