Approve the Cully Tax Increment Finance District Plan
The City of Portland ordains:
Section 1. The Council finds:
Local, State and Federal under-investment in housing, access to capital and social services, exclusionary public policies and laws, the legacy of traditional urban renewal practices and land use decisions, and infrastructure investments have collectively harmed the economic health of Communities of Color in Cully and citywide. These include African American and Black persons; Indigenous and Native American persons; Latino/a/e persons, and persons of color. Priority Communities also include immigrants and refugees of any legal status; renters; mobile home residents; persons with disabilities; low-income people; houseless people; and other population groups that are systemically vulnerable to exclusion from Cully due to gentrification and displacement.
As private market pressures intensify in Cully as the area becomes more desirable, there is an urgent need for restorative and transformative community-centered investments that can be used to intervene in the market and proactively and strategically combat rising residential and commercial rents, which disproportionately affect Communities of Color due to prior harm.
On May 25, 2011, City Council adopted the City of Portland Neighborhood Economic Development Strategy (NED Strategy) with the goal of fostering economic opportunity and neighborhood vitality throughout Portland through community-based partnerships, including: Objective I. Create the Focus Area Program for commercial areas within priority neighborhoods and Objective II.B.3. Establish Neighborhood Opportunity Districts as small scale, long-term, debt-free tax increment finance districts in three to six commercial hubs within priority neighborhoods.
On April 11, 2012, in alignment with the NED Strategy, City Council approved the creation of six micro tax increment finance (TIF) districts - in 42nd Avenue, 82nd Avenue and Division (Jade District), Cully Boulevard, Division-Midway, Parkrose, and Rosewood – with the purpose of investing in and launching the Neighborhood Prosperity Network (NPN) of partners in commercial areas and along specific corridors with lagging investment, higher poverty rates, lower median income, greater racial diversity, and interested community groups.
Prosper Portland has cultivated strong relationships and facilitated equity-centered, small-scale community economic development priorities within the Cully area through partnership with two NPN districts in Cully, Our 42nd Avenue and the Cully Blvd Alliance, whose accomplishments include: administering small scale TIF grant funding to respond to community economic development needs, from physical improvements for small businesses to community plazas to managing and tenanting affordable commercial space; engaging community and businesses to highlight activities of the district such as the Cully Farmers Market and Community Coffee Hour; creating connections to business technical assistance and workforce supports; and, deploying critical resources to address community and business needs during the pandemic in partnership with Prosper Portland, the City and Multnomah County by disbursing multiple rounds of grant funding, providing Personal Protective Equipment (PPE), encouraging diverse businesses to apply for federal funds, and assisting with grant applications.
The Portland Housing Bureau (PHB) has cultivated strong partnerships in Cully to deliver on affordable rental housing and housing stabilization in partnership with Habitat for Humanity, Home Forward, Community Development Partners (CDP), Native American Youth and Family Center (NAYA) and Hacienda Community Development Corporation (Hacienda CDC), amongst others, which most recently resulted in nearly $24 million of Portland’s Affordable Housing Bond resources in two affordable housing projects. Combined, these projects create 191 new homes that will be permanently affordable to low-income households, ranging from studios to three-bedroom apartments.
The Bureau of Planning and Sustainability’s Gentrification and Displacement Risk Typology Assessment shows the Cully area in Dynamic and Late Type 2 phases of gentrification. The dynamic phase indicates an area currently undergoing gentrification with higher shares of vulnerable populations and the Late Type 2 phase indicates areas that have experienced demographic change by losing higher shares of vulnerable populations.
Cully has a larger share of low-income residents than Portland as a whole, with a mean household income that is almost $20,000 less than that of all Portland households, and is experiencing increased market and gentrification pressures through rising retail and office lease rates (37% and 51%, respectively) and increased housing costs.
The 2020 State of Housing in Portland Report found that rental housing is unaffordable to three-person extremely low-income households, Black residents, and single mothers in Cully-Roseway, outlined how homeownership is affordable only to couples with children and white residents, and identified Cully-Roseway as the neighborhood with the second largest loss of racial diversity between 2013 and 2018.
