"Urban renewal" scam heads out to Cully
The mailman brought us a postcard the other day, reminding us that the obscene racket known as "urban renewal" is still alive and well in Portland. Now it will be used to funnel tons of tax dollars to developer weasels and construction companes to erect more cr-apartment bunkers in the Cully neighborhood in Northeast Portland, out toward the airport.
There seem to be plenty of these monstrosities going up over that way already, without massive handouts from the government, but hey, TIF ("tax increment financing") never sleeps. It's the tool whereby we taxpayers have paid for such hideous concrete jungles as the South Waterfront "district" (SoWhat), and now we will make the same dudes richer slapping up some vertical slums in Cully.
If tax dollars are gong to be spent in that neighborhood (for a change), what the locals really need are way more cops and about a year of homeless sweeps. It's gotten so rough out there that they had to cancel their perfectly good farmers market because of all the crime. But crummy apartments are all City Hall can ever get done, and that's what Cully is getting, like it or not. I'm sure quite a few members of the nonprofit industrial complex are lining up for a piece of the action.
When you read the fine print, it gets even worse. Only 45 percent of the diverted property tax money will go to the housing bureau for "affordable housing." The other 55 percent will be funneled to "support Prosper Portland programs and projects that implement the goals and objectives of the Cully TIF Plan." A fund doesn't get any slushier than that, my friends. (And they spell the percentages out in words rather than numerals, I guess so that you might not notice them.)
But they save the pièce de résistance for last. They seal their message with a kiss on the bottom. It reads: "The adoption of the Plan may affect property tax rates." You don't say.
The taxpayers pay, the weasels prosper. Same as it ever was.
It would be inserting to see the prospectus on this area. What exactly is going to generate the increment to pay off the bonds. Cully has always been mostly low-middle to low-income housing. Grew up there on the corner of 53rd and Killingsworth (1953-1978). Sort of what use to be called, "the end of the streetcar line" type area, There's not much there in the way of commercial or industrial. Most of the apartments along Killingsworth are owned by non-profits that don't pay property taxes. So where is the increment coming from to pay the TIF bonds. The "theory" behind urban renewal is where the government make infrastructure improvements (road, sewer, water) and this will stimulate private development which in turn generates an "incremental" increase in property taxes to pay off the bonds.
ReplyDeleteAnd yes., this WILL have an impact on all Portlanders property taxes.
After they run out of neighborhoods to "renew" will they then change the name to Urban Re-Renewal and start over? Besides the "public education slush fund", this is second place on the worst return on investment for our tax dollars.
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I have long advocated that if you are going have TIF schemes at all, you have to do it in such a way that the areas benefitting from the TIF schemes have to be rated against the rest of the non-TIF areas and only the increment of value increase (in the TIF benefits area) that is ABOVE the average value increase of the non-TIF areas can be dedicated to paying the bonds in the TIF jurisdiction. In other words, if you spend a wad of TIF bonded money to benefit a 20-block area in Portland, then each year, the "par" value of the TIF financed area increases by the same percent as the whole city's increase in property values, and all that money goes to where it was going before the TIF plan came in (schools, etc.). If the average value for all parcels in the city is increasing 2% this year, then the TIF money spigot only opens to repay the bonds if the properties in the TIF area increase by more than 2% on average, and only the extra value is captured to retire the TIF bonds. In return for assuming this risk, the investors would get all the increase above the general par value for the life of the bonds, even if they were already paid off (making them more like an equity investment rather than a loan).
ReplyDeleteIf you did TIF this way, investors would have a very strong incentive to actually care whether the proposed improvements made sense and were likely to pencil out, and nobody would be getting paid interest for lending money that did nothing to actually create a meaningful real increment in value.
I’ve always felt that projects like these were conceived by someone in the private sector and promoted to willing ears in on the government payroll
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