Occasional comments about business and politics in Portland, Oregon, mixed in with stories from our city's colorful if not always compliant past.
"The more pity, that fools may not speak wisely what wise men do foolishly." -- Touchstone
Complain as I do about the eccentricities of the Portland city council, they have been making the city a more desirable place to live, at least if housing prices are evidence. Now and then it's been reported that people who are priced out of the Portland housing market are finding less expensive housing -- even in Lake Oswego.
Five years ago I told the story of how some prominent Portland charitable organizations got together a few years earlier to encourage a Person Of Standing to make good on his pledges to those charities. They wrote identical letters to the Person Of Standing, who was an well-known investment manager active in the Republican Party, all saying basically "You made a very generous pledge to our organization last year. If things are tight for you right now, we can work out an installment plan so that you won't be embarrassed about not meeting your pledge." The Person Of Standing, no doubt realizing that the well-connected trustees of these charities all talked with one another, paid his pledges by return mail. He quietly ended his relationships with the charities and moved to Florida.
I don't know whether times were in fact tough for the Person Of Standing ten years ago, but they are now; this week the P.O.S. was arrested and charged with two counts each of securities fraud and wire fraud. I'm guessing that none of the trustees of those charities were still doing business with him.
The humps in the middle of the Interstate Bridges are two of the reasons that proponents of the Columbia River Crossing point to when explaining why a replacement bridge with a light rail line is the most pressing transportation need that merits $450 million, plus interest, of Oregon's tax dollars. The interesting thing about the humps is that they were built not as a problem but as a solution.
The original Interstate Bridge (what is now the northbound bridge) had a drawspan, but no humps. The road was level. When the southbound bridge was built in the 1950s, the highway department wanted to reduce the number of bridge lifts, and built the southbound bridge with a hump, under which some river traffic could go without requiring a bridge lift. When the southbound bridge opened, the northbound bridge was closed so that a matching hump could be added.
The basic problem with the project, and a possible solution, occurred to me a few days ago, and I'll share the problem and the solution this week.
Wednesday the Land Use Board of Appeals reversed Portland's approval of an 80-unit mixed-use building at 37th and Southeast Division, proposed to be built without any off-street parking. (Thanks to Willamette Week for the story.)
LUBA reversed the City's decision, not for reasons relating to the lack of parking, but because of how the City wrote its zoning code. The site is a rectangle with one of the short sides along Division and one of the long sides along 37th. The developer proposes to build retail space on the ground floor and apartments upstairs. The portion nearer Division is subject to the City's "Main Street" zoning, which is intended to make buildings along certain streets, including that portion of Division, look like buildings in small town Main Streets. One of these standards says that if any of the building is in a non-residential use and the site is on a corner, then "for portions of a building within the maximum building setback, at least one main entrance for each tenant space must (a) be within 5 feet of the facade facing Division Street, and (b) either (1) face Division Street, or (2) be at an angle of up to 45 degrees from Division Street, measured from the street property line."
In that zone, the maximum building setback is 10 feet, meaning that the building's Division Street wall can't be more than 10 feet from Division Street. In fact, it's built on the lot line, so it's set back 0 feet. The portion of the building within that 10-foot area includes both street-level commercial space and twelve upstairs apartments. The main entrances to the streetfront retail face Division Street, but the entrances to the apartments don't -- they're around the corner, on SE 37th, and are more than 5 feet from Division Street.
The City planners rallied valiantly around the developer, and argued that this provision of the zoning code was never intended to apply to apartments, only to non-residential uses. LUBA rejected the City's argument, saying that the plain language of the code states that at least one main entrance to any tenant space within the 10-foot setback must be within 5 feet of the Division Street facade.
Here are the developer's options, none very attractive:
1. Convert all of the street-level space to apartments so that the building will be residential-only, increasing the construction cost and reducing the rental income.
2. Take out some of the commercial space on Division Street (the highest-value portion of the building) and put in a Division Street entrance to the apartments, also increasing the development cost and reducing the rental income.
