If The Bulletin plays the story on its front page, it must be official: Bend is broke.
Well, just about. The paper reports this morning that the heads of city departments told the city council yesterday that they’ve slashed spending as deeply as they can.
“There’s no fluff left in our budget,” the story quotes Community Development Director Mel Oberst as saying. “We’ve eliminated all our overtime, and as a result of [reduced revenues from] our service level, we’ve spent down all our remaining reserves.”
Later in the story, Finance Director Sonia Andrews says that if the city doesn’t find some new revenue sources it will be running a $4 million to $9 million deficit by 2013.
And here’s what may be the most interesting part: According to The Bulletin, Andrews said the city “started dipping into its reserve funds, which are used to provide a cushion for emergency situations, years before the economy took a major downturn. As a result, she said, many departments don’t have much wiggle room left.”
That has a lot of people muttering (or screaming) “WTF???” including downtown merchant and blogger Duncan McGeary. “Methinks they don’t understand the words ‘reserve’ and ’emergency,’ he writes.
“I predict that the city council will let Bend go bankrupt before they raise fees,” McGeary continues. “Indeed, I predict they’ll delay or lower fees. I predict they’ll keep pushing Juniper Ridge. I predict they’ll keep the Bend buses rolling. I predict I’ll have to replace my shock absorbers [because there’s no money to fix potholes] and get another lock on my door [because there’s no money to hire enough cops].”
While The Eye agrees with McGeary that the city has displayed fiscal irresponsibility of eye-popping magnitude, we don’t think all its financial ills can be blamed on Juniper Ridge and Bend Area Transit, or even on the recent real estate bubble and subsequent bust. The root of the sickness is that the Good Old Boys who run the show here and the politicians they control have put all their eggs in the basket of GROWTH, GROWTH, GROWTH for the past 20 years instead of developing a balanced and sustainable economy with a solid base of living-wage jobs, and when the basket of growth fell all the eggs broke.
So what’s the new city council majority going to do now? Our guess is that they will follow the advice of the GOBs and prescribe more GROWTH, GROWTH, GROWTH as the cure. And McGeary’s right: They will sacrifice essential city services before even thinking about (horrors!) increasing fees on builders and developers.
This article appears in Jan 22-28, 2009.
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I think it’s been pretty thoroughly demonstrated, at least for those of the capacity to grasp such, that “growth” is a perpetual motion machine bound by the laws of nature to fail. Again. And again.
Been through 3 booms and 3 busts here.
Bears, you’re right. But the psychology of boom-and-bust keeps us trapped in a perpetual boom-and-bust cycle. During the boom times everybody is so terrified of another bust that they’re unwilling to restrain or manage growth in any way for fear of bringing it on. Of course the bust comes anyway, and in the end we’re no better off than we were before the boom — in fact this time we will be worse off, because we allowed a lot of development to occur without the infrastructure and public services to support it or adequate means to supply said infrastructure and services. We have more roads than we can plow or repair, more neighborhoods than we can adequately police, more kids than the schools can hold, etc. This in turn causes our quality of life (which, for most people, means good schools and safe streets rather than lots of mountain bike trails) to deteriorate, which makes recovery harder because fewer people want to live here.
You cry about the cost of housing, then you want to increase fees on builders and developers. Who do you think will ultimately pay these fees??? You can tax the hell out of everything but the consumer is the one that gets screwed by poor government money management. Look at the make up of the city council the last few years, you cannot say they were very competent.
I think the city should opening more restaurants, that will save Bend, we don’t have enough of those and we are already complaining due to the lack of ones downtown. The city should by the old Merendas building and open a nice restaurant.
>Builders and developers are already burdened with heavy fees (15% of the cost of a residential home), beurocratic tape and stagnant sales.
Then maybe they should have paid less for the land and not built so many homes.
Easy to say after the fact that the growth industry is a bad decision, and ideally, the attitude that “I have mine so you don’t need yours” is one that’s easy to grasp (no-growth). Keep it small and exclusive. One person’s nirvana, another’s boredom and poverty.
TV reports say that the average Bend home has $30k in fees (aka TAXES) before anyone ever breaks ground. That TAX is then financed by every owner from day one into oblivion. Not something I’m fond of but the tax is indeed passed from owner to owner, forever left behind if someone sells (at a profit) and leaves the area. Essentially they transfer the tax to the next owner. Sweet?
