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Four hundred of Portland's elite descended on the Hilton Hotel last Friday to celebrate the 25th anniversary of the city's Downtown Plan. Power brokers, from former Gov. Neil Goldschmidt to current Mayor Vera Katz, sipped Rex Hill pinot noir and supped on chicken Wellington as they patted themselves on the back. Two decades ago, downtown Portland choked on traffic and pollution during the day and at night was as desolate as the Forbidden Zone in Planet of the Apes. Today it's an urban oasis. Two weeks ago, the New Orleans Times-Picayune called it "America's master planning nirvana." Downtown Portland's future looks even brighter, judging by the cranes dotting the sky and the holes cratering the ground. An estimated $800 million worth of downtown construction activity is now under way. It is, according to Portland State University professor Carl Abbott, the area's biggest building boom since Portland hosted the 1905 World's Fair. Move a little dirt around, however, and you'll find that all is not well. "On the surface everything is great," says Ruth Scott, executive director of the Association for Portland Progress, a group that represents leading downtown businesses. "But when you start digging down you discover we're doing the same as every other city--we're seeing suburban office growth and urban office decline or stagnation." The evidence is startling: While the region added nearly 200,000 new jobs in the 1990s, downtown lost approximately 1,500 jobs, according to Metro, the regional governing body. So what is the city getting out of this construction, if not jobs? The answer, in a word, is change. In a remarkably short period of time, the identity and role of downtown has shifted from that of a job center for white-collar workers to a playground for visitors, shoppers and affluent young professionals moving into lofts in the Pearl and River districts. "Downtown used to be where you came to work. Now it's where you come to play," says developer Homer Williams, who plans to build 3,000 apartments and condos in the River District. Obviously, that's not all bad. But the shift of office jobs to the suburbs does raise some troubling questions: Does it mean lower-paying jobs downtown? More congestion, pollution and sprawl in the suburbs? Will it require tax breaks to seduce new employers? "The shift is pretty substantial," says Rick Gustafson, the former executive officer of Metro who now works as a consultant for the APP. "And the part that's bleak is not understanding the ramifications of that shift. No one is working at that." In fact, Gustafson says, no one has even asked him about it. One way to understand the changes downtown is to pose a few simple questions about what's going on, why you should care and what, if anything, can be done about it. What are all the cranes doing downtown? This is not your father's downtown. Thirty-six private-sector projects are either under construction, recently built or in the planning phase. When those projects are complete, downtown will look different. It will have 1,300 new hotel rooms, 1,700 more condos and apartments, 4,700 added parking spaces and enough new retail space to hold the equivalent of 25 Zupan's Markets. Most of the new retail space comes in a single project that occupies a full block between the MAX tracks on Southwest 3rd and 4th avenues. Called Pioneer Place 2, it's a $41 million, five-story mall developed by the world famous Rouse Co., the folks behind Baltimore's Inner Harbor and the Riverwalk mall in New Orleans. The company is betting the new mall will be as successful as the original Pioneer Place and its upscale stores such as Saks Fifth Avenue. "Rouse tells us it's one of the strongest retail projects in the country for them," says Katz. Hotel developers are also bullish on Portland. By graduation day next year, four new hotels will be open, with two more in the works. That will increase the number of hotel rooms downtown by 30 percent; with Portland's 77 percent hotel occupancy rate, that translates to roughly 1,000 more visitors staying downtown every night. Much of this is a national, not local, phenomenon, as hotel profits nationwide are projected to hit a record high of $17.6 billion this year. "No question there's a hotel boom at the moment, and what you're seeing in Portland is part of that," says Adam Brecht, a lodging industry analyst at Coopers & Lybrand in New York City. Downtown Portland also offers a few of its own enticements. Its occupancy rates are among the highest in the country; its hotel tax is comparatively low; and investors anticipate that voters will approve an $82 million bond to expand the Oregon Convention Center in November, a move that's likely to boost the demand for downtown hotel rooms. It's easy to see why people would want to stay downtown. New restaurants are opening, the Portland Art Museum is bringing in blockbuster shows (and planning a $30 million expansion) and classy old buildings have been reborn as night spots such as the Crystal Ballroom. What's surprising is how many people want to live downtown. Eleven different housing