3. Remove the portion of the upper floors that's within 10 feet of Division Street; that is, chop off portions of 12 apartments.
4. Persuade the City to change its zoning code very, very fast, before the neighbors force the City to make the developer tear down what is now an illegal and unpermitted building.
I'd be worried if I were the developer. I'd be even more worried if I were the developer's lender.
As it does almost every year lately, the United States government is bumping up against the debt ceiling. Congress sets the maximum limit on how much debt the federal government can issue. Congress also commands the president to spend more than the government receives; that is, to run a deficit. The administration can finance the deficit either by printing money or by borrowing more money, which increases the national debt. Congress has approved raising the debt ceiling 11 times since 2001.
Within a few months the government will have to print or borrow more money to pay for the spending that Congress has approved. Several Republican representatives are making noises that the nation would be better off if the government shuts down when it hits the debt ceiling than if it borrowed to pay its bills.
Jerrold Nadler, a Democratic representative from New York, found a way in which the government could pay its bills without borrowing more money. Possibly inspired by Mark Twain's story "The Million Pound Bank Note," and after some searching through our laws on coin and currency, he proposed that the Treasury mint a trillion-dollar coin in platinum and deposit it with the Federal Reserve. Why the Treasury? And why platinum?
The Federal Reserve Banks, not under the administration's control, print and issue our currency. The Treasury hasn't issued paper money since 1968 when it gave up printing United States Notes. The Treasury does, however, issue our coins, in denominations and with metal content strictly prescribed by statute. All gold and silver coins, for example, must contain gold or silver that is worth more than the face value of the coin. A $50 gold coin, for example, must contain 1.09 troy ounces of gold. There's no profit to be made in making gold or silver coins.
The Treasury Department may, however, mint platinum coins of any denomination and weight that pleases the Secretary of the Treasury, including, in Mr. Nadler's proposal, a platinum coin with a face value of $1,000,000,000,000.
Republicans in Congress (including Oregon's own Greg Walden) have lined up to oppose the trillion-dollar coin, though it's not clear whether they also oppose the government paying its bills. An administration less charitable than the current one might offer to avoid the debt ceiling cliff by cutting federal spending in those states whose representatives vote against raising the debt ceiling.
A few days ago Metro released the market impact study for the proposed Convention Center hotel. (Here's the Oregonian story reporting that happy fact.) The study, performed by a firm nondescriptly named Strategic Advisory Group, says that the Oregon Convention Center would attract more conventions if a 600-room headquarters hotel were built across the street. I read the study with great interest. Its reasoning seems sound and the methodology is better than what I expected. I was also impressed with SAG because it included one hotel project, Detroit's, in which it concluded that there was not enough demand to justify building a convention center hotel. (Beware the consultant who always gives the same answer.)
The consultancy's website includes a list of eleven convention center hotel projects that it's worked on, which you can read by following this link. One of them is the Portland project, which SAG describes in these words:
The City of Portland desired to increase it marketability within the convention and tradeshow industry. With a recently completed expansion of the Oregon Convention Center, those charged with marketing and booking the facility continued to face obstacles in attracting many key, high-impact events. Would-be customers of the Center and visitors of the City frequently vocalized the need for a larger, first-quality hotel adjacent to the OCC. Therefore, the City of Portland, the Portland Oregon Visitors Association (now "Travel Portland"), and later the Portland Development Commission engaged SAG to create a Headquarter Hotel Strategic Plan and help realize the project. The project involved understanding and defining the market, customer needs, and required hotel program; assessing the impact of a new headquarter hotel on the existing hotel market; quantifying the economic impact on the OCC and the community; estimating the hotel's cost and financial feasibility.
SAG's description includes this juicy bit:
SAG's Plan did detail a need for a new hotel but also described other necessary steps Portland would need to take to truly maximize its penetration in the industry.
Why is this a juicy bit? The study that Metro released is only part of what SAG did for Metro.
The study that the Oregonian links to doesn't include the list of "other necessary steps" that Portland must take to "maximize its penetration of the industry," that is, to get more convention business. SAG told Metro. Metro should tell us.
