RoguePundit

Ashland, Garbage, Trains, and PERS

Currently, Ashland Sanitary Service takes the city's garbage (sans recyclables like glass) to the Dry Creek Regional Landfill, which is owned by Rogue Disposal & Recycling.  Eagle Point is a lot closer to Ashland than Winnemucca NV.  Why that thought?

The Ashland City Council has cleared the way for Ashland Sanitary Service Inc. to be sold to Recology, a solid-waste collection company based in San Francisco.

Last month, I blogged about Recology--the former Norcal Waste Systems--working to get a major landfill approved near Winnemucca NV.  It's usually cheaper for waste companies to use their own landfills, even if it involves shipping garbage hundreds of miles.  From this link...

Recology intends to collect household garbage from San Francisco and about 50 other communities in Northern California and haul it over 300 miles of Union Pacific track to a mile-square landfill 28 miles west of Winnemucca.

Senator Harry Reid (D-NV) is still fighting the proposal.  He's encouraging state officials to deny the necessary environmental permits, and about three weeks ago...

The U.S. Senate has approved a measure sought by Sen. Harry Reid to study the environmental impacts of a proposed landfill near Winnemucca and tons of imported trash from California.

An amendment to the Interior Department's appropriation bill approved Tuesday night funds a study by the U.S. Geological Survey on seepage from trash at the site.

...

Reid says the study would evaluate how long it would take seepage from the dump to contaminate local water resources, and how far contamination would travel over the next two centuries.

Considering that the landfill would be lined, seepage wouldn't go anywhere unless the liner fails.  Nonetheless, studying that should stimulate the economy.

If Recology wanted to ship Ashland's garbage to Winnemucca by train, it would either first have to truck it over the Siskiyous or send it by rail via Eugene...the rail line over the Siskiyous is closed.  Though that rail line is owned by Union Pacific, it's operated by Central Oregon & Pacific Railroad (CORP).  From this link...

It's been [over] a year since the shippers coalition filed an emergency Petition for Alternative Rail Service with the Surface Transportation Board to allow West Texas & Lubbock Railway and Yreka Western to operate the Siskiyou Summit line.

The [Coos-Siskiyou Shippers Coalition has] been at odds with the CORP for nearly two years since the RailAmerica unit shut down the line connecting Coos Bay with Eugene and curtailed runs over the Siskiyou Summit between Weed, Calif., and Ashland. CORP hasn't run trains over an 85-mile stretch crossing the Siskiyou Summit since May 6, 2008, forcing Timber Products Co. and Roseburg Forest Products to rely on trucks between Northern California and their Southern Oregon plants.

...

"The 300 percent rate increases on the Siskiyou Summit that CORP threw at us in May of '08 would have prompted a long and costly legal battle to overturn," Ragon said. "Our issue was lack of service, but they turned it into a rate issue. The present system to challenge exorbitant rate increases provides no meaningful relief in a timely, cost-effective manner. Having better oversight by the Surface Transportation Board (STB) can only be a major improvement."

The STB has taken an unacceptably long time with this decision.  The eventual winner may eventually benefit from hauling Ashland's garbage.  If it's CORP...well, earlier today.

The stock opened at $14.35 a share on the New York Stock Exchange, down 4% from its initial public offering price of $15. A total of 22 million shares were sold in the offering, one million more than expected, at a price below its expected $16 to $18 range. It was trading recently at $13.98, down 7%.

RailAmerica owns and operates short lines, which are tracks that carry private facilities and plants' freight to major railways. Most of the freight hauled includes commodities such as agricultural products, chemicals and metals. Like most railways, RailAmerica has suffered during the economic downturn as manufacturing has slowed; carload volumes have fallen, and RailAmerica's revenue declined by 19% in the first half of the year.

...

Of the total shares in the IPO, slightly more than half--11.5 million--were sold by private equity firm Fortress Investment Group LLC (FIG), so those proceeds won't benefit the company. The extra million shares added to the deal after it priced below range went to Fortress, not the company.

Fortress took RailAmerica private for $1.1 billion in February 2007, delisting it from the NYSE and borrowing heavily to finance the deal. The company plans to use the proceeds it raises to pay down debt and for possible investments or acquisitions. Like many companies brought private by private equity shops in recent years, RailAmerica carries a heavy debt load of $714 million, or nearly 60% of its total capitalization.