In 2018, seven community-based organizations working in the Cully neighborhood of northeast Portland -- Our 42nd Avenue, Cully Boulevard Alliance, Cully Association of Neighbors, Habitat for Humanity, Native American Youth and Family Center, Verde, and Hacienda CDC -- approached Prosper Portland to explore creating, within Cully, a full-sized Tax Increment Financing district or urban renewal area (Cully TIF District or Area), building on the work of the Neighborhood Prosperity Network and community based partners and scaling City support to counter market pressures and center people most at risk of displacement.
The seven partner organizations referred to above, and other residents, formed an Exploration Leadership Committee (ELC) to facilitate and lead a community conversation around the potential new Cully TIF District. The creation of the Cully TIF District aims to equitably address challenges and center the experiences and needs of communities most at risk of displacement pressures that could accelerate gentrification. Between 2019 and 2022, the ELC, together with Prosper Portland and PHB staff, facilitated a community led process regarding a potential new Cully TIF District with funding from a Metro 2040 Planning and Development grant, City General funds, and Prosper Portland funds.
The ELC issued a Preliminary Report establishing a 2040 vision of the Cully neighborhood as a place that provides a sense of belonging for its residents, particularly for those most vulnerable to displacement, with plentiful safe, affordable housing, thriving Black-, Indigenous-, and People of Color (BIPOC)-owned businesses, rewarding employment opportunities, safe and accessible transportation options, parks and open spaces, a clean and healthy environment, climate resiliency, with places and programs that reflect the cultural diversity of BIPOC individuals. The Preliminary Report also identifies many challenges in Cully, including rising costs of housing and rents, sparse commercial development, poor walkability, insufficient transit, brownfields and a lack of open space/recreational opportunities and provides a baseline of input regarding initial shared priorities for the district from community members.
Prosper Portland, PHB and the ELC partnered on engagement in the preparation of the proposed Cully TIF District urban renewal plan (Cully TIF District Plan), TIF report required under ORS 457.087 (TIF Report), and Governance Charter, with City agencies focused on broad public engagement and the community engagement subcommittee of the ELC leading deeper, focused engagement with Cully’s Black and African American community, Latine and Hispanic community, Somali community, Indigenous and tribal communities, low-income homeowners, mobile home park residents, small business owners and workers and houseless people.
In August 2022, the ELC voted in favor of supporting the City’s adoption of the Cully TIF District Plan, TIF Report and Governance Charter.
Approval of the Cully TIF District would provide $350,000,000 in maximum indebtedness and significant resources over the life of the Cully TIF District to stabilize residents and small businesses, with more modest resources available in the first five to ten years that will be critical to its stabilization. Forty-five percent or $143,000,000 would be reserved for PHB-stewarded investments in line with the City of Portland’s Housing Set Aside Policy and the remaining would be administered by Prosper Portland with a minimum of 45 percent reserved for economic development investments. The Cully TIF District is expected to reach maximum indebtedness in 2059.
Affordable housing and economic development investments within the Cully TIF District will be guided by 5-Year Action Plan priorities, which will be co-created with a forthcoming Community Leadership Committee (the Committee) as further outlined in the proposed Governance Charter and align with the list of eligible TIF investments outlined in the Cully TIF Plan.
Implementation of the Cully TIF District Plan will be undertaken with significant community leadership and partnership as set forth in the Governance Charter which further details the Committee’s role in decisions, recommendations, and accountability oversight; how the Committee will make recommendations regarding implementation; as well as membership, Charter compliance, and other pertinent matters.
The Cully vision aligns with Prosper Portland’s Strategic Plan goals to create healthy, complete neighborhoods, foster wealth creation within communities of color, and form 21st century civic network, institutions, and partnerships.
The Cully TIF District Plan, the TIF Report, and the Governance Charter, each attached hereto as Exhibits A, C, and Exhibit 2 to Exhibit A, respectively, have been drafted to address how TIF investments in Cully will accomplish development of the projects described in the Cully TIF District Plan.
The Cully TIF District Plan has been prepared in conformance with ORS Chapter 457 and with public involvement in all stages of its development.