The elephant just born at the Oregon Zoo to Rose-Tu belongs, not to the Zoo, but to a California elephant rental company called Have Trunk Will Travel, according to this report from the Seattle Times. Have Trunk Will Travel owns Tusko, the sire of the baby elephant, and contracted Tusko to the Zoo for breeding, with the Zoo to own the first, third, and fifth babies and the company to own the second, fourth, and sixth. A spokesman for the Zoo says that the baby elephant will stay at the Zoo, but under the contract that's not the Zoo's decision to make. Here's the contract.
The Zoo is running an election to give the baby elephant a name, at least while it's living at the Zoo. Whether her owner will agree to follow the election results hasn't been answered.
Yet another encounter with the ubiquitous phrase "carbon footprint" (hopelessly vieux jeu) and a chance remark by Mrs. Laquedem spurred me to consider the effects of humankind on the other ninety-plus naturally occurring chemical elements. Two years ago I wrote about China using its near-monopoly over the element neodymium as an instrument of foreign policy, so let's start there.
Neodymium is one of the lanthanide series of metallic elements, commonly called "rare earths" although they are neither rare nor earthy. Neodymium's main use is as an ingredient in powerful magnets, including those in earphones. If you're listening to your iPod while you read this, you have some neodymium in your ears right now.
China has been the only supplier of neodymium from 1998 when a rare-earth mine in Mountain Pass, California closed for environmental reasons (here's some talk about that); the California mine reopened a few months ago.
Mining and refining the rare earth metals is a messy business: Bloomberg reports that China's rare earth mines produce five times more waste gas a year than all of the mines and oil refiners in the United States, and that waste gas is part of our neodymium footprint.
What else is in our neodymium footprint? Electric cars, for one thing; a Toyota Prius contains about 2 pounds of neodymium. Wind power, for another; Vestas uses 180 pounds of neodymium in its 3 megawatt wind turbine. Vestas may be efficient: The USGS, relying on an outside source from 2008, said that a wind turbine uses about 1 tonne of neodymium for each megawatt of generating capacity.
One metric ton ('tonne") of neodymium is enough for 1100 Priuses -- but then Toyota sells 500,000 Priuses a year, so it uses about 450 tonnes of neodymium a year, about 1/40 of the world's annual production. Neodymium is also in the Chevrolet Volt engine as well as in its Bose speaker system.
So who knew? When we drive our electric cars through the gorge and look at the wind farms, somewhere in China a hillside is crying because we stepped on it with our neodymium footprint.
Carrying on our tradition of remembering Grandmother Laquedem, whose lifelong democratic socialist (sometimes lower case, sometimes with capitals) support of the working classes ended only with her death on Labor Day itself many years ago, we commemorate the day with a suitable reading. Today's reading comes from the Labor Day speech of Woodrow Wilson, then the Governor of New Jersey and a candidate for the presidency, on September 2, 1912.
Very well then, when I speak to you today, I want you to regard me as a man who is talking business. I want in the first place to say that I shall be scrupulous to be fair to those with whom I am in opposition. Because there is a great deal to be said for the programs of hopeful men who intend to do things even if they haven’t struck upon the right way to do them. And we ought not to divorce ourselves in sympathy with men who want the right thing because we do not think they have found the way to do them.
I want to speak upon this occasion, of course, on the interests of the workingman, of the wage earner, not because I regard the wage earners of this country as a special class, for they are not. After you have made a catalogue of the wage earners of this country, how many of us are left? The wage earners of this country, in the broad sense, constitute the country. And the most fatal thing that we can do in politics is to imagine that we belong to a special class, and that we have an interest which isn’t the interest of the whole community. Half of the difficulties, half of the injustices of our politics have been due to the fact that men regarded themselves as having separate interests which they must serve even though other men were done a great disservice by their promoting them.
We are not afraid of those who pursue legitimate pursuits provided they link those pursuits in at every turn with the interest of the community as a whole; and no man can conduct a legitimate business, if he conducts it in the interest of a single class.
Our usual jovial support of management and the capitalist classes will return tomorrow.