Sunday, November 2, 2008

Two pages in.

It's funny how I used to have to really search for the underlying economics, both locally and nationally. It was there, but you couldn't just skim the surface. You had to go ten or twenty pages in to find the real news, past the superficial headlines, the sexy gossip, the boosterism.

But it was always there.

So I'd try to find where it addressed some of the problems I was facing, and bring it to my blog.

Nowadays, all I have to do is look at the front page of the business section of the Bulletin. It hasn't made it to the front page of the news section much yet, but it used to not be there at all, or it was so whitewashed as to be unrecognizable.

Now the bad news is so overwhelming that I'm purposely not going more than about two pages in. Just to keep a monitor. A maintenance news level so I don't get surprised. Going ten pages in would just bum me out too much. I can't go there. Or more to the point, I can't live there and still function.

If the absolutely worst of what some of these blogs (Calculated Risk, Mish's, Big Picture) are saying comes true, there isn't much I can do to prepare for it.

All I can do is batten down the hatches.


Duncan McGeary said...

A great example of going ten pages in: Commercial Real Estate lending pretty much dried up at the first of this year.

Yet as late as October there were local developers announcing big plans.

Today's Bulletin is talking about the wreckage of most of these plans, but these plans NEVER HAD A CHANCE.

Without lending, you can draw up all the blueprints you want, and the Bulletin will apparently print them for you, but it's all smoke and mirrors.

If you didn't find financing before the end of last year, it probably won't get built.


Duncan McGeary said...

To be clear, I have no inside knowledge.

But look at the difference between Gotts. and Kohl's. Both were talking about coming to town around the same time; one at the old Jake's Truck Stop, the other at the old Bend River Mall.

The timeline between the two may have been a very short time; one got the green light, the other hovered at yellow long enough to come to it's senses.

I think even until mid-summer Kohl's might have happened, but now?

I don't know.

But I do know that the financial mechanisms that are used to loan 80% of all CRE has dropped to nearly zero since the first of this year.

Gotts. talked about a '2 year' time since they decided to go ahead, and the time they opened. And the subtext was that they weren't too delighted by it.

If commercial lending stopped in January 2008, even with some retroactive loan cancellations, we won't begin to see the effect until mid-2009 and mostly late 2009.

But once it starts, we'll see a gap in CRE spending for a couple of years, minimum.

So places like the Oxford Hotel will be finished, because they were financed more than 2 years ago. Everything else will be put on hold.

So how many construction jobs does that represent?

bruce said...

Cross-posted from your favorite blog:

read this one BIG PUSSY

You have to stop being such a dumb fuck. I linked to that doc and extensively quoted from it five posts above this.

It begins, after your BS, "Actually, they took the Suterra money, $2.3M after JRP's $150K cut, and passed it through the General Fund directly to BURA."

And then I fed you all the supporting docs.

The real issue is that on Oct. 22, the city took $1.2M above and beyond the Suterra sale proceeds to build out their land.

Then on Nov. 5 the city is going to cut reserves by over $2.5M and other expenses, including not hiring cops, by several hundred thousand while increasing funding to Engineering and Long Range Planning by over $1.1M, much of which is needed for the JR buildout.

Basically, no cops, no buses, more Knife River bulldozers at JR.

Say thank you as you bend over.

You can still write me in for Position 3, instead of Linda Johnson or Kathie Eckman.

BilboBend said...

Many of us come from different fields here, but its clear their are no CPA's, and BP don't fucking tell me your a CPA, your not.

Homer is an mba, tt a reporter, rdc(bebb) realtor, quim&lava who fucking knows, marge realtor, ... but no fucking CPA's, ... will somebody here find a fucking CPA and explain me something?? Dunc is just another fucking biz man like me, ... can anyone get a CPA to answer??

Ok, here is the question, and I want a REAL FUCKING ACCOUNTANT TO ANSWER.

Why is does the City on the behalf of the BULLetin borrow short-term money to pay for SDC's for rich companys for their infrastructure, and then book expense as a long term deferred SDC albeit non-collectable, on budget doing this hokey pokey accounting shows a balanced budget.