Actually, Fortress--a publicly-traded manager of hedge funds--paid $639.3 million in cash for RailAmerica.  The company came with roughly $460 million in debt, which is how one arrives at the $1.1 billion purchase price.  In the IPO, Fortress sold 11.5 million shares at $15 per, which equals $1.725 billion.  Add the $714 million in debt, and Fortress essentially sold RailAmerica for $2.44 billion.  That extra $1.34 billion has to be enough for Fortress--which has been hemorrhaging cash (previous blogs here & here)--to have made a nice profit.  Meanwhile, it's obvious from the way the IPO sagged that the average investor isn't thrilled with how the economy and debt load will impact RailAmerica's future.

Fortress made that profit not just by stripping the fat from RailAmerica.  As Oregon has learned all-too-well, it also tried to railroad customers into paying much higher rates and subsidizing some of the track and tunnel maintenance.  Now, a weakened RailAmerica must pick up the pieces...which no longer include the Coos Bay Line and soon may not include the line from Ashland to Weed.

But, at least the IPO should have made PERS beneficiaries happy. PERS has a considerable investment in Fortress, so much so that the OIC helped bail out one of its investment funds that was being hammered by bad investments and thus redemptions (previous blog here). That's the OIC...supporting the few at the expense of the many.

Weak Economy, Weak Candidates

Winn Parish is a rural county in the timber country of north-central Louisiana.  Back when the housing industry was still booming, JELD-WEN (headquartered in Klamath Falls) committed to building a door factory in the county seat--Winnfield...which by-the-by was the home of the infamous Huey Long.  The factory was supposed to open last year; however...

[Louisiana Economic Development Corp] officials granted the extension for Jeld-Wen to finish a site where $85 million has been spent and $20 million more is needed, mostly for equipment, before the 75 workers can be hired with an annual payroll of $2.534 million.

Jeld-Wen now must hit those targets by 2012 and maintain them a year longer to qualify for state economic development aid of $750,000 for a road and water and sewer services at the site.

Louisiana also committed $3.19 million in Enterprise Zone and other state incentives to the project.

The slow economy has driven JELD-WEN to lay off a number of workers at several of its facilities.

Ron Saxton, an executive vice president for external affairs at the privately held firm, said a dreadful housing market has delayed the Winnfield plant. Housing starts of 2.5 million a year when the project was announced plunged to annual rates as low as 500,000 this year and prevent the plant from operating now, he said.

"We just can't do it," Saxton said.

"We'll survive this economy. We’re not going to be filing any bankruptcies. But I’ll be honest with you, it's a really, really tough time. We’re holding on by our fingernails."

Yes, that Ron Saxton...one of the Republicans who lost to the seat-warmer between our previous and probably future governor, Dr. Kitzhaber. 

It's a sad state of affairs that Oregon's Jimmy Carter could get yet another shot to prove that considerable intelligence doesn't guarantee even modest managerial or leadership skills.  For instance as I've noted before, when Governor Kizthaber was inaugurated, Oregon had an unemployment rate of 4.9%, which was lower than the national rate of 5.5%.  By the time he turned over the keys to Governor Kulongoski, Oregon's unemployment rate had risen to second highest in the nation.  Maybe that's why Kitzhaber was ahead of his time in lying to us about the cost of providing health care to the uninsured.

The political careers of Goldschmidt's cronies need to finally be put to rest.

Compensation Inflation

Gee, if we pay more, will the DEQ's e-mailing capability improve?

Monday, [County] Commissioner Sandi Cassanelli received e-mail notice of a potential 60 percent increase in fees from the Oregon Department of Environmental Quality, which regulates the siting, construction and inspection of septic systems statewide, and administers that work directly in 14 of 36 counties, including Josephine County.

Mike Kucinski, manager of the DEQ's septic system program, wrote Cassanelli that "we were recently made aware that you were not on the mailing list for our current rulemaking announcement that proposes to increase application fees. I sincerely apologize for this oversight."

But she still had to ask him for an extension to the Friday deadline.  We now have until October 9 to register any futile objections to this done deal.  The 60 percent increase will keep our manning at 2.5 positions.

