Cully neighborhood in Northeast Portland plans to aid the community in economic development

In November, Portland City Council approved an ambitious tax increment financing plan for the Cully neighborhood. The goal will be to aid in economic development and invest in affordable housing in Northeast Portland. Edy Martinez is the district manager for Our 42nd Avenue. He joins us to share what makes this plan different from previous urban renewal proposals and his hopes for what this will mean for the community.

This transcript was created by a computer and edited by a volunteer:

Dave Miller: From the Gert Boyle studio at OPB, this is Think Out Loud. I’m Dave Miller. Last month, after something like four years of collaboration with local partners, the Portland City Council approved a plan to invest as much as $300 million in the Cully neighborhood in Northeast Portland. The money will come from what has historically been called an urban renewal district, but this time there’s a twist. The city and local groups say they are going to prevent the kind of displacement or gentrification that often follows from the creation of these districts. For more on this plan, I’m joined by Edy Martinez. He is a district manager for the neighborhood economic development organization Our 42nd Avenue. Edy Martinez, welcome.

Edy Martinez: Hi, thanks for having me.

Miller: Thanks for joining us. How would you describe the Cully neighborhood right now?

Martinez: I would definitely describe it as one of the most diverse communities in Portland right now.

Miller: Okay, so that’s demographics. What else is going on? What are the reasons that your organization, and many others including Prospect Portland, the economic development arm of the city, why have all these groups gotten together pre-pandemic to figure out a financing model to prevent displacement? What’s been happening?

Martinez: Well, a big part of that was because of the NPNs, the neighborhood prosperity networks, that live within Cully, Our 42nd Avenue being one of them, and Cully Blvd Alliance. The last 11 years we’ve been doing economic development on a very very small scale, often known as many TIF districts. This came out of Prosper Portland, can these funds be used on a very small level to not gentrify community, and can the community dictate how to use those funds? So for the last 11 years, the work I’ve been doing in my agency, we’ve been overseen by a community steering committee.

Miller: How is that different from the way this kind of economic development normally works?

Martinez: Historically, a city will look at a community, it will say “we really need to revise this community.” The city will draw out a map or an outline, and the city will dictate what kind of projects are coming in. The city, along the way, will do some sort of community engagement, to let the community know. But ultimately, all decisions and start points come from the city.

What we’ve created here, in what we’re calling the Cully TIF District, everything starts from the community. We’ve gathered information from the community. The boundary line that was approved by city council back in November was vetted through the community, and changed from their feedback.

Miller: We should take a step back, because you use the acronym TIF to describe the economic mechanism of what has normally historically been called urban renewal. We should talk about how this works. So what is tax increment financing (TIF)?

Martinez: Good question. So TIF, tax increment financing, is a tool that you just stated. And that tool really is freezing property taxes. So it’s not a new tax, but it’s just freezing existing property taxes, and then letting those taxes grow overtime, in which pockets of money form that you could use for affordable housing or housing complex projects, or economic development projects. That’s what we refer to as TIF, a TIF district. It’s a tool that’s been used historically in all of the urban renewal areas. That same tool we are using for this, just a different approach.

Miller: Let me run my version of how I understand this by you, because I want to make sure I understand correctly and our listeners do, because I think of it as slightly different than freezing property taxes.

I thought it was: Let’s say it starts today, that whatever the property taxes that are coming in are today, if because of development that happens in this district property values rise - and more money would go normally to Multnomah County in this case or to schools - the difference between that increase and what it is now, instead of going to the county or into schools, that difference can will go to pay back the investments that are made in that district.

So it’s the county and schools, for example, that aren’t gonna be able to, for some number of decades, take advantage of the increased property values or the taxes from the increase in property values. Is that accurate?

Martinez: Yeah. Definitely, those revenues would go to paying back or bringing in investments that will support priority communities.

Miller: Okay. So then the key questions are then what’s the best way to spend that money? In a sense, another way we could think about this is the implicit argument in an urban rural district, or in a TIF district, is that either a city wide economic development organization, or in your case, local community members advising Prosper Portland, that you can make better use of that money than the county as a whole. What will this money be spent on?

Martinez: A lot of those kinds of questions, we ask ourselves, and we also ask the community. And in doing community outreach for almost two years, we were able to create, alongside Portland Housing Bureau and Prosper Portland, governance documents that outline that all projects will benefit priority communities. And we explain in these documents what priority communities are: Black African Americans, mobile home residents, low income residents, small commercial property owners. We created documents that were then approved by the city, which is a very big win for us, in the sense of wanting to make sure all projects are being vetted with the lens of equity moving forward.

Miller: So that’s the sort of the collaborative process of how you’ll make these decisions. What are concrete examples that have already come forward that you think, or the community thinks, are good ways to spend these hundreds of millions of dollars?

