It's been well-known for months that a neighborhood-sponsored plan to redevelop Old Town and Chinatown—relying on infrastructure waivers to hopefully spur construction of 500 "workforce" housing units—would divide the Portland City Council along some immutable fault lines.

When the Oregonian first reported on the plan back in March, two commissioners—Nick Fish and Amanda Fritz—stood ready to offer their opposition. They liked the idea of helping the neighborhood. But those foregone fees, they argued, would cost the city's transportation, parks, water, and sewers bureaus—and might be subsidizing development that would come to the neighborhood anyway. They also flagged a departure from city policy. The fees, also known as system development charges, are typically waived only for affordable housing units.

They repeated the same during a hearing July 23, at which today's formal vote was scheduled. Thusly, as expected, the redevelopment plan, pushed hardest by Mayor Charlie Hales' office, wound up moving forward on a 3-2 decision.

Hales had sufficiently persuaded Commissioners Steve Novick and Dan Saltzman to bet that the waivers—worth $7 million—would be the magic ingredient breaking impoverishment's tenacious hold on a neighborhood that's been increasingly surrounded by prosperity.

"This district has managed to sleep through two amazing real estate booms without anyone laying one brick on top of the other," Hales said this morning. He went on to say he was "ashamed" at the state of a neighborhood home to much of the city's social services infrastructure and with the vast majority of the housing stock set aside for low-income residents.

That's not to say there weren't a few surprises. Fritz, not content to merely recite her previous reservations, whipped up another rhetorical tornado, full of digs at the mayor—akin to the speech she delivered in 2013 when Hales didn't back her requests to fully fund (money that's since been restored) anti-sex-trafficking programs.

She called the whole plan a "shell game," which I guess is a kind of a gamble. She talked about the optics of giving money to developers at a time when the city is still short housing units for its neediest. She also reminded the council about the wisdom of giving up infrastructure fees just before her parks bureau, this fall, asks voters to renew an expiring bond measure that comes out of property taxes.

Here's a sampling:

Leaving aside who pays, the other core question in this issue is whether or not we should be subsidizing middle income housing, and if so whether the new policy should apply only in Old Town Chinatown.

We know that the greatest need for housing subsidies is at the level of 60% of median income and less. We know that we can't afford to help everyone who needs help even at that level, and so two thousand people are living on our streets.

Even though the desire for middle income housing has validity, can we really afford to dedicate resources to something that would be nice, that the market otherwise provides, and isn't as life-and-death as housing for people living outside, under our bridges, along the river and streams and in our parks?

But then again, Lents and Gateway don't have longtime developers and landowners sitting on expensive developable assets waiting for the Council to provide millions of dollars of SDC subsidies along with millions of dollars in Tax Increment Financing.

Mayor Hales asked a question at the end of the hearing in July, making sure the subsidies would apply to affluent owners of Old Town parking lots. I appreciate that level of transparency, and I hope other strategies will be forwarded to the Council soon, to prompt redevelopment of surface parking lots.
• A study in Florida indicates that waiving fees does not prompt development.
• I believe new construction in this area will happen anyway, as the Pearl is built out and developers look for new downtown sites.

It’s a shell game, and Parks, Transportation and the utilities lose in the funding mechanism chosen to implement this Plan.

As a piece of political rhetoric, it's bracing and pointed in a way that's awfully rare. I asked Fritz's office for a copy, and that way you can read the whole thing... after the jump.

I watched the public hearing on this item live in Yorkshire, England, thanks to Portland Community Media and PortlandOnLine. I appreciated the public testimony and Council discussion. Since I wasn’t able to participate in the hearing, I have many comments to make as we are voting.

• I support many elements of the action plan.
• Old Town Chinatown Japantown is an important neighborhood, which deserves our best efforts to make it vibrant and special place.
• So do all the other 94 neighborhoods, of course. Each neighborhood has unique qualities and challenges. Every neighborhood could use additional support and taxpayer-funded investment, even affluent ones that lack basic services like sidewalks and playgrounds.
• Community members have worked hard with PDC and City bureaus to identify improvements and strategies that are likely to conserve and improve the special characteristics of this historic neighborhood, and I commend you all for your diligence and vision/

The primary question is how to pay for the plan.