According to state officials, costs to operate the program have increased more than 40 percent since 2000, and are expected to continue to rise. Because of the continuing shortfall, the Legislature this year approved DEQ's request to increase fees by 40 to 60 percent, with the understanding that the new fees will take into account rising costs through 2015.

Inflation since 2000 hasn't gone up anywhere near 40 percent.  It's health care and PERS that are driving this huge cost increase...but we're supposed to ignore the latter part.  Wonder what DEQ will do with the windfall?

School Districts Making Us Pay to Sue Ourselves

It's a sign of failure whenever one government agency sues another.  There are all sorts of causes, including badly-written laws, agencies which can't or won't compromise, defending or trying to expand one's turf, an unwillingness to live within one's means, on and on.  It's all unnecessary...or at least should be.

My local Three Rivers School District was one of several that combined to sue the state over the amount of school funding provided by Salem (previous blog here).  To recap...

On March 21, 2006, six school districts and three parents, on behalf of their school-age children, filed a school funding case against the State of Oregon and legislative leaders. Based on the state constitution’s requirements to provide “a uniform and general system of common schools” and to appropriate funding “sufficient to ensure that the state’s system of K-12 public education meets quality goals established by law,” plaintiffs are asking the court to declare the current finance system unconstitutional and order the state to create and fund a constitutional system.

In the Pendleton School District v. State complaint, plaintiffs point, inter alia, to the Quality Education Model (QEM) created by the state’s Quality Education Commission. The legislature established the Commission to determine – using the QEM – the specific qualitative changes and funding required for Oregon’s schools to be able to attain the education goals set by the legislature in 1991. Plaintiffs allege that the state has fallen far short of reaching the funding levels required by the model.

The school districts claimed that they wouldn't spend any school resources in pursuing the case, as a new non-profit, the Oregon School Funding Defense Foundation, would reimburse any costs.  That was never completely true, but at least it wasn't tone deaf.  And never mind the fact that Oregon taxpayers would end up bearing the cost of both defending and adjudicating the lawsuit.  More on that in a moment. 

The lawsuit was a fishing expedition.  Early this year, the Oregon Supreme Court confirmed that the QEM is an accountability check, not a funding requirement (previous blog here).  Yes, the state failed in its Constitutional requirement to provide what's defined as adequate school funding, but that doesn't automatically mean that the schooling itself was inadequate. 

Flashing forward to today...

In a final note on its ruling the Legislature failed to adequately fund public schools from 2005 to 2007, the Oregon Supreme Court has denied attorney fees to the school districts that sued the state.

In a sharply divided opinion, the court awarded the schools $1,056.55 to pay the costs of filing the paperwork in the massive lawsuit but denied them more than $100,000 in attorney fees.

Ahhh...the school districts were going to pay for this, at least if they could backdoor the Oregon taxpayers for the legal fees.  Wonder who's going to pay now?  If the Oregon School Funding Defense Foundation is out of cash, will this money end up coming out of school supplies, maintenance, etc. in our school districts? 

The taxpayers should have never had to spend a dime on this idiotic intergovernmental warfare.

Job Openings on the Grants Pass City Council

In the last few months, many JoCo residents have gone from being embarrassed at the quality of our county government to glad that it's not as bad as the cesspool in Grants Pass.  There's been all the drama with multiple city attorneys, the botched firing of the city manager, meetings that shouldn't have been closed, spending like the city was a little Ashland, myriad claims of a hostile work environment, on and on.  At least some of the responsibility had to lie with the city councilors.

This isn't Portland...a recall effort was a foregone conclusion.  The fates of five councilors rested with the voters, and yesterday the majority (of the meager 41.35 percent who voted) sent them packing. 

Lisa Berger..........58.2 - 41.8

Bill Kangas...........52.8 - 47.2

Rob Pell..............54.8 - 45.2

Mark Townes........52.9 - 47.1

Ward Warren........56.2 - 43.8

I know a couple of them casually...nice folks.  But plenty is rotten in the halls of city government.  I'm not convinced the voters have gone far enough.

Data Centers Aren't Green

One of the key selling points in Google choosing to develop a data center in Oregon was a good deal on our already cheap power, made possible by large dams.  Data centers are energy hogs...though not as bad as the aluminum smelters which used to use a bunch of that hydroelectric capacity.  However, cheap energy isn't always enough when attracting data centers.

