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Did the Portland Streetcar Generate $2.3 Billion in Development?

Feb 12

2007

According to the city of Portland, the city’s streetcar line generated nearly $2.3 billion worth of development. They calculated this using a very simple methodology: they simply added up all the development that had taken place within three blocks of the streetcar line since the line had opened and attributed it to the streetcar.

As Tom Rubin says, that is like giving a rooster the credit when the sun comes up.

The city includes 85 specific developments on its list. Here are just a few:

• All new construction at Portland State University ($142.2 million), including a $7.5 million garage with nearly 1,200 parking spaces (349 new, 810 renovated).
• The new Whole Foods grocery store — which is built on top of a large parking garage.
• Station Place, an $18 million apartment building — and the $8.8 million parking garage that goes along with it.
• The $11 million renovation of the First Presbyterian Church — and the 170-space underground parking garage that goes with it.
• Benson Tower, including 150 parking spaces.
• The Crane Building, which converted its basement to 46 parking spaces.
• The Cronin Block, a $50 million townhome project with 335 parking spaces.
• Edge, a $27 million mixed-use project with three parking lots, one underground.

Most of this stuff would happened without the streetcar (does anyone think the University would have faded away were it not for the streetcar?). Some of it is double counted: Portland sometimes credits OHSU’s $103.5 million South Waterfront office building (with 650 underground parking spaces) to the streetcar, and sometimes to the aerial tramsway. Hardly any of it is “transit oriented”: most of these developments have plenty of parking.

Still, there has been a bunch of new development. What role did the streetcar play? Answer: Not much. As shown on the map below, almost all of downtown Portland and surrounding neighborhoods is in one or another urban-renewal district (click on the map to download a larger PDF version). (West is the top of the map and north is to the right.)

Portland’s streetcar starts on Northwest 23rd, heads east on Marshall/Northrup, and enters the River District(which includes what is popularly known as the Pearl District) at 16th Avenue. The streetcar turns south on 10th and 11th, passing itn the South Park Blocks district when it crosses Burnside, and then turns east on Hall/Montgomery. After a couple of twists, it enters the North Macadam district (which includes the area more often known as the South Waterfront district) at 4th and Harrison. Notice that the North Macadam district has conveniently been extended up Harrison on a one-street-wide finger from 1st through 4th so they could spend North Macadam urban-renewal money on the streetcar.

In short, except for the first seven blocks, the entire streetcar route is in an urban-renewal district.

According to page 3 of the Portland’s Urban Renewal History Appendix, the city issued around $234 million worth of bonds to subsidize this district. These bonds would be repaid by the “incremental” property taxes paid by properties in the district, which means that other Portlanders would have to pay for the police, fire, library, schools, and other services used by occupants of the district. The city also added some federal grants to the pot.

All this money was spent on such things as buying land (to be resold to developers at a loss with the understanding that the developers would build high-density, mixed-use developments), subsidizing housing, building parking, providing parks, and other infrastructure. Some of the money was also spent removing a Broadway Bridge off ramp to free up land for the district. The city also tore out a bunch of railroad tracks next to Union Station — tracks that Amtrak said it would need if it ever expanded service to Portland — so it could build more condos. None of this money went to the streetcar.

Page 1 of the Urban Renewal History Appendix says that the city sold $144 million worth of bonds for the South Park Blocks district. This money is going to historic renovation, subsidies to housing developments, and parks. In addition, about $7.5 million of this money went to the construction of the initial streetcar line.

The urban-renewal plan for the North Macadam (South Waterfront) district is even more expensive, calling for the sale of $289 million worth of bonds. Many of the things funded by these bonds, such as the aerial tram, have gone over budget, but so far Portland has not decided to sell any more bonds. About $12.2 million of this went to extend the streetcar line into the South Waterfront area.

Between these three districts, we have more than $665 million worth of subsidies. The streetcar accounts for less than 3.0 percent of this. In addition, part of the North Macadam district used to be in the Downtown Waterfront district, which received $165 million of tax-increment financing. Some of that money went into RiverPlace, now in the North Macadam district, and the streetcar report counts new developments in Riverplace among those supposedly generated by the streetcar.

These are just the subsidies from tax-increment financing, which is the largest source of funds for Portland’s urban-renewal agency, the Portland Development Commission (PDC). But according to PDC’s budget, the agency also gets money from federal grants, property sales, rents, and other “program income.” These sources account for $35 to $40 million per year in additional funds that can be used to subsidize urban renewal.

The subsidies don’t stop there. As Jim Karlock has documented, many of the residential buildings on the streetcar line have had their property taxes waived for ten years or more. Karlock says that at least $163 million of “core-area multi-unit” housing has been exempted from taxes.

Improvements to many “historic properties” have also been exempted from property taxes for fifteen years. It is quite likely that this includes most of the renovations in the city’s list of streetcar-generated developments.

I expect to soon do a detailed search of both the historic property and multi-family housing lists. But a quick comparison reveals that many the city’s streetcar-stimulated properties are on the Jim’s list of tax-exempt properties. These include the properties on River Parkway, the Pearl Court Apartments and Pearl Townhomes, and the Streetcar Lofts. Jim’s lists are from 2003, so many of the newer developments won’t show up on them.

So we have multiple subsidies going to most or all of the properties on the city’s list of streetcar developments. Which do you think played the most important role? The $665-million-plus spent on below-market land sales, parking garages, and other infrastructure? The ten to fifteen years of property tax waivers? Or a piddly-dink, 7-mph streetcar line? And if you still think the streetcar line made such a difference, then why did developers build thousands of new parking spaces along the line?

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Reprinted from The Antiplanner