Case Studies

Study I:

Saying All the Right Things:

Portland’s Interstate MAX Light Rail Planning Process

In 1998, Portland, Oregon, completed its first light-rail line, which ran east to west from the city to the job-rich suburbs of Washington County. City officials planned for another line running north-south, but voters rejected its $350 million funding measure.

The defeat frustrated transportation and equity advocates; Ross Williams of Citizens for Sensible Transportation believed it reflected an “I got mine” attitude of voters along the first rail line. The north-northeast section of Portland, which would have been served by the second phase of the north-south line, is home to most of Portland’s small African American population and one of the few remaining affordable areas in the region. “It would be outrageous,” says Williams, “to spend so much money to build a ‘Lexus’ line to Washington County, and not to provide [light rail] to the low-income community, which would let them apply to Intel or other job opportunities.”

Despite the funding defeat, the Tri-County Metropolitan Transportation District of Oregon (Tri-Met), the City of Portland, and many north-northeast residents were still eager for a north-south light rail line. The agencies revised their plans, deciding to start with the north section of the project, relying on $250 million in federal money and also using tax increment financing from an Urban Renewal Area to cover the city’s share. The rail line, called the Interstate MAX because it runs down the center of Interstate Avenue, began construction in November 2000, and was completed in May 2004—ahead of schedule and under budget.

Making the Plan

In keeping with Portland‘s national reputation for strong civic engagement, North-Northeast boasted many vocal and committed neighborhood organizations. City and transportation officials knew it would not be feasible to establish an urban renewal area without community involvement and entered the planning process with only one non-negotiable point: TIF money must first go toward the city’s match of federal funding for the light rail. The Portland Development Commission (PDC) created an Urban Renewal Area Advisory Board of 54 community members, representing neighborhood associations, the business community, affordable housing advocates, individual residents, other community-based and nonprofit organizations, and government agencies. In numerous meetings and working groups, the group established boundaries for the Urban Renewal area (URA) and principles to guide development in the area and allocation of surplus TIF money.

Community advocates organized extensively, bringing the public to hearings and making the case that the light rail needed to benefit existing North-Northeast residents.

Gentrification and displacement were primary concerns. Portland’s housing prices had been rising steadily, and gentrification was a growing but often unacknowledged phenomenon, says Trell Anderson, housing programs coordinator for Portland’s Bureau of Housing and Community Development. But in North-Northeast, residents wanted to address gentrification explicitly, says Anderson:  the predominantly African American neighborhood had been hard hit by racially inequitable planning and policymaking in the past, including a stadium and a highway project that had displaced many residents.

There was little doubt in anyone’s mind that a light rail line would increase property values substantially. But any transportation equity victory would prove hollow if, as Ross Williams of Citizens for Sensible Transportation says, “we built the line and the community’s character changed so dramatically that the people we wanted to serve could no longer live there.” Thanks to the dedicated work of transit advocates and neighborhood organizers, the Urban Renewal Area plan released in August 2000 reflected the community’s gentrification concerns—so much so that the plan read, in the words of advisory board member Alan Hipólito, like “an environmental justice textbook.” It included 18 major anti-displacement projects and assistance programs for small businesses.

The plan states explicitly that the URA should primarily benefit existing residents and protect against gentrification and displacement. The housing subsection suggests specific programs to prevent displacement, promotes housing for people who work in the area (along with high-need populations like seniors and single parents), and calls for mandatory community review of designs for any URA-funded development. The plan also takes a broad view of displacement—addressing not only traditional condemnation and eminent domain concerns, but also economic displacement—with strategies to protect small businesses, create living wage jobs, and offer wealth-building opportunities. “The goal was to make the plan accountable to what the community needed and wanted,” says Hipólito, who works at a local community development corporation.

Anderson celebrated the plan’s language as a major achievement: “It’s pretty amazing to me that an urban renewal agency and a city council would adopt a plan that talks about benefiting local residents,” he says. “I think that’s a tremendous public policy statement.” The URA plan was also strong because it built on an existing foundation, says Paul Mortimer, one of the original co-chairs of the advisory board. The city had created a local community plan for Albina, one north-northeast neighborhood, in 1993 with significant community input. Instead of reinventing the wheel, the URA modeled their planning after the Albina process, which helped diffuse resident concern that past efforts would be disregarded or forgotten.

Capturing Capital Investment

Tri-Met was also involved in a community benefit planning process around the contracts associated with the light rail construction. Agency director Fred Hanson, who previously worked on transportation equity at the federal level, hired Bruce Watts, a community activist with construction experience, to establish strong minority contracting provisions. After collecting community input and assessing what had gone wrong in past efforts, Watts built a successful program that exceeded all its goals during the construction phase of the project. Tri-Met directed its contractors to devote at least 16 percent of capital spending to “disadvantaged business enterprises” (DBEs, generally defined by the federal government as businesses owned by racial minorities or women), with preferences for subcontractors from the North-Northeast community. The program also offered the subcontractors technical assistance, capacity building, and local hiring provisions strategies. To gain approval from Tri-Met, primary contractors were even required to present their minority recruitment plans at community meetings. To date, 19 percent of the project’s total contracting dollars (valued at $35 million) have gone to disadvantaged business enterprises, and $8.1 million in contracts have gone to north and northeast Portland DBE subcontractors.

Challenges to Implementing the Neighborhood Preservation Goals

The URA’s neighborhood preservation goals were much more difficult to implement. Although the Interstate Area Urban Renewal Plan prioritized community benefits and offered equitable development guidance, several obstacles emerged—some predictable, others unforeseen.

