Thursday, February 21, 2008

JR Financing Just Doesn't Make Sense

Big updates on Juniper Ridge tonight, some good, some curious. Short update now, as it's the middle of the night, with more to come.

The good: Les Schwab came through with a building that looks nice and, most important, creates jobs. Which is what JR is supposed to be all about. Open, natural light, pretty much as green as a building can be. Kudos to the architect and LS for making it happen. It's not a wart, which is a huge relief to everyone. The LS PR person promised to send me the latest rendering from their Powerpoint show tomorrow, which I'll post here. It is really very nice.

Now to the "curious": Could someone from the City please tell me just how we are going to finance this thing without going bankrupt? The sequencing just does not make sense to me. Let me try to sort this out better, as this was what was bothering me and it came together and woke me up just now.

City Finance Director Sonia Andrews gave an update on the JR financing, stating flat out that we don't have the money or the financing capability to even cover everything we are doing now for LS, and that some "hard choices" are going to have to be made if we don't make any land sales in the near future. And this doesn't include the $37-40 million for the Cooley Rd/Hwy 97 changes that need to be made. we need about $14M, and about half of the is going to have to come from a short term bank loan, which although it is going to be at a good rate (3%) it is going to have to be repaid, and the only source for repayment of it all is going to be next 50 acres in land sales at JR that will be made possible by the Cooley/97 upgrades if all goes as planned.

Ron Garzini passed around a letter he was proposing to send to local businesses to see if they were interested in purchasing trips to help fund the Cooley/97 changes, although there still seemed to be confusion over whether we had 3000 trips available or only 1500, according to ODOT. Ron was still negotiating with ODOT on this, as best I could decipher. It's a huge difference, one that could be a deal breaker in and of itself, so getting a clear answer on this is imperative.

But, even more incredulously, John Russell, Director of the Department of Economic Development, blithely stated that we would get enough from that 50 acres, which he seems to think will be an easy sale at $10 a square foot, to cover the shortfall for the improvements so far, i.e. to repay the $7+ million dollar line of credit from the bank, through a combination of cash from the sales and, I presume, bonds that the City will be able to sell once we have more taxes coming from that land. Mr. Russell stated that he expected to get $10 sq. ft. for the land.

And this is where my confusion began:

1) Les Schwab has set the comparable at $7 sq ft shovel ready, without SDCs, so unless Mr. Russell knows something I don't $10 a sq. ft. doesn't seem very realistic.

2) Even at $10, the proceeds are $21,780,000, while at $7 they are $15,246,000, leaving the issue of SDC's out of it for now. As an example of SDC amounts, LS was relieved of paying around $400K-$500K of them for their initial 120,000 sq. ft. building on 6 acres of their land.

3) This is where my head exploded--to have a chance in hell of getting $10, it is going to have to be shovel ready, like the LS land, with sewers, roads, etc. Which is going to cost millions of dollars. Which is going to have to be financed somehow, but the money from this next 50 acre sale is going to be used to pay off the bills for LS's 20 acres (not including the Cooley/97 bill) meaning it won't be available to pay for the infrastructure needed to make the 50 acres shovel ready in order to sell it.

Do you see what I'm getting at? Exactly. It just doesn't add up, let alone work out in the sequencing of financing and infrastructure improvements provided as the "plan" for getting out of this hole.

After the presentation I brought up the LS comparable and the infrastructure issue with Mr. Russell, and was simply and rudely dismissed as some kind of idiot. I followed him around and brought up the infrastructure issue again, and was simply told "No" when asking about if the City had plans to pay for it, and was again rudely dismissed and further ignored.

I must say that Mr. Russell is pretty damned rude to at least one of the citizens that are paying his salary.

So, I'll ask you again, Mr.John Russell, oh-so-much-smarter than myself Director of Economic Development, please tell us stupid tax-paying citizen's of Bend a couple of things, seeing as how you weren't willing to discuss them any further with me at the City Council meeting:

1) How is the City going to pay for the 50 acres of infrastructure needed to sell said 50 acres for the shovel ready price of $10 per sq. ft.

2) What company is going to pay $10 a sq. ft. plus SDCs when we sold Les Schwab property for $7 sq.ft. with no SDCs, and this is now the most direct comparable.

Because there are some real curious and not-feeling-real-prosperous-right-now Bend citizens that want to know.

You know the kind: they're the ones that pay your salary.


IHateToBurstYourBubble said...

Nice Job Brucey!

