An East Multnomah County lawmaker is aiming at a big target—the $169 million funding mechanism the City of Portland has used like a no-limit credit card.

Rep. Nick Kahl, a rookie Democrat whose district includes parts of east Portland that have long felt neglected by City Hall, wants two big changes to the mechanism the city uses known as urban renewal.

First, a quick primer in how urban renewal districts work: When a district is created, the city borrows against future property-tax revenues generated inside that area to pay for projects. For up to 40 years, all tax increases and taxes from new property within the district go toward repaying that debt. Such funding was used to build new streets and other improvements in the Pearl District, for example.

Kahl's bill, which targets Portland because it's written for cities with populations larger than 300,000, would require Multnomah County's approval for the creation or amendment of an urban renewal district.

Kahl's House Bill 2615 also would let urban renewal funds be spent on social services, not just bricks and mortar.

Both proposed changes would be a sharp break from the status quo.

Residents of urban renewal districts such as the Pearl or South Waterfront directly benefit from urban renewal dollars. But county government loses tax revenues. For example, about $20 million a year that would otherwise go to Multnomah County's general fund for human services goes instead to pay debt service in the city's 11 urban renewal districts.

Kahl says the city spends too much of other governments' money too freely. And Multnomah County Chair Ted Wheeler agrees, saying, "We support Rep. Kahl's efforts."

By law, Kahl notes, urban renewal is supposed to combat "blight."

But the city and its redevelopment agency, the Portland Development Commission, define what constitutes blight. And the definition can be loose. Kahl points to Timbers/Beavers owner Merritt Paulson's $85 million proposal (see "Paulson's Pitch," WW, Nov. 26, 2008) to recruit Major League Soccer, which includes $20 million to $40 million in urban-renewal funds at a time the county faces a $45 million budget gap.

"The city is taxing the county to build projects and doing so unilaterally," Kahl says. "Declaring the area by PGE Park blighted shows [urban renewal] is a cash cow to produce any project they want."

Kahl's bill awaits a hearing in a House committee. And while Portland-area Democrats hold sway in the Legislature, Kahl and Wheeler have hope for the bill. The Oregon Special Districts Association—which represents counties, fire districts and others that lose tax money to urban renewal—have long called for limits on urban renewal. And lawmakers outside the city are often happy to limit Portland's power.

Kahl grew up on East 113th Avenue and Burnside Street, surrounded by unpaved streets and roadways lacking sidewalks. And he worries the city may be more willing than ever to agree to developers' pet projects anywhere but East Portland. Why? Because Mayor Sam Adams, who oversees the PDC, is embroiled in an attorney general's investigation into his 2005 sexual relationship with then-teenaged Beau Breedlove (see "Why Adams Confessed," WW, Jan. 21, 2009).

"In the current environment, we should be concerned that urban renewal will be used more aggressively to benefit wealthy downtown interests," Kahl says.

City lobbyist Dave Barenberg thinks the city can find ways to accommodate Kahl's concerns, saying, "We've met with him, and we're planning to meet with him again."

But Kahl wants major change in the status quo. "A storm is brewing," he says.


Portland's $169 million in urban renewal spending for 2008-2009 is by far the city's largest source of discretionary spending. The city's general fund, which doesn't include urban-renewal money, is $530 million.