Microsoft and Yahoo, which set up shop on the Washington side of the border, have been re-evaluating their plans, however, after the state determined they do not qualify for a sales tax deferral program. Microsoft recently announced it is shifting some of its Azure cloud computing platform away from its data center in Grant County, Wash.

Amazon claims the slow economy is adversely impacting its plans here in Oregon.

Amazon.com has confirmed that a major data center under construction on the Columbia River in Oregon belongs to the company. Work at the site, however, has quietly come to a halt.

...

A recent visit to the site at the Port of Morrow, revealed a sprawling industrial park where some two dozen agricultural and manufacturing companies have facilities with access to the Columbia River, a rail line, and Interstate 84. Both the local Chamber of Commerce and the Port of Morrow confirmed that the data center's construction had been halted until sometime next year. They cited economic conditions as the reason for the delay.

When asked about the status of the project, a spokeswoman for Amazon said only that "we continuously evaluate the requirements for our infrastructure capacity and are judicious in our investment decisions."

That's a $35 million facility that would host $100 million of equipment...and obviously bring a few jobs.  Switching links again...

But as the Boardman site sits idle, Amazon has purchased a 110,000 square foot property in North Virginia, according to Data Center Knowledge. Like the neighboring North Carolina--where Apple is building its $1bn behemoth--Virginia recently passed new laws meant to lure data-center-building web giants.

Some have also speculated that Amazon is focusing efforts on Virginia in an effort to backing its fledgling AWS Federal offering, a service tailored to hosting government apps and infrastructure in the proverbial cloud.

Unless companies can get long-term deals that hold their electricity prices down, they must be nervous about Oregon's zealous pursuit of renewable energy.  In bending over to radical environmental interests, Oregon's Democrat leadership has adopted the unscientific position that large dams don't produce renewable power.  Then in mandating the state get 25 percent of its energy from renewable sources (like wind and solar) by 2025, Oregon's leadership is undermining one of the few business advantages the state has--cheap power.  California's renewable energy push won't help.

Oregon's leadership keeps claiming that by being leaders--early adopters, we gain a long-term advantage over states which lag on renewable energy.  That's simply ridiculous.  We're paying a premium for power generated by what will eventually be older, less efficient technologies.  States which wait save money now and save money later with state-of-the-art systems that produce renewable energy more cheaply...and almost assuredly with less impact on the environment.  And because wind and solar (and wave) energy can't produce power 24/7, they can't replace the power sources that so many environmentalists demonize--fossil fuels and hydro.

Whenever our political leaders talk of Oregon being a leader, what they really mean is Oregonians being guinea pigs.

Rent-Seeking Librarians

Yesterday's Daily Courier had an article which noted the State Librarian "speculated" that Josephine County still lacks what is defined as adequate service.  But after reading the following, it's harder to care.

The state's benchmark for adequate service sets five criteria:

• The library is legally established and makes basic services available to citizens within its tax-supporting service area without charge.

• The library is open a minimum of 20 hours per week.

• Staff consists of one paid staff person per 4,000 persons in the service area or 0.5 full-time equivalent, whichever is greater, and populations over 10,000 must have a full-time paid professional librarian with a master of library science degree.

• Collection is 5,000 books or one volume per capita, whichever is greater.

• Children's programming is provided.

A library can't meet standards if it doesn't receive tax dollars?  A library can't meet standards if it's fully manned by volunteers?  Don't get me started...

The main branch in Grants Pass reopened in December, using donations and a $300,000 county matching grant, and the Cave Junction branch reopened last weekend, after about two years of being closed. Branches in Williams and Wolf Creek are next on the list. During opening ceremony remarks, the organization's board members and Josephine County Commissioner Dave Toler called for sustainable funding.

It's obvious that depending upon donations to keep our county libraries open won't work long-term.  And, it's obvious that the availability of tax dollars will remain problematic until the county finally comes to grips with the impending loss of timber funds.  The windfall during the bank bailout bought us some time, which our county leadership sure seems to be frittering away.

Toler said he would make some portion of ongoing library funding from the county a priority, if he runs for office again.

If?  He could spare us and resign now...

Sweet Jobs for Legislators

I'd been building up to a post on the golden parachute jobs that some of Oregon's legislators have been getting.  Little wonder the following editorial in the Medford Mail-Tribune caught my eye.

