This page contains a single entry from the blog posted on December 12, 2002 2:39 PM. The previous post in this blog was Another done deal. The next post in this blog is In with the ornaments. Many more can be found on the main index page or by looking through the archives.

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Thursday, December 12, 2002

More on the Burnside plan

After my post of yesterday on the City Council's plan to narrow Burnside Street and turn it into a one-way thoroughfare, I saw a clip on the news from the council meeting at which the plan was approved. My neighbor, Commissioner Jim Francesconi, was telling the audience, "This will stimulate development and expand our property tax base, and we need to do that, folks," or something along those lines.

Today I couldn't resist doing a little math, and as a result I am even more dubious of the plan. The media is reporting that the project would cost between $40 million and $50 million, and it might be a few years before it gets started. Given inflation and the tendency of these projects to run over budget, let's use $50 million as the projected cost. How much property tax would it take to equal a present value of $50 million? At a 5% discount rate, it would take $2.5 million a year in new taxes.

How much new property tax base would it take to generate $2.5 million a year in taxes to the city? According to my rough calculations, of the 2.12% of assessed value that's paid in property taxes in Portland, the city gets less than 1%. But using 1% just for the sake of argument, there would have to be the equivalent of $250 million in new assessed values for the city to break even. If it takes five years after the city spends its money for the development to occur, due to the time value of money, the needed increase in assessed values to break even would be in the neighborhood of $319 million.

Commissioner Francesconi, do you really think that making Burnside a one-way street is going to add $319 million in assessed values to the tax rolls?

It doesn't add up.

UPDATE: Just a day after all this discussion of the future of inner Burnside Street, a frightening battle took place, in the heart of the area, between police and a suspected parole violator. Is somebody up there trying to tell us something?

Perhaps some will say this incident highlights the need to clean up Burnside and get rid of the transients who make so much trouble there. But gentrifying that stretch will only move them and their problems elsewhere in the neighborhood. Meanwhile, we spend money that's desperately needed to treat the mentally ill on frivolities like development incentives and traffic management.

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