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Add education to urban renewal mix

MyView • Portland must take into account tax districts' impact on schools
by: Christopher Onstott, A My View writer questions how the city can balance today's critical need for better educated citizens and continued restoration of city areas such as South Waterfront, which is part of the North Macadam urban renewal district.

The city of Portland has just announced its Portland Plan, a plan for the future, and the Portland Development Commission is embarking on the establishment of a new community and neighborhood economic strategy.

Education is, and must be, a key component of any such plans. How do we balance today's critical needs for better-educated citizens and yet continue to build and restore blighted city areas?

Urban renewal projects have been called double-edged swords for a good reason. Urban renewal districts restore blighted areas with the added goal of eventually bringing more tax income to the city, county and school districts. But during the long time from start to finish, any increases in tax dollars to the county and schools are frozen until the urban renewal district is terminated.

Generally, the district is under the supervision of the city for 20 years, with options for extensions and expansion. School districts and counties continue to receive the same property taxes as when the urban renewal district was set up, but receive no added revenue as new structures are built.

New buildings pay more in property taxes. The difference in tax income from the old base of taxes and the new is called the tax increment, which drives the continued development of the so-called blighted areas.

Tax increment funds can be used for many things, such as sewer, water, electricity, roads, land purchases, sidewalks, bike trails, parking needs and more basic area needs.

When the urban renewal area has been restored, the project is supposed to end. Once it does, the city, county and the school districts then receive much higher amounts of property taxes than they had at the start, some 20 years or more earlier.

In theory, property tax income in greatly enhanced after the urban renewal area is restored.

That raises some questions: When should the urban renewal project end? When is the project determined to be a success? When is the vastly increased future property tax income more valuable to our schools, or even to the county, than it is to the continued restoration of a so-called blighted area? Who needs the money more?

Here are my recommendations on Portland's urban renewal districts:

n The city needs to define what "good" development is. Is it the construction of more and bigger buildings alone, or is it also to provide quality-of-life facilities, such as support for schools, the arts and recreation?

Several years ago, the state invited chief executive officers of major companies to discuss just what the companies would require to relocate to Oregon cities. The state representatives assumed that these companies would respond by listing items such as sewer, water and access roads.

The CEOs' responses were a big surprise. They said, in essence, that they know that cities will offer these basic infrastructure needs, but they wanted to know things like what quality of schools, support for the arts and recreational facilities will the communities provide.

They told the state that their companies' employees would want to live with their families only where these quality-of-life items were solidly present.

• The city of Portland (in conjunction with the Portland Development Commission) needs to review options regarding all of its present and planned future urban renewal districts. Should the city keep specific renewal districts intact, yet channel some of its funds to local schools and to key county projects prior to the district's termination date?

Even though they might not be able to do that because of legal restrictions and long-term financial obligations, is it possible when establishing future urban renewal districts to change the rules to allow more of the tax increment funds to go to our schools? Thus the schools' tax base would be only partially frozen.

• Define what is meant by a blighted area. Urban renewal districts in non-blighted areas should not be allowed.

• The city needs specific criteria for what constitutes a successful completion of an urban renewal area. When do you declare victory and terminate urban renewal districts?

Property tax revenue is down. Portland needs to adjust its financial obligations to the new future that it faces. Helping educational needs must be one of the city's top priorities.

Roger L. Gertenrich is a South Waterfront resident and former mayor of Salem.