So in these tough times why don’t we just raise that TAX to $100k and make it easy on everyone? We can lock down building to X number of units per year which will drive everyone’s prices up due to lack of product, until of course they simply start building OUTSIDE OF TOWN. Ooops.
All industry can have it’s ups and downs. No guarantees, and NOW is a perfect example, worldwide. The city shouldn’t be developing property (or compete with private enterprise) and it would probably be more cost effective to simply provide every bus rider with a bicycle and weather-appropriate riding gear than to keep the buses running. Depends on how much outside funding is involved (state, federal).
When times are tough I have to make tough decisions. I expect the same of our elected officials. Shame on them for spending in the red. Shame on us for electing them to begin with. “Be a poor steward of our funds ONCE, shame on you. Do it again and SHAME ON US.”
Corporate exec’s are losing their jobs everywhere for making poor choices. Anyone ever heard of a RECALL? Stop complaining, start acting. I’ve been involved in major recall efforts and it’s a lot of work. But it can be done. It takes WORKERS…
Mel Oberst’s comment that he’s cut things to the bone is laughable. He has cut staff 50%, but the applications for building permits have fallen 90% and the planning department’s applications have virtually halted.
To put the staffing level in context, the building department has a total of 24 staff, and last month month they issued 7 new home permits.Until 1986 the Building department consisted of 1 staff, Bill Hunt, and he issued an average of 10 permits a month.
“Climate and recreation are perks…every community has them, believe it or not (Bend is cool, but not THAT special)”
Agreed. If you’re not into the whole outdoor rec thing there is very little to do here.
And the climate here (PR spin to the contrary notwithstanding) is not great. “300 days of sunshine a year” is an outright lie, and the winters go on for seven and a half months. That’s one big reason Bend will never be a retirement mecca. Old farts like me prefer to live in a place where don’t have to shovel the driveway, we won’t slip on the ice and break our hips, and we can put on our Bermuda shorts and white patent leather shoes and play shuffleboard in the sun.
“Anyone ever heard of a RECALL? Stop complaining, start acting.”
Who do you want to recall? The only people remaining from the old city council are Jim Clinton and Mark Capell, and the new guys have been in office less than a month.
“it would probably be more cost effective to simply provide every bus rider with a bicycle and weather-appropriate riding gear than to keep the buses running.”
This is a joke, right? A lot of the people who ride the bus aren’t even capable of riding a bike.
And now the BLP schoolboard is making the same noises. Would the money spent on Summit’s athletic field have been better utilized elsewhere? How deep in the sacrosanct athletic programs have the cuts permeated? I am sure the admin staff is lean and mean? The first cuts discussed are academic year length and text book replacement. There is no joy in Mudville…
“Mel Oberst’s comment that he’s cut things to the bone is laughable.”
True, true. If you read between the lines of all the City spokespeople in the Bulletin article about the budget shortfall you see them saying that, OK, they’re not stretched NOW, but they want to maintain that extra capacity. Which is a decent argument for police and fire but for building and planning? I think it’s safe to say that for the next few years they can take their staffing levels back a decade to 1999 and they’ll be OK. Somehow I think that if they need to ramp back up, the City will have no trouble finding people with building/planning experience who’re looking for work.
But in a larger sense we’re just seeing local government go through the same motions they always do when faced with budget shortfalls. You see the schools and parks operating from the same playbook – saying that ESSENTIAL functions will be cut if new funding sources aren’t found. Well right now, Central Oregon taxpayers are a turnip and you can’t squeeze any more blood from them.
Hopefully the elected representatives and taxpayers will hold the City to account and force it to do what many of the rest of us are doing: getting by with much less.
I have lived here all of my life. I graduated from the schools here, have worked and played here and raise my kids here…and this “great” growth that has occured with out any regulation has just destroyed this town on top of the entire countries downfall. We got a double whammy folks.
