Waste and Fraud in Portland’s Pearl District

There is an old joke that claims that Christopher Columbus was the first liberal Democrat.

1. When he left to discover America, he didn’t know where he was going.
2. When he got there he didn’t know where he was.
3. And it was all done on government money.

There is no place where Democrats are more liberal or the joke more true than Portland, Oregon. Portland’s ruling liberal elites dash from one “socially responsible” project to the next, throwing millions of dollars of tax money at every perceived “need” and never bothering to find out if the need is real, the money was beneficial, or the project was complete. What the hell, it’s not their money and there is plenty more where that came from.

The most recent example is the vaunted tax abatement program that is the centerpiece of Portland’s urban renewal plans in the Pearl District and now the foundering South Macadam Project. A recent audit of the program was summarized as follows:

“The City’s current tax abatement programs have evolving goals, incomplete reporting and monitoring, and poor verification of either the overall social goals or the specific project benefits that the pro-grams were designed to provide.”

The tax abatement program was the carrot for developers to undertake the construction of high-end condominiums, upscale dining and chi-chi boutiques in the Pearl District. Now, in the South Macadam development equivalent tax breaks are being used to develop new offices for the medical community and high-end condos for the very rich. In essence, developers and subsequent purchasers pay no property taxes on the improvements for a significant period of time — usually ten years. According to the audit, that amount is currently $8.5 million dollars annually.

That is $8.5 million dollars annually out of taxpayers’ pockets for what purpose?

Well, that depends on when you ask the question. Originally, these abatements were “incentives for new housing construction”; however, since the city required retail uses on the first one or two floors in many of these projects, it resulted in the tax subsidized construction of restaurants, boutiques, supermarkets, brew pubs and acres of underground parking.

Later the purpose was changed to provide “affordable housing.” Have you ever been to the Pearl District? Have you ever looked at the prices for even six hundred square foot lofts? Does anyone in their right mind think that people earning at or below the poverty level can afford those exorbitant prices?

Of course not.

The Pearl District has become the playground for the very wealthy. It is inhabited primarily but “trustistas” (trust fund recipients who have migrated from California and the East Coast), two-income families, and highly paid public officials and employees. The jobs it has created are among the lowest paying positions in Oregon — waiters, cooks, house cleaners, laundry workers, beauticians and low paid salespersons at high priced shops. Most of those people, while they work in the Pearl, cannot afford to live in the Pearl.

The audit noted in this regard:

“We found that the City has done too little to ensure that property owners with tax abatements follow through to deliver the benefits they promised. For example, one apartment building developer in the Pearl District was required to make some units affordable, and to submit financial statements to prove that the abatement was needed for the project to succeed. However, we found no verification that
project units met the affordability requirement, and the developer had not submitted the required financial statements to the City.

“In another example, a condominium developer was required to sell units at a specific, affordable price as a condition of qualifying for the tax abatement. The condominiums were already built at the time the application was submitted and approved. Therefore, the abatement did not provide an incentive for new housing development. Six units were granted tax abatements, but we found that five of the units exceeded the initial sales price, did not meet the standard for having an affordable price, and should not have been approved.”

One of the criteria for obtaining the tax abatements is a demonstration that the project would not succeed without the abatements. As noted above, at least in these two instances, the projects were already completed before the applications were submitted and neither included proof of the “demonstrated need.” In fact, quite the opposite is true. If you have already built the project, it suggests that the developer believed the project to be successful without the abatements. The tax abatements then became just “gravy” for the developer.

And it is right here that the tough questions should have been asked by the auditors, the press who gave it minimal coverage, and the law enforcement officials at the county and state level. But, apparently, all of these groups have been allied with Portland’s liberal ruling class for so long that they either have forgotten those critical questions or don’t want to hear the answers. (It is the same reason that nobody asked the critical questions of Neil Goldschmidt even though many knew of his repeated molestation of a fourteen year old girl over at least a three year period.)

Be that as it may, here are the questions that should be asked and answered:

1. Who are the developers who benefited from these tax breaks?
2. Are any of these developers, their officers, or employees related to city or county officials or members of their immediate families?
3. Who are the agents that these developers used to obtain approval of the tax abatements? (In particular, which of these developers used Neil Goldschmidt or members of his firm as their agent?)
4. What campaign contributions were made by these developers to city or county elected officials or to initiatives undertaken by city or county officials?
5. Have any of the city officials who approved any of these tax breaks gained subsequent employment (either direct or as a consultant) by these developers?
6. Did any of these city officials receive preferential treatment from any of these developers in the purchase or financing of their own homes or places of business?

But these questions and their follow-up questions will never be asked. When you wonder why the lavish spending of Portland’s liberal ruling class is seldom challenged, it may well be because many of Portland’s wealthy class are the primary beneficiaries of such lavish spending.

But, what the hell, it’s not their money and there is plenty more where that came from.