Anonymous said...


LS got $60M in land ( knife-river + cooley improvement ) in exchange for $3M to send KURATEK away.

They would have caught hell to borrow $3M to payoff KURATEK.

So they'll sell 50 acres to cover the $12M min that they currently owe on LS development ( shovel ready SDC ).

How can they sell 50 acres for $12M JUST TO BREAK even, when they just sold 40 acres for $3M including ALL SDC???

It can't be done, Les Schwab paid $4 sq-ft for shovel ready land.

The break-even on the LS for city would have been $15M just to break even, the land was FREE just the SDC cost on the LS 20 acres was $12M min.

In order to break even the city needs to sell at $15 sq-ft.

The farther the city goes into attracting biz to LS, the deeper the HOLE, but then this is what this all about.

In summary you are our Bruce Pussy, and your doing a damn good job of covering Dick Borgman corrupting fucking ass, but then he bailed out all your butt-banging mormon boyfriends.

Anonymous said...

Could someone from the City please tell me just how we are going to finance this thing without going bankrupt? - bruce

* WRT Juniper-Ridge Financing of LS

Bruce Pussy,

First of ALL the city GOT nothing for the land. LS paid $3M on the behalf of Dick Borgman to get rid of KURATEK. This was why LS was brought in.

In exchange for providing the $3M hush-money, LS got 40 acres for FREE, plus $15M in SDC ( shovel ) ready. 20 acre explicit for CAMPUS plus the other 20 acres was used as a source for MT-BORGMAN the pad for the campus.

Given that the road cost for LS @ JR will be $60M, the true cost of LS@JR is $75M to the city of Bend.

Now WRT the LAND, the land was FREE $1 back in 1990, the city gave the land to LS, for bailing them out of the KURATEK fuck-UP.

Now the city of bend OWNS to very nice master-plans ( OTEK+KURATEK ) that Garzini & good old boyz can shove up their ass for perpetuity.

Its game over, now what in the fuck are you dwelling on??

There were was NO $10 sq-ft, there was NOTHING that came in, cuz what happened was a straight transfer the same FUCKING day the LS money came in it was wired to KURATEK's account. This was always the DEAL.

KURATEK got city-hall to DUMP the OTEK master-plan in 2005, in 2006 of August the UBS $20M finance that KURATEK promised failed, that was the NAIL on the coffin for KURATEK.

Good OLD boyz, garzini/hollern came to BORGMAN (LS) for a bailout. He drew up the LS-sales agreement on oct 15,2006, only two months after KURATEK announced he couldn't get financing. On dec 2, 2006 the city signed the infamous LS sales-agreement that said the city would give LS 40 acres for free, and spend $75M in SDC, in exchange for paying off KURATEK $2.5M + costs to go away.

Bankruptcy? The city of bend has been a dead man walking for a long time.

COMPS?? The next company that comes to JR ( juniper-ridge ) can expect to pay nothing for the land, and also get $100M or more in SDC's paid for by the city-of-Bend. This is NOT even a ponzi scheme as the first tier didn't pay, nor will anyone ever pay.

The real problem here is the cost to develop desert ROCK LAND, there is a reason JR sat empty all these years. Its ALL ROCK. It cost the city $12M just to have Knife-River move around 40 acres of ROCK to build MT-BORGMAN on behalf of LS ( Les Schwab ). Thats a cost of $300k per acre just to make that land shovel-ready. That's a cost of $7.5 sq-ft just to develop the land, for get about what the land cost.

The ONLY one that EVER profits from this boondoggle is KNIFE-RIVER aka Mark Capell.

There are simply too many other places that there is NO cost to develop the ground. What can the city sell this SHIT for?? Let's say the city asks $7sqft, that's just break-even, if they continue to provide the excavation. If they don't then the buyer has to pay $15sqft just for land, thats $600k/ac for worthless desert land.

ALL this crap is corporate welfare for Knife-River, Brooks Resources, ... which will probably all go bankrupt as well.

Les Schwab has ALWAYS bailed out BEND, they bailed out Old-Mill for Bill Smith, they bailed out every fucking problem this city has ever had.

Thus the city-hall had NO problem committing $100M in SDC's & free land to LS to pay KURATEK to go away, win-win for all.

FUCK the taxpayer, FUCK the citizen, they have nothing to do with this town. The ONLY reason the 70k population in this fucking town is kept around, is they'll be used as prison-fodder for Garzinis big wet prison dream.

Anonymous said...