We were “raped” by anyone looking to capitalize on this place through home building and resale all within a decade plus. Where are these people now?…They left or are leaving, no one is spending, no one is hiring and all the building insdustry is at a standstill…you can’t keep building homes with homes open and unfinished all over town!…
Unemployment is outrageous and climbing and only reflects unemployment of those of us who can qualify for it, not all the independant contractors, painters..etc…
It was overkill with no one watching where it was going…
Now what is going to suffer??..schools, families with children just trying to eat, programs that help addicts and community service programs. Thats backwards thinking to me. How about some of the rich fat cats who made money off of all this pitch in? How about the city officials that just drooled and threw money in the air with no regard tighten their belts? We are preached at to save, work harder, be finanically responsible while our “leaders” throw money around like its just a number and then take away what is most important.
I too, have seen the ups and downs in Bend…but this was back in a town that was at about 20k or less in city limits.
This is not little Bend anymore, has not been for years…this problem is going to be bigger than it ever has been before, because the amount of people it is effecting is much bigger than it has ever been before. Individually, our town is suffering…all over the country is suffering and it will hurt a place like Bend the most because of the rapid housing growth that simply exploded…
“We were just racing down the highway at 200mph having a grand old time with out any regard to the consequences”
HBM,
” “Climate and recreation are perks…every community has them, believe it or not (Bend is cool, but not THAT special)”
Agreed. If you’re not into the whole outdoor rec thing there is very little to do here.”
Oh, even though it’s not my life passion, I’ll admit to taking advantange and liking the climate, diverse geography, and recreation/parks (I’d take advantage of any perk in any community I moved to) – and it’s a nice lure to entice friends from outside the pacific NW to visit.
Yes, I agree, 300-sun_days is over-rated, but still it’s pretty damn good if you want 4 ..ok, 2 or 3, everything is green 12 months/year..seasons with pleasant weather.
But for most of us, it’s not the perks we move and stay for, it’s the substance. Substance = good job, safety, pride, a nice community.
As much as I generally agree – via neighbors, mostly – with the negative Calibanger comments on BB2, I will say this. There is a certain threshold many of us non-oregon, non-Bendites require to move to such an isolated place..regardless of climate and perks. Calibangers are solely responsible for this. A good thing. Bend can tolerate some ugly times, econommically, I think, and still be a good place because of this. A BIG difference from the overquoted comparison of now to the 80’s dire straits in Bend.
But a few things need to be preserved, as I mentioned in my first post. Safety, schools, new business-enticements.
Thanks for replying, here and on other local blogs. You have credibility.
Interesting is this deal about ‘growth’, but EVERYBODY is avoiding the issue. The city is truly broke. There was a hell of a party 2002->2008, and now the bill has to be paid, and smart people are leaving with the money they made.
The reason that the ‘reserves’ are getting hit, and the reason that cracker-ass Bend can’t pay the bills, and the reason they can’t borrow their way out of this hole is that TODAY 1/2 the revenue goes towards paying debt. What’s also interesting is that the real debt load didn’t come along until 2005, well after the bubble got moving. Post 2005 is when Bend’s total-debt went astronomical.
So today there is near $200M in debt, and NOBODY wants to discuss where it went, and who got the money. Today the debt-service ( monthly payments on debt ) completely wipes out Bends ability to pay for public safety.
Where did the $200M go?
Today Bend can no longer borrow money, the SDC ratio is to low ( below 1.5, e.g. revenue/debt ), because there is now almost zero SDC revenue. Bend’s credit rating is now toast which means that Bend must pay more interest on the $200M. Bankruptcy is the ONLY solution to save this town, as to wipe out the $200M in debt, and start over, and restructure the city to #1 public-safety, #2 kids, and builders, & bankers LAST.
There is this repeating theme about how much was paid to build a home in Bend. The SDC for a new home was set around $12k/home, in Wilsonville post 2002 it was close to $60k/home, so all our favorite builders left the ‘valley’ and came over here and built. The city had to ‘borrow’ to cover the lost revenue. Now that the building boom is over the city can’t meet the loan payments. The problem is as simple as this.
The builders made their profits on having the general tax payer cover their expense. Builders run city-hall in this town. Now today what’s their solution? Cut cops, schools, and fire, and build more STD’s.
The reason that Bend was #1 in appreciation, and we had the building boom, and now bust is that city-hall was lobbied by the builder’s who run this town, to keep the SDC artificially low. The irony is that the money was not collected in good times, and the city took on astronomic debt to cover the shortage.
