The Riches Of A City Should Not Be Just For The Rich
Randy Leonard
After reading today’s Oregonian editorial entitled “City council should keep its mitts off PDC” I was struck with a couple of immediate reactions.
First, I can't help but observe a consistent pattern by the editorial board anytime the city council criticizes Portland General Electric (PGE) or the Portland Development Commission (PDC).
Those two entities enjoy enormous –and exclusive- economic power over Portland’s citizens and therefore, I believe, must be subject to even closer scrutiny than most economic concerns.
However, each time the council begins probing either of those two entities the editorial board of the Oregonian reacts viscerally including questioning if not the integrity of the council, certainly its competence.
That may make some on the editorial board feel better, but it does little to persuade.
Second, the most important job of the Portland city council, in my opinion, is to oversee how Portlanders' taxpayer dollars are spent. PDC should not get a free ride from that principle.
When I first I arrived on the city council, PDC was granting property tax abatements to developers of high end apartment houses in downtown Portland that were worth millions of dollar notwithstanding this community's unmet needs for affordable housing for the poorest of Portlanders.
Until the council passed an ordinance last year stopping this practice, the PDC was approving those property tax abatements based on the economic analysis justification provided by the developer that financially benefited from the tax abatement.
Amazingly, every time a developer hired an economist to see if their project needed a property tax abatement to financially succeed…it did! And never –not once- did a project require anything short of the maximum 10 year/100% property tax abatement the law allows.
Worse, the PDC did no audits of the tax abated project after completion to verify that the rents and expenses were what the developer said they would be to justify the property tax abatement.
This kind of sloppy handling of taxpayer dollars stopped only after the city council intervened.
The council also suspended, over the PDC’s objection, abatements to developers of high end housing projects for “market rate housing”.
According to the editorial board some of my colleagues and I don't "get it" when it comes to the PDC.
If the tax abatement "deals" are an example of what they are talking about -and they are- they are absolutely right.
Interestingly, the editorial today also did not so much as acknowledge the PDC’s curious machinations on the property at SW 3rd and Oak.
Without the city council asking hard questions and demanding an audit of this highly suspicious series of “deals”, the public would have most surely been taken for a financial ride that would have benefited only the developer and upper income condominium buyers.
Only through council intervention has the PDC agreed to fund developments such as Central City Concern's (CCC) wonderful tratment and housing project for alcohol and drug addicts on SW 8th and Burnside.
That project, admittedly, does not directly serve wealthy interests. It does, however, provide a second chance at life for some of society's most challenged human beings. People with no money, no job and no hope. In my view, this is exactly the kind of project taxpayer dollars should fund.
Why? Because it’s a smart investment. People with addictions have a nearly incalculable cost, left untreated, on society. They use, rob, use, steal, use, assault, use, get arrested, imprisoned, released and then start their out of control behavior all over again.
With decent housing AND treatment, such as CCC provides, they have a chance to break their destructive cycle and actually become tax paying citizens.
However, in the short term projects such as CCC's do not “pencil out”. Only with a concerted push by Commissioner Sten before I came onto the council in 2002 did the CCC housing and treatment project get funded by the PDC.
Finally, for two years in a row the PDC has refused to cooperate with the city council in reiewing its budget. In my view, budget development is the bed rock of a representative democracy. For the Oregonian editorial board to argue that the PDC should not be part of the scrutiny that all other public agencies are required to submit themselves to is nothing short of irresponsible.
So, please, I am not interested, no matter how insulting the editorial, in turning over the financial future of this city’s citizens to unelected bureaucrats who somehow think their mission in life is to hand out tax abatements and properties like so much candy at Christmas…and then to only those who really don’t need the financial help.
It is the city council’s job to make sure this city is a place all can prosper…not just the power elite that the editorial board seems to speak for.
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Jul 30, '06
"The function of a newspaper is to comfort the afflicted and afflict the comfortable." Not so with the Oregonian where keeping the establishment happy is job #1. M.W.