Portland Sen. Margaret Carter became the most recent legislator to move to the ranks of full-time state employees when she accepted a $121,872 job as a deputy director for Human Services Programs, a newly created position. Carter, a longtime supporter of the Department of Human Services, brought extra clout to that position in the past session as co-chair of the powerful Ways and Means Committee, responsible for doling out the very dollars that made the new position possible.

That certainly raised some eyebrows, as did the news that Carter was hired for the job without an outside search for applicants.

Prior to Carter's move, state Sen. Vicki Walker of Eugene was named chairwoman of the Oregon Board of Parole and Post-Prison Supervision, a job paying $97,000 a year. She was selected for the position after originally failing to be selected as one of the three finalists.

Rep. Larry Galizio of Tigard was appointed by Kulongoski to serve as director of strategic planning for the Oregon University System, a job that reportedly will pay between $90,000 and $100,000. The job had been vacant for years because of budget problems. Galizio was previously in the news when he changed his stance to cast the deciding vote for passage of a Metolius Basin protection bill, one of Kulongoski's pet projects.

These jobs are a huge step up monetarily from $1,801 a month that legislators are paid.  And note that "pensions in the Oregon Public Employees Retirement System are based on both years of service and the three highest years of salary."  Sweet.  Vicki Walker was open about the fact that as a state legislator, she'd been scrambling to make ends meet. 

But it's not just the appointment process.  The successors to these legislators are hand-picked, which puts local leadership in the position of kingmaker and gives the new incumbent an advantage in the upcoming election.  Whether or not there's been any impropriety in the hiring and replacing of these legislators, the entire process stinks--badly.

Republicans are crying foul and say they'll introduce legislation to stop the practice.  Governor Kulongoski's office dismisses this as partisan politics, noting that Republicans didn't object in the past--like in 2004--when he appointed a few of their own.  So true.  But as far as I'm concerned, better late than never, regardless the motivations.  The question now is does our Democratic leadership feel so safe that it can continue ignore this whiff of corruption.  There is a blue backlash gathering strength nationally...

The three former legislators all bring admirable qualities to their new jobs, but the issue is not about their abilities, it's about a process that appears (there's that word again) to be stacked in favor of elected officials.

The hint of impropriety in these hirings is unmistakable and clearly damaging to state government's credibility. Legislators should set aside politics--and their own potential self-interest--and do the right thing by restricting access to state jobs until a suitable amount of time has passed.

Amen.

With Green Priorities Like These...

For an organization that is claims to be a coalition of over 50 Oregon conservation groups, the Oregon Conservation Network (OCN) sure doesn't make it easy to find out who its members are.  This incomplete list (linked from here) includes groups like 1000 Friends of Oregon, the Bicycle Transportation Alliance, and the League of Women Voters of Oregon.  Hmmm.  

Anyway, the OCN recently amended its legislative wish list for the umpteenth time this session.  There is some disappointing stuff in its top five.  

• Senate Bill 101: Prevents Oregon utilities from entering into new contracts for coal-fired power.

That's a pretty obvious one, though it wouldn't be good for the energy bills of most Oregonians.

• SB 740: Allows Water Resources Department to charge $100 annual fee to holders of water rights to fund administration, field staff and science for managing more than 85,000 water rights in Oregon.

So, property owners with wells--like me--would have to pay $100 a year in exchange for what?  The Water Resources Department needs another $8.5 million to do what it's already doing?  Meanwhile, there's nothing in the bill to stop the legislature from cutting a similar amount from the department's budget and spending the money elsewhere.  And laughably, the bill would declare the collection of this money a public peace, health, and safety emergency.  This bill smells.    

• House Bill 2020: Authorizes issuing $10 million in lottery-backed bonds for a fund to target invasive species as soon as they're spotted.

Combating invasive species is usually a good thing.  But doing it with debt rather than within the state budget is a lousy idea. 

• HB 2220: Charges fees to boaters to fund check stations that would check boats for aquatic invasive species. Establishes civil penalties for knowingly transporting zebra mussels and other invasive species on a boat.

I suppose it's possible that boat check stations could be more effective than the agricultural inspection stations we pass through when entering California.  We do need penalties though for knowingly transporting invasive species in boats...and cars, trains, planes, etc.  The release of bait fish has certainly caused all sorts of problems in Diamond Lake (previous blog here).  One would presume the state would try to prove the "knowingly" part through the permitting process.    

