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Portland Business Journal: PSU builds support for urban renewal, expansion
Author: Matthew Kish, Portland Business Journal
Posted: February 3, 2012

Read the original article in the Portland Business Journal here

Portland State University isn’t waiting for Mayor Sam Adams.

Nearly a year ago, the mayor talked about creating an urban renewal area around Portland State that could put the university’s already booming growth on overdrive. The plan could pump $134 million into the sleepy south side of downtown and revitalize it much the way a dreary warehouse district became the Pearl.

Since the mayor first proposed the idea in his February 2011 State of the City address, however, seemingly not much has happened.

Portland State isn’t content to sit around.

This month, the university started building public support for the plan by releasing several documents that show its potential impact. The university also released a map of the proposed new urban renewal area.

If all goes as planned for Portland State, the Portland Development Commission will consider the plan this month and Portland’s City Council will hear it in April. It could be effective as early as May, a timeline that insiders said was optimistic.

Some said the proposal is so complex it could also easily get delayed until next year when a new mayor takes office.

The proposed 134-acre “education district,” which extends to Lincoln High School, is roughly one-third the size of a proposed urban renewal area that got derailed in 2010. It would have included Portland State and stretched from the waterfront all the way to a collection of surface parking lots controlled by the trucking giant Con-way in Northwest Portland.

The new, smaller proposal basically includes just the areas around Portland State to Lincoln High School.

“This is absolutely critical,” said Portland State President Wim Wiewel. “This is not a ‘It would be nice to have.’ It is absolutely critical to our ability as an institution to serve the needs of the region.”

Wiewel, who’s considered an international expert on the role of urban universities in economic development efforts, also emphasized that there’s no rift between the mayor and Portland State.

“We’re very pleased with the mayor,” he said. “He gets it. He gets the role of a great city needing a great university. Not all mayors do. Very few cities, frankly, have a mayor that understands the role of the university quite as deeply as Sam does.”

A spokeswoman for the mayor said he remains supportive of the idea, but he declined to answer questions.

A story in The Oregonian newspaper in January said Adams is still trying to build support for the plan at City Hall.

SCHOOLS AND SERVICES

Urban renewal typically faces two criticisms.

The first is the philosophical argument that taxpayer money shouldn’t finance private development. Critics argue it’s simply a way to steer tax dollars into the pockets of campaign-contributing private developers.

The second argument is that it takes money away from schools and other essential public services.

When the city creates an urban renewal area, it essentially draws an imaginary line around an area that it wants to improve. When property taxes in the area rise, the money is redirected to capital projects in the district.

The proposed education district would mean $53 million less for Multnomah County over the 25-year life of the district, according to PDC estimates. Public schools would get $58 million less statewide, but Portland Public Schools would only take a small hit.

A spokesman for Portland Public Schools didn’t return a call seeking comment.

Multnomah County Chair Jeff Cogen is adamant that any discussion about creating a new urban renewal area include all parties, including school districts and other local governments. So far that’s yet to happen.

“We share the goal of making Portland State University a world-class university and are committed to the collaboration that’s needed to achieve that goal,” Cogen said in a statement. “We haven’t seen the mayor’s final PSU proposal. But it’s important to remember that any time an urban renewal area gets created, there’s an impact on already financially strapped taxpayers. And there’s an impact on the services we provide to people in need — senior citizens, people facing financial hardships involving their homes, youth programs and other critical services that aid vulnerable populations.”

Wiewel understands the concerns.

He said the education district would offer long-term benefits by improving the local workforce, which in turn would lower unemployment and lift income and property tax collections.

“What we’re doing here will help the economy of this region and will prevent the kinds of problems our public sector has been focused on addressing.”

The PDC estimates the urban renewal area will triple the property tax base in the area from $620 million to $1.7 billion, meaning a significant boost in cash for schools and public services in the long run.

Portland State officials also said the plan is also much smaller than previous proposals in order to lessen the impact on schools and other services.

“It’s taking as little off the tax rolls as possible,” said Associate Vice President Mark Gregory. “It’s very targeted. It has a purpose. It’s small.”

A 25-year plan

Wiewel said Portland State is already “grossly under-spaced” and the plan is necessary to keep up with the university’s rapid growth and Gov. John Kitzhaber’s goal of putting bachelor’s degrees in the hands of 40 percent of Oregonians.

In the past decade, Portland State’s student population has grown faster than any of the state’s public universities. It now exceeds 30,000 students, more than 50 percent higher than a decade ago. In the past 10 years, Oregon State University and the University of Oregon have grown 42 percent and 31 percent, respectively.

Portland State projects enrollment will hit 36,000 in the next 10 to 15 years and could hit 50,000 in the next 25 years.

“The only way we can do that is if we can accommodate both the students, the faculty and the staff that go with that,” Wiewel said. “Finding space for them is not an easy task.”

To accommodate 36,000 students, Wiewel said the university needs to add a “bare minimum” of 1 million square feet of space to its 4.5-million-square-foot campus. That’s roughly the equivalent of adding one Big Pink skyscraper.

Without urban renewal, Wiewel said it’s unlikely Portland State will have the cash for any significant capital projects.

Oregon ranks No. 42 for state spending per full-time employee, according to the Oregon University System   

“There are very few states in the country that do as little for their universities as this state does,” Wiewel said. “That’s why the reliance on tools like this is so much more critical.”

Private developers say it’s unlikely any of the surface parking lots dotting the Portland State campus will be developed in the absence of an urban renewal area.

“If the private sector could do it on its own it would have,” said John Russell, president of Russell Development Co. Inc., which owns the nearby Black Box building that houses the Regence health insurance company corporate headquarters.

How to turn $50,000 to $740,000

The jury is out on whether urban renewal works. For every Pearl District, there’s a South Waterfront that has seemingly yet to fulfill its promise.

Portland State President Wim Wiewel said one example on Portland State’s campus illustrates how a proposed urban renewal area could play out on the south side of downtown.

In 1993, the university approached the city about redeveloping an under-utilized block of campus. With the help of $4 million in public money, it cobbled together other funds to build its Urban Center Plaza and Academic and Student Rec Center. The Portland streetcar bisects the block.

The projects were key to the development of the nearby $90 million University Pointe Residence Hall that will open this fall.

The building was largely financed by Austin, Texas-based American Campus Communities. It includes 360,000 square feet of taxable space.

“They said the existence of that rec center was the key factor in making them interested in building that kind of facility,” Wiewel said.

The new dormitory will generate around $740,000 per year in property taxes, Wiewel said. The property previously generated $50,000 in annual property tax revenue.

The same company also just bought another piece of land nearby for development.

“Again, that will be a property-tax paying building,” Wiewel said. “This is such a powerful example.”