Jul 30, '06
Instead, the riches of the city should be given to the unions, the public employees, and the politically well connected?
Jul 30, '06
When you live in a community such as Portland where the political leaning is Liberal, then you run the danger of one party politics that pervades the American South as well. The problem is elitism. Eventhough liberal-minded, the communities wealthiest and most powerful are going to set themselves apart from the rest of the citizenry forming their own elite class which is out of touch with the average citizen. This has been a problem with Portland's politicians citywide for decades. We had a brief reprieve with Bud Clarke in office - the only mayor in recent time to relate to the everyday Portlander. Until we see more working men and women involved in politics, then you are going to see an elitist attitude pervade local politics that is out of touch with the needs of the average citizen. This example from the Oregonian is yet another sign of such elitism ruling the roost.
Jul 30, '06
Give em' hell Randy...you are doing a great job!
Although I must say...these types of tirades are making you sound like a good "hold government accountable" Republican:
"...turning over the financial future of this city’s citizens to unelected bureaucrats..."
"...not just the power elite that the editorial board seems to speak for..."
Maybe you are moderating with old age.
You know you are shaking up the establishment when the big O' takes a shot at you. Keep up the good work, many people on all sides support your meddling.
LBG
Jul 30, '06
The only people that take the Oregonian editorial board seriously any longer are those constituencies that they serve: the monied and the elite.
Luckily, we didn't elect them to govern us. Give 'em hell, Randy.
Jul 30, '06
Hey Larry!
It's not that I am turning into a Republican...you are actually turning into a Democrat!
Jul 30, '06
Randy:
Would the council have standing to sue the PDC to force it to release the report it is statutorily required to produce every year (and has yet to do so once) outlining the amount of money the city's general fund loses each year due to Tax Increment Financing?
Just curious, as that would be a great place to start, seeing as how they've never once complied with the law.
Don Smith
9:13 p.m.
Jul 30, '06
unelected bureaucrats
Randy, the PDC is appointed by the Mayor, with the consent of City Council. Is there anyone on the commission that you did not vote for?
Jul 30, '06
The Oregonian editorial board has said the same thing about many other bad policies and agencies.
The PDC has a stench of cover up, with help from the O.
PDC budgeting, accounting and reporting methods have been clouded for years with PDC Commissioners and City Commissioners left hold the bag on the massive spending without any measurement of legitimacy or worthiness. With no oversight of the PDC check book there is not a single elected official, or appointed commissioner,who knows who gets what for what reason. Including Commissioner Leonard. Unfortunately their are those who don't care and do not want any scrutiny simply because the PDC has funded their pet projects.
I suggest a complete opening of PDC books including all of their payables for the last ten years.
Jul 30, '06
Randy, while you are pursueing the Oak Street "gimmie", look into the Block 49 Homer William's "gimmie" in the North Macadam Amendment 8 soon to be before the Council. The City buying the block for $5.5M after it was bought for $1.5M a year ago without the PDC/City required appraisel is a crime. Just because the city's purchase is for "affordable housing" doesn't make it right. And why is Homer/Dames being given exclusive rights to develop the property without public bidding? That's criminal too. Plus the taxpayers having to pay for the site's toxic brownfield-Homer/Dames is proposed to be held harmless-is a crime-shame.
Jul 30, '06
Actually, Chris, only since this past July 1st is the PDC comprised of all the members that have come on board since I joined the council.
My reference to "unelected bureaucrats" is not the PDC commissioners themselves. Rather, I am referring to the paid staff that I have discovered drives most of the decisions that the part time PDC board has approved in the past.
In one on one meetings with each of the current PDC members, I have expressed that observation and concern.
In fact, since Mark Rosenbaum has taken over as Chair of the PDC this past July 1st I have been impressed with the hands on approach he has taken to address some of the specific concerns the majority of the council has expressed.
In that context, it is even more unfortunate that the Oregonian editorial board wrote the antagonistic piece that they did today.