Now the QUESTION: "The city takes the money for the sale of JR land, and puts the money into the General Fund as cash", fine. But the city seems to be able to borrow all it wants for 'infrastructure', on its letter-of-credit.

Why doesn't the city just borrow money on its Letter-of-Credit and dump the money into the 'general fund', is it NOT ALLOWED to do this?? I mean the racket I see as a business man of 40+ years that always has done cash-basis accounting. It makes no sense to me as what the city is doing.

They're OBVIOUSLY not allowed by city charter to simply borrow money on its line of credit, and then dump the cash in the 'general fund'.

Instead they use BURA as a front for JR, where JR sell's land for cash, and the cash is placed in the general fund. Then the city spends 2X->10X of the amount of the sale on infrastructure for same, for instance, Les Schwab paid $3M for JR, and it went to the general fund, they paid off KURATEK $2.5M that was an infrastucture service expense paid with line-of-credit(LOC) debt, and booked a deferred SDC, which is shown as an asset. On the same deal knife-river got over $10M in developing JR for Les-Schwab and that also is booked as a deferred SDC.

What the city is doing is for every $2M of cash they put in the general fund, they create $10M in short term debt, albeit they book the debt as an asset, however the 'deferred SDC' is never going to be paid, which is why the BULLETIN is demanding these deferred SDC's be deferred indefinetly, aka 'written off'.

Then in the recent weeks the Suterra deal, city got $2.5M ( or close ) from suterra, and booked as cash to 'general fund', to pay cops , fire, and city-staff salary. Then on the same deal they're going to spend $4M for Suterra's infrastructure, which is financed by short-term LOC debt, but booked as a 'deferred SDC'.

This is going to go on FOR ever, the city can continue to sell JR land, as any business will buy into the deal, the city will load JR up with beautiful shit, but the DEBT, even though hidden by balanced accounting is still fucking there.

Somebody who is a CPA explain this to me why this is legal???

Somebody explain other than the fucking pussy, why the city just doesn't borrow on its LOC and dump the cash in 'general fund'.

Sure Knife-River gets Millions, the BULL gets millions for worthless land given by HOLLERN, hap-taylor got millions for worthless land near boyd-acres, ... so yea the city is handing out millions here and there of cash to its OWNERS.

All the while chump-change is deposited into the general-fund.

How is this legal??

RDC said...


As indicated in numerous other places. I am not a realtor, nor dod I have any relationship to that profession other than having purchased and sold property on occasion. I am a physicist that has worked extensively in the computer field and managed organizations that have handled financial analysis, contracts, market research and strategic planning for Corporations.

Your lack of focus on trying to gather actual facts is definately a weakness in trying to convince people of your position. You criticize Bruce and others about the positions they take. However, Bruce in particular certainly does a better job of trying to find out and present actual facts and supporting information.

I may not agree with his postions and interpretations, but I certainly can respect his efforts to gather and present information.

For what you asked you do not need a CPA. The first question of how can this be legal is not a CPA question it is a legal question.

The City of Bend apparently feels, as many other cities around the country, that taking a loss to attract jobs is money well spent.

Can a city make such decisions the answer is yes? The real question is have they followed all of the steps defined by the law in making such decisions? Bruce has identified some cases where they appear to be on shaky ground. However, unless someone files a legal challenge we will probably never have a ruling.

The other question is even if they can make such decsions are they the correct ones for the city? That is the ground of political debate and the conflict of visions on how the city should proceed. Clearly there are signs of a budget out of control with the economic down turn.

In my view the city has clearly over reached. However, you can apply that same problem to just about every level of government that jacked up spending in the good times, instead of limiting spending to a more reasonable sustainable level.

The city has also demonstrated very poor decision making during the implementation of several projects. Would a public trasnportation system be good for the city - yes. However, the way Bend went about it was a disaster at best. Juniper Ridge was a good idea, but the implementation approach will probably turn out to be an economic disaster for the city.

The other question is are these decisions