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West End Building It’s Time For Plan S – Part 2

“Nothing can stop an idea whose time has come.” – Victor Hugo

In May I promised the details of Plan S – selling the WEB. By adopting Plan S the city gets physical consolidation of city services, a replacement police/emergency center, lower ongoing maintenance charges, an opportunity to repurchase the WEB, and a better than decent chance of recovering a significant portion of the $20 million spent to purchase the building.

Plan S follows:

1) 2011 – Commit to selling the WEB.

2) 2011-2012 – Coincident with the rebuild of City Hal, move on a temporary basis, all City Hall employees to the WEB.

3) 2012 to 2014 – Rebuild and expand the existing facility. The city owns ¾ of the block on which City Hall sits. Based on the most cost effective result either remodel the existing City Hall to meet existing deficiencies or tear down the existing building and rebuild on the ¾ block. The city gets physical consolidation of city services, a new emergency and police center, and lower ongoing maintenance charges.

4) 2014 – All city employees at the WEB return downtown.

5) 2014 – Sell the WEB with a right of first refusal. WEB proponents rightly point out the merits of the location. Selling the WEB with a right of first refusal gives the City the opportunity to purchase the building when it comes up for sale in the future.

Because we did not have WEB long term financing the bank is calling the tune and we are dancing to the beat of their drummer. The bank now requires principal repayment of the $20.2 million line of credit. The city must make annual minimum principal payments of $850,000. By 2014 the line of credit may be reduced to $16 million. At the same time, the commercial real estate market is more likely than not to have recovered. The City may sell the WEB for $16 million (or more). Therefore, sale of the WEB may not require additional city resources and repayment of the remaining line of credit.

The financing of City Hall can be done substantially, if not completely, with Lake Oswego Redevelopment Agency (LORA) monies. This is particularly the case if the new City Hall is done as a mixed use facility. Rebuilding City Hall may not equal economic development. But, if we make the case that Sundeleaf Plaza, Millennium Park/Plaza, the replacement fire station and a new library generate economic development, then a new mixed use development City Hall will too.

Plan S has costs. It is the operating costs in retention of the building between now and 2014 and the cost of moving employees to and back from the WEB. There are limits as to how much LORA money can be used. The city will want very good legal counsel. Some LORA projects will not be done. The biggest risk remains prolonged recession in the commercial real estate market, not the carrying cost of the property

The benefits are a new City Hall, physical consolidation of city services, a new police and emergency center, lower ongoing maintenance charges, and an opportunity to repurchase the WEB. Lastly, the city gets back to what it needs to do, like the Lake Grove Village/Boones Ferry plan, parks, library services, pathways and road maintenance.

The time for Plan S has come.

New Assumptions & Conditions = New Problems

The Streetcar
New Assumptions & Conditions = New Problems

Oscar Wilde – “Arguments are to be avoided, they are always vulgar and often convincing.” – Oscar Wilde

Having lost the intellectual argument for the $450 million (in 2017 dollars) Portland to Lake Oswego Streetcar project, proponents now seek to delay a recommendation of the Locally Preferred Alternative (LPA) to early 2012 and try out different assumptions to convince a citizenry not persuaded to the merits of the Streetcar. Each time the City and consultants provide additional clarity or new assumptions regarding analysis behind the arguments for the Streetcar, the case for the Streetcar becomes weaker. At the Clackamas County Commission meeting June 9, the Commissioners decided to wait until early 2012 to consider supporting the Streetcar between Portland and Lake Oswego. In addition to the conditions (additional analysis, a Lake Oswego survey and citizen vote) raised by the Lake Oswego and Portland City Councils, Clackamas County Commissioners wanted assurance Tri-Met will keep full bus service between Oregon City and through West Linn to Portland. Let’s examine in more detail some new assumptions and conditions from Clackamas County on the streetcar alternative and see if they hold up.

Retention of Bus Service – The “system operating cost savings” of the Streetcar will be eliminated by retention of Oregon City/West Linn to Portland bus service. Elimination of bus service between Oregon City/West Linn and Portland was a key element of the project operating cost “savings”. A justification for the Streetcar is gone.

