Coming up below is an article about the privatization of America’s formerly public infrastructure – with the premise that America is For Sale. It brings up the issue that Molalla has always been for sale to the good old boys with the biggest pull.

Molalla has been a leader in selling out public interest for private gain. The housing boom produced special “deals” that left the city with NO System Development Charges for future infrastructure. Even worse, it left the City with a deficit of parks and open space. The good old boy buddy system of back scratching and looking the other way has produced increasing urban decay and tanking property values.

And as we flash forward to today, the carnage give away policy is still alive and well. The City “leaders” must decide whether to devote the slim public funds left for massively expensive road fixes needed to move the MILLION DOLLAR SDC WAIVER Hart Street/Vest apts. forward. Talk about short-sighted.

Reading recent public information from DLCD and ODOT, it is obvious that Molalla’s back is up against the wall. There are only two paths open on the Vest/Hart street MILLION DOLLAR GIVE AWAY project: waste city funds to facilitate the “project” with a new downtown stoplight, expensive turn lanes that will steal parking and infuriate the few “businesses” left (where, oh where will the patrons of all those 4 way stop bars park?), and god only knows what other EXPENSIVE improvements will be needed that could be deferred if the MILLION DOLLAR GIVEAWAY APTS. weren’t crying for public money – or do the correct thing, slow WAY down, work with County planners to understand the true mess the fake planner has created so his beer drinkin’ buddy could get a leg up.

It sure wouldn’t be a hard choice for me. Just slam the door shut on zone changes and road fixes using public funds at least until there is a clear pictures of priorities and public needs.

It was funny to see the Dolan case citied in the planning hearing in relation to how much the City could make the Hart project developers contribute to public infrastructure like a stop light.

Even though the stop light would be immediately needed for the project to move ahead, the important Supreme Court case Dolan vers City of Tigard established rules that say a City can’t make a developer pay out of scale for infrastructure that would be in majority for general public good.

In other words, even though an expensive and disruptive stoplight and turn lanes would be needed for the project, those “needs” would be for the general public benefit so there are limits to the costs that can be imposed on a developer for SPECIFIC public infrastructure that is not entirely on-site.

So guess what? That’s what SDCs are meant to do – to cover the “public good” costs when growth occurs. Except guess what? Dumb Molalla is WAIVING A MILLION IN SDCs for the bogus “project”. So that makes any improvements for the public good a double rock and hard place – there is next to no public money and there will be EVEN LESS if the City “leaders” approved spending the slender funds they do have for this PRIVATE PROFIT MILLION DOLLAR GIVE AWAY PROJECT.

Molalla will give up and MILLION and likely end up having to spend that much or more for improvements How much dumber can a place get?

The coming article suggests that the trend is to sell out to private interests and make everyone pay tolls and use fees for what used to be PUBLIC in America. How about if Molalla just sells itself lock, stock and crumbling barrel to the good old boys – like Vest, Deardorff, Avison and the players on TEAM? We already watched the fiasco when the City racked up a HALF A MILLION DOLLAR PLANNING DEFICIT to try to “help” good old boy Kyllo get into an urban reserve! Does anyone ever learn from history?

What the hay, those local good old boys have already gotten so many perks at the expense of the public the “leaders” may as well just go whole hog and sell everything openly. We can have the “Vest” toll stop light, the “Avison” toll turn lanes, and Deardorff can put some razor wire around old downtown and make people pay to get through the gate to discover his decayed, empty store fronts.

We’re already paying, as a society, for DEQ to evaluate the polluted mess at the old Avison/Florgan site south of Molalla. You know the one – where Bear Creek disappears under a sea of polluted concrete and weeds? We’re all paying the bills for that public clean up!

Who needs a city hall when the “leaders” are simply going to be puppets to facilitate yet another great for profit deal for a private developer at public expense? It will be fascinating to see if the developer wins the MILLION DOLLAR WAIVER when the plans hit the City Council.

Will they actually change course  for once and examine the huge financial risks vers the weak or no gains? Remember – property values are tanking more in 97038 than in most of the state. It only took a few months for StonePlace Apts to start running ads that they were open to “Section 8” renters. How long would it take Hart Street to run that kind of ad in this economic and real estate crash? How much more empty commercial space does a tiny berg need?

I talked to a downtown shop owner who can’t even continue to stock an Amercian made line of shoes because the store can’t sell enough to meet the corporate stocking quota. And TEAM trots out surveys asking what people want to buy? Ha! It’s a lot deeper than that, folks and corporate America doesn’t value tiny low quality bergs with low economic profiles. But the council wants to GIVE AWAY A MILLION for more commercial space? To fill with WHAT?

Will the council slow down and work to deeply understand the ramifications of stuffing in more housing in these economic times? Or do they just figure they can continue to be a welfare town?

Will they slow down and work with County planning, ODOT and DLCD to make sure every can of worms associated with the insider trading Hart project is revealed BEFORE it is fully approved by the Council?

