"Urban renewal" money scheme starting to unravel
"Tax increment financing" is the basic premise on which all of Portland's "urban renewal" gyrations rest. Wonderful developments like SoWhat and the Pearl are supposed to cause property tax collections to rise, and after the mega-bonds that the city uses to pay for these projects are paid off, the rest of us taxpayers are supposed to enjoy the benefit. If the taxes don't roll in, the taxpayers get burned first, and then maybe the banks (depending on the terms of the bonds).
While the huge debts are outstanding, tax revenues from the "urban renewal" districts apparently also pay for the staff and other overhead at the Portland Development Commission, and some of the taxes apparently even make their way to the city's public housing system.
Well, folks, it appears that things are not going so well in "tax increment" land these days. On Friday, staffers at the city's housing bureau got this e-mail message from their director:
All ~Our friend Bill McDonald long ago rechristened this program as "tax excrement financing," and that label may be particularly apropos now. The bursting of the TIF bubble will no doubt have repercussions well beyond what's happening in the public housing operation. One wonders how the ratings on those hundreds of millions of dollars of bonds are going to hold up.
As the budget process continues to unfold, I want to make you aware of
a reduction I have agreed to with respect to the tax increment funds
(TIF) portion of our FY 2010 – 11 budget. In concert with PDC
leadership, and in consultation with the PHB executive team, we will
reduce the amount of TIF we spend on direct and indirect staff costs
by $427,000, which is 10% of the amount of TIF we had budgeted for
those costs in the coming fiscal year. The steep decline in TIF that
PHB is facing in the coming few years tells me that a reduction
commensurate with that being taken by PDC is prudent and appropriate.
Please note that no decisions have been made about how these
reductions will be achieved. Our budget team is hard at work
identifying a series of options that will include not filling existing
vacancies, reallocating staff to our non-TIF funds sources, and
realignment of certain functions. The executive team is open to
suggestions you may have about cost saving or realignment measures as
this analysis proceeds. I expect to actively follow the analysis of
options and be prepared to communicate some decisions about our
direction before April 30 when we are required to provide our next
budget submission to OMF and Council.
Meanwhile, of course, the spendthrifts on the City Council are getting ready to create another massive "urban renewal" district, sucking up a lot of Northwest Portland, Goose Hollow, and the Portland State environs. The whole program loses money on every block, but they're going to make it up in volume. And Williams, Edlen, Hoffman, Walsh, and their ilk will keep themselves busy building some more awful apartment bunkers that nobody wants to live in.
Insanity, thy name is Portland.