The Oregon Garden, an 80-acre botanical preserve in Silverton, Ore., has been billed as an educational oasis and an event location since its inaugural season in 1999. The garden, which boasts flowers, produce patches, forests, and wetlands, was created with the vision of becoming a world-class tourist attraction.
Unfortunately, the tourists didnt cooperate, and the nonprofit garden has been unable to make payments on $5 million in revenue bonds issued in 2002 by Marion County to fund debt consolidation and capital projects for the garden, and county officials have moved to put the garden into receivership.
A $60,625 interest-only payment is due on the bonds Thursday, and the county plans to make the payment, said John Lattimer, chief administrative officer for Marion County.The countys never defaulted on anything, and we dont intend to start now, he said last week.
All of the bonds, which had 15-year maturities, were privately placed with Bank of America NA. A spokeswoman for the bank declined to comment on the situation. A state court judge is expected to rule on the receivership Thursday.
The bonds are secured by both the gardens revenue and the countys yearly distribution of lottery money. A 61-acre portion of the park is also used as collateral security for the county. If the receivership is approved, the assets of the garden will be turned over to an appointed receiver, who will manage them.
According to Lattimer, the garden has not made any of the quarterly payments since last September, and the county stepped in. On June 1, the county paid $60,625 to the bondholders. Since the payments so far have been solely on interest, the outstanding balance on the bonds remains $5 million.
The money spent for these payments comes from a reserve fund the county set aside for this purpose.
Its always a burden when you have to pay something you dont expect to, but its not a big chunk of our resources, Lattimer said.
At least one county taxpayer, however, disagrees. James Vick, a lawyer who represents a retired assistant city attorney for the city of Salem, filed a lawsuit in Marion County Circuit Court in July seeking to derail a debt restructuring plan for the garden and charging that the county government should not pick up the debt of a private entity.
Were trying to prevent Marion County from coming in and essentially throwing $5 million of taxpayer money down the rathole, Vick said.
The state and county have not yet filed their motions in the case, Vick said. Meanwhile, Lattimer said the debt restructuring plan never came to fruition.
The garden itself could face trouble for failing to make its payments to the county, which would normally use this money to repay bondholders, said Rick Gustafson, president of the Oregon Garden Foundation.
The garden may be declared in default of its payments to the county, he said.
The garden was first envisioned in the 1940s, but its development began in earnest in the 1990s, spearheaded by the Oregon nursery industry, which wanted to showcase its abilities, and the city of Silverton, which uses the garden to recycle treated wastewater.
The garden is about 13 miles east of Salem, the state capital and seat of Marion County, and 45 miles south of Portland.
Attendance has been disappointing, and despite a concerted marketing campaign, the Oregon Garden failed to take in enough revenue from visitors in August to generate sufficient cash flow going into the slower winter months. The foundation also explored bringing in a new board of directors, but in the end opted to go into receivership.
However, a pending plan to build a hotel next to the parks site in 2007 may offer a ray of hope to spur attendance in the future, Gustafson said.
Everybody thats involved here wants to keep the garden open, he said.
Standard & Poors rates Marion Countys general obligation debt AA-minus, while Moodys Investors Service assigns the county an issuer rating of A1. Fitch Ratings does not carry an underlying rating on the county.