• The Mayor, PDC and the plan propose to stimulate development by excusing developers from paying their fair share for improvements and maintenance in parks and utilities. Improvements that will be needed by the new residents.
• System Development Charges are the way almost all new development pays its fair share as compensation for the impacts that development and its users have on the City services and infrastructure.

• The exceptions up until now has been SDC waivers for affordable housing, either at or below 60% of median family income, or for small Accessory Dwelling Units.
• Now, this plan proposes to change City policy and possibly give millions of dollars in subsidies for median family income residences. Instead of debating this overall policy, the proposal is to apply the subsidy in just one of 95 neighborhoods.
• Commissioner Fish explained at the hearing that the Water and Environmental Services SDCs pay to maintain and replace the existing system.
o I agree with Commissioner Fish that requiring ratepayers to subsidize median income housing is a policy that raises significant concerns.
o Commissioner Fish made excellent points about the impacts on ratepayers.
• If I had been present, I would have illuminated the planned impacts on the Parks bureau.

Because of the timing of the hearing, I must do that now after the public hearing is closed.

• A couple of weeks ago, Council approved the referral of a Parks ballot measure, asking voters in November to replace the expiring bond measure authorized in 1994, to provide money for parks maintenance. In order to not raise taxes, I am asking for much less than is needed to avoid closures, let alone provide all the improvements needed to provide parks services to every neighborhood.
• Portland Parks and Recreation faces a gap of about $360 million in needed capital improvement projects and major maintenance.
• The bond measure, if passed, will raise at most 1/5 of that amount or about $68 million.
• This gap of nearly $300 million doesn't even count the additional $400 million that is needed to provide adequate levels of new parks facilities for all neighborhoods, including Old Town Chinatown.
• I am disappointed that the Plan does not address parks needs in the district. Last night, I attended the Movie in The Fields Park in the Pearl District. If this Plan is successful in attracting median income families to Old Town Chinatown, there won’t be a neighborhood park for them to relax in.
• Expected future needs in the Central City area near in or near the district include improvements to the Greenway, a park opposite the Post Office, and one in the Conway development, as well as other potential major projects.
• Tax Increment Financing funds will not cover the full cost of these parks.
• Parks System Development Charges pay for new facilities needed to accommodate new growth, not for maintenance and repairs like the bond measure funds.
• Cutting SDC funds further reduces Parks’ ability to provide adequate levels of service.
• The current SDC fund for the Central City plus expected income does not cover the projected costs of known needs in the area. Based on my 14 months of experience being the Parks Commissioner, I can assure you the new median income residents will be as demanding as the residents of other neighborhoods, in asking for their fair share of parks facilities. And so they should.

Let's be clear. This proposal to forgo SDCs benefits construction companies and landowners. Future residents will not benefit. They will face widening gaps between the services needed in pipes and parks, and the capacity of the responsible bureaus to pay for those needed services.
• And the worst part of this financing plan is, there are other options. It's likely there will be a higher than forecast ending fund balance in the General Fund this year. The Council could choose to allocate some of that balance to subsidize or provide incentives for development in Old Town Chinatown.
• Instead, the plan is to make four bureaus bear the burden of encouraging middle income housing here.
• Whatever foregone revenue in Parks occurs should be reimbursed in the Budget. I intend to make that clear in any future budget decisions contemplated by this Council.

This funding mechanism violates one of my core principles: There must be a reasonable answer for the question of: Who pays, who benefits, and is it fair?
• Leaving aside who pays, the other core question in this issue is whether or not we should be subsidizing middle income housing, and if so whether the new policy should apply only in Old Town Chinatown.
• We know that the greatest need for housing subsidies is at the level of 60% of median income and less.
• We know that we can't afford to help everyone who needs help even at that level, and so two thousand people are living on our streets.
• Even though the desire for middle income housing has validity, can we really afford to dedicate resources to something that would be nice, that the market otherwise provides, and isn't as life-and-death as housing for people living outside, under our bridges, along the river and streams and in our parks?