developments are under way or recently completed. For the most part, this new housing is not for the people who work in the hotels and stores. It's condos--like the MacKenzie Lofts projects in the Pearl District (where prices range up to $456,000) and the Riverstone complex in the adjacent River District (where studios start at $131,500 and penthouses at $330,000)--for affluent buyers. Developer Williams says he's only following the demographic spike in young professionals and baby boomers who want to live downtown. "Life is fundamentally changed," Williams says. "The city has become the amenity. The return to urban living is happening in communities around the country." Michael Wrinn, 46, typifies the new breed of "reverse commuter." An engineering manager at Intel, Wrinn shuttles between offices in Hillsboro and Shanghai. He just bought a $300,000 condo from Williams, he says, because he prefers the downtown lifestyle. For Wrinn that might mean coming home and going to the symphony, followed by a late meal out. Other nights it's a trip to Powell's to browse books, or to a club to listen to jazz. "Portland has an excellent downtown," says Wrinn, who's lived in Montreal and San Diego. What downtown doesn't have, however, is enough people like Wrinn working there. What's not being built? Of 54 private projects under construction or discussion, just six are office developments. Historically, office buildings have been the lifeblood of downtown. In 1972, the city was the white-collar center of the region's economy: 91 percent of the region's office jobs were concentrated downtown. By 1995, however, that share had sagged to 52 percent. Downtown captured virtually none of the new jobs created this decade. According to Metro statistics, downtown jobs actually decreased from 103,872 in 1990 to 102,161 in 1996. Several factors explain the shift of jobs to the suburbs. Tax breaks to computer chip manufacturers such as Intel spurred explosive growth of the high-tech industry in Washington County. Executives at Intel didn't see any sense in putting their office workers downtown. The chip plants required vast tracts of land, and the company wanted the engineering and support staff nearby. A sprawling campus environment, they believed, would also promote productivity among Intel's 11,000 employees. Also contributing to the job shift were the real estate failures and banking crises of the late 1980s. Those problems led many of the financial institutions that bankroll office towers to adopt stricter lending polices. After the era of speculative deals and empty high-rises, it became more difficult to build office towers. Downtown Portland, with its limited space and spectacular views, suddenly found itself unattractive to builders. "[Financiers required] high-rise towers to have 50 percent of their space pre-leased," explains Michael Ogan, business development manager for the city. "That was tough, and it put Portland at a disadvantage." Meanwhile, the suburbs offered the abundant space--particularly for parking--that made it easy to develop smaller office buildings. Just ask the folks at Waggener Edstrom. A 250-employee public relations firm that counts Microsoft as its biggest client, Waggener Edstrom recently outgrew its Portland offices in Johns Landing. City officials tried to lure the growing company to an empty lot near Riverplace. But they couldn't match the appeal of Kruse Way in Lake Oswego. Kruse Way offered 3.63 parking spots per 1,000 square feet of office space; downtown could only offer 2 spots per 1,000 square feet. Waggener Edstrom will be moving in December. "We were looking for more parking and an easier commute for our employees, 70 percent of whom live on the west side [of the Willamette]," says company spokeswoman Cindy Raz. "Kruse Way was attractive and handy to the freeway." As if losing the parking wars weren't discouraging enough, downtown is also losing employees to merger mania. Local companies are being bought by out-of-state corporations and cutting jobs in the ensuing consolidation of services. The mergers of U.S. Bank and First Interstate, for example, will lead to a loss of approximately 1,500 jobs in Portland, according to the Portland Development Commission's Ogan. So why care about office jobs? Not everyone sees a problem with what's happening downtown. Money is coming in, buildings are going up, Portland is getting busier. "People are reinvesting in the city," says John Fregonese, formerly Metro's top planner. "If the patient's temperature and pulse are good, then things are going to be fine." But Scott, of the Association for Portland Progress, sees two problems. First, it appears that downtown wages are declining as fewer workers wear white collars and more don the uniforms of waitresses, chambermaids and sales clerks. The mayor is concerned about statistics that seem to support this idea: When adjusted for inflation, median household income in the city declined from 1989 to 1996. "That's a big indicator that a large population is not sharing in the wealth of a strong regional economy," Katz says. It's hard to know for sure, however; no agency has tracked incomes just