Ok, the BULL has NOW reported where the $70M went, and why!


Les Schwab’s departure leaves hole in Prineville

By Erin Golden / The Bulletin
Published: February 24. 2008

PRINEVILLE — On almost every weekday afternoon for more than a decade, tire magnate Les Schwab took lunch with his company executives in the same place: a corner table at Meadow Lakes Restaurant with a panoramic view of the golf course.

More than nine months after Schwab’s death at age 89, the table is still his, reserved for employees who make the short trip across town from the corporate headquarters of the billion-dollar tire chain. And it’s not just a small table of corporate executives who frequent the restaurant. Some days — including Thursday, when company staff took up at least three large tables — Les Schwab employees lunching in the sun-filled dining room nearly outnumber the remaining customers.

But by the end of the year, when the Les Schwab Tire Centers’ corporate headquarters — and its approximately 300 administrative employees — move from Prineville to a new site in Bend, the lunch rush is going to look a little different.

“We’re building our budget for next year with the anticipation that our business could be substantially reduced,” said Wayne Van Matre, Meadow Lakes’ director of operations. “We’re not sure when the (drop) will happen ... but this is something we’ve been planning on.”

Although about 800 of the company’s approximately 1,150 Prineville employees will remain in town at the Schwab distribution center, the approaching loss of the administrative and upper-management staff is making waves across Crook County.

Several local leaders and business owners said they’re not sure exactly what will happen when Les Schwab moves more than a quarter of its staff, but that change is certainly in the air. The move could mean the loss of dozens of Prineville residents who choose to move to Bend, and at the very least, a large number of high-level jobs that could be hard to replace with so many other local cities competing for new businesses.

“It’s a constant problem for the region — the continuous challenge of how you get people to build in Prineville when Bend is next door,” said Crook County Judge Scott Cooper. “How do you grow yourself to the critical mass where you can meet those amenity needs?”

Making the move

Founded in the early 1950s, Schwab’s tire business grew out of an O.K. Rubber Welders tire store and expanded across the West and Alaska. Today, Les Schwab Tire Centers employs more than 7,000 people in 400 stores, according to the company’s Web site.

After a half-century in Prineville, the company announced in December 2006 that it would move its headquarters from the city’s west end to a new, 120,000-square-foot facility north of Cooley Road in Bend. Builders broke ground on the new site, located within the Juniper Ridge development, in September.

In a presentation to the Bend City Council on Wednesday, architects said workers should be able to move in by November.

Many locals said they were shocked when they first heard the news about a company they thought would never leave Schwab’s hometown. The news was tough on everyone but particularly on employees facing a choice between a long commute or a new community, said Prineville Mayor Mike Wendel.

“I think they’re worried that they’re going to have to commute to Bend,” Wendel said. “I don’t think they were ever anticipating having to move or commute to Bend when they took a job for Les Schwab — it was an organization that was planning on staying here in Prineville.”

Last month, Les Schwab spokeswoman Jodie Hueske said around 10 percent to 15 percent of the corporate office employees already live in and around Bend. But for the dozens of workers who call Prineville home, the prospect of a 75-mile, round-trip commute could mean more make the move to Bend. Hueske said employees who decide to sell their Prineville homes will receive some assistance with closing costs.

Hueske said the company will provide a shuttle bus service for employees between Prineville and Bend. The details of that arrangement will be worked out after officials survey employees later this year.

The business effect

With so much still up in the air, some Prineville residents, government leaders and business owners said they’re uncertain about what kind of hole the move will create in the community. At the Towne Pump, a gas station, grocery store and laundromat located next door to the Les Schwab main office and across the street from its distribution center, cashier Joanie Robertson said she was worried when she first heard the news and is still concerned about the loss of business from the Schwab lunch crowd.

“I about fainted,” Robertson said, remembering when she learned of the move. “I’m really worried, because a lot of our customers are Les Schwab people.”

The move could mean a loss for other service industries, including the hotels where Les Schwab hosts visiting executives. Restaurants like Meadow Lakes, which also provides catering service for Les Schwab corporate functions, will likely see a dip in business. Van Matre said his restaurant has already been losing some Les Schwab business for a couple of years after the company began hosting some of its events in Bend rather than Prineville.

Prineville-Crook County Economic Development Manager Jason Carr said conversation about the new Bend facility has dropped off since the initial announcement, but that Prineville is still preparing for whatever comes next.

