Cash for Cronies IV: PSU Goes From Verdant Oasis to Cabrini Green
by Victoria Taft
Did you know that Portland State University is now blighted? This jewel in the middle of the City, or whatever they call it on the tourist pamphlets, is now a slum.
I’m not even kidding. It happened that fast. Like one of those HGTV shows where the designer magics a shed into something out of the pages of Elle Decor in under 30 minutes, Portland State University went from being a verdant oasis to Cabrini Green overnight.
How else to explain that PSU is now the centerpiece in the latest urban renewal scheme? Planners have come up with a new urban renewal idea that even one of Portland’s elected officials labels “radical.” How radical? On The Bill Ayers Scale of Radical, with ten being Weather Underground Worthy, Portland is an eleven.
Under the traditional rules of urban renewal (URA), areas that are run down and blighted are eligible to become URA’s. But as I’ve pointed out here, here and here, this isn’t your mama’s urban renewal.
Portland’s planners have come up with a unique urban renewal zone: an “education URA.” Portland State University and Lincoln High School are a part of it (OHSU is also listed as a benefactor).
While this is the only education URA, it is one of seven new urban renewal areas the City wants to establish. The education URA would last for 31 years. The smaller districts, nine years.
These seven URA’s would establish seven pots of money from which Portland’s planners at the City would be able to spend within the district. For example if they want to pay developer Homer Williams a premium for parking spaces, call blank-scapes parks or pay off community groups with “scholarships”, as they propose to do with PCC (see previous posts), it will be done with URA money. But what happens to the rest of it? Besides paying planners at the Portland Development Commission (with the borrowed money), the rest becomes a wonderful pot from which to dispense largesse to friends and hush critics. It’s high rent walking-around money. It’s cash. For cronies. And it’s corrupt.
Here are the nuts and bolts of it. Lawmakers freeze the level of property taxes in a URA. If taxes go up the additional dollars are skimmed off and tossed into a big bin of money. That money is used for the planned improvements to an area. See the chart below on how urban renewal’s “tax increment financing” works.
The problem is the additional property tax money is supposed to finance cops, schools, fire and the library. That’s why those other entities have to be bought off somehow. Portland Public Schools is getting Lincoln spruced up and probably other spiffs, grievance groups are being “hired” to sell the other URA’s which will get new paint and signs, but what does PSU get out of this deal? Keep reading.
I don’t know where the sweet spot is vis a vis URA and City budgets, but 26% seems, ah, a little high. Lewis and Clark University tax law professor and fellow blogger, Jack Bogdanski, does a yearly analysis and finds that more than one quarter of every dollar in City of Portland tax receipts goes to pay for urban renewal debt service. Put another way: more than a quarter of the funding for public services have been eaten away by urban renewal. AND MAYOR SAM ADAMS AND THE PLANNER CLASS WANT TO CREATE SEVEN MORE URBAN RENEWAL AREAS. Here’s Jack’s recent post with graphs and pretty pictures and everything.
Key in this discussion is the fact that PSU doesn’t pay property taxes. Government properties aren’t assessed property taxes. They do pay some taxes as I found out in a quick check of Portland maps. Nearby is a picture of an entire block of PSU. Then find its assessed value and how much is owed in taxes on that picture of the column of numbers.
The value of the land is $28 million and change and they owe $378 bucks in tax. You may as well call it zero.
PSU doesn’t pay property taxes but other buildings in this URA do. More on that in future posts. But consider this scenario offered up by a friend.
Imagine you’re a city planner and you want to establish an urban renewal area. Bummer, you think. There aren’t enough paying big property owners in the area to give me enough money to do what I want to do. So you redraw the map to capture other projects that look like winners.
That scenario is real. It’s the story of “Big Pink.”
The US Bankcorp broke ground on their complex between 5th and 6th around 1979 with the planned Tower to be in a second phase. In approx 1981 the PDC drew a new UR district around the whole site to capture the Increment.
The Tower was built soon after and it has been in the SW UR District it’s entire life. Virtually all of the Tower property taxes on the Tower go to UR debt.
Its entire life and is still in an UR district.
US BankCorp Lot 2-The Tower- 2011 property tax $1,818,742.61
So what will Portland State University get out of this deal? This is a win-win for them. They still get their money from the state, tuition from kids’ parents and no taxes to pay to speak of. And…I’ll bet you they’ll get their $65-$90 million Oregon Sustainability Center.
This white elephant is the most ardent wish of all the planner class. That’s because the planners will use this as ground zero for Portland’s precious planning story. But after years of trumpeting and begging the legislature said no to millions in funding for this piece of civic navel gazing.
However, Sam Adams and his planners had another idea. A radical idea.
Look at that map below. That red dot is the proposed location of the Sustainability Center. It’s smack dab in the new education URA. What a coincidence!
More to come. Check this space often.
PS As if on cue here’s the latest lament about the Sustainability Center. Cue the violins.