Razed & Confused

In the past few months, Mayor Charlie Hales has talked about changing the way the city of Portland tries to bring struggling, rundown neighborhoods back to life.

He calls it "place-making."

The mayor wants the Portland Development Commission, the city's urban-renewal agency, to select a handful of neighborhoods where it might shape new shopping districts, new places to live and—most of all—a new sense of identity.

"Who else is in the place-making business?" Hales told WW in October. "Pick a few sites where you think you can make projects happen, and do the deals. We've got to rebuild those muscles."

It's part of an evolving agenda for a mayor who in his first year has yet to show many accomplishments. It's an idea that appeals to Portland's sense of neighborhood livability.

But as Hales should know, it's also a strategy fraught with risk. Look no further than Lents.

In 1998, the Portland City Council, led by then-City Commissioners Hales and Jim Franscesconi, told the PDC to focus on Lents, a poor and struggling neighborhood nicknamed "Felony Flats" that stretches east from Southeast 82nd Avenue to 122nd Avenue, and south from Southeast Powell Boulevard.

Hales, Franscesconi and the other City Council members, including Mayor Vera Katz, promised to rebuild Lents as if it were its own small-town Main Street, with jobs, housing, retail, restaurants—a pumping economic heart to an area mired in blight, crime and despair.

The city has spent $96 million since then. And as PDC officials acknowledge, the city has so far failed.

"We don't have a lot of successes to talk about on the commercial-revitalization front," PDC executive director Patrick Quinton says of Lents. "I think that's pretty apparent."

Meanwhile, the PDC bought up land, paid for housing and covered the cost of roads and sidewalk repairs. But it has also frittered away millions on redevelopment plans no one wants to build, relocating businesses that failed, spiffing up a no-tell motel, and building a forlorn, unused plaza in front of a pest-control company.

After all that, there are no more places today in Lents that make you want to get out of your car, walk around and spend your money than before the city began its grand experiment.

The city finds itself as the major landowner in Lents, sitting on 12 vacant acres. The PDC is even considering bringing in goats to graze on some of its property.

As Hales tries to revive his place-making strategy, WW used the Oregon public records law to trace 16 years' worth of spending in Lents to see what we got in return for that $96 million.

Lents residents already know.

"Most neighborhoods have main streets where you can go to the laundry, the grocery, to a clothing store, maybe a shoe store," says Judy Welch, former chairwoman of the Lents Neighborhood Association. "We don't have those. It never happened."

Piles of Plans

Much has changed in Lents since 1996, the year the city produced the first plan to transform the Lents Town Center from a dilapidated business district into "the region's showpiece."

Much has gotten better: Lents' population grew by 12 percent, while violent crimes dropped, as they did across Portland. The MAX Green Line opened four stops in the urban-renewal area in 2009.

But what hasn't changed is the hole in the center of everything.

The original plans called for a "town center" at the intersection of Southeast 92nd Avenue and Foster Road that consisted of a grocer, a community center, a bike-rental shop and a bookstore—the streets lined by banners and flower pots and the shop windows shaded by trees and awnings.

Instead, that intersection currently includes a fountain, a smoothie shop, a gas station and perhaps the neighborhood's only landmark, a nightclub and off-track betting parlor called New Copper Penny.

Over the past 16 years, the PDC has produced at least five more sets of studies for the so-called town center development—at a cost of $3.5 million spent on consultants, appraisers, artist renderings and feasibility studies.

A portion of the tax money raised from the Lents area is dedicated specifically to paying for improvements. (For an explanation of how an urban-renewal area works, see sidebar below.)

The PDC often offers subsidies to developers to induce them to come to urban-renewal areas, but could never attract private investment of any significance in Lents.

John Southgate, who managed Lents' urban renewal for the PDC from 2002 to 2005, says a big problem is geography. "The main streets serving the Lents Town Center are essentially the on- and off-ramp for [Interstate 205]," Southgate says. "It was always going to be more of a slog than what we had in mind."

In most cases, urban-renewal areas launch when developers are banging on the door to get in on deals. Not so in Lents. The City Council dove in without one.

