The postcard landed in my mailbox a week ago. It was from Prosper Portland and the Portland Housing Bureau and it was headlined, Notice of Public Hearing, followed by standard governmental boiler-plate gobbledegook, which I scanned for a new way the city might shove its gnarly hand deeper into my pocket…
NOTICE IN HEREBY GIVEN that a public hearing will be held…at (or after) 2pm to consider an ordinance for the adoption of the Cully Tax Increment Plan…hybrid meeting…subject to a referendum…maximum indebtedness…$350-million…the adoption of the plan may affect property tax rates…
Bingo! The oldest story in Portland…
We‘ve Got More Expensive Ideas!
Instead of tossing the card (with its odd illustration of a happy POC mother chatting amiably with a non-POC child next to a mural of baseball legend Jackie Robinson) into the recycling bin, I shoved it under the desk blotter.
A question nagged: what the hell is a TIF Plan anyway?
Ready for a deep dive? You’ll need an extra oxygen-tank. There are strange, and seemingly immortal, creatures down here…
Here’s a definition of TIF financing courtesy of the World Bank, which ought to know a thing or two about financial legerdemain…
TIF allows local governments to invest in public infrastructure and other improvements up-front. Local governments can then pay later for those investments. They can do so by capturing the future anticipated increase in tax revenues generated by the project.
This graphic, from the New York-based Citizens Budget Committee, might help with the concept….
The concept behind TIF is that public investments in infrastructure and services will induce private development, which in turn will lead to higher property values, more employment, and additional tax revenue. Since this economic activity and revenue growth would not occur “but for” upfront investments made by the public sector, cities can capture the new property tax revenue to pay for the investments that sparked the growth.
Bear this in mind as we explore what Portland has in the works for Cully.
Today’s progressives really don’t like talking about it, but Portland was bitten by the Urban Renewal bug—hard!—back in the days when the words “urban renewal” weren’t anathema.
Let’s turn to Prosper Portland’s colorful, and self-congratulating website, where the word “urban renewal” hasn't yet been expunged…
Since its establishment in 1958 as the city’s urban renewal agency, Prosper Portland has managed 25 urban renewal areas and/or programs, primarily locally funded. The four earliest, and federally funded urban renewal projects were the Albina Neighborhood Improvement Plan, Portland State Urban Renewal, Emanuel Hospital Urban Renewal, and the Model Cities/Neighborhood Development Program.
Funny thing about those projects: progressives, who once thought they were perfect solutions to “slums,” now hate them with white-hot fury. The Albina neighborhood is mourned as reflexively as Portland pols like to apologize to Native Americans before kicking off meetings (after everyone shares personal pronouns).
Why?
Back in the go-go 1960s, Emanuel Hospital, with the help of the city, condemned 188 properties to build out their “campus.” Albina had to go; nothing personal and, besides, the city government declared that the area was “blighted.” (The term is still used to applying urban renewal law, but you will not hear it spoken out loud).
Unfortunately, the hospital overestimated its growth prospects, something that should be familiar to current observers of Portland pretensions. It left…
…vacant land at the corner of Williams and Russell… as a painful reminder of the past…
In the hospital’s online mea culpa, “REALIZING OUR WRONG,” Legacy Health’s President and CEO Kathryn Correia took a knee…
…we must recognize our organization's historical role in perpetuating racist systems and our commitment to dismantling these systems…
And, one day, Prosper Portland and the “community,” will figure out what to do with the dirt.
Just as an aside, South Portland also got leveled around the same time, but it was an immigrant/white neighborhood full of “affordable” housing (aka flophouses) and no one offers retroactive apologies. As for other communities sacrificed to the 205 and other urban aggrandizement projects…don’t hold your breath.
Urban Renewal may have left a lot of wreckage in its wake, but it never really went away. It did what any smart pol knows: change the name, but not the players.
The city now has 11 active TIF districts. Each is described in glowing PR-prose on the Prosper web site. Portlanders might want to add a few qualifiers…
River District TIF—”…a once-in-a-generation opportunity to demonstrate inclusive, sustainable, memorable and financially successful redevelopment…” Plus Old Town/Chinatown where the entertainment is spiced up by real-life murders.
Central East Side TIF— “…an entrepreneurial vibe, industrial properties and proximity to the waterfront and downtown.” And gave us The Yard, aka the Darth Vader apartments.
The Airport Way TIF—”…has attracted job-generating investment in the hundreds of millions…” which cleared the way for Cascade Station’s franchise megastores and Ikea.
