Mayor's $26 million economic plan has some leaders yawning and others applauding

Mayor Vera Katz is moving forward on her long-delayed plan to stimulate the city's economy, but even the promise of millions to keep and attract businesses may not soothe critics.

'We need to think about where we go and what industry is ahead,' she said this week during an interview at City Hall. 'When the national economy improves, we will come back.'

Katz's response to everything from business income tax reform to reforming permits and fees has driven a wedge between City Hall and corporate Portland, say local business executives and owners.

Some frustrated business leaders say her economic strategy, headed toward a City Council vote in early June with a 44 percent boost in economic development spending, may be too little, too late.

Besides setting aside $26 million for business from the Portland Development Commission budget, Katz has announced the revival of her business roundtable to help follow through on her strategy.

About six firms already have moved, the latest being Millennium Funding Group, which is moving in June from Northeast Portland to Vancouver, Wash. Officials with the mortgage banking company said they were uneasy with the city's proposed business tax increases.

'There's a lot of discontent,' said architect Jerry Ward, who accuses city officials of favoring one neighborhood over another on the property tax rolls. 'Why is everything being done under the guise of public subsidy, giving tax breaks to people who don't need it?'

Not everyone faults the city's efforts.

Developer Homer Williams and a cadre of business leaders say they're tired of Katz bashing, pointing out that no other city of this size is readying $1.5 billion in economic development as it is on the south waterfront. Williams lashed out at the Portland Business Alliance, whose executive director, Franklin 'Kim' Kimbrough, has stoked the perception of the city as antibusiness.

Business alliance spokesman John Czarobski was unavailable for comment Thursday morning.

'The alliance is taking a negative approach to it,' Williams said. 'You have to look at the reality of it. I don't know where these guys are coming from. It's destructive. She's (the mayor) busting her tail, and so is PDC (the city's redevelopment arm, the Portland Development Commission).

'I'm tired of hearing this stuff.'

NW Natural Chief Executive Officer Mark Dodson, who will helm the mayor's soon-to-be-revived business roundtable, agrees it's time 'to get out of a situation where business demonizes City Hall and City Hall demonizes business.

'That doesn't solve any problems. I just think a constructive, calm discussion of the issues is the only way we can make things happen.'

However, other business owners are supporting a recall drive against Katz that was launched April 21 with the filing of the Better Portland Alliance political action committee.

'I can't wait to start circulating recall petitions,' said Dave Rogoway, owner of La Rog Jewelers, at 539 S.W. Broadway.

A difficult time

Katz is fighting not only an exodus of businesses, but a lousy economy, high unemployment and dissension in the corporate ranks. The business alliance itself is having trouble deciding its future direction and leadership, sources say.

'It's real easy to point fingers,' said Ashforth Pacific President Scott Langley, noting that the negative feelings are more widespread than any one organization.

'The business community has stepped up and let its feelings be known, and it's not being listened to,' he said. 'City Hall says, 'It's not our fault.' I hear more and more about the taxes. I hear more and more (from businesses), 'We're moving out of Multnomah County, the city.' Draw your own conclusions about that. The general consensus is people are sick of the lip service, and the only way it will be resolved is in the next election.'

According to local political consultant Patricia McCaig, recent polls show that two-thirds of likely Portland voters think the city is headed in the wrong direction.

The mayor said she was not surprised by the polling results, which echoed a recent city Audit Services Department survey.

Those feelings are 'tied to the economy and the inability of the Legislature to act,' Katz said. 'This is a reflection of fears and anxiety the public has.'

Some business leaders are so focused on the Portland Public Schools funding initiative going before voters May 20, they are largely ignoring Katz's economic strategy.

'If you don't have a school system, I don't care what your strategy is,' said City Center Parking President Greg Goodman, who largely backs the mayor's initiatives.

A year in the making

Katz first proposed her economic development plan in the State of the City speech in September 2001. Soon after, she appointed a blue ribbon committee Ñ led by John Russell, chairman of the PDC Ñ to establish a list of priorities. The group finished its work in October.

Suggestions included: bringing in additional industrial land within the urban growth boundary to meet industry demands and providing public-private incentives to retain and recruit businesses.

'The top goal is creation of jobs,' Katz said.

The mayor sees potential for regional growth in the high-tech and professional services industry, and also in smaller sectors such as biotech and nanotechnology, creative services and the sustainability industry.

The PDC approved its 24-page Economic Development Strategy plan Feb. 12, but it sat on the shelf for three months awaiting funding to implement it and revival of the mayor's business roundtable.

Now the PDC is proposing to boost its 2003-04 economic development budget by $8 million, from $18 million to $26 million. About $23 million of the total is from tax increment financing, and another $1.5 million is from revolving loan funds paid for by federal dollars. The remaining amount, $900,000, is from the city's general fund, said the PDC's economic development director, Marty Harris.

'That's a huge commitment in terms of the strategy,' she said. 'We hope other key players Ñ the university, schools Ñ take it as seriously. I am optimistic, but it is going to be a slow climb.'

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