The approval procedures required by ORS 457.095 were followed, and notice of the November 9, 2022, Council hearing was sent on October 3, 2022, to postal patrons in the city of Portland, as required by ORS 457.120.
The Area, as a whole, is blighted (as defined in ORS 457.010(1)) based on the information set forth in Section XI of the Report. The indices of blight identified in the Report include:
Based on information from the Portland Bureau of Transportation, Section XI(B)(1) of the Report shows that 47 percent of the streets within the Area are in poor or very poor condition. Such inadequate rights of way constitute blight in accordance with ORS 457.010(1)(e).
Based on information from the Bureau of Environmental Services, Section XI(B)(2) shows that sewer and stormwater lines in the Area are in poor or very poor or immediate attention condition. Such inadequate utilities constitute blight in accordance with ORS 457.010(1)(e).
Based on information from the Portland Water Bureau, Section XI(B)(3) of the Report shows there are water main deficiencies in the Area that are in poor or very poor condition. Such inadequate utilities constitute blight in accordance with ORS 457.010(1)(e).
An analysis of the improvement to land ratio (“I:L”) in the Area, summarized in Section XI (D)(3) of the Report, shows that over seventy-nine percent (77%) of the Area has an improvement to land ratio of less than 1:0. Such prevalence of depreciated values and underutilized properties constitute blight in accordance with ORS 457.010(1)(g). In addition, there are two hundred thirty-three vacant parcels in the Area for a total of 107.55 acres of land.
The stagnant and unproductive condition of the land, combined with the inadequate rights of way set forth in the Report result in the Area, as a whole, being blighted as defined by ORS 457.010(1). Rehabilitation and redevelopment are necessary to protect the public health, safety and welfare of the community by curing the identified blight.
Acquisition of real property is necessary to carry out the Cully TIF District Plan. The purpose and use of parcels to be acquired are described in Section VII of the Plan.
No housing displacement is anticipated in the Plan. If displacement occurs, provisions for such displacement will be made in accordance with ORS 35.500 to 35.530. Section XI of the Cully TIF District Plan establishes the procedures for the relocation of displaced persons in accordance with ORS 457.095(2)(d).
Adoption of and carrying out the Plan is economically sound and feasible, based on the Financial Analysis of the Plan as set forth in Sections VI, VII, and VIII of the Report.
The City will assume and complete any activities prescribed to the City by the Cully TIF District Plan.
On September 14, 2022, the Prosper Portland Board of Commissioners held a public hearing and, after considering testimony and other information presented to it, unanimously recommended approval of the Cully TIF District Plan (Resolution No. 7465).
Pursuant to ORS 457.089(2), notice of the intended Cully TIF District was forwarded to the governing body of each affected taxing district on September 15, 2022, with confirmation of receipt of the documents by all taxing districts received as of September 20, 2022. Prosper Portland has consulted and conferred with such taxing districts, and the City Council has not received any written recommendations from these districts.
The Prosper Portland Executive Director, under authorization from Prosper Portland’s Board of Commissioners, submitted the Cully TIF District Plan, Report and Governance Charter, along with supporting materials, to the Council for final approval in accordance with ORS 457.095.
On September 27, 2022, the Portland Planning and Sustainability Commission held a public hearing and voted unanimously to recommend that the Portland City Council adopt the Cully TIF District Plan and found that it conforms to Portland’s Comprehensive Plan. Chair Steph Routh’s letter of support is attached as Exhibit D to this Ordinance.
On October 27, 2022, PHB and Prosper Portland met with the Multnomah County Board of Commissioners to review the Cully TIF District Plan, including the projects, the maximum indebtedness, and the time frame of the plan.
On November 9, 2022, the City Council held a public hearing to review and consider the Cully TIF District Plan, Report, Governance Charter and Planning and Sustainability Commission recommendation, and to receive public testimony.
Pursuant to ORS 457.095, the City Council has considered any public testimony on the Cully TIF District Plan, Report, Governance Charter, the materials provided by Prosper Portland, and the Planning Commission recommendations.
The City Council finds that the Cully TIF District Plan conforms to the Portland Comprehensive Plan, as shown in the Findings of Fact Report, attached as Exhibit B to this Ordinance.
