Pamplin Media Group – Opinion: The Clackamas County Courthouse deal is bad for us

Steven F. Cade: Our tax money on this project will be exported to a Canadian hedge fund.

Am I the only one who thinks the new courthouse contract is bad?

Clackamas County is paying $313 million for a four-story, 215,000-square-foot building on suburban greenfield land the county already owns, with pre-existing utility infrastructure and planning. By contrast, Multnomah County paid $324 million for its recently completed (about two years ago) 17-story, 464,700-square-foot City Courthouse, which required demolition, excavation, a lengthy permitting process and significant utility upgrades. That is, Clackamas County gets 46% of the building at 96% of the cost. Are things just cheaper in Portland? PHOTO COURTESY: CLACKAMAS COUNTY - This aerial photo shows the section of the Clackamas County Red Soils campus (between two existing buildings, top) where the new courthouse will be built.

Even though some of this is due to construction cost inflation, it means people should consider alternatives to constructing a new building in such an unfavorable market. Has the county reassessed rental and renovation options in light of this cost inflation? In December 2021, less than a year ago, Pamplin Media Group announced that the expected cost of the courthouse was $189 million.Steven F Cade

“Partnership” with a hedge fund

My main concern is the convoluted and “innovative” (i.e. – never done before) “funding” method by which a hedge fund will profit from our courthouse for the next 30 years. Hedge funds are essentially devices to divert money from a local community.

Money spent locally by the government recirculates locally, improving the local economy. Instead, our taxes on this project will be spent once and then exported to Canada.

Instead of developing a local economy, our leaders signed us on to a plan that will apparently suck money from our economy and send it to Toronto for the next 30 years.

The maintenance and operation contract of the hedge fund lasts exactly 30 years. Of course, that means they have an economic incentive to make everything last just long enough to overcome that hurdle. The fund, called Fengate, is obviously made up of smart people – they know exactly how long their bond is and their motivation is to make the building last exactly 30 years. They design the building, which means they will first select the fixtures, roofs, finishes, structural components and everything else. They will not buy building systems with a lifespan of more than 30 years.

Our current courthouse is made of stone. Do you think our new building will be made of stone? Think again. It will consist of manufactured building products designed to last as close to 30 years as possible. Have you ever had an iPhone or vacuum that dies a week after its warranty expires? This same engineering principle is applied by the county commission to your new courthouse.

After 30 years, we won’t have a brand new courthouse. We will barely have a functional building. We’ll be lucky if we can avoid tearing it down.

Deciding not deciding how to pay

The county commission has promised to make “painful” budget cuts to pay for this courthouse. Rather than fund this project through taxes, we are simply going to cut services. What services are we going to do without to enrich the shareholders of Fengate PCL Progress Partners?

Maybe we should pave our roads less. Or maybe we can defund the sheriff’s treatment and mental health services. None of this has been decided, of course.

The Fengate deal is structured so that payments won’t be due until 2025. The delay buys plenty of time for current commissioners to seek re-election when a free courthouse appears and defer those matters. later, or to another politician. .

Private benefits, public costs

Fengate has smart lawyers, accountants and project managers who all have one goal: Fengate’s bottom line. In a contest between Fengate and Clackamas County, my heart would be with the county, but my money would bet on Fengate.

In our own little “pond” the county is the biggest and most sophisticated party – it should naturally do good business. But now he swims in a much bigger ocean, an ocean where private entities bring much more firepower to the table than even our county government can. We should expect this uneven bargaining power and sophistication to mean that Fengate will get the better part of this deal.

Besides the $300 million public cost of a 30-year-old building, Fengate’s other major source of revenue also comes from public spending: pay cuts. Fengate will pay its employees less. By “its employees”, I of course mean “our neighbours” — the people who maintain and operate the courthouse. And Fengate won’t pass the savings on to us – the money it saves on salaries will go straight into shareholders’ pockets. Thus, not only does this plan create disincentives for long-term maintenance, but it encourages the destruction of family salaried jobs for very little return.

I’ve read what I can about “partnership” with Fengate. But nowhere did I see what Fengate expects to do on the case. Clearly, Fengate thinks they’ll make a big profit out of it.

The county pays $15 million per year (to be increased with inflation, as I understand it – how does that transfer the risk to Fengate?). What is the expected benefit? Are there contractual provisions that require a certain percentage of this payment to be used for the operation of the courthouse? Or are we just opening ourselves up to the relentless escalation of Fengate’s profits?

This deal, as far as I can tell, stinks. Our county commission seems to be leading the way with the idea of ​​short-term gain, but long-term pain. I understand that the contract has been approved. Has it been signed? Is it too late to do anything other than ask our commissioners for explanations during the November elections?

Steven F. Cade is a resident of unincorporated Clackamas County.


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