Safeco: Is it a white elephant?
- William Barbat
- Lake Oswego Review - Opinion
The Safeco project can be described as a white elephant, just like Multnomah County's unused, $58 million Wapato jail.
When a business undertakes an $80 million or $100 million venture, it first conducts an expensive, scientifically based survey of the potential customers to determine just how likely they are to spend enough money using the business to justify the initial investment, the operating costs, and the depreciation costs. Nothing is left to chance with that much money at stake. The vague questions posed to persons in the community by the promoters of Safeco do not begin to provide such answers.
Multnomah County made the same mistake in building the Wapato jail without the proper economic analysis. As a result, the county is saddled with a huge debt for a white elephant that costs so much to keep empty that they cannot afford to house their convicted burglars and drug dealers. They have to turn them out on the streets where they immediately resume business as usual. Not only that, but the county has to rely on considerable financial help to run their schools. They also cannot afford to replace the crumbling Sellwood Bridge that can no longer be used for the public transit purposes or for trucking, and cannot adequately carry the present volume of auto traffic.
Mountain Park ran into a similar problem with its recreation center. Had they taken into account the costly deterioration of the Olympic-size swimming pool and the building's roof with a depreciation schedule, the annual assessments could have hit the residents so hard that they would have had to scale the idea way back before it was built. They now have a new roof and no swimming pool. They couldn't get users to pay for using the pool, so they now have a large unused portion of a building to maintain.
Arguing over the number of paying users at a given charge at the Lake Oswego's new project in the making at Safeco is useless without a business-like study, and we do not even have a suggested user fee or serial tax levy to look at.
The (Lake Oswego) City Council says we must wait two years, and lose millions of dollars in interest and development costs before we get to vote. This is nonsense - let's vote now and save our money for projects that really need doing.
William Barbat is a resident of Lake Oswego.
Editor's note: Mayor Judie Hammerstad responds: 'We have a consultant team and a steering committee that is now in the process of analyzing uses and their associated costs. Unlike Wapato, both capital and operating costs are part of this analysis. Similarly, we're looking at uses that generate operating revenue and are self-supporting - unlike a jail. Private partnerships may also help offset operating expenses. As options are recommended, please be assured that a thorough financial analysis will be undertaken. This information will be generated prior to the vote so that our citizens will know exactly what they are voting on.
'As for your concern regarding the interest we are paying on the loan: Because of our triple A bond ratings, we are able to finance this purchase at a favorable interest rate which will decrease further now that the building is vacated by Safeco. In addition, the interest paid is well below the increase in the property value of the Safeco site. I can assure you that, because of the desirability of that piece of property, it will never be a white elephant. In the event that it does not become a community center, the appreciation of the property will more than cover our costs of acquiring and financing.
'Thank you for your interest.'