The Gateway Center TIF— “…has the potential to be a hub of employment in East Portland,” although residents (including this one) wonder when the pot shops and strip clubs will be replaced by, well…anything.
The Lents Town Center TIF—”…development that fosters equitable growth and community vibrancy…” Hope the murder rate goes down.
The North Macadam TIF—”…has generated remarkable growth…” which gave us those postmodern south-end high rises, mentioned earlier.
Downtown Waterfront TIF—”…strengthen downtown’s role as the heart of the region’s economic growth and success.” Be nice if shoppers would come back.
Interstate Corridor TIF—”…Capacity-building to support business growth, job creation and social equity…” All those crowd-em-in apartment cubes sure look like equity, East German style.
Oregon Convention center—”…the long-awaited Convention Center hotel…” someday.
Willamette Industrial—”…expand the supply of serviced, developable industrial lands.” Before Florida makes a better deal.
South Park Blocks—”…an economic generator.” How come PSU is losing customers?
Every mid-sized town—Portland no exception—has a subset of the elite, clubby-types who really think their town should be Manhattan. How else to explain the incongruity of the US Bank Tower? They’re what used to be called “boosters,” and they think big. Make that…
BIG!
Say what you will, this is what drives all of the city’s TIFs: socialize land-acquisition and “improvements;” roll-over someone’s privately-owned land (use the hammer of condemnation if the mopes won’t sell out); ease up on zoning (or use it to exclude competitors); get the developers lined up neatly at the public trough (with appropriate political contributions); and build a whole bunch of high-density stuff that will throw off loads of higher property taxes. Which can be recycled to keep the great engine of capitalism humming as bond-payoffs crank out to the hedge funds and pension plans and insurance companies and, for all we know, plutocrats in China and Dubai.
In an era (now over) of ultra-easy money, it seemed like a perpetual motion machine. Here’s how the Citizens Budget Commission puts it:
The new investments begin to induce development, and total property values within the TIF district begins to rise. This growth in property value translates into an increase in the properties’ assessed value, which generates incremental property tax revenue above the baseline value, which then flows into a special TIF fund.
But the machine stops dead if property taxes do not materialize.
Which brings us to Cully.
It is not what you would call a posh neighborhood. In the words of the “Cully Tax Increment Finance District Plan,” 186 pages of often dense prose…
Most of Cully’s development occurred between 1910 and 1960. Its character from the outset has had strong rural elements: large lots, unpaved and meandering streets, and low density. Historically, investment in Cully’s parks, sidewalks, roads, other infrastructure, family-oriented businesses and other amenities has lagged behind other areas of the city.
For readers who wouldn’t visit the neighborhood on a dare, here’s a handy map…
The report adds…
Cully residents, including households already displaced to Cully, are now threatened with displacement from Cully as investment pressures rise. Unlike in closer-in neighborhoods, some properties remain relatively affordable, and land is still available for development, attracting new private, and potentially gentrifying, development in Cully and in nearby neighborhoods. The experience of other Portland neighborhoods as well as communities from across the United States make clear that gentrification inherently entails the displacement of existing community members, especially low-income and BIPOC residents.
“Gentrification,” being one of the Very Bad Words in the progressive lexicon, Prosper vows thatCully will…
…remain a neighborhood where low-income people and BIPOC individuals can live and thrive.
Contemplate that ringing statement, reeking of a peculiarly Portland variety of patrimony, as well as a denial of a TIF’s basic premise…
Property values and uses must grow to pay off all those bonds…
…and look at every other large-scale TIF being run by the city and you might want to wonder about all those Bigger! Denser! More expensive! buildings in the Pearl and South Park and—golly!—everywhere else and wonder…who might be dumb enough to buy those Cully bonds, $350-million of ‘em—with the promise that Cully will always be poor.
But happy!
Prosper Portland seems to be arguing for investing, instead, in Argentine bonds when it writes piffle such as…
“Permanently affordable homeownership” means homeownership opportunities which prescribe affordability for subsequent buyers of the property or home, in contrast with homeownership opportunities which proscribe no additional affordability beyond the first purchaser.
Hint to Prosper Portland: property taxes go up along with property values (see chart above), unless basic economics laws stop at the TIF’s boundaries. Which the agency disregards in a statement such as…
For large-scale investments, our TIF District will prioritize investments that remove properties from market-based ownership in order to permanently preserve them for uses that meet our values, vision, and goals. This means we will prioritize investments in properties owned by (or being purchased by) non-profits, public agencies, land trusts, resident-owned cooperatives, and other models of community ownership.