The City Council finds, as set forth in the Findings of Fact Report, that the proposed Cully TIF District area is blighted and that rehabilitation and redevelopment described in the Cully TIF District Plan is necessary to protect the public health, safety or welfare of the city.
The City Council finds that the Cully TIF District Plan provides an outline for accomplishing the urban renewal projects described therein, it complies with ORS 35.500 regarding housing and displacement, and adoption and carrying out of the Cully TIF District Plan is economically sound and feasible.
NOW, THEREFORE, the Council directs:
- As set forth and described more specifically in the Cully TIF District Plan and in accordance with the Cully TIF District Plan, the Board encourages investment in healthy public/private/community partnerships and projects with community development corporations, community-based organizations, and culturally specific businesses and real estate developers with ties to Cully and Priority Communities to achieve the objectives of the Cully TIF District Plan.
- The Cully TIF District Plan, attached hereto as Exhibit A, and incorporated herein by reference, is hereby approved and will be effective thirty (30) days after passage of this ordinance.
- The Report on Cully TIF District, attached hereto as Exhibit C, and incorporated herein by reference, is hereby approved.
- The Governance Charter, attached hereto as Exhibit 2 to Exhibit A, and incorporated herein by reference, is hereby approved. The consequences for not following the agreements and procedures outlined in the Governance Charter are set forth exclusively within the document.
- That the success of TIF District implementation long term, with its intentional focus on Priority Communities, will require community-based staff to help coordinate and advocate for the forthcoming Community Leadership Committee; continue to engage with vulnerable communities to ensure Action Plan priorities reflect their needs; and proactively provide navigation services. It is expected that Prosper Portland will bring forward a proposal to satisfy these needs prior to the next budget cycle.
- Prosper Portland shall administer implementation of the Cully TIF District Plan, and the Portland Housing Bureau shall assume and complete activities agreed upon by the City and prescribed to it by the Cully TIF District Plan.
- The Plan shall be financed, in part, by division of taxes as provided in ORS 457.420 to 457.450.
- The City Auditor shall forward to Prosper Portland and the Planning Commission certified copies of this Ordinance upon approval by the Council.
- The Prosper Portland shall record in the Deed Records of Multnomah County, Oregon, a copy of this Ordinance and the Cully TIF District Plan, upon adoption by the Council.
- The Prosper Portland shall send a copy of this Ordinance and the Cully TIF District Plan to the Multnomah County Assessor.
- The Prosper Portland, in accordance with ORS 457.115, shall publish notice of adoption of this Ordinance approving the Cully TIF District Plan, including the provisions of ORS 457.135, in the newspaper having the greatest circulation in the City within four days following adoption of this Ordinance.
Official Record (Efiles)
An ordinance when passed by the Council shall be signed by the Auditor. It shall be carefully filed and preserved in the custody of the Auditor (City Charter Chapter 2 Article 1 Section 2-122)
Passed by Council
Auditor of the City of Portland
Mary Hull Caballero
Purpose of Proposed Legislation and Background Information
Purpose: This legislation would approve the Cully Tax Increment Finance District Plan under Oregon Revised Statutes 457 – Urban Renewal. The Prosper Portland Board of Commissioners unanimously approved the plan at a September 14, 2022 public hearing. The Planning and Sustainability Commission also voted unanimously on September 27, 2022, to recommend the Plan to City Council for consideration.
Background: Historically, TIF districts1 in Portland have been a vehicle to serve ambitious land use plans and create resources for investment into regional assets like light rail, the Oregon Convention Center, and the Eastbank Esplanade. In recent years, Prosper Portland has used TIF in innovative ways, to support neighborhood Action Plans and implement smaller TIF districts through the creation of the Neighborhood Prosperity Network (NPN), which have been informed by significant community engagement and outreach. TIF has also been a crucial tool for the Portland Housing Bureau to support the development of affordable housing projects in districts across the city.