Or will they just follow noxious past practice and hit the “yes” button only to find out later they made a big mistake and that they couldn’t afford the PUBLIC funds needed to make the project happen?

Read on for the growing trends – maybe the City Council could make a few bucks writing the “Guide to Giving Away Quality of Life with No SDCs“.  It could be a best seller in these times. At least it could work till the lowly taxpayers revolt when they find they can’t afford the tolls and fees and higher taxes that result when developers don’t pay their fair share and when city leaders don’t respect the people who elected them enough to ensure that the need for quality for EVERYONE is protected.

Dylan Ratigan

America for Sale: Is Goldman Sachs Buying Your City?

Posted: 06/15/11 09:01 AM ET
Introducing America for Sale, a new Huffington Post-Dylan Ratigan Show collaboration.

In Chicago, it’s the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In Indiana, it’s the sale of the northern toll road to a Spanish and Australian joint venture. In Wisconsin it’s public health and food programs, in California it’s libraries. It’s water treatment plants, schools, toll roads, airports, and power plants. It’s Amtrak. There are revolving doors of corrupt politicians, big banks, and rating agencies. There are conflicts of interest. It’s bipartisan.

And it’s coming to a city near you — it may already be there. We’re talking about the sale of public assets to private investors. You may have heard of one-off deals, but what we’ll be exploring with the Huffington Post is the scale and scope of what is a national and organized campaign to shift the way we govern ourselves. In an era of increasingly stretched local and state budgets, privatization of public assets may be so tempting to local politicians that the trend seems unstoppable. Yet, public outrage has stopped and slowed a number of initiatives.

While there are no televised debates around this issue, there is no polling, and there are no elections, who wins it will determine the literal shape of modern America. The Dylan Ratigan show is teaming up with the Huffington Post to do a three part series called “America for Sale”, showing the pros and cons, and the politics and economics, of a new and far more privatized government.

On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.” While the bank sees increased opportunity in “distressed assets” (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes “reputational concerns with the manner in which these assets are being operated or held.

The funds themselves are clear when communicating with investors about why they are good investments — a public asset is usually a monopoly. Says Quadrant Real Estate Advisors: “Most assets are monopolistic in nature and have limited competitors, creating the opportunity for stable, long-term investment returns. Investment choices include economic assets and social assets.” Quadrant notes that the market size is between $12-20 trillion, roughly the size of the American mortgage market. “Given the market and potential return opportunities, institutional investors should consider infrastructure a strategic investment allocation.”

As with mortgage securitizations, the conflicts of interest are intense. Pennsylvania nearly privatized its turnpike, with Morgan Stanley on multiple sides of the deal as both an advisor to the state and a potential bidder. As you’ll see, these deals are often profitable because they constrain the public’s ability to govern, not because they are creating value. For instance, private infrastructure company Transurban, now attempting to privatize a section of the Beltway around DC, is ready to walk away if local governments insist on an environmental review of the project. Many of them have clauses enshrining their monopolistic positions, preventing states and localities from changing zoning, parking, or transportation options.

While the trend is worldwide, privatization of public infrastructure only came to America en masse in the 2000s. It is worth discussing, because where it has happened it has sparked deep and intense anger. In Chicago, protests flared as Mayor Richard Daley pushed the privatization deal through. In Wisconsin, recent protests and counter-protests around controversial Governor Scott Walker revolved around, among other issues, the privatization of state medical services. In Ohio, a controversy is swirling around the political proposal to put the turnpike up for sale, while in Indiana, the state toll road has been in private hands since 2006 (upsetting the truckers who are paying much higher tolls).

The political organizing is intense – on the Republican side, conservative groups are aggressively driving it as a strategy for fiscal prudence. The American Legislative Exchange Council (ALEC), the influential think tank that targets conservative state and local officials, has launched an initiative called “Publicopoly”, a play on the board game Monopoly. “Select your game square”, says the webpage, and ALEC will help you privatize one of seven sectors: government operations, education, transportation and infrastructure, public safety, environment, health, or telecommunications.

On the Democratic side, the Obama administration has been encouraging Chinese sovereign wealth funds to invest in American infrastructure as a way to bring in foreign capital. It was Chicago Mayor and Democratic icon Richard Daley who privatized Chicago’s Midway Airport, Chicago’s Skyway road, and Chicago’s Parking Meters. Out of office after 22 years, he is now a paid advisor to the law firm that negotiated the parking meter sale.

Ratings agencies are also in the game, rating up municipalities willing to privatize assets, or even developing potential new profit centers around the trend (see the chapter titled “Significant Debt issuance Expected with the Privatization of Military Housing” from this September 2007 Moody’s report).

Over the next three days, we will explore what it means to have a government for profit, whether we get better roads when Goldman Sachs determines how much we pay in tolls. As we explore this topic, I hope we as Americans will be able to decide if we truly want to see America for Sale.

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