PDC math: $384 million, 705 jobs
So, is the Portland Development Commission getting it done? The city auditor's recent study of the agency, though tightly limited in scope, provides some interesting data with which to make an assessment.
The auditor's study zeroed in on five urban renewal districts -- those which the auditor's staff "determined had economic development as a primary goal and which had enough history that one would expect results to have occurred." It then went to the state Employment Department and Metro to see what had happened in the realm of private sector employment in those districts between 1996 and 2004. Since "job creation and business development" are "what is generally thought of as economic development," the study group saw the employment trends as a key indicator of PDC success (or lack thereof).
Refining the analysis further, the auditor's staff looked at the same data in "three separate control areas in the City with land use patterns similar to" the urban renewal districts. The control areas were not in urban renewal districts; they did not receive significant PDC subsidies during the period in question, and the auditor's group did not see any other governmental investment in these areas, either.
The five urban renewal districts selected for study were Downtown/Waterfront, River District, Convention Center, Central Eastside, and Airport Way. The "control areas" were (1) just east of the Central Eastside district, straddling the Banfield Freeway out to around 39th, (2) a westerly section of North Portland, and (3) a large area of southeast Portland, between Division and Powell just east of I-205.
The findings? The "control areas" had better job growth than the urban renewal areas -- 3 percent vs. 1 percent! Both those groups did better than those areas of the city outside any urban renewal district, where employment declined 9 percent.
Here's the tale of the tape for the 1996-to-2004 job changes within the five urban renewal districts:
Airport Way: + 11% (+ 1,403 jobs)
Central Eastside: - 9% (- 1,337 jobs)
Downtown/Waterfront: - 8% (- 2,017 jobs)
Convention Center: + 2% (+ 383 jobs)
River District: + 21% (+ 2,273 jobs)
Five districts combined: + 1% (+ 705 jobs)
Although the auditor was too polite to do the math, the report does reveal that in these five districts, the PDC spent around $384 million over the period studied. Yielding 705 jobs, that works out to $544,681 of PDC "investment" per job added!
Of course, who knows what would have happened in the urban renewal areas without all those PDC subsidies? But the "control areas" did even better without them, thank you very much.
On the other side of the ledger, the average wage in the five districts increased substantially over the eight years in question -- by 25%, compared to a 14% decline in the control areas and an 8% increase in the rest of the city. The tale of the tape by district for the eight-year period was as follows (total jobs multiplied by average annual wage, difference not adjusted for inflation):
Airport Way: + $104,342,973 wages
Central Eastside: + $7,442,302 wages
Downtown/Waterfront: + $84,995,545 wages
Convention Center: + $255,631,262 wages
River District: + $228,541,767 wages
Five districts combined: + $680,953,849 wages
Taking 20.4% inflation into account, however -- inflation over that eight-year period was around 20.4% nationally -- the payroll results are not as flattering:
Airport Way: + $19,420,476
Central Eastside: - $89,517,190
Downtown/Waterfront: - $109,877,505
Convention Center: + $159,004,223
River District: + $151,493,485
Five districts combined: + $130,523,489
So in inflation-adjusted terms, a net annual wage increase of around $130.5 million was seen in the five districts. Assuming that inflation makes that $384 million PDC "investment" look more like $400 million in 2004 dollars, it works out to about $3.07 of PDC outlay for every $1 of annual payroll created. In other words, to create a $50,000-a-year job in the five districts, the PDC had to "invest" $153,000.
Of course, statistics often lie, and the auditor's report is full of caveats -- among them the reminders that the PDC is also trying to create "affordable or mixed-use housing," and that "there is a complex relationship between housing, jobs, and other livability issues." Nonetheless, when you look at the expenditures and the results, it doesn't seem that the PDC is succeeding as a job creation engine.
Which makes you wonder just what it is that it's supposed to be doing. (Don't we already have a city housing authority to create low-income housing?)
And if the PDC disagrees with this math, it apparently doesn't have the data to defend itself. As the report noted: "During fieldwork, we determined that we could not fully assess the efficiency of the [PDC Economic Development] Department's strategies, such as cost per job created, due to difficulty in obtaining financial information on a refined program basis and the lack of readily available actual jobs creeatd and retained data in most programs."
One last point on the jobs figures: It's interesting to compare jobs in Downtown/Waterfront and those in the River District over the study period:
Downtown/Waterfront: - 2,017 jobs
River District: + 2,273 jobs
Downtown/Waterfront: - $109,877,505 inflation-adjusted wages
River District: + $151,493,485 inflation-adjusted wages
Has the Pearl District sucked the life out of downtown? Apparently so. All those cranes and condo towers look like prosperity to the kids they send out from the New York Times travel section, but underneath it all it's just a migration of around 2,000 jobs out of downtown, with an overall increase of another 200 to 300.
That and a whole bunch of rich ex-Californians sitting up all night counting their money in their condos, and marvelling at their good fortune.
I get the sense that the PDC's new leadership is moving away from condo-mania and toward helping small businesses. Based on what the auditor found, they have their work cut out for them.