Made in Old Town: Just More Corporate Welfare

By William MacKenzie,

During the recent Legislative session, lawmakers passed Senate Bill 5701 to set aside $2 million for the Old Town Community Association. The bill proposed putting the money toward establishing a 30,000-square-foot green manufacturing facility in the Old Town section of Portland that would help get new companies off the ground and existing companies develop new products and technologies for the footwear and apparel industry.

WHY?

The proposed facility would potentially be part of a $125 million Made In old Town (MiOT) project that would eventually include 100,000 square feet of manufacturing space, 120,000 square feet of housing and 145,000 square feet of office and retail space in eight largely vacant Old Town buildings.

MiOT’s backers need to raise $5 million from the private sector to fund the green manufacturing facility, which they hope to open by this fall. Elias Stahl, a MiOT Board Member and CEO and co-founder of  Hilos, an Old Town-based 3D-printed footwear company, told The Oregonian in March he was “extremely confident” they could raise the money.

In early April 2024, it looked like Oregon Gov. Tina Kotek might throw a monkey wrench into the deal when she said she was considering vetoing the $2 million item. “My office is awaiting more information from the development group about the viability of financing for the entire project before I make my decision,” Kotek said.

But on April 17, 2024, Kotek announced she would allow the expenditure for the project to move forward. “I am grateful to legislators for responding to our state’s most pressing needs,” she said. “In the days following last week’s notice of potential vetoes, I received adequate information to have confidence in signing…Senate Bill 5701…”

On April 11, 2024, Vince Porter, Kotek’s Economic Development and Workforce Policy Advisor, informed the governor and key staff that he had received a letter from the Old Town Project and followed up with a conversation with Jonathan Cohen, the Old Town Community Association’s treasurer, who made a “commitment that they will not request (state) funding until they have raised their own funding,” referring to the $5 million to be raised from the private sector.

“I think the letter along with written confirmation from me will meet the requirements we specified for the project, Porter said. “ Hopefully you all feel the same. Jonathan will provide documentation during the DAS funding process demonstrating that the other financing is secured to match the state funds. This will include “seller financing” which they are counting on to complete the project.”

The MiOT project’s website announces it will be building “An Innovation Campus in a Thriving Neighborhood Creating the Next Generation of Footwear & Apparel.” The website says MiOT is currently accepting tenancy applications, with various lease terms and spaces available, and that MiOT plans to announce the first cohort of brands that have signed on as founding members early in 2025.

Democratic State Treasurer-elect Elizabeth Steiner, who previously served as a state senator representing Oregon’s 17^th district, including the Old Town neighborhood, said in April, “As somebody who both cares about her district and cares about the City of Portland and the state as a whole, creative ideas like that—that revitalize a part of the city that has really been neglected, if not abandoned for a long time, and do so in a way that meet a bunch of different goals simultaneously—are a very exciting prospect for me.”

The collaborative nature of the project, its potential to revitalize a neighborhood and support re-shoring manufacturing in the U.S. has merit. But, given all the state’s “pressing needs” and the wealth and resources already available to MiOT’s key backers, plus the presence of hundreds of companies in the Portland metropolitan area tied to the footwear and apparel industry, why did the governor sign this ill-advised bill that would siphon money from Oregon taxpayers for private gain?

I can understand why politicians like Steiner would go for MiOT. Politicians love the spectacle of ribbon-cutting ceremonies and the prospect of jobs (and voters). But that shouldn’t drive this corporate welfare. Oregon does, indeed, have other “pressing needs” that should take a higher priority in the allocation of public dollars.

If the players behind the entire MiOT project are confident of its viability, let them provide the start-up money. If they make their vision a reality, taxpayers will have been spared the diversion of public dollars and the backers of the project can take full credit for MiOT’s success.