…and, just to rub it in, the TIF will be looking to lock up properties with……
‘Right of first refusal’ or ‘Right of first purchase’ agreements, which give nonprofits and public agencies the first opportunity to purchase properties that have received TIF investments, at whatever point in the future they might be sold…
Let us observe that non-profits, who make up the core of the TIF’s backers, do not pay property taxes. Taking properties off the tax rolls is not, sad to say, how a TIF District pays back the bond-buyers.
There’s another wrinkle that should keep any developers dumb enough to sink money into a community that is designed to stay poor reaching for the famotidine. Cully promises to…
Ensure that investments in privately-owned properties create community benefits, in addition to benefits for the property owner.
Meanwhile, there will be many eyes peering over a developer’s shoulder…
Implementation of this plan will be undertaken with significant community leadership, input and involvement, a key component of which is the Community Leadership Committee…
Interesting to note that…
The Mayor will nominate six (6) Committee members for initial 2-year terms. City Council will confirm Committee members.
…which raises a side-question about the proposed city charter. Will the capon-mayor have that kind of power? If not, who will?
Having written about various “Citizen Committes” cluttering up government—Charter Commission, anyone? Police oversight?—let’s just say that the committe will be made up of self-selected true believers, not to mention the usual smattering of non-profit self-dealers. And the TIF document makes it clear: these folks will do whatever they damn well please…
[The charter] It is a living document that may be updated from time to time, pursuant to the procedures stated within.
Change the rules of the game after you sell the suckers the bonds? Easy-peasey!
There are too many escape clauses to count in the proposed charter. Here’s just one…
Cully community members and stakeholders have expressed an interest in new programs using TIF funds. These new programs may or may not be developed in accordance with the current legal definitions of affordable housing, but if agreed to as part of an Action Plan, will be implemented in line with the vision, values, goals,and implementation principles in this District Plan.
Goals? It’s the usual progressive word-salad…
Equity Inclusivity. Diversity Community leadership and Control Cultural Responsiveness Community Stabilization and Prosperity Forward Thinking Solidarity with similar community-led efforts.
Darn! They left out “Pay $350-million back by increasing property taxes.”
You might get the feeling that the architects of this scheme read too much Marx, as opposed to Standard & Poors.
God forbid that any one of the property owners in Cully (the report doesn’t mention a percentage) might want to sell for whatever they can get on the open market. But suffice to say that not everyone wants to be stranded in Cully. And isn’t one of the last American freedoms the right to move on up? Maybe—dare we hope—to Laurelhurst?
It will be interesting when the Committee dive-bombs these, essentially, private negotiations. Who will buy those “right of first refusal” properties as they sit, not producing any property taxes, waiting patiently for the Great Utopia—where everyone stays poor.
Really, why should Cully—as opposed to swaths of the east side or Felony Flats or any other down-market neighborhood be forever isolated, frozen in aspic, isolated from the free market? Do we really want to give the Prosper Portland bureaucrats the right to mark any neighborhood as belonging to a defined level of income or class? To, in effect, turn Cully into some sort of progressive reservation?
What would have happened, a few decades ago, when Mt Tabor was not a fashionable address, if the city had permanently locked it down from dreaded “gentrification.” Mt. Tabor came back from the dead because there were mostly young people willing to take a flyer and—astounding!—got rewarded for sticking their necks out.
But not in Cully!
How come the TIFsters get to call this shot, repeatedly, through their document…
“Priority Communities” refers to the intended beneficiaries of the Cully TIF District: African American and Black persons; Indigenous and Native American persons; persons of color; immigrants and refugees of any legal status; renters; mobile home residents; persons with disabilities; low-income people; houseless people; and other population groups that are systemically vulnerable to exclusion from Cully due to gentrification and displacement.
Who got left out?
Will any of our local media—barely able to cover anything that requires asking questions and digging beyond PR releases to cover what could turn into a festival of self-dealing and backroom deals?
Isn’t this stuff really the purview of elected officials? After all, if the new charter passes, Cully will be in one of the four mega-districts and there will be three Councilors on call—think they’ll want to let juicy real estate deals be insulated from their tender attention?
The TIF report screams “unintended consequences” from almost every page. Didn’t the Oregonian just run a front-page story telling us how Commissioner Rubio is going to clean up the embarrassing mess of the Climate Change tax?
Time will tell. Meanwhile, if all goes well for the lurking non-profits and Prosper Portland bureaucrats (busy shopping for a new umpteen-year project), the voters will get to mark their mail-in ballots after reading some obscure language in the Voter’s Pamphlet.
It’ll pass. Junk like this always does.
