Urban Renewal Needs Investment Professionals

The Eugene City Council recently extended the life of the city’s downtown urban renewal district for another few years, focusing spending on four projects: ultra-fast wi-fi for downtown, transforming the old LCC downtown building into a business incubator, updating and enhancing the downtown’s public spaces, and assisting the downtown farmers market.

These are all worthy projects, but they betray a lack of vision for how urban renewal districts can be used to accelerate growth in the city’s central core. Most cities with a progressive governing majority love “tax increment financing” because it focuses funding to achieve tangible — and popular — outcomes.

In fact, the Portland Development Commission (PDC), functioning as Portland’s urban renewal agency, achieved so many outcomes by the turn of the millennium that the organization had to be reined in. Its power coincided with Portland becoming a national darling for entrepreneurs and job-creators. If anything, Portland became too successful, as anyone who has scouted the city for storefront or housing locations can testify.

Eugene is a long way from having that sort of problem, but we are seeing a certain momentum — the technical term is “vibe” — especially downtown. Now would be an excellent time to convince the members of Eugene’s current urban renewal agency to bring in experts focused exclusively the funds available for improving downtown.

There’s only nine things keeping that from happening — the members of the urban renewal agency themselves. They didn’t earn their position by being good financial planners or investment brokers. None of them have accounting degrees. And every one of the agency’s current members is already very busy with other duties.

So, you may ask, why doesn’t the Eugene City Council replace the agency’s current members with professionals who manage real estate, development, affordable housing, and investments all the time? They may believe bad luck could follow from breaking nine mirrors. Since the 1980s, the Eugene City Council has been doubling as our Urban Renewal Agency.

The supposed synergy has economic consequences. Urban renewal funds too often function as an expense account to further the wider goals that the city is pursuing. By contrast, Portland has seen the benefits of having those funds focused intently on growing the district and its future funding capacity.

Take another example. The University of Oregon Foundation is not run by a bunch of professors, even though the foundation’s mission is to further the school’s academic goals. Bankers and investment professionals manage the foundation to earn maximum returns to support the university. Eugene should follow that model.

But how do you get nine public servants, charged to look out for the city and their constituents, to give up some of their power? There may be a way — and one of our former mayors happens to be the one who found it.

Brian Obie built his outdoor advertising empire by offering public transit agencies an irresistible deal. His company would do all the work selling ads on their busses and trains — for free. The agency would get as much or more money to support their transit mission, but without doing any of the work. Obie guaranteed them at least the same revenue, but with less risk and almost no effort.

Obie’s staff would then focus intently on one thing — selling ads. They earned money only by exceeding the transit company’s prior revenue returns. They often exceeded those expectations by quite a bit, making plenty of money for Obie’s company.

Eugene could adapt that playbook for public good, charging a volunteer urban renewal agency to focus only on what PDC, led by Eugene alumni Abe Farkas and Lew Bowers, called “the multiplier effect.”

Only revenues above the current baseline would be reinvested by the agency, but its focus would be squarely on that multiplier. Each dollar invested downtown would be required to return ten dollars to the district. As that multiplier begins multiplying, the baseline give-back would quickly become negligible.

Could Eugene give its staff and city councilors the same amount of money each year to lavish on projects inside the district’s boundaries, while growing the district’s capacity to accelerate downtown opportunities? I’m sure of it.

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Don Kahle (fridays@dksez.com) writes a column each Friday for The Register-Guard and blogs at www.dksez.com.