Plan would hand over $35 million, extend urban renewal area to Old Town, Chinatown
by: JIM CLARK, Multnomah County’s aging Gladys McCoy Building would be redeveloped by the PDC as part of an agreement between the county and the city of Portland to give the county cash from city coffers.

The Portland Development Commission is poised to share its urban renewal riches with cash-strapped Multnomah County.

Tuesday, a city urban renewal advisory group voted to set aside $35 million for county projects when the PDC expands its lucrative River District Urban Renewal Area to cover Old Town and Chinatown.

The advisory group was responding to prodding from Multnomah County Commissioner Jeff Cogen, who argued that expanding urban renewal areas keeps too much property off the tax rolls and crimps county funding for human services and public safety.

'Blight is not just about buildings,' Cogen said.

The advisory group agreed to put $10 million more on the table for Multnomah County, beyond $25 million pledged earlier. The money would come from extending the life of the River District Urban Renewal Area an extra year, as Cogen proposed.

The advisory group's recommendations still must be ratified by the full PDC and the City Council, but the group includes two of the five PDC commissioners and two of the five city commissioners.

Cogen wants the city to go beyond a one-time funding deal. He's lobbying the City Council to approve an intergovernmental agreement giving the county an ongoing voice when the PDC expands or adds urban renewal districts.

Cogen's proposal would require the city to reimburse the county for half its lost property taxes if county commissioners opposed a new or expanded urban renewal district. Money would come from the city general fund, not urban renewal funding.

'When I was campaigning, I kept getting asked by people, 'Why is it that Multnomah County is broke when the city of Portland has so much money?' ' Cogen said. 'The last seven years, our budget's been cut every single year.'

The bulk of the PDC's funds go to downtown construction projects, with little discussion of the trade-offs involved in keeping property off the tax rolls, Cogen said. 'In essence, you're allowing transportation and buildings to take resources away from people.'

Getting the City Council to voluntarily give up power and money will be a tall order. City Commissioners Erik Sten and Dan Saltzman, who sit on the urban renewal advisory group, support Cogen's proposal. But Sten said Tuesday he's not sure it could pass in its current form.

'At this point, I don't think there's three votes to do it,' he said.

Mayor Tom Potter is a potential third vote. 'He has not made up his mind on the specifics of Cogen's proposal yet,' said John Doussard, Potter's spokesman.

County impacted the most

The county forfeits the most taxes when urban renewal districts are kept off the tax rolls. Schools are largely held harmless because the state pools all local property taxes with state funds, then sends money back to school districts based on their enrollment. Other local governments also forfeit property tax collections in urban renewal districts.

When urban renewal districts are created, property values are 'frozen,' allowing local governments to collect taxes only on that amount. The PDC collects taxes from rising property value to finance urban renewal bonds.

No one denies that the River District, which includes the trendy Pearl District and some nearby blocks, would have so much property value without PDC's investments. But now the PDC is at a policy juncture.

It can pay off existing bonds and put the River District back on the tax rolls sooner. Or it can sell more bonds, expand the district boundaries and fund more projects in Old Town, Chinatown and the Pearl District.

There's $3.5 billion worth of property kept off the tax rolls in PDC's 11 urban renewal districts throughout the city, $991 million of it in the River District.

Multnomah County's share of forfeited property taxes for those 11 districts is $18.5 million per year, or $5.2 million for the River District. Coincidentally, Multnomah County faces $18 million to $19 million in cuts to balance its next general fund budget, Cogen said.

There's no way all that property could go back on the tax rolls any time soon, and urban renewal supporters say most of the increased value wouldn't occur without PDC projects. But the issue is more than just theoretical, because the PDC is moving to extend the life of its three downtown urban renewal districts: the South Park Blocks, Downtown Waterfront and River districts.

Some question plan

The PDC's phenomenal success in the Pearl District has turned the River District into a golden goose for urban renewal funds.

On Tuesday, the urban renewal advisory group declined to suggest cuts to the PDC's list of proposed projects, and voted instead to maximize bond sales for the three districts. That means that much of the South Park Blocks and Downtown Waterfront districts would be kept off the tax rolls until 2024.

Saltzman was the lone dissenter on the advisory committee, arguing that the two districts be closed down in 2018 instead. He called for pruning the list of urban renewal projects. Sten countered that he saw 'no particular cut package that works.'

The Portland Business Alliance also supports ending the South Park Blocks and Downtown Waterfront districts in 2018 instead of 2024. That group hopes that would free up some land to be included in a future downtown urban renewal district.

The advisory group also recommended Tuesday that the PDC take on $311 million more bond debt for the River District and expand the district 61 acres to enfold Old Town, Chinatown and other parcels from the South Park Blocks and Downtown Waterfront districts.

At that level of debt, city officials estimate the River District wouldn't revert to the tax rolls until the 2026-27 tax year. Cogen's proposal would extend that further.

'There is a tendency to keep those things rolling over, because there's always something new to be done,' observed Tom Linhares, director of the Tax Supervising and Conservation Commission, which monitors the financial affairs of governments in Multnomah County. 'I think it's what's given urban renewal a bad name.'

Shelley Lorenzen of the League of Women Voters complained that extending the life of the River District would mean a 'staggering' loss of revenues to the county and other local governments. 'When you have a successful district, it's supposed to end,' she said.

Cogen said he's trying to be creative, recognizing that urban renewal has improved communities, and that PDC money must go to 'bricks and mortar' under state law.

The tentative plan is for the county to use the $35 million to acquire the Lincoln Building, where it now leases space. The PDC then would redevelop the county's aging Mead and Gladys McCoy buildings, which are used for parole and probation and health services.

That could save the county $1 million to $3 million a year in operating costs, Cogen said.

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