Streetcar Ridership – The projected ridership on the Streetcar will be significantly reduced by retention of Oregon City/West Linn to Portland bus service. The same number of people will ride the Streetcar or the bus. Therefore, there will be fewer people riding the Streetcar. Therefore, the cost per Streetcar user will increase significantly. Another justification for the streetcar is gone.

Economic Impact – Not having people ride the Oregon City/West Linn to Lake Oswego bus and transferring to a Streetcar will have an impact on economic activity in the Lake Oswego terminus area. People will not linger to shop while they wait for a Streetcar or bus transfer. Another justification removed.

Energy Usage – Retention of bus service between Oregon City/West Linn and Portland has a negative impact on energy usage “savings” from a Streetcar. According to the DEIS, at best the Streetcar alternative will reduce gasoline consumption by 66,400 gallons per year. Retention of bus service means there will be reduced energy savings. In other words, the new Streetcar condition negatively impacts energy usage compared to the old alternative. Another justification removed.

Environmental Impact – Retention of bus service between Oregon City/West Linn and Portland has a negative impact on the environment “benefit” of a streetcar. i.e. greenhouse gas emission reductions. The new conditions retain all the projected environmental costs of a streetcar and decreases benefits. Another justification removed.

Portland and Lake Oswego are the primary governments impacted by the Streetcar. Portland and Lake Oswego selected the Streetcar as the LPA. Clackamas County is not a financial partner for the construction or operating cost of the Streetcar or costs of preparing the Final Environmental Impact Study. If Clackamas County is unwilling to select a LPA until all the additional questions are “answered”, Portland and Lake Oswego should reverse their LPA selection now and wait until all the new analysis comes in.

The Streetcar How Much Will It Really Cost – Part 2

The Streetcar How Much Will It Really Cost – Part 2

Will Durant – “The man who insists on seeing with perfect clearness before he decides, never decides.”

Did you know that energy savings, reduced greenhouse gases, creation of long term jobs, and increased density in our city are among the purported benefits of selecting the streetcar as the preferred alternative to not building or enhanced bus service? Let’s examine in more detail each of these elements of the streetcar alternative and see if the need for additional clarity is justification for building the streetcar.

Energy Usage – One of the purported benefits of operating the streetcar is the projected fuel savings and associated reduction in greenhouse gas generated. However, according to the Draft Environmental Impact Statement (DEIS), construction of the streetcar will require approximately 11.2 million gallons of gasoline. In addition, construction of the streetcar will require construction of a maintenance facility storage yard, which includes buildings and equipment. Construction of the maintenance facility will require approximately 140,000 gallons of gasoline. In total, the amount of gasoline required to construct the streetcar is approximately 11.34 million gallons of gasoline. Unfortunately, also according to the DEIS, at best the Streetcar alternative will reduce gasoline consumption by 66,400 gallons per year. Therefore, in slightly more than 170 years we will “recover” all the gasoline used in construction. In other words, it will be 170 years before we make up for all the greenhouse gases generated by construction of the streetcar. The streetcar increases – not decreases – greenhouse gas during our lifetime, the lifetimes of our children, grandchildren and great grandchildren.

Employment – Another of the purported benefits of the Streetcar is the creation of long- term jobs after the project completes construction. According to the DEIS, 13 long-term jobs will be created. If Lake Oswego’s local share of the project is 20%, then Lake Oswego’s potential share of the construction costs of up to $33 million will generate 2.6 jobs (20% of 13). There has to be a better way of investing Lake Oswego’s $33 million to generate long-term jobs.

