The blank-check problem

Are these votes blank checks?

Legally, no — and officials will correctly say so. The County’s August 6 resolution is an affirmation plus instructions; its money still requires an intergovernmental agreement in December, a county-code change, and budget votes in 2027 and 2028. The City’s August 12 term sheet is non-binding; its money still requires an MOU vote this winter, a lease ordinance in early 2027, and budget actions after that. Every vote below is a toll gate where the public can still speak and conditions can still be attached:

• Aug 6 — County board votes its resolution and amendment slate (9:30 a.m.).
• Aug 12 — Council votes the term sheet.
• Nov/Dec 2026 — Council votes the MOU; County board votes the IGA.
• Q1 2027 — Council votes the lease ordinance — the binding one, and, like any city ordinance, subject to referendum by petition.
• 2027–28 — budget appropriations, at both governments.

But here is why “non-binding” is cold comfort. In public deals, the number voted first becomes immovable while the scope stays fluid. Once August passes, every later vote inherits $573M as settled fact. By December, “we already committed” forecloses the scope question. The check isn’t blank — it’s worse: the amount is pre-filled, and the payee writes the memo line later.

The deal is not $573 million. It is $848 million.

On August 6, in a council session called to consider amendments, Councilor Mitch Green — an economist — put a spreadsheet on the screen and showed what the term sheet actually commits. The $573 million everyone has been discussing is only the construction capital. Buried in Exhibit D is a second commitment: $275 million of Moda Center user fees, Blazers parking revenue, and Veterans Memorial Coliseum income, pre-pledged to the arena over twenty years. Add them together and the public’s obligation is:

The mechanism matters as much as the number. Because that revenue is pre-committed, the City cannot borrow against it — which is why councilors have been told there is no money in the Spectator Facilities Fund for the City’s $120 million share, leaving the Portland Clean Energy Fund and the general fund as the remaining candidates. Green’s amendment would have freed that stream to bond against, funding the City’s entire share without touching PCEF or cutting services. He said plainly it would move him to yes on the term sheet.

It failed, 5–7. So did every other amendment offered that day: a rent line on a building the City owns and currently leases for one dollar a year (failed 6–6), a private-capital contribution from an ownership group that paid $4.25 billion for the franchise (5–7), a share of naming-rights revenue (5–7), an increase in the arena user fee from 6% to 7%, with the added point going to the City unrestricted instead of back into the building (6–6), a larger payment in lieu of property taxes (6–6), a requirement that Council receive a funding-source and opportunity-cost report 30 days before any vote (5–7), and a single sentence directing the Mayor to negotiate any return on investment at all (6–6). Eleven amendments reached a recorded vote. Zero adopted. [Correction, August 8: this page previously said “seventeen amendments.” More than eleven were filed, but eleven is the number that came to a roll call, and eleven is the number we can verify from the session record.]

The reason given was not that the ideas were wrong. The Council President stated before the first amendment was introduced that he would oppose all of them, because they had not been cleared with the administration’s negotiating team in advance. Councilors also established on the record that this was their only opening: executive sessions cannot take votes under Oregon’s public meetings law, and amendments at the December definitive-documents stage would come after the negotiation is finished. The August 12 vote is up or down.

Two more things about this money deserve plain statement. First, the $275 million pre-commitment does something subtler than block a bond. Money that can only be spent on the building is money the building’s operator has every reason to spend: once venue revenue is earmarked for arena capital, another club level, another scoreboard, another hospitality suite costs the operator approximately nothing to want. Without eligibility standards, an independent lifecycle plan, and an owner contribution formula, that stream is not a maintenance fund. It is a standing invitation. Second, a correction to this page, dated August 8. We wrote here that nothing says who pays when the project runs over. That was wrong, and the term sheet is better than we described: “All costs for the Renovation will be the sole responsibility of, and be paid for by, Rip City, except for the Public Funding Contribution… Anything in excess of the Renovation Budget as shown in Exhibit A is the responsibility of Rip City,” and the ownership entity is to provide “an unconditional guaranty.” That is a real protection and it should be said plainly.