The reasons developers didn't build in 1998 are the same reasons they aren't interested now. Most people living in the area are renters, but retail developers are looking for homeowners. And Lents household earnings—the median income was about $44,000 a year in 2012—also haven't turned developers' heads.

Lents resident John Notis recalls giving developers tours of the business district. "They get this look on their face," he says. "And you know it's not going to happen."

Yet the PDC kept coming up with increasingly elaborate plans. By 2009, the city depicted Foster Road sporting an upscale grocer, with a sign reading "Nature Store." In 2010, then-Mayor Sam Adams debuted an animated sequence in his State of the City speech. It showed a streetcar literally falling out of the sky onto the corner of Southeast 92nd Avenue and Foster Road. Today there is neither a streetcar nor a large grocer in the Lents Town Center.

The PDC's Quinton, who has led the agency since 2011, acknowledges the plans created false hopes of fulfilling the primary pledge of a town center.

"Expectations haven't been met," Quinton says. "After all this time, there should be something there."

Quinton—whose agency has charged taxpayers $16.5 million in overhead costs to manage the Lents urban-renewal efforts—also says the PDC and the city shouldn't be held accountable 16 years later for failing to follow the original plan.

"I don't think what you write in 1998 has to be true forever," he says. "The notion of success evolves."

The Chevron

The PDC spent $10.3 million to eliminate what it considers "blight" by buying up older buildings and clearing the lots. It's called land banking, allowing the city to have more control over future development.

As a result, the city has become the biggest single landlord in the business district, owning 40 percent of property in what's supposed to be the new heart of Lents, and the properties go off the tax rolls while the city waits.

Take what happened in 2008, when the PDC paid $1.7 million for properties on the southwest corner of Southeast 92nd Avenue and Foster Road—lots that housed Edmondson's Drapery and a strip club called the 92nd Street Club.

PDC records show the agency spent $20,000 on "relocation" for the strip club, $6,550 on environmental cleanup at the drapery, and $42,926 on demolition of the buildings.

The plan has called for locating an upscale grocer on the site. (New Seasons Market was in negotiations as recently as December 2012.) The problem is, the deal requires a fourth lot, which houses a Chevron gas station. PDC officials and station owner Jaginder Gill say the city hasn't offered to buy the property since Gill purchased it in 2007. The three adjacent lots remain vacant.

"It's representative of the way the PDC does things," says Nick Christensen, former chairman of the Lents Neighborhood Association. "They get three-quarters of the way done, and then they drop it and move on to something else."

Quinton acknowledges the PDC's mistake: He says the central business hub would have grown faster if the PDC hadn't bought the properties.

"Now it's a company town," he says. "That's not what you want. The residents should expect that their major landowner should do something with their land."

The Cockroach Plaza

The city has spent $7.9 million on the streets and sidewalks of Lents—much of it real progress, given that more than $1 million of the money was spent on paving the area's dirt roads.

It has also made a $2.6 million investment in sidewalks, bioswales and plazas that mostly run along empty lots and vacant storefronts.

The keystone to the Lents Streetscape Improvements is an unnamed, 2,000-square-foot plaza created by rerouting Southeast 91st Avenue. The gathering space, with tree saplings and a white picket fence, effectively created a courtyard for a 1915 Carnegie library building and the current business it holds, A&A Pest Control.

The exterminator's red sign promises to get rid of "Ants, Roaches, Bed Bugs, & General Pests." It shows a cartoon rat squashing a cockroach. The owner has declined to move.

"They got the cute patio in front," says Kay Barna, owner of nearby antique store Milk Creek Crossing. "I don't know what it achieved. Maybe they know something we don't know. I'm sure they do."

Quinton says the investments in streets and sidewalks were successful whether they attracted business or not.

"People care a lot about sidewalks in East Portland," he says. "If we had the money, I would do those over and over again."

Ararat Bakery

The PDC promised to bring jobs to Lents. Sometimes, that has worked: Bridgetown Natural Foods moved in 2010 from the inner east side to an industrial park on Southeast Foster Road, backed by $250,000 in loans from the PDC. This success for Lents came at the expense of another neighborhood, but the company grew by one-third and now employs about 180 people making granola bars.