“Lots of the business executives and management, the people at headquarters, are here every day, buying lunch out in the community, shopping at local stores,” he said. “I think the community is going to feel that when they pick up and leave.”

Prineville-Crook County Cham- ber President Jay Porter said he and other community leaders hope they’ll be able to find new businesses to replace the void created by the Les Schwab departure. In particular, he said the community needs to attract more professional-level, higher-paying jobs to complement the rest of the Prineville job market.

“It would be really nice to see something come in that does have the range of professional and blue-collar work,” he said. “With Les Schwab, what’s leaving is the white collar and the blue collar is staying. It would be nice to see more professional and administrative, because we rely pretty heavily on mills and Les Schwab’s warehouse for general employment. (Those jobs) are not the higher wage-earners that a town needs.”

Looking ahead

An uncertain economy and dramatic downturn in the building industry could complicate the loss. The latest building permit data for Crook County shows a 94 percent drop in permits for homes in January.

At the least, filling the empty Les Schwab office building could be difficult, said Crook County Assessor Tom Green.

“We won’t really know what can be made of that building, whether they would raise it or convert it to businesses,” he said. “It probably depends on the market — you can’t measure it at this point. If this had happened a couple years ago, that would be a significant piece of property there, and they maybe could get something like a Wal-Mart to build there or just tear it down. But at this point, the market is very slow and people are very tentative, and it would be hard to market that at all.”

At the Crook County School District, officials were initially concerned that the move could make for a dramatic drop in enrollment. But now, Superintendent Steve Swisher said he believes many families will stick around, and the impact will probably be minimal.

“There was a fear at one point that some of the operations were going to be moving and speculation about the headquarters moving out of state,” he said. “It was sort of a relief that it was just a short Central Oregon move ... we have many people in the warehouses that have kids in school but fewer people in the central office. We thought we would have some impact, but now we’re quantifying that in terms of 20 or 30 students (possibly leaving) instead of 200 or 300.”

And at Meadow Lakes, where the tables of Les Schwab employees will soon come exclusively from the production facilities, longtime server Jennifer Miller said it’s simply too soon to tell just what the move will mean for Prineville. Miller, who often waited on Schwab when he came in for lunch, said the business’s namesake would likely be surprised by the turn of events.

“Because he was kind of old school, he might have had a little bit of a hard time with (the move to Bend),” she said. “But sometimes, change is good — I guess the company is doing what it has to do.”

Anonymous said...


I'll try this ONE MORE time, cuz it sounds LIKE I'm NOT getting through to you.

The LS deal to date has cost the city over $12M to make it shovel ready, that was for 20 acres, but they really used 40 acres, LS has a later option to buy the other 20 acres, the reason they need 40 acres, was that the other 20 was used as FILL to make MT-BORGMAN the pad at which the buildings sit.

Now 20 acres is 800,000 sq-ft, and it cost $12M to do the SDC, and dig 10-20 feet on the 40 acres and build the MOUNTAIN. Thus is cost $15 sq-ft JUST to make the site shovel ready.

The city gave LS the land, LS gave $3M to Kuratek, that deal is DONE.

Let's use your COMP and say that the city finds a sucker to build @ LS at their cost. That means $7 sq-ft for land ( LS paid ZERO ), and $15 sq-ft for excavation & site-prep. Thus the cost to an outsider in the future would be $22 sq-ft. That's a COST of $800k an acre for worthless fucking desert land.

NOTE ALL the JR only cost $1 for the whole fucking 1500 acres.

The fact is the ONLY fucking reason the LS office is getting built is that the city is picking up the $12M+ for excavation, and the $60M for access ( Cooley Improvement ), thus it cost the city of Bend $75M to put the LS building their shovel ready.

Bruce, please don't tell me how all the 1500 acres is going to become a bike, old village, university mecca, there is NEVER going to be enough DUMB fucking money.

I know about excavation, I own Big Cat's, I have done blasting, I know what this shit costs. The only reason that what has happened, did happen is that the fucking city of Bend paid the WHOLE FUCKING BILL.

WHO profited ?? KNIFE-RIVER aka Cappell.

WHO Profited? Kuratek

Will LS profit from this boondoggle? Only time will tell, cuz this next $60M to improve the access for Borgman 300+ employees at rush-hour is going to be toxic, this WHOLE fucking project is like building a battle ship in a bottle.

Anonymous said...

This is what the CC is trying to build out at JR at the cost of hundreds of millions of dollars, walkable neighborhoods, but we can do it in town with judicious and firm zoning.


