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Real Property & Development Review

Portland Planning a Failure to Job Growth

Posted in Real Estate

As published in the Daily Journal of Commerce

The city of Portland is known for great restaurants, a beautiful environment, progressive land-use planning, bike friendliness, mass transit, etc. Lately, however, Portland is becoming known for negative job growth.

In an ECONorthwest study commissioned jointly by the Portland Business Alliance, the Oregon Business Association, the Oregon Business Council, Associated Oregon Industries, the Port of Portland and the Pacific Northwest International Trade Association, Multnomah County was found to be almost dead last in the western United States for private-sector job creation, among many other indicia of relative economic decline.

I chaired programs presented by the nonpartisan Urban Land Institute the last couple of years in connection with the ongoing Portland comprehensive land-use plan, which corroborates results of the study. The panelists reported that 30 years ago, two-thirds of the metropolitan jobs were in Portland; today, two-thirds of those jobs are in suburban counties.

In absolute terms, the number of Portland jobs has remained relatively flat over that entire period. While city staffers participated in these programs and acknowledged the long-term failure of Portland’s plan to achieve job growth, Mayor Sam Adams and all but one commissioner were conspicuously absent.

Adams rejected the new study out of hand without any rebuttal of the evidence. The study sponsors are hardly anti-Portland, and ECONorthwest is highly regarded as being professionally objective. It is often consulted and relied upon by local governments in Oregon.

It seems fair to say that Portland’s elected leaders are somewhat out of touch with economic reality in their denial of these facts. As John Adams said, “Facts are stubborn things; and whatever may be our wishes, our inclinations or the dictates of our passions, they cannot alter the state of facts and evidence.”

The study was obviously intended to be something of a friendly “family intervention” to overcome this state of denial. Unfortunately, the city leaders’ response is only a reflection of more common misperceptions.

Portlanders’ pride in their city’s supposed superiority has blinded them not only to its lack of adequate long-term economic development but also the degree to which Portland has been losing ground to other cities.

Chicago recently was recognized as being greener than Portland. Hillsboro continues to attract more jobs than Portland. Los Angeles is installing a locally funded light-rail system that dwarfs Portland’s. Seattle has both jobs and a desirable environment. Denver has the competitive advantage of the lowest cost of living when incomes are considered. Portland has the highest. Portlanders’ view of the city’s economic condition tends to be fairly provincial. Perhaps Portland should be called “the city of rose-colored glasses.”

As a parent of two children finishing their college education who want to live and work in Portland, I am personally concerned about their inability to find jobs here. Portland seems to have planned and governed itself into being a poster child for economic stagnation.

In discussing Portland’s condition recently, I found a New York City commercial loan officer well informed on Portland being “challenged” in the economic development department. Perception is reality when it comes to economic and community development, and Portland’s image is not as great as the mayor and many of his constituents want to believe, especially among those deciding where jobs will be located.

Successful community development requires a coordination of land-use and transportation planning with execution of the right economic strategy. Unfortunately the Portland City Charter gives commissioners management control over bureaus, which virtually assures a lack of this needed coordination within the city. Until Portland voters reform the charter to follow the dominant model of a full-time, paid city manager supervised by a council of volunteers, this structural impediment to economic development will ensure Portland’s continued decline.

Portland’s economic success, however, also depends upon the cooperation, coordination and support of other local, regional, state and federal officials. Metro President Tom Hughes and Gov. John Kitzhaber are potential partners who have explicitly made job creation their top priority. Portland’s leaders should welcome and solicit their help in overcoming the problems disclosed by the ECONorthwest study and the ULI programs.

Portland needs job-promoting fiscal and educational systems, which require local, regional and state assistance from other jurisdictions. Portland and its partners must convince companies that they have truly put out the welcome mat for new business. They will never succeed until Portland’s tax burden becomes competitive. Right now, city and county income taxes are a major contributor to economic decline.

Jobs are the golden goose that funds other programs, such as schools, welfare benefits, low income housing, etc. Robust job growth will more than make up for the elimination of the local income tax. Every policy and program should be assessed for its jobs impact if Portland wants job growth. Many cities have seen their central business districts decline into irrelevance over the last 50 years. Oregon cannot afford to let that happen to Portland.

Many point to the success of the Pearl District as evidence of the vitality of Portland’s central business district. That is a mistake because the Pearl District is largely a reflection of the national housing bubble and is not evidence of healthy job growth in Portland.

The irony is that many Pearl District residents now commute to work outside of Portland. Reverse commute congestion is the consequence of Pearl District housing success.

What Portland really needs to focus on is expediting the remediation of its many brownfields and superfund sites so that industrial land will be available to major economic redevelopment.

Portland is facing long-term economic decline because of many structural and political problems, as well as a misperception of the city. Portlanders need to face these facts and solve these problems now.