Testimony on proposed Metro Convention Center Hotel. 0/20/07
By Don McIntire,
President of the Taxpayer Association of Oregon
I’m Don McIntire, President of the Taxpayer Association of Oregon. In that capacity I appear on behalf of the taxpayers of Metro. I want to remind you of your moral fiduciary responsibility to carefully husband the resources you have extracted from taxpayers.
I use the phrase moral responsibility, because there is something inherently wrong with forcing people to invest in a business project which has absolutely no upside for the investors. This “investment ” is only one-way … all investment and no return.
I must ask of you, “Why do you think owning and running a retail business should ever be a function of government?” Moreover, why should government ever compete with private citizens who are exposed to risk in the marketplace and who must bear the additional costs of business and property taxes?
Beyond that, why should anyone believe projected costs will be as advertised. History is replete with business projections by governments which are invariably wrong. Locally, time-after-time we have witnessed the faulty projections of government and downtown insiders on too many projects, including light rail, urban renewal, jail building and the recent of gondola tram fiasco.
In this regard, the Oregonian reported supporters as saying, “If the Convention Center is to survive,” it will need the taxpayers to put up a $244 million hotel! Wait a minute, aren’t these the same kind of boosters who years ago said that if we just built the Convention Center, it would be such a wild success that it would be its own engine of future growth. Obviously these kind of people always get it wrong. But, what the heck. no skin of their noses … it’s not their money.
The Oregonian also reported that the reason Metro can do this project, while private investors cannot, is because government gets a lower interest rate on bonds. That is true, because taxpayers are captive payers who will have to make up any revenue shortfall. That makes bond sellers more secure, but not the taxpayers.
Here’s an idea, if bond interest rates are all that’s keeping private risk takers from building the hotel, then let private people bid on the project with the guarantee that the Metro will subsidize the differences in the higher bond rate. Of course, it’s worth mentioning that if the taxpayers build this hotel they will have to pay the so-called “prevailing wage” on all construction costs, where a private builder wound be built on the basis of competitive wages? In light of that, “prevailing wage” will alone eat up much of any so-called bond interest savings.
In closing I repeat, that as representatives of the taxpayers, by forcing them to pay for a hotel is an abrogation of your fiduciary responsibilities. To illustrate what I mean … If Metro people want to be in the hotel business, then establish that any losses will be born by those of you on the Metro payroll. Make yourselves eligible to share in the profits, but also responsible for losses. As with private investors revenue shortfalls could be met with either personnel layoffs and, or, by payroll deductions. Since the current average compensation of the 674 Metro employees is better than the average taxpayer, at around $96,400 per year, perhaps collectively you can afford the risk.