10:09 p.m.
Jul 30, '06
Randy, while I largely agree with you on the big picture - I think it's a bit silly (and playing into GOP framing) to talk about "unelected bureaucrats".
After all, every single public employee that works for the city is an unelected bureaucrat of one kind or another. Ya gotta have staff.
As you've discovered in this thread, using GOP catchphrases brings so much emotional baggage that your larger point gets lost -- that they're making dumb decisions.
The point isn't to move all the decision-making everywhere in the city up to the level of elected officials (you'd never get ANY sleep!) -- but rather to replace the unelected bureaucrats who are making dumb decisions that don't reflect the public will and the most effective policy, with other unelected bureaucrats who will make smart decisions that do reflect the public will and the most effective policy.
Jul 30, '06
Kari- It is human nature to take the path of least resistance.
If the PDC staff knew their budget was subject to council approval and oversight they would never engage in some of the behaviors I have outlined here.
Until last fall, the PDC staff actually argued to the city attorney that the city auditor, Gary Blackmer, lacked the authority to audit their books.
Only a political bucket of cold water caused even the PDC staff to realize that they were going too far.
No staff person that knew its budget was subject to city council approval would ever take the position –in writing none the less- that the staff at PDC did.
For two years running, I have asked the staff at PDC for a break down of how they spent general fund dollars given them by the city council. For two years in a row, I have been rebuffed by the PDC staff with the excuse that their budget timeline is different than the city council’s.
This past budget cycle, Commissioner Sten and I asked the PDC and the Office of Sustainable Development (OSC) to each prepare a written proposal in how they would spend one million dollars to create a biodiesel economic development initiative.
At the same hearing a week later, both PDC and the OSD gave their response.
PDC had no written document and gave a generalized description of how they would spend the one million dollars.
As one of our staff observed later, “they blew you guys off”.
OSD, on the other hand, gave a detailed written account, as both Commissioner Sten and I requested, of exactly how they would spend the money and what benchmarks for success they would develop to measure our effectiveness in creating a Portland based biodiesel industry.
OSD got the money. Amazingly, the PDC staff was stunned and, according to other city staff, even angry. They truly do not get it.
The staff at PDC has run fast and loose for a long, long time. Within city government, there is no shortage of examples of the lack of cooperation PDC employees have displayed in years past. In another time and place, maybe that was OK. But those days are over.
I believe in and do reward good behavior. However, I feel just as strongly that ignoring or excusing misbehavior on the part of employees enables poor performance and dysfunction.
Having said all that, we do have a brand new PDC board of commissioners and, as I said earlier, I have communicated what I have written here to each of them.
I truly am optomistic that we may see some much needed changes at the PDC during the next year. However, that is only possible AND sustainable if the council has authority over the PDC's budget.
12:07 a.m.
Jul 31, '06
I agree completely on the substance. My only complaint was about falling into the trap of using right-wing framing -- which ultimately leads to fighting on their turf.
Keep it up! Give 'em hell, Randy.
Jul 31, '06
Working in and around PDC has a tendency to make the most liberal among us to become a bit cynical and testy.
As much as I had hoped that Bruce Warner would begin a new era at PDC I have, along with some of my colleagues on the city council, unfortunately, been disappointed.
The first glimmer of hope I have seen that PDC may change its ways has been in the past month since Mark Rosenbaum has become chair.
6:51 a.m.
Jul 31, '06
Randy,
One can only hope you are working just as hard on reforming the Police and Fire Disability fund as you are on reforming the PDC and PGE.
Jul 31, '06
Randy, Don't wait on the PDC books or their "reports" Start a process to confiscate them ASAP. It's not the million dollars they can't explain. They can't explain the $65 million in TIF funds they control this FY year alone or the out of control SoWa budget. Remember the $15.5 Tram? The whole SoWa plan has grown into that level of inaccuracy and misrepresentation by the PDC along with many other shenanigans in other districts. North Interstate folks, including on the URAC, have severe criticisms of the PDC operation. Don't get distracted by Kari's ridiculous concern over "right wing" jargon. There's plenty of non right wing CoP citizens who smell the stench at the PDC. So far it's only the tip of the PDC iceberg in plain sight.
