Debunking Portland Light Rail

No. 596 July 9, 2007


Debunking Portland
The City That Doesn’t Work
by Randal O’Toole


Executive Summary


Oregon, a model of 21st-century urban planning,
the region’s integrated land-use and transporta-
tion plans have greatly reduced the area’s livabili-
ty. To halt urban sprawl and reduce people’s
dependence on the automobile, Portland’s plans
use an urban-growth boundary to greatly increase
the area’s population density, spend most of the
region’s transportation funds on various rail tran-
sit projects, and promote construction of scores of
high-density, mixed-use developments.
When judged by the results rather than the
intentions, the costs of Portland’s planning far
outweigh the benefits. Planners made housing
unaffordable to force more people to live in multi-
family housing or in homes on tiny lots. They
allowed congestion to increase to near-gridlock lev-
els to force more people to ride the region’s expen-
sive rail transit lines. They diverted billions of dol-
lars of taxes from schools, fire, public health, and
other essential services to subsidize the construc-
tion of transit and high-density housing projects.
Those high costs have not produced the utopia
planners promised. Far from curbing sprawl, high
housing prices led tens of thousands of families to

outside the region’s authority. Far from reducing
driving, rail transit has actually reduced the share of travel using transit from what it was in 1980. And developers have found that so-called transit-
oriented developments only work when they include plenty of parking.
Portland-area residents have expressed their
opposition to these plans by voting against light
rail and density and voting for a property-rights
measure that allows landowners to claim either
compensation or waivers for land-use rules
passed since they purchased their property.
Opposition turned to anger when a 2004 scandal
revealed that an insider network known as the
“light-rail mafia” had manipulated the planning
process to direct rail construction contracts and
urban-renewal subsidies to themselves.
These problems are all the predictable result
of a process that gives a few people enormous
power over an entire urban area. Portland should
dismantle its planning programs, and other
cities that want to maintain their livability would
do well to study Portland as an example of how
not to plan.



Introduction
The city of Portland, Oregon, has received
enormous publicity in recent years for its land-
use and transportation planning. The New
York Times calls Portland “the city that loves
mass transit.”1 Portland is “successfully getting
people out of their cars,” says the BBC.2
From all over the country, city planners,
elected officials, and reporters travel to Portland
to examine the region’s urban-growth bound-
ary, rail transit system, and transit-oriented
developments. “It sometimes seems as if the
whole country is looking to Portland as a role
model for 21st-century urban development,”
says Governing magazine.3 Portland’s plans have
won numerous awards from the American
Planning Association, and Congress happily
gives the city more than its share of federal tran-
sit dollars to fund expansion of the region’s
light-rail system.
Residents of the Portland area are not as enthusiastic about the region’s planning process. Recent elections reveal that most cit-
izens are upset by the unaffordable housing, traffic congestion, increasing taxes, declining urban services, and disappearing jobs that have resulted from the plans.
In 1995, the city council adopted the slo-
gan, “The City That Works.”4 No one on the
council felt any sense of irony that Portland
was borrowing a slogan first applied to
Chicago by Mayor Richard J. Daley. Daley, of
course, was famous for using a political
machine of patronage and pork to get himself
reelected five times. Since few Portland may-
ors remain in office for more than two terms,
no one imagined in 1995 that the Northwest
city was also run by a machine.
The head of that machine, Neil
Goldschmidt, had been mayor of Portland in
the 1970s. President Carter appointed him
Secretary of Transportation in 1979, and in
the late 1980s Goldschmidt served as gover-
nor of Oregon. In 1991 he left public office
and started a political consulting firm that
used his federal, state, and local contacts to
promote seemingly idealistic schemes that





quietly diverted billions of dollars in public
funds to Goldschmidt’s clients and cronies.
Known to insiders as the “light-rail mafia,”
Goldschmidt’s machine suffered a huge set-
back in 2004 when the public learned that,
while mayor, Goldschmidt had a three-year
sexual relationship with a teenage girl starting
when she was just 14. The former mayor disap-
peared from view, leaving his allies to fend for
themselves. Today, public employee unions,
neighborhood groups, and county officials are
among those challenging what remains of the
machine, and the main goal of many of these
groups is to halt the diversion of funds from
essential urban services to expensive transit and land-use projects.