“Anyone ever heard of a RECALL? Stop complaining, start acting.”
Who do you want to recall? The only people remaining from the old city council are Jim Clinton and Mark Capell, and the new guys have been in office less than a month.
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Excellent point hbm, the ‘bandits’ are long gone, Capell really cares about this town, and so does Clinton, all the other newbies to city-hall are pro-growth, but they don’t look at the budget close enough to realize that Bend can no longer legally by State law borrow money or issue MUNI debt ( bonds ).
Hummel didn’t walk from Bend he ran. Abernethy who largely played all along with the CACB debt game feeding tens of millions to Knife River knows that’s game-over, and he’s gone from public life.
So yes, ‘recall’ is too late. Bankruptcy is the only option, as in 1-2 years almost all of the little revenue that Bend will see will go to paying off the debt from the party.
Re: Easy to say after the fact that the growth industry is a bad decision, and ideally, the attitude that “I have mine so you don’t need yours” is one that’s easy to grasp (no-growth). Keep it small and exclusive. One person’s nirvana, another’s boredom and poverty.
TV reports say that the average Bend home has $30k in fees (aka TAXES) before anyone ever breaks ground. That TAX is then financed by every owner from day one into oblivion. Not something I’m fond of but the tax is indeed passed from owner to owner, forever left behind if someone sells (at a profit) and leaves the area. Essentially they transfer the tax to the next owner. Sweet?
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So I take it you would rather have dirt roads and no water or sewer? That’s one of the basic things government does. Here you have to blast through volcanic rock to do it. It costs. Simple fact.
It’s not I have mine, so you don’t need yours. We’ve got a good 5000+ places just waiting for you. Empty.
Where did the money go? Avion Water $12M settlement, two TaylorCo properties $10M, Juniper Ridge $16M and counting, etc. The bus stuff is actually 80% fed funds. The roads get some help from state gas taxes. Bringing you water and taking your s**t is mostly SDC’s.
What, you want to build around a dirt road with no sewer or water? That’s called DRW.
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No they want to keep doing what they were doing, building for cheap, and having the general tax payer pick up the SDC cost as muni bond debt. But guess what? Something happened.
Our credit is now sub-prime, we have max’d our ‘muni credit card’, and soon 1/2 our falling revenue will be credit-card debt, a debt councilor would call this a nightmare, but so far all the lemmings in Bend are ignoring this elephant, they want to make it sound like ‘community hysteria’ drove growth.
BULLetin SH*T.
Insiders setup a PONZI-SCHEME backed by tax-payer credit. Now Bend has ran out of SUCKER’s ( muni investors ) to screw, and its Bend game-over.
No the developers want water, sewer, power, flood-control, parks, schools that sell’s STD’s they just don’t want to pay for it up front. See the SDC up front is REAL cash, even $12k/home, its up front CASH. Most of these builders were throwing up STD’s by the 1,000’s with nothing down. Thus the city SDC cost was their only real problem.
Ok, so they filled city hall with builder/banker HO’s, and now are debt is max’d out, … and we BK, so what.
Let’s never forget why this happened, let’s not forget where the money went. Let’s tattoo on the BULLetins mast head “never again”.
Where did the money go? Avion Water $12M settlement, two TaylorCo properties $10M, Juniper Ridge $16M and counting, etc.
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Hush Money is Bend. $5M just last year city paid the BULLetin, for land it got for free from Mike Hollern of Brook Resources back in 1998.
Ten’s and ten’s and ten’s of Millions to Knife-River, which is owned by MDU of which CACB Patricia Moss sits on the board and gets $200k/yr, and also sits on the Juniper-Ridge board which passes all the money to Knife-River.
Recall?: The crooks are gone. Retired. PERS retired, public dole, the best in Orygun.
Refund?: The money is gone.
Throughout history civilizations always fail when good men remain silent and complacent.
Bend will recover from the BK, but lets hope that the future city-hall really is people that puts public-safety, and education first.
An entire book can be written on the single subject of “Bend’s Debt: Where did the money go?”.
Hush. Omerta, Bend is a mob town.
“everything is green 12 months/year”
??????
Where are you, Palm Springs?