In 2018, a coalition of community-based partners in the Cully neighborhood approached Prosper Portland to explore a community-centered TIF district creation process that could lead to a new TIF model that centers historically underserved, marginalized, and underrepresented community voices in the TIF district creation process. To that end, Prosper Portland participated in a co-creation model that centered those most vulnerable to displacement and elevated the voices of historically underserved and marginalized communities in the engagement and planning process of the plan. Co-creation is a form of partnership and collaboration in which parties jointly guide and develop products together, sharing knowledge, power, and acquiring deeper understandings of each other’s needs, interests and challenges.
An Exploration Leadership Committee (ELC) made up of community-based organizations and Cully residents, Prosper Portland staff, and Portland Housing Bureau (PHB) staff co-created the Cully TIF District proposal for consideration by Prosper Portland Board and Portland City Council. ELC partners include:
- Native American Youth and Family Center (NAYA)
- Our 42nd Avenue
- Cully Boulevard Alliance
- Cully Association of Neighbors
- Hacienda CDC
- Habitat for Humanity Portland Region
- Cully residents
The community’s long-term vision is to transform Cully into a place that provides a sense of belonging for its residents, particularly for Priority Communities. This means Cully will have plentiful safe, affordable housing, thriving Black-, Indigenous-, and People of Color (BIPOC)-owned businesses, rewarding employment opportunities, safe and accessible transportation options, parks and open spaces, a clean and healthy environment, climate resiliency, with places and programs that reflect the cultural diversity of BIPOC individuals.
The Cully TIF District Plan, Report and Governance Charter are the products of multiple years of co-creation with the ELC and extensive community outreach. Consistent with ORS 457.085, the Plan will guide future 5-year Action Plans and establishes the Project List, a list of legally eligible housing and economic development project types for future TIF investment that will help move the community toward its vision.
The project list contains affordable housing-related programs and projects like single- family home repair, homeownership down payment assistance, multi-family rental development, and rehabilitation and preservation of existing regulated housing. It also contains commercial property-related programs and projects to support affordable commercial space, employment, and mixed-use development. In addition, the Project List allows for investments that support arts, culture and signage; land acquisition and land banking; recreational improvements; infrastructure improvements that directly support stabilization; and administration.
The Draft TIF Plan aims to stabilize Cully residents and ensure the neighborhood provides a sense of belonging for everyone. The TIF Plan takes a targeted universalism approach, meaning, to move the community toward this goal of stabilization and belonging, energy must be spent on those historically marginalized, made invisible, or most at risk of displacement.
“Priority Communities” refers to the intended beneficiaries of the Cully TIF District: African American and Black persons; Indigenous and Native American persons; persons of color; immigrants and refugees of any legal status; renters; mobile home residents; persons with disabilities; low-income people; houseless people; and other population groups that are systemically vulnerable to exclusion from Cully due to gentrification and displacement.
Financial and Budgetary Impacts
The total maximum indebtedness being established in the Plan is $350 million that will be issued using short-term and long-term borrowing over an estimated 30 years, with total payoff of the district estimated to occur by FY 2058-59. As part of the Consult and Confer period mandated by ORS 457 prior to the November 9, 2022, City Council hearing date, copies of the Cully TIF Plan and Report were sent to the City Budget Office on Thursday, September 15, 2022, for review and comment.
The total estimated impact to taxing jurisdictions through FY 2058-59 is anticipated to be between $350 million and $479 million, the range of which is dependent upon the amount of short-term borrowing vs. long-term borrowing. The estimated high impact of $479 million assumes $150 million in long-term debt (bonds) with terms of 20 years and conservative interest rates, and $200 million in short-term debt with minimal interest.
The impact to the City’s General Fund at this level is estimated to be $115 million through FY 2058-59. Higher use of short-term (pay-as-you-go) borrowing, or more favorable interest rates for long-term borrowing, will reduce the financial impact. Lowering the financial impact to $350 million requires the issuance of only short-term borrowing that has no interest and minimal issuance costs, but also limits resources earlier in the District’s first 5 to 10 years and puts more constraints on the size of projects that could be accomplished. This will result in an estimated $84 million in foregone revenue to the City of Portland General Fund.. Long-term borrowing is currently included in the model to illustrate when higher levels of resources could be made available by leveraging tax increment revenues to support earlier investment in the community.
