PHOENIX - Market participants expect a slower year for Oregon public finance, though some sectors could pick up and major policy questions about corporate and property taxes could see some discussion.
"Frankly, this year looks like it is going to be fairly quiet," said Pat Clancy, a municipal advisor at Western Financial Group in Portland. Clancy, who advises a number of municipalities around Oregon as well as the state government, said that 2016 could see some refunding activity, but that most of the refundings that made sense have been done already.
"Some that weren't working are likely going to happen as short-term interest rates rise," Clancy added. "This is likely going to be a low volume year."
Clancy said that there will be some higher education deals in the spring for Portland State University and Oregon State University, as well as some state debt issued for seismic upgrades. Governments are more focused on using the recovery and reasonably strong resulting economies to refill their reserves and make sure they can provide essential government services, he said.
"Priorities are trying to fill potholes," he said. "General government stuff."
Carol McCoog, a bond lawyer who is a partner in the Portland office of Hawkins Delafield & Wood, said that she expects there could be some school district bond activity thanks to a new state program to issue Oregon general obligation debt to match a certain level of school district debt. The legislature has authorized $123 million of bonds to back the new Oregon School Capital Improvement Matching program, which would issue the proceeds as grants of up to $8 million to match bonds communities issue for schools. Oregon schools face $7.6 billion in deferred maintenance costs, according to the state's Department of Education.
"Our students need and deserve schools that are safe, healthy, and promote learning," Deputy Superintendent Salam Noor said in a release announcing the program last month. "This grant program can help communities address critical maintenance needs, upgrade aging buildings, and improve learning conditions for our students. Through leveraging both state and local resources, we can maximize our impact and remove barriers to student success by improving our schools."
The grants will be administered by the newly formed Office of School Facilities within the education department. Districts with low-assessed property values and higher rates of student poverty will be prioritized for 60% of the available program funds, while the remaining allotment will be available to districts on a first-come-first-served basis. This process is designed to provide all districts with a chance to receive matching grants from the state, according to the department.
McCoog also said that there has been some talk of tackling a housing shortage in Oregon through more local debt issuance.
"We've had conversations with folks about using general obligation bonds or more traditional governmental bonds for housing," McCoog said.
She added that she expects to see a trend of more public-private partnerships in Oregon, but that she did not think any particular type of P3 was likely to predominate.
"I just feel like there's a lot more interest," McCoog said. "A lot more interest and thought about how they can utilize P3s.
Jonas Biery, who recently left his post as Portland debt manager and is now business services manager at the city's Bureau of Environmental Services, said that the year could see some interesting discussion around Oregon's property and corporate taxes as well as some local intrigue for the state's largest city.
"There's some talk of an increase or a change in corporate taxes, Biery said. Oregon's 7.6% corporate tax rate is currently on the high middle end nationally, according to the Tax Foundation. "There could be a push to get something on the ballot," Biery said.
Biery said he also expects that there might be additional discussion about Oregon's property taxes, a contentious issue that he said comes up often but frequently gets abandoned as too difficult to deal with. Oregon's property tax is based on assessed value, but the growth in that value is capped at 3% annually unless there are major changes to the property. The result has been a discrepancy in the taxes paid by older neighborhoods vs. those in newer neighborhoods as the state's population has grown, especially in the Portland area.
"It's being widely acknowledged that that is an inequitable system," Biery said.
Another thing that is scheduled to come Portland's way this year is a decision by the Federal Government on what the city will need to do to clean up its harbor, an Environmental Protection Agency Superfund site that is the result of "more than a century of industrial use along the Willamette River," according to the EPA. The water and sediments along Portland Harbor are contaminated with many hazardous substances, the agency said, creating a potential danger to those who may consume fish who have been swimming in those waters.
Biery said there is thought that the cleanup plan could cost in excess of $1 billion.
"That could be a big story, maybe later in the year," he said.
Portland is in the midst of a mayoral race, and the current mayor, Charlie Hales, has said he will not seek reelection.
Oregon Treasurer Ted Wheeler has thrown his hat into the ring in what Biery said is likely a tight race against Multnomah County Commissioner Jules Bailey. Bailey has held that office since June 2014, and was a member of the Oregon House of Representatives from 2009 to 2014. Wheeler got a governor's appointment to the Treasurer post in 2010, and was subsequently elected twice.
"It's going to be an interesting race," Biery said. "They're both very well-qualified. It's probably a toss-up."
Term limits would have prevented Wheeler from seeking another term as treasurer, creating an open-seat race for the position, which oversees Oregon debt issuance.