The main impediment was funding. Unfortunately, between an economic downturn and a 2001 state Supreme Court decision  in favor of a hotel chain (Shilo Inn) that challenged the TIF assessments, very little surplus TIF money reached the community. Even when it did, PDC as well as city policies allowed the use of TIF funding only for capital improvements or for planning capital improvement projects. PDC publicly explained that 18 of the 19 projects in North Portland would not move forward, leaving only the light rail construction.

As the representative of the community development department, Trell Anderson tried to balance the neighborhood residents’ needs, city priorities, and fiscal realities: “I had to walk the fence between helping PDC folks articulate their goals and trying to fund [the plan] with TIF money, because I wasn’t supposed to spend our [city] money,” he recalls. “Community residents really need funding to help long-term tenants who are vulnerable to sudden rent increases—but TIF can’t be used for that. We set up some pilot programs, but we have to call them pilots because we don’t have ongoing funding.”

Once they realized the limitations of the surplus TIF money, advocates began to question the decision to allow urban renewal money to fund the light rail construction. Although the URA was originally created precisely to fund the rail line—and few believed the revitalization plan could have been created otherwise—many participants in the original planning process were distressed to find themselves left with few resources for the other elements of their comprehensive community plan. “Urban renewal money is not a good idea for the local match for rail funding,” says Ross Williams. “I would never say don’t do it ever, but there ought to have been a much higher bar raised. We should have figured out how we could replace that money with something else.”

Gentrification pressures increased in the neighborhood. Newcomers moved into the area and existing residents, especially renters, faced evictions and rent hikes. Participants in the planning process were dismayed as the promises made by the plan were not kept. Williams says that even if the URA proposals were adequately funded, the original plan did not anticipate the magnitude of the light rail’s effects on the neighborhood: the market began to escalate as soon as the rail route was set—if not before. “I was naïve about how quickly the gentrification process would happen, and how difficult it was [to control it] so late in the game,” he says. “We started with a neighborhood that was already moving. If you’re going to deal with gentrification, you have to do it when you are first planning where the light rail is going to go. Once you have started construction it is way too late.”

As the funding stalled, advocates turned their attention to the task of holding developers accountable to the community benefit standards outlined in the URA plan. With community groups unable to receive early TIF revenues for their own anti-displacement programs, it was even more crucial that station area development plans and RFPs incorporate affordable housing and workforce development concerns. In Fall 2000, for example, Hipólito wrangled his way onto the committee that was making station area plans, only to find that key guidelines from the URA plan like “other measures besides ROI [return on investment] will be considered” and “protection from displacement” had been dropped. He fought successfully to restore the language. Hipólito and other advocates believed that if each developer followed the original plan’s strong community benefit guidelines—from community review of project designs to a diverse range of housing options, including affordable housing—the URA advisory board would realize at least some of its community goals.

Fast Forward: North-Northeast in 2008

While the plan said all the right things, its equitable development goals were ultimately not achieved. The Interstate MAX rail line contributed to the transformation of the neighborhood, but not as the original committee members had hoped. According to Maxine Fitzpatrick, Interstate Corridor Urban Renewal Area (ICURA) committee member and executive director of the Portland Community Reinvestment Initiative (PCRI) , a CDC based in north-northeast, there has been massive residential displacement in the neighborhood over the past decade. The process had begun prior to the Interstate project but was accelerated with the new transit investment. There has been a major demographic shift in North-Northeast: while the historically black community remains more racially diverse than the rest of Portland, which is 80 percent white, the racial composition has changed dramatically. Many of the neighborhood’s African American residents have moved to Southeast Portland, or have left the region.

Fitzpatrick explains that two of the biggest challenges to implementation were that resources were disproportionately allocated to new businesses and homeowners (compared to locals), and that the majority of the affordable housing projects did not benefit the most vulnerable residents: those with incomes below 60 percent of median, and as much subsidy went to market-rate housing as affordable housing. While the PDC and city officials should have done more to ensure that the community goals were met, the community needed to be better organized to hold the city agencies accountable: “Minority communities need to be engaged in the entire process. There must be sustained advocacy through plan implementation, focused on monitoring. The community’s voice is important but it wasn’t there. There should have been a committee focused on making sure the goals are met, especially those focused on ensuring that existing minority residents benefit from public investment.

Recent Progress: Citywide TIF Housing Policy and Stronger Housing Coalitions

Although the neighborhood-level efforts were unsuccessful in stemming displacement in the north-northeast neighborhood, the level of organized community support for preserving housing affordability in the city and region of Portland has grown tremendously over the past five years. Community groups became an increasingly organized and powerful voice for affordable housing in the city after 2002, mainly through the efforts of the Affordable Housing NOW! Coalition, which was initiated by the Coalition for a Livable Future (CLF), Community Alliance of Tenants (CAT), and the Community Development Network (CDN). The coalition has successfully advocated to secure more resources for affordable housing. One of the major victories of the coalition came in 2007, when the PDC board and City Council passed a new policy that sets aside 30 percent of TIF funds for affordable housing in most of the city’s TIF districts (including ICURA) for households with incomes below 80 percent of the median, with at least 48 percent of the set-aside resources going to households with incomes under 30 percent of the median. The set-aside should bring over $125 million in new housing resources to low-income communities over the next five years.

In addition to Affordable Housing NOW’s efforts, a relatively new coalition has formed to create a base of support around housing issues specific to Portland’s small minority community. In 2005, PCRI, Hacienda CDC, and Native American Youth and Family Center came together to form the Housing Organizations of Color Coalition. This coalition will advocate for policy reforms to increase the total amount of housing resources available for communities of color.