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Since Vera Katz began the trend, local politicians have been using Urban Renewal Area funds to finance their pet projects
LEE PERLMAN
THE MID-COUNTY MEMO
As we reported last month (“East Portland UR boundaries may change,” March 2010), the city is reconsidering where to commit its urban renewal resources, and several Mid-county advocates want it to stay near and east of 82nd Avenue.
State law forbids any city or municipality from placing more than 15 percent of its territory in urban renewal districts at any one time, and Portland is currently close to this limit. Last month, the city officially reworked the Airport Way district, removing over 800 acres of land that is primarily undevelopable. There are competing claims for the 800 acres now made available, including the former Conway site in Northwest Portland, part of southwest's Goose Hollow community, possible additions to the North Macadam district and potential additions to the expansive Interstate district, particularly at the Rose Quarter.
In speeches before the Portland Development Commission, Powellhurst-Gilbert Neighborhood Association Chair Mark White and Marie Daniels from the East Portland Action Plan Advisory Committee called for the territory to remain in east Portland. Carter Cummings of the Madison South Neighborhood Association later said the same.
A community activist, who asked to remain anonymous, said, “There are four urban renewal districts on the west side of the river; they aren't large, but they cover very valuable real estate. There are three more on the east side within the central city,” suggesting that in the interest of fairness, the urban renewal area east of 82nd Avenue should be maintained and expanded.
As reported last month, there is in fact a proposal to expand the Gateway district eastward to 122nd Avenue along the corridor bounded by Northeast Halsey and Southeast Stark streets, according to PDC's Justin Douglas.
In an urban renewal district, all property tax revenue over and above what was being collected at the time the district was formed is diverted to a special Tax Increment Fund rather than going into city or county general funds or school districts. This money is reserved for special capital improvement projects, including public works projects for streets as well as upgrades to commercial buildings and housing, within the geographic boundaries of the district. The theory is that these projects will ultimately increase property values. When the district expires, usually after 20 years, the theory continues, the taxing districts will again receive all of the property taxes - including taxes on the improvements, which likely would never have occurred without urban renewal funding.
Gateway URA pocket picked by Saltzman
The Gateway area has had a chronic chicken-and-egg problem for years. It is unattractive, with the ambiance of a suburban shopping area gone to seed, and lacks basic amenities such as sidewalks and enough through streets. Experts say major improvements are needed to attract and justify private investment in the area. The problem is that until redevelopment and improvements take place, the district doesn't have much in the way of TIF capital to dispense - and they probably won't get any until redevelopment takes place, which is unlikely until improvements are made, creating a vicious cycle.
The issue is further burdened by the fact that public officials have treated Gateway as they have every other urban renewal district - as a piggy bank for pet projects. In Gateway - led by the vigorous efforts of City Commissioner Dan Saltzman, a former county commissioner - and to the dismay of activists at the time, the first $1 million of the TIF, in the critical first year of an URA, was used to fund the Children's Receiving Center, which was later scrapped and replaced by the Gateway Center for Domestic Violence Services (see “Domestic Violence Center prepares opening,” March 2010).
In the first year or two of any new urban renewal area/district there is little tax money available because there has been little chance for property value increase. However, there are both community needs and the need to use the funds in a way calculated to increase tax revenue quickly; why it is important to use these scarce funds strategically.
The CRC, being a government entity, ensures this property, situated on a piece of prime commercial property at Northeast 102nd Avenue and East Burnside Street would never again produce a dime of property taxes for anyone.
Later Gateway, like all other districts, contributed millions to the creation of the MAX Green Line from Clackamas Town Center. Also like all other districts, Gateway is subject to an automatic allocation of 30 percent of available revenues set aside for affordable housing, regardless of local priorities or desires. The set-aside was put in place at the insistence of former Commissioner Erik Sten, with the strong backing of housing advocacy groups and requires review for possible changes after five years of operation.
URAs: robbing Peter to pay Paul
Gateway is hardly unique in this respect. Readers will recall Commissioner Randy Leonard's proposal last year to use $30 million in Lents urban renewal funds to help build a baseball stadium in Lents Park. In the Central East Side URA, an industrial district, $15 million went to the construction of the East Bank Esplanade, which one community member called “a jogging path for the west side.” When the district was set to expire, community and business leaders complained that much of its agenda remained undone. The district's term was extended - a usual occurrence - although with a meager budget. Mayor Sam Adams led an effort to increase that budget, motivated in part to fund two of his favorite projects: the Burnside-Couch Couplet and the east side Portland Streetcar extension, both now under construction thanks to more than $20 million of Central East Side urban renewal funds. (The streetcar extension used other districts' funds as well.)
When former Mayor Vera Katz proposed to build the MAX Light Rail Yellow Line from the Rose Quarter to the Expo Center, she at first planned to siphon $30 million from the Oregon Convention Center Urban Renewal District. She was advised that this could not be done legally, since it represented a substantial part of the district's budget and only a quarter-mile of the five-mile line was within the Convention Center district. Instead, Katz created the Interstate district. The original plan was to create a district four blocks wide for the specific purpose of generating $30 million for the Yellow Line. However, when surrounding communities complained that their needs were not being met, Katz, according to reports, instructed her staff to say “yes” to virtually any request rather than risk delaying the project. The result was that the district ballooned to 3,700 acres, by far the largest in the state, with a budget of $300 million and a wish list of projects with a total price tag several times that amount.
The Interstate district boundary grew to include the Portsmouth neighborhood - more than a mile from North Interstate Avenue at its nearest point - encompassing the massive Columbia Villa housing project. Housing Authority of Portland leaders begged the city to include the Villa, about to be rebuilt as New Columbia, within the boundary, promising not to use a dime of TIF money. In fact, they absorbed $6.5 million from the district budget. HAP officials would later say that they had merely asked City Council for a local match for federal funding and hadn't specified where the money was to come from.
One of the biggest criticisms of urban renewal is that successfully revitalizing an area and raising property values often results in gentrification by forcing both businesses and residents to leave the area. When it was first organized, Interstate district activists asked for programs to provide homeownership opportunities for residents and assistance for existing local businesses, and now assert that not enough effort was funded. Nonetheless, city leaders have come up with new uses for Interstate's money. The North-Northeast draft study is recommending that 200 acres - and growing - of the adjacent Oregon Convention Center district, set to expire in 2013, be annexed into Interstate, including the Rose Quarter, which can be expected to make major demands on the district's budget.
As noted, one of the few things local politicians can not do with TIF resources is spend them outside the district in which they were generated. City Council challenged this with the proposal to use funds from the west side's River district to finance construction in the David Douglas School District; the case produced a lawsuit that tied up all activity in the district for months. Political leaders have spoken of altering this provision of the law at the state level.
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