819-2022

DATE: September 20, 2022

TO: Portland City Council

FROM: Lisa Abuaf, Development and Investment Director

SUBJECT: Report on Cully TIF District

BRIEF DESCRIPTION

On September 14, the Prosper Portland Board unanimously approved the Draft Cully TIF Plan, Report and Governance Charter, kicking off the legislative process for the proposal. In November, Prosper Portland, the Portland Housing Bureau and Community Partners will ask City Council to adopt a new Cully Tax Increment Finance (TIF) District.

Maximum indebtedness for the new district is proposed at $350,000,000, of which approximately

$143,000,000 (45 percent of net proceeds) would be reserved for PHB affordable housing investments in alignment with the City of Portland’s Set Aside policy. The remaining funds will be administered by Prosper Portland with a minimum of 45 percent reserved to support small businesses and economic development initiatives. Five-year Action Plans, created in partnership with a forthcoming Community Leadership Committee, will guide specific spending priorities.

In November, we will bring forward the proposal, but ahead of that more technical conversation, we wanted to share the story of the proposal, because it is truly unique. The process to explore the use of TIF in Cully was both community-initiated and community-led, and the proposal itself is the result of extensive co-creation between community and City partners.

BACKGROUND

Historically, TIF districts in Portland have been created as a vehicle to serve ambitious mixed-use, transit-oriented development; affordable housing projects; and local and regional infrastructure investments like light rail.

In 2011, City Council approved the creation of six micro TIF districts through the Neighborhood Prosperity Network (NPN) with the goal of supporting equity-based community economic development at the neighborhood level. The NPN fosters economic opportunity and vitality with a focus on low- income populations and communities of color. Through grants, training, and support from Prosper Portland, NPN organizations are responsible for planning and implementing projects along specific corridors to improve their local communities and commercial districts.

The NPN embodies a community-driven, self-help model where stakeholders from the commercial district and surrounding service area organize a non-profit organization, raise funds, hire a salaried district manager, complete physical improvement projects through small-scale TIF funding, develop marketing initiatives, and pursue other efforts to improve economic conditions – including workforce services, business technical assistance, and district-specific programming. Districts leverage Prosper

Portland operational funding and staff support through building rental fees, program income, and traditional fundraising efforts.

In 2018, a coalition of community-based partners in the Cully neighborhood, including the two NPN districts, approached Prosper Portland to explore the creation of a large-scale, community-centered TIF district. The coalition proposed an engagement process that could lead to a new TIF model that centers historically underserved, marginalized, and underrepresented community voices in the Cully TIF district creation and prioritization process. Funded with resources from Metro and the City, an Exploration Leadership Committee (ELC) made up of community-based organizations and Cully residents led an extensive engagement process that resulted in the Preliminary Report (Exhibit 1) which served as the foundation of the TIF Plan (Exhibit A) and TIF Report (Exhibit B) as proposed.

With support from Living Cully, members of the ELC include:

• Cully Association of Neighbors
• Cully Blvd Alliance
• Habitat for Humanity Portland Region
• Hacienda CDC
• Native American Youth and Family Center (NAYA)
• Our 42nd Avenue
• Verde
• Residents of the Cully Community

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.

EQUITY IMPACT

Over the past ten years, Cully has experienced increased market and gentrification pressures through rising retail and office lease rates (37% and 51%, respectively) and increased housing costs, making rental housing unaffordable to average three-person extremely low-income households, Black residents, and single mothers in Cully-Roseway. As market pressures intensify, there is demonstrated need for community-centered investments of scale that can proactively mitigate displacement pressures, which disproportionately affect low-income people and people of color. Future stabilization investments build on PHB’s recent bond investments in affordable housing projects like Las Adelitas in partnership with Hacienda CDC, Hayu Tilixam in partnership with NAYA and Community Development Partners, and others. The proposed TIF Plan provides a unique and timely opportunity to shape investments that increases equitable access to capital, housing stability and economic opportunities for those that reside or own a business in Cully and secure those benefits for future generations of Priority Communities.

The TIF Plan and TIF Report center “Priority Communities,” a term that refers to the intended beneficiaries of the Cully TIF District. Priority Communities is a defined term used throughout the TIF Report and includes: 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.

The ELC-led engagement process, the process of co-creation between the ELC and the City, the proposed governance structure, and TIF Plan goals and priorities similarly center stabilizing community and ensuring investments actively counter displacement pressures and gentrification. Goals of the Cully TIF district as memorialized in the TIF Plan include:

• Prevent displacement of vulnerable people
• Preserve existing opportunities for affordable housing and economic prosperity, and create new opportunities
• Ensure that current residents benefit
• Ensure that those most affected will play lead roles
• Develop and inspire a new model for TIF
• Actively work to remove access barriers
• Spur innovation of environment and climate change

Without TIF district funding, there is limited public funding available to respond to and intervene in ongoing market pressures in Cully, be it through affordable housing investments or small business support and stabilization. Based on the proposed TIF funding model, if approved, the Cully TIF district would generate $25 million in the first 5 years of the district and an additional $35 million in years 6 through 10. Based on past investments this could support an additional 2 to 3 larger multifamily affordable housing projects and help stabilize Priority Communities owned businesses and organizations through grants, loans, and affordable commercial space.

COMMUNITY PARTICIPATION AND FEEDBACK

ELC-Led Preliminary Report Engagement. A subcommittee of the ELC created and implemented a community led engagement strategy which resulted in the Preliminary Report. To ensure the engagement of community members, all community organizations involved with the ELC helped recruit and activate Community Leaders (CL). CL are active and trusted Cully residents who helped connect our effort to people that our project partners might not otherwise be able to reach. CL engaged residents, committed to approximately 40 hours of involvement between October 2020 and June 2021, and received stipends for their time and efforts.

The subcommittee and partners hosted multiple focus groups within various communities. Each focus group targeted a specific community for outreach and recruitment. The CL helped support these organizations during the focus groups. 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.

Recognizing that focus groups might have limited reach, the subcommittee also developed a survey using feedback from pilot focus groups. The goal of the survey was to capture community responses to a wide range of questions about creating the TIF plan, including investment priorities and values around decision-making. The survey was available in both English and Spanish.