Urban Renewal Areas have already received additional dedication of taxpayers’ dollars intended to stimulate economic development so that other more market based development will invest.
• This funding mechanism sends even more money to an Urban Renewal Area that has already been extended and expanded.
• Just three months ago, Mayor Hales assured us that there is plenty of money and capacity in this URA to cover all current and future needs, and therefore that it was fine to decrease the size of the district.
• Now, we are told that the Old Town Chinatown plan can only be accomplished by taking SDCs from Parks, Transportation and the utilities.

If we are going to institute this funding mechanism as a new policy, why wouldn’t we do it first in areas that have greater need for middle income housing opportunities such as in Gateway or Lents?
• There, too, is an abundance of low income housing, and not enough middle income housing in the district or nearby to support local businesses and neighborhood prosperity.
• Lents and Gateway don't have the benefit of a Pearl District nearby, with its new parks and vibrant commercial and employment opportunities, so the need is even greater there.
• Lents and Gateway don't have two MAX corridors, or a nearby streetcar loop.
• But then again, Lents and Gateway don't have longtime developers and landowners sitting on expensive developable assets waiting for the Council to provide millions of dollars of SDC subsidies along with millions of dollars in Tax Increment Financing.

Mayor Hales asked a question at the end of the hearing in July, making sure the subsidies would apply to affluent owners of Old Town parking lots. I appreciate that level of transparency, and I hope other strategies will be forwarded to the Council soon, to prompt redevelopment of surface parking lots.
• A study in Florida indicates that waiving fees does not prompt development.
• I believe new construction in this area will happen anyway, as the Pearl is built out and developers look for new downtown sites.

It’s been said that Parks is not losing any money, because no development is currently happening in Old Town.
• It's interesting to hear again the argument made by my opponent in my re-election campaign, that if nothing is done then nothing is saved and nothing is lost.
• That assertion didn’t convince Portland voters in 2012, and I believe Portlanders will see through it in this instance also.
• A hole gets deeper the more you keep on digging, and this funding mechanism will put Parks deeper into the hole, in the best case scenario that it achieves the goal of prompting more development.
• Without a commitment by the Council to pay back the lost SDC money from the General Fund or from URA funds, there is no potential scenario in which the Parks bureau, Transportation or the utility bureaus and consequently the citizens of Portland can come out ahead in this plan.

The fact is that this is a shell game of what Commissioner Fish referred to as the different colors of money.
• We’re talking about taxpayers’ and ratepayers’ money.
• The money to improve Old Town Chinatown exists in Tax Increment Financing, or TIF. The majority of the Council is choosing to fund seismic retrofits with the TIF money, instead of using TIF to subsidize SDC waivers.
• There was no discussion of how the available TIF money could and should be spent, at the hearing on this plan in July or in the Budget hearings this spring.
• It’s a shell game, and Parks, Transportation and the utilities lose in the funding mechanism chosen to implement this Plan.

Old Town Chinatown is an important part of our downtown core and we need to support changes needed to make it a thriving neighborhood and business district.
• The action plan speaks to many of the issues that will be addressed in the coming years to make this a successful and vibrant area.
• Connectivity, Parking, Seismic upgrades, historic preservation, and enhancing neighborhood business and retail areas are but some of the goals this plan addresses.
• The River district Urban Renewal Area is an important part of that “renewal” and TIF funds are clearly intended for that economic purpose.

I again commend and thank those in the community who have participated in the creation of this Action Plan I know you all worked hard in achieving this endpoint, and I believe there can be many good things to come out of it that will benefit and make this an even more successful neighborhood.

In England, the famous saying in the London Underground is, "Mind the Gap".
• This caution appears appropriate in this decision, if a majority of Council is willing to promote middle income housing in Old Town on the backs of parks and ratepayers.
• If approved, the funding mechanism chosen shows that a majority of Council is willing to widen the gap between what we now have and what is needed for parks facilities and utilities.
• This is a good Action Plan, but as a member of that working group stated at the hearing, with all the intelligent people here on this Council we should be able to make the right decision on how to pay for it.
• I believe in this instance, that is not the case, and we are not minding the increasing gap to our Parks and Infrastructure needs with how this plan is being funded.

I must respectfully vote NO