Jul 31, '06
Go Randy,
Thanks also for following up and responding to my question on Tax deferrals at the Gateway Condo development.
Jul 31, '06
Thanks for having the courage, Randy. As an outspoken critic of The Oregonian myself, I hate it when people suggest that as a small time activist (and somebody who really would not have even the first interest in politics if present crisis in leadership did not exist), I am just trying to get publicity. The reality is that no self-serving political aspirant would ever willingly take on The Oregonian, because its media power in this market is so great.
As I have editorialized before and debated publicly, the redevelopment tax breaks used by PDC to supposedly stimulate demand to contribute to revitalization of urban areas is basically a direct transfer of taxpayer dollars to Big Developers. The taxes lost by the tax breaks result in revenue losses that must be made up somewhere else and eventually hurts weaker government services or gets reshuffled out of the taxpayers' pockets. The economic theory behind this basically depends on the elasticity of demand in the market for these high end condo developments. The fundamental premise that anybody arguing on behalf of real estate tax breaks is that circumstances are such that without the discount available to be passed on to the buyers of such properties, demand would not be sufficient to justify the "urban renewal." Indeed, this was probably the case in the Pearl District some 10-15 years ago and the economic stimulus provided probably played a significant (though not exclusive, since the same kind of renewed interest in urban living has occured in other cities without such incentives) role in the revitalized downtown area Portland now enjoys. Indeed, this may still be the case for neighborhoods like Lents. However, the prices and rapid appreciation of real estate in the Pearl District and Park Blocks areas are ample evidence that the revitalized interest in downtown living and development has become self-sustaining, with a high percentage of units being sold months before buildings are completed for move-in. Under this scenario, the developer is free to charge what the market will bear. The reason the PDC refuses to validate their economic justifications is because the evidence does not support their analyses.
Tax breaks for the developement of popular, luxury housing is nothing more than slop being thrown in the trough for the pigs to feed. In many cases, these development companies are headquartered out-of-state, meaning that even some of profits from this activity that will eventually trickle down becomes expatriated from Oregon anyway. It's time to call downtown Portland a success and redirect this economic stimulus to parts of the city which are currently being neglected. Thanks for not feeding the pigs, Randy. I hope they don't eat you before it's all over.
10:50 a.m.
Jul 31, '06
Hey don't stop those tax abatements outright just yet!
Wait until I can afford to get me a vacation condo in downtown Portland. I will need the help paying the rent.
Once I am in, then you can close the doors.
yip yip
Jul 31, '06
I sure wish some one would start another paper to rival the Oregonian. It was much better when there were 2 major Oregon papers. I used to read the GT and the Oregonian. Lately I've been reading the Register-Guard instead of the Oregonian. It's easier on my digestion.
Jul 31, '06
Randy,
I was a small business in SE Portland that you helped out two years ago. I had issues with getting my shop ADA compliant ( ironic because I am disabled )and I contacted you. The same day I received a call back, and you put me in touch with an expert on the issue. Now, a storefront that was boarded up is a valued meeting place in our neighborhood.
The idea of spreading PDC funds out, opening a 100 or a 1000 small businesses in neighborhoods that need it is the idea we should be pursuing. For the million dollars that gets squandered, community storefronts could be renovated, and neighborhoods can see immediate improvement. This is all local money staying where it needs to be.
Just my two cents, and a belated thanks to Randy. I owe you a cup of coffee. If you use " conservative catch phrases ", so what. The truth is the truth, and sometimes, both sides can have a point.
4:40 p.m.
Jul 31, '06
The idea of spreading PDC funds out, opening a 100 or a 1000 small businesses in neighborhoods that need it is the idea we should be pursuing. For the million dollars that gets squandered, community storefronts could be renovated, and neighborhoods can see immediate improvement. This is all local money staying where it needs to be.
