Eastside Streetcar – Summary

1. On September 6, the City Council will commit $33 million in city money to build the Eastside Steetcar.

2. The Portland Development Commission Board will not be a factor in the decision whether to use $27 million in tax increment financing for the Streetcar project. The PDC Board will be charged with recommending what other projects to cut, and/or how to increase the debt and length of debt of three Urban Renewal Areas, to accommodate the increased spending.

3. The immediate payback for moving ahead with the Eastside Streetcar is $99 million in money from outside Portland, which will fund family wage jobs in the Streetcar construction. Taking only this into consideration, Portland taxpayers pay 25 cents for every dollar spent on the project.

4. The intermediate payback is estimated at a net gain of $1.65 million in tax revenue over ten years. Since the districts won’t pay off their debts within that timeframe, that money will be used within the boundaries of the URAs, rather than going to the City’s General Fund.

Note: I haven’t seen the breakdown of this estimate. I don’t know if it includes TriMet and the City covering annual operating costs. It’s also unclear whether it includes increased interest on the debt and length of indebtedness for the two Urban Renewal Areas (URAs) that will need extensions to provide more money for the Streetcar.

5. It is unknown which other projects will not be funded in order to provide the Streetcar allocation. Therefore, it is not possible to calculate the financial impact of not doing those projects, to compare with the projected benefits of doing the Streetcar and reach an estimate for a net long-term financial benefit.

6. The Council was not told how much tax revenue will be lost to the General Fund, Portland Public Schools, TriMet, Multnomah County, and other taxing jurisdictions, and for how many years, due to the increased time needed to pay off the additional debt for funding the Streetcar. And nobody on the Council asked.

7. The Central Eastside URA Citizens Advisory Committee supported the Streetcar, when the district’s life and maximum indebtedness was increased by 12 years and $51 million last year. Published minutes don’t reflect how the committee feels about increasing the debt and timeline again, which may be needed to fund this project. In a March 2007 meeting, the minutes say one member “asked if we could reallocate funds from the Streetcar project and put it into projects that matter to the District.” Last year, the committee’s recommendation was a more modest $35 million increase in indebtedness, including $4 million for the Streetcar. The Council now plans to extract $6.2 million from the Central Eastside URA for the Streetcar extension.

8. The River District will take the biggest hit, $20 $17 million, in dedicating tax increment money to the Eastside Streetcar project. The Old Town/Chinatown Neighborhood Association has not been briefed or asked to comment on the plan.

9. The rest of the City outside of the Urban Renewal Areas will pay at least $6 million in money from the Transportation Systems Development Charges fund. This money could be used to pay for infrastructure improvements to add capacity to transportation infrastructure outside of downtown and close-in eastside neighborhoods within the URAs. It represents an extra subsidy paid by Portlanders outside of the URAs, in addition to the annual property tax assessments citizens at large pay for Downtown Waterfront and the Convention Center URAs in the wake of Measure 50 (see Portland Communique for an excellent primer on Urban Renewal in general and “Option 3” property tax assessments).

10. Any cost overrun will likely be funded using General Fund city taxes, since the portion to be paid by adjacent property owners is set, as are the grants from outside the city. While previous Streetcar projects have been completed on time and under/at budget, this segment is much longer and more complex.

Without the answers to points 5 and 6, objective people have difficulty deciding whether the investment of $33 million in City money in this project is a good choice or not. Doing the Eastside Streetcar means bringing in $99 million in outside money, but it also means not doing $27 million of other projects within the Urban Renewal Areas and $6 million in transportation improvements in the rest of the city. Proponents are saying the long term gains will make the short term losses worthwhile, but the list of other short term projects that won’t get done isn’t known. And, the long term costs haven’t been defined. They will be affected by how much and how long the Council chooses to extend the Urban Renewal Districts budgets and timelines. So far, the public only has projections for the costs and benefits of the Streetcar extension, not on the other factors that need to be considered.