Other times, the PDC has stumbled. In 2008, the PDC convinced Ararat Bakery to move from 111 NE Martin Luther King Jr. Blvd. to Southeast 92nd Avenue.

Moving Ararat to Lents accomplished dual goals for the PDC: It cleared the way for the Burnside Bridgehead development and created an anchor business for Lents that could appeal to Eastern Europeans, who make up 12 percent of the neighborhood's residents, according to 2012 census data.

The PDC gave Ararat owners Avetis Karapetian and Nelli Grigorian $653,000 in loans for building improvements and capital costs. The agency spent $2.1 million to purchase the 92nd Avenue building in 2009—even though the PDC knew the bakery was already two months behind on rent in Lents.

Even before the PDC bought the Lents building, the new Ararat location had become better known for its second use as a nightclub. Police had investigated a rape allegation at the club, made an arrest for aggravated assault and checked a liquor-license violation.

Ararat defaulted on its loans in 2011. Total cost of the deal to taxpayers: $3.2 million.

The PDC still owns the building, leasing it to a carpet outlet, and is close to signing a deal with craft-beer startup ZH Brewing to open a brewpub in the former bakery space this year.

"Ararat didn't work," Quinton says. "People can say, 'What did that get us?' But the fact that we controlled that asset made it possible to go forward when ZH Brewing came to us.'"

Housing and Job Training

One area of success for the city's urban-renewal efforts has been in housing. The PDC spent $27.7 million for housing in Lents—by far its biggest expenditure in a single category—building 1,144 units.

The housing hasn't been enough to help ignite a shopping district.

One of the original promises the city made was that an urban-renewal area would make Lents a wealthier place. The median household income in Lents fell 12.4 percent between 2000 and 2012, to $44,464. In the same period, median income citywide has declined 3.9 percent.

In 1999, the PDC spent $971,000 for job training—specifically, a building shop and classroom space in the basement of Marshall High School, located in the northwest corner of Lents near Southeast 91st Avenue.

For one year, the Lents Tech Manufacturing & Learning Center offered welding and technician training until railcar- and barge-builder Gunderson stopped funding it, PDC records show.

Classes were rare after that, and the entire facility shut down when Marshall closed in 2011.

The city also made $202,976 in loans and $402,406 in grants to Portland YouthBuilders, an alternative high school and job-training program. Last November, the PDC announced a $300,000 grant to fund a community center—including classes and job services—for the parents of children at Earl Boyles Elementary School.

Meanwhile, the number of jobs in Lents has dropped 6 percent since 2007. While those were tough recession years, it was a far steeper drop in jobs than occurred as a whole in the Portland metro area, which saw a 2.7-percent job loss during that time, according to the Oregon Employment Department.

The promise of jobs has left residents cynical. "We ask for a grocery store," says Cora Potter, a past chairwoman of the Lents citizen advisory committee to the PDC, "and they throw another job-training program at us."

Lents Little League

In 2009, the PDC spent $931,771 to move existing ball fields a half-mile north, to Lents Park, because it wanted to make way for a development that has never been built.

The PDC wanted the 3-acre site for a community center, an apartment complex and offices—less than a block from a new light-rail station.

Developer Ed McNamara, an affordable-housing builder, agreed in 2010 to develop the site as an apartment complex with ground-floor retail. The PDC gave McNamara's team a $40,000 grant and a $22,586 loan (which it forgave) to develop plans that went nowhere.

McNamara, who is now Hales' top aide overseeing the PDC, says the deal fell apart because the agency was given conflicting instructions by the City Council. He says that will change.

"If people are going to invest," McNamara says, "we want to give them some clarity and some certainty about what's going to happen over the next five years."

Last year, the PDC suggested the empty field be used as a "U.S. Innovation Park," created by British firm BRE, to showcase green demonstration homes.

Dressing Up a No-Tell Motel and Other Storefront Improvements

No one disputes Lents has been cleaned up to some degree. The PDC spent $1.6 million to help business owners fix up their properties, part of hundreds of business grants it gave out: $39,025 (plus $200,000 in loans) to Standard TV & Appliance, $20,000 to Izzy's Pizza, $28,861 to Tidee Didee Diaper Service and $33,328 to Working Class Acupuncture.