When that postcard arrived in my mailbox, I did a quick read on it. Two sentences jumped out at me: “The ordinance, if approved, is subject to referendum,” and “The adoption of the Plan may affect property tax rates.” Terrific. Something new to fight about — and the first public hearing is the day after Election Day.
Housing isn’t supposed to be a guaranteed investment. It’s supposed to be a place to live. Just because one generation made a killing on the real estate market doesn’t mean every generation is now entitled to the same.
" 'Permanently affordable homeownership' means homeownership opportunities which prescribe affordability for subsequent buyers of the property or home, in contrast with homeownership opportunities which proscribe no additional affordability beyond the first purchaser."
Because my mind is still reeling from what Portland's benevolent hyper-ultra-woke planners have in store for Cully, for the time being I'll limit my comment to a paradox that hit me between the eyes like a rake handle when I stepped on the text quoted above.
On the one hand, the city's planning apparatchiks, BIPOC activists, media and elected officials treat "gentification" as if it were a race crime only slightly less heinous than slavery and Jim Crow. Perhaps elsewhere pundits have recognized the vilification of gentrification for the low-grade (for now) taxpayer funded, class war against the middle and upper middle classes that it is. Not so in Portland, where progressives universally lament the fall of historically black (and redlined) neighborhoods to white interlopers. That's all in the past now, since real estate in the Alberta neighborhood today fetches about the same as a nice house in Portland Heights would have 25 years ago. But memories of "displacement" and its consequences are long.
Let's examine one of the primary grievances of gentrification's progressive foes. A brief hypothetical will help explain it:
If Geoffrey and Arabella Trustfunder hadn't come along in 1993 and snapped up Grandma's beautiful Old-Portland-style house with its big maple tree off Alberta, the house might have passed tax-free to her heirs, say a granddaughter. Today, that granddaughter and her husband might decide to downsize now that they're empty-nesters. Meeting with their realtor,® they learn that the house grandma bought for $15,000 in 1970 is worth a cool $625,000! The For Sale sign is up before the end of the day.
There's a term for what happened in the preceding scenario. The house appreciated by $610,000 in 52 years. When the sale closes, the net proceeds will constitute what racial justice advocates call "generational wealth." The granddaughter didn't earn the $625,000 that was just deposited in her account. Neither did she buy the house. The money came to her from past generations of her family.
BIPOC generational wealth is so important to the city of Portland that it has a program that is meant to help people like the granddaughter in our scenario stay in their houses. A success story is even featured on the city's web site:
"Miranda Monroe’s grandparents lived in their NE Portland home for 60 years before Miranda and her sister inherited the home in 2014. Although not fully prepared to take over the maintenance of the home, Miranda understood the importance of keeping the family legacy going and her grandparent’s home was a big part of that history."
“My grandmother left it for us to be able to connect with each other—to be able to have GENERATIONAL WEALTH, and to have something to pass on to our children. My four-year-old son didn't get to meet her, but he thinks he can feel her presence in the house—he even creeps around as if we have to be quiet!” (Emphasis added)
And how is it that your tax dollars and mine are helping Miranda preserve her generational wealth?
The city tells us:
"To prevent displacement of longtime N/NE Portland homeowners, PHB supports home retention through a number of programs and resources, including 0% interest loans and grants, to help low-and moderate-income homeowners, seniors, and people with disabilities make the repairs and accessibility modifications to continue living safely in their homes."
"Struggling to pay for the repairs and hoping to avoid costly fines, Miranda was relieved to learn that she qualified for PHB’s Lead Paint Abatement Program as well as a Home Repair Loan."
https://www.portland.gov/phb/nnehousing/news/2022/9/7/saving-my-grandparents-north-portland-home
Now, let's imagine that Miranda's good friend Patty, who's heard about Miranda's good fortune, goes looking for an affordable property that might give her grandchildren a nice nest egg 50 years hence. It happens all the time all over Portland, though what's affordable to some might be out of reach of others.
Be that as it may, let's hope that Patty has a responsible realtor® who understands her needs, and that the terms of "Permanently Affordable Homeownership" in Cully's TIF zone are clearly and conspicuously disclosed. Otherwise, I would not want to be in the room when Patty learns that "Prosper" Portland put a permanent cap on the sales price of her permanently affordable house and that neither she nor any of her children or grandchildren will be ever be able to enjoy the kind generational wealth that just fell into Miranda's lap.
I sure hope I've misunderstood what Prosper Portland's magnanimous social engineers are planning for Cully. Assuming I'm more or less right, it would not surprise me if, when confronted with the terrible paradox of unequal outcomes, a planner would smile and call it equity in action.