for the downtown area, nor has any agency studied them in the suburbs. There is perhaps a more ominous aspect to the growth in suburban office buildings. It means more cars on the road, more pollution in the air, more sprawling development. For people who work downtown, transit is convenient. Thus, 42 percent of downtown workers commute by bus or train. But move jobs a short distance away--to Portland's inner east side, for instance--and the percentage of workers who ride transit drops to a meager 8 percent. Move further out to Kruse Way, which is virtually inaccessible by transit, and no one commutes by bus or train. Taken to its extreme, Portland will look like San Antonio, says APP consultant Gustafson. "San Antonio has a fun, entertaining downtown. But the employment is on the freeway ring outside the core. They preserved the core as a theme park, with all the business activity on the outside. "The bad part," Gustafson continues, "is that you've got no more hope of solving our transportation problems than Los Angeles. You've created an environment totally incapable of accommodating alternative modes. Kruse Way is already there." The problems in such a scenario extend far beyond downtown. Metro's growth management blueprint calls for Portland's central city to accommodate 70,000 new jobs by the year 2015. If it doesn't happen, the region's surging population growth might not fit into the urban growth boundary. Then, says Ogan of the Portland Development Commission, we could become something worse than San Antonio. "We become L.A." Where do we go from here? It's surprising that a city known as a nirvana of master planning hasn't addressed these potential problems. But that's the case. "Getting jobs downtown just has not been a priority," Scott, of the APP, concedes. In part, that's because the roaring economy had city leaders focusing on more pressing problems. "Affordable housing and congestion have been hitting us in our face," says Scott. "And now fish and water issues are in our face." Nor was the City Council really aware of the problem until recently. In fact, Metro data on job growth from 1990 to 1996 hasn't been published or formally released yet. Finally, though, civic leaders are acknowledging the job shift. Katz says Scott is "like the canary in the coal mine" and adds that "it's just recently that the council is seeing the fragility of downtown." Scott says business leaders such as parking magnate Doug Goodman are now asking what can be done. City Commissioner Erik Sten says Gustafson is raising provocative questions that merit discussion. Solutions are still far away, however, and it looks as if there aren't any easy ones. More parking isn't the remedy, says former city planner Ernie Bonner. It was a cap on parking spaces that made downtown so friendly to pedestrians and public transit, Bonner notes. Building a bunch of new garages, he says, "is about the worst thing that could happen downtown." Using tax breaks to snare select companies might help. But a financial-aid strategy hasn't yet been discussed by the City Council; nor is it on the agenda. "Show me a tax break that gets jobs that wouldn't otherwise be here and maybe I'll listen," says a skeptical Sten. Instituting a regional business income tax--like the one paid by companies in Multnomah County--might level competition between downtown and the suburbs. But it wouldn't reach across the border to fast-growing Clark County. "So that's a discouraging topic," says Scott. One answer might be to accept the current trend and market downtown as a fun center--a clean, safe place where you go for things you can't find in the suburbs. "Maybe it's time to rethink it," says Sten. "I'm not sure the vision of office-job center is going to hold. The numbers argue to me that we need a different plan for downtown." Fregonese agrees. "We might be creating something that's more interesting and lasts longer than a job-producing behemoth," he says. "Look at Paris, London and Rome. You don't think of them as big office complexes. They are complex vital places where there's lots to do." Gustafson and Scott disagree. In a strange twist, the downtown business advocates say local governments have been too willing to let the market dictate job trends. "We ought to be doing more to put employment where it can be served by transit," says Gustafson. "If there's a failure in the region, it's that we're doing nothing in that regard." At the least, Gustafson says, we should be talking about the job shift and its impact on transportation as we head toward a "Downtown Summit" in November. Organized by APP, the summit will bring together civic leaders to devise a downtown plan for the next 25 years. Gustafson says it's time to grapple with some nagging issues before we convert downtown to a yuppie theme park. "We could just be a tourist attraction, but that's not how cities grow," says APP communications director Janis Nichols. "It takes new jobs to take great cities to the next level. It's the commuters who will push the transportation issues, not the visitors who come for three days or three hours." --Matthias Fripp contributed
to this report. |