Steve's Imports, an auto-body shop owned by anti-tax Damascus Mayor Steve Spinnett, received $83,840 from the PDC. Orozco Auto Wrecking had a $250,000 loan written off in 2008; Northwest Bumper Co. had the balance of a $533,500 loan forgiven in 2011.

"It's almost like every time somebody needs to paint their building," says Lents resident Potter, "they go to the PDC for a 75-percent discount."

But a standout is the Del Rancho Motel, which has received $31,279 in PDC grants for beautification and business expansion. Portland police say the Del Rancho is one of the five motels that keep them busy along 82nd Avenue. Since it received its last PDC grant in 2004, it has been the site of 105 reported crimes, including meth use and sale, child molestation and a rape.

What now?

Last fall, pink signs went up at two empty lots in Lents that read "What Would You Like to See?"

In 1998 and 2000, the PDC paid $365,000 for the lots, at 8930 SE Foster Road and 9316 SE Woodstock Blvd. Without ideas about what to do with the land, it last year found a Web startup, called What Would You Like to See?, to handle crowdsourcing.

The most popular suggestions are a "rotating art installation" and "inexpensive [office] space made from old cargo shipping containers." Someone has also suggested a "tunnel to the center of the earth." (One pink sign has since fallen down; the other is missing.)

Francesconi, currently running for chairman of Multnomah County, says he doesn't regret sending the PDC into Lents. 

"Listen, I'm proud I championed that urban renewal should be in poor neighborhoods," he says. "The PDC should have concentrated more on singles and less on home runs."

Hales says his place-making venture will be different this time. "I can't do anything about the past," he says, "but I can take the cards we're dealt. Which is PDC owning a lot of land there in an improving real-estate market. You're going to see us move from talking about it to trying to make it happen."

Absent that, what are some paths to reform?

The city could admit failure and walk away. It could pause smaller projects until a major development gets under way.

Another way to jump-start development in Lents is simply to ramp up the level of government subsidy it's offering.

Quinton believes Lents is nearing a tipping point where developers will show more interest. "My prediction is," he says, "in a few years, we'll be talking about how to manage growth in the town center, as opposed to asking, 'When will it happen?'"

While Lents floundered, other parts of the city, such as Northeast Alberta, North Missisippi and Montavilla in outer Southeast, attracted the kind of amenities Lents residents can only dream about—and with a fraction of the public investment Lents got.

The PDC can point to urban-renewal successes downtown and in the Pearl District, and even South Waterfront, despite its growing pains, that produced hundreds of millions of dollars in new taxable real estate—and saw property values grow more than twice as fast as in Lents. Those urban-renewal districts benefited from proximity to high-income workers and shoppers.

"Urban renewal can't solve poverty problems," says former City Commissioner Erik Sten, who voted to send the PDC into Lents in 1998. "You had no consensus on 'What are we trying to do?' If the answer is, 'Help Lents,' that's not an answer."

Another way to make a difference: Hold the City Council accountable.

City Auditor LaVonne Griffin-Valade has tried, sort of. She evaluated the PDC's performance in December 2012 and issued a glowing report on urban renewal, saying the system improved property values.

Her office looked at five urban-renewal areas.

But the city auditor never looked at Lents. 

So how is urban renewal supposed to work?

The city draws a boundary around the area it wants to change. As far as other local governments are concerned, the amount of taxes they can collect from the area is frozen. As property values rise, all increases in tax revenue—the increment—goes directly to urban renewal and not to schools, the county or other taxing districts. The more development the area spurs, the more money the city collects. 

The Portland Development Commission can spend the money directly on the area or sell bonds and use the revenue to pay down the debt. The city is currently carrying $100.9 million in debt for the Lents urban-renewal area.

Portland has been using urban-renewal areas since 1961, in downtown's south auditorium area, when it built fountains and plazas and wiped out the city's traditional Jewish and Italian neighborhoods. In downtown, urban renewal has been successful: The Pearl District, for example, saw property values rise by $1.7 billion in 13 years—more than 441 percent. AARON MESH.

WWeek 2015