What is wrong with it is subtler, and worse. An overrun is measured against a budget, and the budget is Exhibit A — the page that reads “to be attached.” The same clause then provides that “Rip City will provide an updated Renovation Budget to be set forth in the Definitive Agreements.” So the party that bears every dollar above the baseline is the party that writes the baseline, after the public money is already committed. A budget authored to be sufficient cannot be exceeded. The protection is real; the number it protects against does not exist yet, and the counterparty holds the pen.

The number came before the scope

Every private construction project runs in one order: scope, then budget, then commitment. This deal is running in reverse. The proof is in the City’s own July 16 draft term sheet, obtained under public records law. It prices the renovation at $573,000,000 — “as itemized and shown in Exhibit A,” “based upon information to be verified.” Exhibit A is an empty page:

Meanwhile, the City’s own consultant priced the full renovation scope at $253M in today’s dollars — and no document anywhere in three governments’ processes reconciles the $573M ask to it. The number didn’t come from a scope. So the scope will be reverse-engineered to consume the number.

At the July 30 work session, the City confirmed the genealogy on the record (per the session’s caption record): the winter talks set a “$600 million… target” that the NBA was “validating,” and “573 was us getting as close to that 600” from the three governments’ combined capacity — while the NBA, councilors confirmed, never requested $573M specifically. And the deputy administrator, in the same session: “we still don’t know what 573 is getting us.” A target validated by the league, assembled from what governments could pay, itemized by no one.

It gets one step worse. The draft says the budget will be “updated… in the Definitive Agreements” — meaning the team writes the baseline after the money is committed, and whatever it writes becomes the baseline. That matters because the deal’s best protection — cost overruns belong to the team — only bites above the budget. If the counterparty drafts the budget after the commitment, padding isn’t an overrun. It’s the budget. A padded budget is an overrun the public pays in advance.

In August, the bill’s own sponsor confirmed all of this on camera. Asked by KGW’s Tim Gordon about the state’s $365 million, Sen. Kate Lieber said the quiet part in sequence: “we don’t have architectural renderings… it’s a little chicken or egg… when you renovate your house, it depends on the budget”; the amount was “what they wanted from the state… between 500 and 600 million in this capital sort of stack, and that’s what we tried to put together”; and its purpose was a message to the league during the sale — “so that the NBA would… basically say to the new owner… they’re coming in with a really good package here. It’s a market deal… now you need to stay and negotiate a long term lease.” Asked whether the owner should contribute a couple hundred million: “it was not something that was overwhelmingly needed at the time.”

That is the blank-check mechanism described by the person who wrote the largest check: no drawings, an amount set by the recipient’s ask, assembled as a signal to the league — and no private contribution required, because no one thought to ask.

The protections, audited

Both governments have written real protections. The question is what each one actually covers — and when it can still be used.

The shared gap is the fatal one: no independent scope referee. The state law funding this deal (SB 1501 §6(2)(a)) already requires the State to retain an arena-negotiations expert during this negotiation — and the deal-terms review still hasn’t surfaced. The only independent scope document in existence is the City’s own $253M study, sitting on its own shelf.

What sufficient would look like

Five fixes — all still available, none of which slows the deal by a day:

1. A scope gate with a quality bar. No MOU vote until an itemized budget exists and an independent owner’s representative reconciles it, line by line, to the City’s own $253M study.
2. A frozen baseline. Exhibit A completed and locked before the overrun clause means anything. You can’t have an overrun against a budget nobody wrote.
3. Money that follows scope categories. Genuine repair funded differently than the revenue-generating upgrades the operator keeps — the City’s study already sorts the scope into ~$164M of repair and ~$341M of upgrades.
4. Walk-away preserved at every stage. A verification right without a walk-away right is a formality. The City’s signature is the consideration — condition it. Term 00 →
5. The County’s sliding scale, adopted city-side. “Proportionately reduced if terms are not achieved” is the only protection in this entire deal that works automatically, instead of requiring a future council to find the courage to blow up a deal.

None of this is exotic. It is how every bank, every insurer, and every homeowner in Portland commits money to construction: the bid first, the check second. The City’s own Exhibit A says “to be attached.” Attach it first.