Martinez: Some examples of these, even before this TIF district is going into effect, there’s already amazing organizations doing good work in Cully. There are affordable housing units going up from Habitat, from NAYA Family Center. Our 42nd Avenue, we were able to leverage the small amount of TIF dollars we had, being a small TIF district, to support all of our small businesses, especially during the pandemic. We were able to revitalize some commercial spaces. We are able to help small business owners purchase and go through the permitting process through the city. In the last 10 to11 years, we’ve had very small wins. And the community understands that with the bigger TIF district, we are able to scale up all the work we’ve been doing.

Miller: What have you specifically accomplished with Our 42nd Avenue? As you noted, it seems like what you’re saying is that these micro urban renewal districts in Cully have led the way to this larger neighborhood-wide one. So what exactly has Our 42nd Avenue done?

Martinez: One of the amazing things we’ve done is that, over time, building the relationships with the community and community members, business owners and property owners, commercial property owners, we were able to leverage some of those dollars we had, and formed a partnership with the commercial property owner. We helped them build out their space, and in return, they gave us an affordable master lease. And what we did with that is that we passed those savings down to small businesses. We oversee a building and we use it as an onboarding space for new small businesses to try out having a brick and mortar shop, to really help them grow while providing wraparound services. That was one of our biggest wins. We now have two master leases on two separate buildings with a total of 12 small businesses that have been thriving even through the pandemic.

Miller: One thing that people who drive through Cully may be aware of is that it’s one of the parts of the city where you can be going along, and all of a sudden you’re just on an unpaved road, in some cases very rutted or muddy dirt roads. Where does something like paving streets stand in terms of the concerns or priorities that you’ve heard from members of the community?

Martinez: Yeah, that’s a good question. We heard from the community that they did not want all of these dollars being spent on those types of infrastructures, because they believe that’s the responsibility of the city. The city has acknowledged that in the past, the city has, for lack of a better word, promised to help that infrastructure, and they are currently out there in some small areas. But there’s still, like you said, some dirt roads going through this community. And so we were very clear and adamant that, because of the community’s voice in our governance, in what we call a project list, that we specifically call out that no new infrastructure will be built with these dollars.

However, if there is another project, for example let’s say an affordable housing unit that needs to go up and those streets around it need to be improved, then that’s a qualified use for these dollars. So we definitely called that out to make sure this wasn’t something that potentially the city could tap into and take X amount of dollars to do something they should have already done in years past.

Miller: That’s a fascinating reason that you just outlined, and it makes sense as you’re describing it. I also wonder how much you heard from people a fear that if things like paving or other infrastructure improvements were to happen on a big scale, that those would invariably lead to even larger increases in market values that could increase the exact displacement that you’re trying to slow down.

I’m curious how you balance that, how you balance improving people’s lives in your neighborhood with the real fear that the more you do that, the more valuable you make the property, and the bigger chance you have of pushing people out because they can’t afford to rent an apartment there?

Martinez: Yeah, that is a concern we’ve had internally. We knew four years ago when we started this that this isn’t a perfect tool, and this was never going to stop displacement and gentrification 100%. We’ve been trying for four years to make this such a protection of community members, every last dollar. And it’s not a guarantee. And those worries and concerns are valid, they’re real.

I think the way you do that is by really looking at all aspects of someone’s life, not just building affordable housing units and not just building more housing units, it’s about the economic development side, it’s about supporting local businesses. It’s also about trying to find ways to get residents better paying jobs, which is one of the reasons we included the industrial area that’s on Columbia in this map, to try to figure out how we could levy these dollars to get residents better paying jobs. The idea is not just to live and work in Cully, but it’s also to thrive in Cully.

Miller: What’s your own metric then? Say 15 years from now, what will it take for you to say “yes, this worked?” And I’m also curious about the flip side, what would it take for you to say “this was a kind of larger scale experiment to use this financing mechanism, and I don’t think it worked?”

Martinez: For me, because I see a little bit more on the economic development side, day to day I interface more with small business owners and small commercial property owners. So they’re on the forefront. But if I were to look at the whole picture, for me it would be that both the economic development side and the housing side are moving simultaneously together, that one is not outpacing the other. And on the flip side of that, I would probably be really concerned if 15 years from now, there’s only housing projects happening, and nothing for economic development, nothing for small businesses. That would give me a concern down the road.

Miller: Before we say goodbye, since the city council passed this or maybe even in the previous years as you’ve been working towards this new district, have you heard from people who do similar work in other neighborhoods in Portland or other cities in Oregon, people who’ve said “help us do our own version of this newish model?”

Martinez: Not quite yet, because I think people are still waiting to see how it pans out. We looked across the nation for models like this and the closest one we found was here at home with the NPNs, the neighborhood prosperity networks.

Miller: You were the small version of your own model, in other words, you couldn’t find anything else?

Martinez: Exactly. We’re hoping this is a blueprint. We’re hoping that here in 20 to 30 years, people from Oregon, and from across the nation, will look at it and duplicate it.

Miller: We will find out. Edy Martinez, thanks very much. I really appreciate it.

Martinez: Thanks for having me. I appreciate it.

Miller: Edy Martinez is district manager for the neighborhood economic development organization, Our 42nd Avenue. He joined us to talk about the recently passed district in Cully. That’s in Northeast Portland.

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