Now, David's suggestion plus some reality-based affordable housing could turn this town around economically in a new york minute...
Lower the business fees for small business as an added stimulant and small businesses will do what the large corportations haven't done very well in this area... Create jobs for Portlanders.
Jul 31, '06
Kudos to any city official willing to take on PDC [or PGE]. The era of pickpocketing the public purse needs to end.
Jul 31, '06
I agree with Eric Sten's assessment that the real estate community has far too much representation in all levels and areas of government. What other business among us has a guaranteed 20 year supply of raw materials (real estate added to the urban growth boundary? The PDC has been just one of many infectious symptoms of this "growth at any cost to everybody else" constituency and I'm delighted that Leonard and the city council are finally cauterizing it.
Jul 31, '06
Randy: I know you have a bag full of examples of PDC failings.
One issue that needs to be addressed is "conflict of interest". At a recent PDC Orientation for all eleven URACs, PDC's attorney explained again the two degrees of "conflict of interest". There have been several votes in URACs where URAC members who would/will have direct economic benefit have voted on motions to their advantage. For NM this conflict has been noted several times in the past two years that I am aware of. Recently PDC staff have indicated they will look into this matter more closely. I hope you can oversee this important issue because it gets to some of the issues you describe needing attention.
URACs are another form of "public oversite" that you are searching for by the Council. The URACs need to be more broadbased reflecting more than PDC dogma and the developers it now serves. It is fine to have "stakeholders" but when their vote on a URAC motion directly benefits them, that is too much and contrary to state law.
Aug 1, '06
Randy,
The problem with PDC and all this is not taking care of what we got as pointed out in the article. At least they are publishing this stuff. I hope the general population knows what this is and can understand it.
http://www.oregonlive.com/search/index.ssf?/base/news/1153709752270750.xml?oregonian?lcfp&coll=7
The tax dollars should be going into public services and not developers pockets. We should be fixing roads, parks, and utiliites in existing neighborhoods. In most governments the developer participates in funding of infrastructure, not the other way around.
There have been stories in the Oregonian that do tell some of this, the "historical" tax exemptions for old money families and some business interests who could well afford to pay thier fair and progressive share of taxes for public services.
But you live in a glass house right now Randy wanting to bump the taxes for F&PD. as it is now it consumes 10% of the property taxes in Portland as compared to 22% for schools. The additional $111 called for in the new plan, will bump it up even more.
On another front I do agree with you wholeheartedly that we should be using Boli Fair Wage Labor on Construction projects, on the majority of the trades. In the long run, it will lead to less and less qualified workers if the trade unions are undermined by greedy developers.
Aug 1, '06
thanks, Randy.
I agree with others, it's time to see the books. and turn this ship around. I love the idea of seeing the storefronts in NE Portland, like along Dekum, open and serving the neighborhoods... I can imagine that Wal-Mart might complain.
exactly!
9:51 p.m.
Aug 1, '06
Very well said Mr. Leonard. Anyone, or any paper that does not believe that the tax-paying citizens should have an accounting and a say in what is happening to their money, needs a major refresher course in the democratic process.
Aug 2, '06
What "framing" would be associated with insistence upon proper and full application of the Equal Privileges and Immunities clause?
Aug 2, '06
"What "framing" would be associated with insistence upon proper and full application of the Equal Privileges and Immunities clause?"
Try that again, Ron.
Aug 3, '06
Thanks, Commissioner Leonard, for paying attention to the details, where both God and the Devil are said to reside. Such interesting comments you've gotten!
Has anyone followed up with Don Smith about his assertion that PDC is statutorily required to produce annually a report outlining the amount of money the city's general fund loses each year due to TIF? Of course, it's not just the City, but also Multnomah County, all the school districts within Multnomah County, etc. whose revenues are affected by TIF. Likewise, all municipal revenues are affected by tax abatement "expenditures" which need to be disclosed as well.