Neighborhood Density – Household Increases – Another of the purported benefits of the Streetcar is it will help absorb transit that comes from increased household density. Lake Oswego’s projected increase is over 6,000 new households by 2035. The projected household growth is based on the 2035 Regional Transportation Plan (RTP), adopted by Metro in June 2010. The projection is the source data used in the DEIS justification for the streetcar. The Lakewood, Old Town, FAN, Foothills, Forest Hills, and Evergreen neighborhood show an increase of 1,818 households. The Palisades neighborhood shows an increase of 567 households. The Hallinan, Skylands, Glenmorrie, and Marylhurst neighborhoods show an increase of 515 households. Aside from whether we want this increase in density, a serious question exists whether there is enough space to hold all of these new households. If there is not enough space, which seems likely given the current density of our neighborhoods, then not as many new homes will be built. Increase in neighborhood density seems too speculative to be a reasonable basis for supporting the streetcar.

The region spent $7.0 million to produce the DEIS. Do we need to spend another $25 million to provide more information? I think not. There is enough clarity on the central point: the Streetcar is not the wisest use of our limited resources.


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One Half Billion in Capital Expenditures Capital Expenditures or Capital Follies

Council approved and desired capital expenditures over the next 5 years are almost a half a billion dollars. In one sentence, this is the city’s fiscal challenge. Nowhere is this truer than the city’s August 3, 2010 Council approved 5 Year (2010/2011 to 2014/2015) Capital Improvement Plan (CIP). The Council adopted the $408 million CIP without including ten’s of millions dollars for a library, without tens of millions of dollars of West End Building (WEB) capital improvements and without tens of millions of dollars for redevelopment of Foothills. Who is minding the store?

Over the next 5 years the Council approved CIP has almost $408 million of approved/ desired/needed capital expenditures or about $82 million a year. Here are the top 15 items in the 5 year CIP:

• $191 million for LO/Tigard Water Agreement;
• $55 million for LOIS;
• $18 million for new Maintenance Facility;
• $16 million for Boones Ferry Road Improvements;
• $12 million for Lake Oswego to Portland trail (not the streetcar);
• $9 million for Police/LOCOM/Municipal Court;
• $6 million for Indoor Tennis Center;
• $6 million for Lake Grove Village Parking Improvements;
• $6 million for 5 years of pavement preservation;
• $6 million for LO to Portland Streetcar (subsequently increased to $6 to $8 million);
• $5 million for Lake Oswego Redevelopment Agency (LORA) B Avenue Village Anchor Street;
• $5 million LORA – Willamette Steps/Transit Center;
• $3 million LORA – Block 145 Safeway;
• $3 million LORA – Block 137 Wizers;
• $3 million George Rogers Park- Ladd Street Phase 5 and 6 of the master plan

Some projects like the completion of LOIS have a funding source identified – the increase in utility bills we are all seeing. Other projects like the Lake Grove Village Parking Improvements and the Lake Oswego to Portland trail do not.

Equally important as to what is in the CIP is items not in the CIP but Council desires and is considering. First is a new library. Not only did a new library not make the CIP, it did not even make the list of capital projects after 2015. If a new library is built it will require millions of dollars. Second is substantial improvement to the WEB. At the September 28, 2010 council meeting, Council directed staff to continue looking at the merits of options for the WEB with a cost range of $39 to $75 million. Third is Foothills redevelopment dollars. Between the approved CIP ($408 million), a new library, WEB improvements and Foothills redevelopment the Council is talking about close to a half a billion dollars over 5 years. This is from a community of 36,000. Where are dollars going to come from?

The Council is jumping from one project to another without taking a look at the whole financial picture of the city. The Council can not and must not look at one project in isolation from the other. If everything is important, then nothing is important. There are trade-offs. A key to a more sustainable financial course is to 1) adopt the policy that for any new initiative, drop an old one and 2) look at a total 5 year projection of all city revenues and expenditures before making significant dollar decisions.

A final observation. Council will be considering a quarter million dollar grant or more to one property owner in downtown Lake Oswego to “improve” his building to attract more people downtown by adding a dining area for their business next to a public park. This is a capital project. Is this a good use of our money? No it is not. Why not give a quarter million or more to every property owner in downtown Lake Oswego so they can make their property more inviting to the public.

We get what we pay for, and we must pay for what we want. There is no such thing as a free lunch.