Through the duration of the District, staff will coordinate annually with the Portland Housing Bureau and Office of Management and Finance to forecast, if and when, the issuance of lines of credit and long-term debt (bonds) should be used to fund planned projects and if the issuance of debt is feasible based on projected resources as well as capital markets conditions at the time of issuance.
Community Impacts and Community Involvement
As development and gentrification pressures intensify in the Cully neighborhood, there is an urgent need for community-led investments that can proactively combat displacement pressures, which disproportionately affect low-income people and people of color. This is a unique and timely opportunity to shape investments that prevent or reduce displacement in a way that increases wealth, choice, and stability for those that call Cully home, and secure those benefits for future generations of Priority Communities.
In order to broaden community outreach beyond regular meetings with the ELC, from December 2021 to June 2022, Prosper Portland staff proactively engaged all neighborhood associations within the proposed TIF boundary, including:
- Cully Association of Neighbors
- Concordia Neighborhood Association
- Beaumont-Wilshire Neighborhood Association
- Sumner Neighborhood Association
- Rose City Park Neighborhood Association
- Roseway Neighborhood Association
Staff offered briefings and notified the associations of engagement opportunities at open houses that occurred in March 2022 and June 2022. Approximately 50 individuals across all neighborhood association meetings and open houses participated in the outreach efforts. Further, the Cully Association of Neighbors published information regarding the open houses on their webpage, reaching a broader audience. Prosper Portland established a webpage on its site for this exploration as a tool for sharing information about the Cully TIF District.
Additionally, between January and May 2022, staff supported and participated in monthly engagements with priority groups led by the ELC. These monthly meetings were intended to both inform participants of the proposal (TIF Plan, TIF Report, and Governance Charter) and obtain feedback from priority group members through affinity spaces/focus groups. The ELC and partners involved with this exploration hosted multiple focus groups within various communities, with each focus group targeted to a specific community for outreach and recruitment. The focus groups and target communities included:
- Latina/o/e/x community members;
- Black and African American community members;
- Urban Native/Indigenous community members;
- Mobile home park community members;
- Somali community members;
- Low-income homeowners;
- Small business community members; and
- Houseless community members.
The ELC voted in support of approving the Cully TIF District Plan in August 2022. More recently, ELC members, PHB and Prosper Portland staff have provided additional briefings on the proposed plan, including:
- Portland Housing Advisory Commission – September 6, 2022
- Portland Public Schools Leadership Briefing – September 26, 2022
- Planning and Sustainability Commission – September 27, 2022
- Multnomah County Board of Commissioners – October 27, 2022
100% Renewable Goal
This action will have no effect on the City’s goal of meeting 100 percent of community-wide energy needs with renewable energy by 2050.
Budget Office Financial Impact Analysis
If approved, the legislation would create a new Tax Increment Finance (TIF) district in Portland's Cully neighborhood (Cully TIF District). Like Portland's existing TIF districts, the Cully TIF District would divert tax increment revenues (the amount of property taxes generated by the increase in total assessed values within a TIF area from the time an area is first established) from the City of Portland's General Fund to pay indebtedness incurred to implement eligible projects in the area, such as affordable housing development, infrastructure upgrades, economic development programming, among other district improvements. The Cully TIF District plan has a thirty-six-year horizon, with expiration estimated in FY2058-59, in which the area is anticipated to complete all projects and have sufficient revenue to terminate the program. Over this lifespan, Prosper provides two scenario estimates for foregone General Fund revenues given long versus short-term debt composition. In the first scenario, which entails $350 million in short-term debt, Prosper estimates $84 million in foregone revenue for the City. In the second scenario, which entails incurring $479 million in long-term debt, Prosper estimates $115 million in foregone revenue for the City through FY2058-59.
948 Time Certain in November 9, 2022 Council Agenda
Passed to second reading
957 Time Certain in November 16-17, 2022 Council Agenda
- Commissioner Mingus Mapps Yea
- Commissioner Carmen Rubio Yea
- Commissioner Dan Ryan Yea
- Former Commissioner Jo Ann Hardesty Yea
- Mayor Ted Wheeler Yea