Tool for Development?

Urban renewal is the problem, not the solution

In the beginning, “downtown renewal” in Eugene was really about greasing the skids for the controversial Valley River shopping center. The development community embraced this “tool,” and a chorus of the optimistic and the self-interested promised an attractive, renewed downtown and a gigantic mall.

Every 10 years for the past 49 years, the Eugene City Council acting as the board of the Urban Renewal Agency declares downtown a blighted area and signs us up for another 10 years of urban renewal (UR). Next year will mark the 50th anniversary of downtown urban renewal.

I will argue that urban renewal has been a program that primarily benefits only real estate speculators; that UR has diminished, not enhanced our downtown; that the whole approach is rife with waste and nepotism; and that City Council and the mayor should honor their prior assurances that downtown urban renewal should now end.

Here’s how Eugene and many other cities were seduced by urban renewal:

The 1972 California innovation of tax increment financing (TIF) was the first of two major changes in the way UR could be implemented. TIF works by diverting taxes from the increase in taxable valuation of property in a tax increment district after the date of the creation of the district. UR districts were permitted to borrow money, subsidize development projects and repay the loans with diverted property taxes. UR was sort of a “pull yourself up by the boot straps” concept. In theory, the actions of the Urban Renewal Agency would enhance the value of downtown, which in turn would pay for further downtown improvements.

Around the same time, in the face of the failure of UR as an element of affordable housing policy, Congress enacted the Housing and Community Development Act of 1974. In short, the responsibility for administering UR was largely shifted to local city planners, who were given greater scope and encouraged to form public-private partnerships. UR became an opportunity for a mutually beneficial alliance between local developers and the ever-expanding city planner bureaucracy.

What’s wrong with investing some money to fix the downtown?

The problem is that, in 50 years, we have not fixed downtown. Essentially, taxing the “incremental value” was really just a tax on inflation. The real dollar value of property in the downtown UR district is practically unchanged.

How we know that urban renewal has failed:

• Every 10 years, our own City Council declares downtown a blighted area — so, how can it be a success?

• The real dollar value of the downtown UR district has risen only 3 percent in 49 years, even though Eugene invested more UR funds than the entire $126 million current taxable valuation of all the property in the downtown UR district! In short, our entire investment was lost.

• UR thwarted genuine investors and entrepreneurs who would have renewed downtown at no expense to the public. For example, the historic part of downtown north of 7th Avenue between Charnelton and High is not in the UR district. Yet, without benefit of UR subsidies, taxable valuation has increased by 284 percent. The Whiteaker neighborhood is also gaining value rapidly without UR subsidies.

• Most of our historic downtown buildings were torn down or ruined with UR subsidies.

• The UR program is grossly deficient in transparency and public involvement.

• Also, the city’s general fund has been tapped to subsidize UR projects. For example, since Jon Ruiz became city manager, the city of Eugene’s rent expenses have doubled, adding $600,000* annually to the city’s rent expenses. And this is because Ruiz moved city offices into the UR projects, and agreed to pay rent even on the developer’s unrented empty space.

We cannot afford street maintenance unless the voters agree to pay extra. We cannot sustain library services unless taxpayers agree to pay extra, but we can always afford a subsidy for a downtown developer.

If council fails to honor its promises to end downtown urban renewal, it is time to take your pitchfork to the next City Council meeting — express your outrage! — Paul Nicholson

* This column has been edited to change $60,000 to $600,00 as per the writer’s request.