Such a report, if prepared in an auditable form, could elevate the question of what PDC buys with public money to a rational process of prioritizing. In any given year, is the development of market rate housing more or less urgent than money for schools or health care?
Don, where would one find the statutory requirment for such a report?
Aug 3, '06
Jeanne:
I would have to refer you to Steve Schopp who knows everything about the PDC stuff. He'll have the statute. Email me and I'll send you his email.
Aug 3, '06
The PDC is not following State law. (details below) Yearly reports on the impacts of Urban Renewal are required by state law.
Portland, unlike other municipallities, is not providing these reports. A discussion took place on this local blog. http://bojack.org/mt-arc/002543.html ,,,,,,,"Namely, is the PDC complying with the state law that requires it to report to the public on the impact of its various programs on the property tax revenue that flows to the local taxing authorities? Here's what state law says. It's ORS 457.460:
(1) An agency shall, by August 1 of each year, prepare a statement on the same basis on which its financial statements are prepared containing:
<hr/>(e) An analysis of the impact, if any, of carrying out the urban renewal plan on the tax collections for the preceding year for all taxing districts included under ORS 457.430.
(2) The statement required by subsection (1) of this section shall be filed with the governing body of the municipality. Notice shall be published that the statement has been prepared and is on file with the municipality and the agency and the information contained in the statement is available to all interested persons. The notice shall be published once a week for not less than two successive weeks before September 1 of the year for which the statement is required in accordance with ORS 457.115. The notice shall summarize the information required under subsection (1)(a) to (d) of this section and shall set forth in full the information required under subsection (1)(e) of this section.
Looking through the reports that the PDC has filed in the recent past, the reader questions whether they comply with this legal requirement.
For example, here is the PDC report for the two fiscal years 2002-2004. When you get to the part where the PDC's supposed to show the impact of its urban renewal program on local tax collections, the PDC drops back 10 yards and punts. Look at the very last page, where the impact is supposed to be shown. It isn't. Instead, the PDC tries to get away with this:
[I]n FY 2000-01, local government levies were not affected by urban renewal, except as an increase in rates might contribute to Measure 5 compression. With the City of Portland, compression occurred on a “spot” basis because of the property-by-property computation of compression. It is not possible to determine the effect that urban renewal taxes had on each local jurisdiction with respect to spot compression. That's it? No numbers, no facts and figures, just "it had some effect, but we can't tell you what it is"? Mr. Warner, I'm no municipal law expert, but that can't be what the Legislature intended when it passed that law. Indeed, if you would like to see an agency that actually tries to comply with the law's mandate, take a look at the report that the City of Lake Oswego's redevelopment agency files. Here it is. Look at pages 8 through 13 (pages 10 through 15 of the pdf file), where you can see how they have done it.
If Lake Oswego can do it, Mr. Warner, why can't Portland?"
Aug 3, '06
Thanks, Steve. I knew you knew.
Aug 8, '06
Interesting. I'll dig around a bit. Try to locate the PDC accountants who, in the late 1980s, prepared the reports you describe. See if they have an interest in participating in this conversation. Or is it bigger than all of us?
Aug 9, '06
Don and Steve, you've been effective! I think PDC has begun (for 2005-6) to publish the required tax impact report. The last page (page 31 of 31) of PDC's Annual Urban Renewal Report shows that the $51 million levied for urban renewal reduced tax revenues for other municipalities approximately as follows: City of Portland - $20 million Multnomah County - $14 million Portland School District #1 - $11 million Metro, Tri-met, PCC, etc - $ 6 million
You can find the report at http://www.pdc.us/pdf/ura/urban-renewal-report-06-07.pdf.
The Multnomah County Tax Supervising and Conservation Commission is (or was, years ago) a terrific resource. Staff there might provide info to suggest what the City, County, Schools, etc. would have bought with the $51 million that was levied to for urban redevelopment.
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