Urban renewal: making a district succeed

Experts talk about the common economic and planning elements of good districts

Proponents of urban renewal will often point to the policy tool's ability to dramatically increase tax values in successful districts.

Detractors will point to failed districts that coughed up millions to developers for investments that didn't last the life of the bonds borrowed to cover them.

For better or for worse, the policy tool is far from an exact science, and the more money a city sinks into its urban renewal district, the higher the potential risks and rewards. But the one thing that follows virtually every urban renewal district - state- and nationwide - is controversy.

Oregon City's urban renewal plan is no different, and it highlights the complicated task of revitalizing an area with limited tax dollars while trying to maintain the city's character. Opinions on how to do this vary.

Oregon City Manager Larry Patterson believes the city has little choice but to essentially grow out of its problems, sinking money into new developments that will eventually increase the tax rolls and provide more money for services while creating a vibrant and liveable community.

Attorney Philip Yates, who also owns Singer Hill Coffee House on 7th and John Adams streets, is suing the city to prevent them from approving future urban renewal bonds without voter approval. Yates says he isn't opposed to all urban renewal, but favors shorter bonds for basic infrastructure improvements like repaving roads and sidewalks over sinking money into specific development projects.

Former Oregon City Mayor John Williams initiated a petition drive to put the debt-ceiling increase on the ballot before eventually backing out to support Yates' lawsuit instead. He's against the urban renewal plan altogether. Williams believes that properties like the proposed development adjacent to Home Depot on Washington Street are such valuable commodities that developers will eventually purchase and build on them without any added investment from the city.

Who's right? Judging by the varied results of urban renewal projects, it's hard to say. To try to find out if there are key planning and economic elements to successful districts, the Oregon City News spoke with two Portland State University experts. They were not given specific districts, but asked general questions about urban renewal. So what's the key to a successful district?

'That's really an almost impossible question,' said Anthony Rufolo, a professor of Urban Studies and Planning at Portland State University who specializes in the region's economy. While there are myriad factors, there is one economic element of paramount importance. 'Bonds should match or be shorter than the expected lifespan of the investment,' Rufolo said. 'If you're doing 20-year bonds for something that's got a very long lifespan that may be a very desirable thing to do … the real question is whether the term of the bonds matches up with the useful life of the investment.'

For instance, if a district creates an infrastructure improvement that still benefits a city decades into the future, well past the life of the urban renewal bonds, it could be a good investment. On the opposing side, a shopping center that winds up sitting vacant and doing little to boost the tax roles after 20 years, while the lives of the bonds used to invest in it were 30 years, would be an economic mess.

Carl Abbott, a professor of Urban Studies and Planning at Portland State who specializes in urban development, said that from a planning standpoint, a successful urban renewal district must generate interest from the private sector.

'I think that the key is urban renewal districts can't create market demand where none exists at all. What it can do is kind of get in front of the wave of private investment and help to direct it in a particular direction,' he said. 'It can help put projects over the edge of the margin with various kinds of assistance or putting in infrastructure that will make a particular part of a city more attractive, and therefore cause private development to turn its attention there a little more.'

Abbott believes it's best for a city to develop a request for proposals before they dole out any funds or name a developer to build a project.

'It's a bit of a level playing field sort of concept: See what you can leverage out of the private sector developers knowing the general idea of what you want to have happen,' he said. 'You get there through an open bidding process, which presumably weeds out some of the questions of favoritism and who knows whom.'

Both experts agreed that if the district is developed correctly and bonds are issued wisely, urban renewal can work.

'It can work,' Rufolo said. 'It really comes down to a question of, 'Does this area require certain infrastructure development that we cannot finance any other way and that are worthwhile?''

However, failing districts not only lead to increased debt, but a breakdown of the public trust. Rufolo said he would be cautious of a city arguing that urban renewal was necessary to spur growth in Oregon as a result of Measure 50, which limits annual tax increases to 3 percent in the 1990s.

'Even with Measure 50, cities always have the option to go out for a bond for infrastructure purposes,' he said. 'The other way of looking at it is that urban renewal is a way of doing it without going to the voters.'