NOT to fucking PICK on you brucey, but this is a dead horse we have fucking killed, the hood south of Newport Market has the Drake Park, and downtown, and established homes going back 50+ years.

YOUR JR is NEVER going to have any of this, YOUR dream and BS of suggesting that JR 'may have been a dream boat', is NO fucking different than that fucking dream-boat up skyline at NWXC, you simply can't throw money on an new desert land and expect 'culture', what makes galveston & newport is diversity, and MOST of fucking all is that Most of us remember the westside bakery back forever, these areas have always had fucking people.

ALL of YOUR fucking NEW hoods like NWXC people never walk, they always drive cuz, they're all from CALI.

If you want to see people use their fucking bike then MOVE to SE PDX, where people use their fucking bike.

In Bend people ride out of town up skyline,phils,centruy,...

Sure I have a cruiser and I ride around downtown all summer long, but I often feel alone, and the round-abouts terrify me, nobody slows down, and even as a driver I can WHY you can't be looking for bikes on your right, when you got someone on your left trying to run you over.

BIKING in BEND sucks.

But MOST of all NO FUCKING NEW NWXC in JR or west of BEND will ever be like DOWNTOWN fucking BEND.

YOUR no different than KURATEK BRUCE, talking shit about what JR might have fucking BEEN, JR is what it is, and what it will always be a fucking FUCK.

I went into detail yesterday, at $10 sqft just to move rock to make that Juniper-Ridge level and buildable, and the the cost of blasting for SDC's ( trenches ), makes the cost/reward of JR impossible EVER.

The reason for DOWNTOWN is that along the deschutes corrridor ( all of westside low land downtown ) is all an alluvial flood plain, all us old timers used to do was take river-rock and build on flat lots, and dig your septic with a shovel for zero cost. AT JR you need a D10 CAT, $20M, and ten tons of ANFO to build.

It takes generations of build an established bike friendly, diversified HOOD, and NO money, and NO HOLLERN or NO KURATEK, and NO brucey can ever create DRAKE PARK are out of a high desert out-cropping.

Anonymous said...

bruce said...

Re: That's why I advocate in-town inner nice little hoods...[like] south of Newport Market

I agree, we need more areas that are walkable/rideable and the west side areas where you have commercial along corridors like Newport, Galveston, (especially) and the Simpson/Century area (although this is a little too much in one place) with pretty dense housing in between are perfect examples.

My wife and her old employee/friend/now employer just started a new venture, buying out the Northwest Adventure bike shop on Galveston. It is a great little area, and we are looking to move back there in the future. You can walk or ride a cruiser to the market, restaurant, bar, school, whatever.

This is what the CC is trying to build out at JR at the cost of hundreds of millions of dollars, walkable neighborhoods, but we can do it in town with judicious and firm zoning.

I am trying to figure out why the OTAK plan was tossed so casually and it is really amazing going over the old docs, like the old RFQ that Kuratek responded to, how that went from virtually all industrial and educational to the place it is now, with the largest use by acreage being yet more residential. Absolutely fucking amazing.

Anonymous said...


What's the point of dwelling on the time-line, and when JR went from industrial to housing??

It happened with KURATEK. He convinced city-hall that everyone could get rich, by building homes, thats why they went for his proposition, and signed his $2.5M MOU, ...

So, what the REAL issue now with JR is that it cost's $15 sq-ft to make the land shovel ready, and that means the city has to spend $800,000/ac for every $200,000/ac they could sell, so they get a net-loss of $600k/ac, whoopy do,

Remember the first LAW of JR, was that NO CITY money would be lost????

JR/LS is the BIGGEST money loser for the city in Bends history, the good news is ALL the money goes to PAPE ( big yellow equipment ), and Knife-River ( big tandem dump trucks ), of course this will all go to auction, once the city can no longer keep Knife-River moving, and all jobs stop, KR will have no choice but to auction all their new equipment.

ALL in Bend is corporate-welfare, for LS the biggest company in OREGON, and for KR, everything is about using taxpayer money to keep the biggest companys from going bankrupt.

Anonymous said...

When I used to live in Provo, UT, or was that Prince George, or Salt Lake, Hell I don't remember, there used to be a cross-dresser name Joseph Smith who had all the answers.

If you know about dime-a-dip, and secret rooms, and crystal, then there is no mystery to Juniper Ridge, like they say Eastern Oregon is no longer Les Schwab country, now it Mormron Country.