• HB 3369: Authorizes $175 million in loans and $10 million in lottery-funded grants for water development projects that meet conservation requirements.

This is another proposal to expand the state budget via debt.  No matter what the money would be spent on, this is fiscally reckless.  No, no, no.

At least the following is moving forward despite its absence from the list...though the governor may veto it.

By a 26-2 vote, the Senate approved House Bill 2472, which lowers the maximum state payments to large wind projects from $10 million to $3.5 million. Along with some other changes, the bill is expected to save taxpayers about $10 million a year.

...

At issue is Oregon's Business Energy Tax Credit, a once minor subsidy program aimed at boosting conservation efforts. Two years ago, at Kulongoski's behest, the Legislature vastly expanded the program, offering millions of dollars to lure wind and solar companies to bring their projects -- and the jobs that come with them -- to Oregon.

The changes allowed a business to recoup up to half the cost of building a new plant that either generates renewable power or makes equipment for renewable power generation. With a maximum credit of $20 million, the subsidies quickly became the most generous in the nation. They have been credited for bringing a number of wind and solar projects to Oregon, including SolarWorld.

As a result, however, state spending on the projects ballooned to more than $60 million over the past two years and was expected to rise to about $150 million in the coming two years.

An investigation by The Oregonian this year showed that millions of dollars in credits were being handed to some risky startup companies, to projects with questionable environmental benefits and to projects that would have been built even without the credits.

If we could just get the leadership in Salem to think long term.  We're bribing companies to come here for a few years rather than investing more money in our university system to build foundations that would attract green businesses here on merit.  Most of the green jobs we've lured here with subsidies don't involve setting down roots...those employers will go wherever their costs are lowest. 

We need to grow more of our own jobs, but our university system isn't up to the task in the sciences and engineering.  There needs to be more research...and the quality of some of what's being done needs to improve.  Our universities are known for producing too many activists and not enough scientists...and of course, the ugly uniforms.

Negotiations Over Tribal Payments in North Bend

The Mill Casino is on what's considered reservation land.  Thus, the Coquille Indian Tribe doesn't have to pay the local property and room taxes.  However, it's been doing so for several years...until recently.

After a 14-year-long agreement with the city of North Bend to pay a room tax similar to other hoteliers in the city, the Coquille Indian Tribe is withholding a three-month payment.

North Bend City Administrator Jan Willis confirmed that the tribe did not pay the tax for January through March. The payment should have come in on April 15. She wouldn't comment further.

Tribal Attorney Brett Kenney said the tribe wants to renegotiate its contract and is withholding the nearly $44,000 payment. In the meantime it is collecting and setting aside the funds.

"Our conversations with the city are not something that I want to be in the public eye," he said. "The tribe always has and always will pay its fair share for municipal services."

...

The agreement with the city stated the tribe would pay two "payments in lieu of taxes," or PILOTs for short. One, a property PILOT, pays for basic municipal services including police and fire protection. The second, an occupancy PILOT, is a replacement for the transient room tax paid by hotels and motels.

For whatever reasons, the Tribe decided it was time to play hardball...except with the money that normally goes to advertising the region.            

Last month, Katherine Hoppe, director of the Coos Bay-North Bend Visitor and Convention Bureau, learned her organization would get less than usual for its third quarter.

...

She received a brief letter from Kenney on June 11, saying the tribe is committed to continue funding the bureau.

"The Tribe recognizes that the Bureau has helped to advance our local hotel and service industries," Kenney wrote.  

...

"Because it values the VCB and its role in the local economy, the tribe tendered the two-sevenths payment to the city to forward on to the VCB," Kenney said. "They said they didn't want to accept only two-sevenths of the total payment."

It's not that the new hotel tower isn't doing pretty well.

According to a spreadsheet provided by Hoppe, bureau funds from the North Bend tax were up 30 percent and 25.2 percent for the first and second fiscal quarters as compared to last year. The increase is due to The Mill's recent addition of a 92-room hotel tower.

Can't help but wonder if this has something to do with Home Depot pulling out of a deal to locate a store on nearby tribal land in North Bend.  And that was after Rep. DeFazio did some legislative work to help it happen (previous blog here).