History
The planning that made Portland famous
attempts to integrate land-use and transporta-
tion. Urban planners have long believed in a
land-use-transportation connection that would
allow them to manipulate one through the
other. So Portland plans land uses to try to
reduce the amount of driving people do while it plans transportation to try to slow the con-
version of rural land to urban purposes.
No such integration was contemplated in
1973, when the Oregon legislature required
every city and county to write plans that con-
formed to goals and guidelines established by
a Land Conservation and Development
Commission appointed by the governor. The
rules aimed to protect farmland from leapfrog
development (subdivisions not physically
adjacent to the nearest urban area) by requir-
ing all cities in the state to draw urban-growth
boundaries. Development inside the bound-
aries was allowed to proceed unchecked while
development outside was strictly limited to rural uses.
The commission’s rules specified that the
initial urban-growth boundaries should
include enough land to accommodate twenty
years worth of growth. As that land was devel-
oped, cities were to expand the boundaries to
maintain land and housing affordability.



2







Indeed, due in part to a severe recession, hous-
ing in Portland and other Oregon cities remained very affordable through 1989.5 The goal was to keep development orderly and effi-
cient, not to slow or stop development.
Transportation planning was a completely
separate process, responding mainly to federal
funding and mandates. Inspired by federal
support for 90 percent of the cost of urban
interstate freeways, Portland had planned a
gridded network of such highways. But the
early 1970s saw a backlash against urban inter-
states from neighborhood residents who
argued that freeways reduced their property
values. In response, Congress passed a law
allowing cities to cancel planned interstate
highway projects and to spend the money on
mass transit capital improvements instead.6
Under Mayor Neil Goldschmidt, Portland
became one of the first cities to take advantage
of the law, canceling a road known as the Mt.
Hood Freeway in 1974. But that created a
dilemma for the city. The federal share of the
freeway cost would be enough to buy hundreds
of new buses. But Portland’s transit agency did
not have the funds to operate that many new
buses. Moreover, simply buying buses did not
create the local construction jobs and profits
that would have been gained from freeway con-
struction.
Goldschmidt’s solution was light-rail tran-
sit, a sort of heavy-duty streetcar that some-
times operated in streets and sometimes on an
exclusive right of way. The term light rail had
been coined in 1972; light referred not to weight
of the vehicles or the rails but to the smaller
numbers of people carried by these rail vehicles
relative to the large numbers carried by the
New York City subway or other heavy-rail lines
such as Washington’s Metro.
For Goldschmidt, the big advantage of
light rail was that it was expensive, easily cost-
ing enough to absorb most of the federal
funds that had been allocated to the Mt.
Hood Freeway and (as it turned out) much
more. Rail construction also provided lots of
jobs and profits for local contractors.
At the time, few observers noted the irony
that an urban transit technology was selected


3





precisely because of its high cost. President
Carter was so impressed with Goldschmidt’s
innovative solution to the freeway controversy
that he made Goldschmidt his second secre-
tary of transportation. As it turned out, light
rail required so much planning and design
work that construction did not begin until
Goldschmidt had left that office in 1981 and
was not completed until Goldschmidt was
running for governor of Oregon in 1986.
Until that point, there was still no con-
nection between Portland’s land-use and
transportation planning. But when the light-
rail line opened, the city zoned much of the
land near light-rail stations for high-density
housing in order to allow more people to live
within walking distance of the light rail.
During Goldschmidt’s term as governor,
the Land Conservation and Development
Commission began writing a transportation-
planning rule.7 This rule was heavily influ-
enced by controversy over another proposed
freeway, this one skirting the southwestern
suburbs of Portland. A land-use group called
1000 Friends of Oregon argued that the high-
way would lead to expansion of the urban-
growth boundary and that the city could avoid
such expansion by integrating its land-use and
transportation planning to emphasize com-
pact development that relied on transit, walk-
ing, and cycling instead of driving.8
The proposed highway was never built and
the final transportation-planning rule
endorsed the 1000 Friends’ ideas. The rule
directed planners in all of Oregon’s major
urban areas to change “land-use patterns and
transportation systems” so as to reduce per-
capita driving by 10 percent in 20 years and 20
percent in 30 years.9 To reach those goals, the
rule specified that planners must increase resi-
dential densities, promote mixed-use develop-
ments, mandate pedestrian-friendly design
(meaning, among other things, that retail
shops should front on sidewalks and not be
separated from streets by large parking lots),
and various related policies.10 In 1996, Maryland
governor Parris Glendenning applied the term
smart growth to this planning philosophy.11
The transportation rule effectively killed





the idea of expanding urban-growth bound-
aries to make room for growth. In 1993,
Oregon homebuilders asked the legislature
to require that boundaries be expanded to
maintain a supply of land, but Portland plan-
ners convinced the legislature to allow them
to instead accommodate growth by rezoning
existing neighborhoods to higher densities.
In the meantime, Goldschmidt announced
in 1990 that he would not run for re-election as
governor. His decision, which he blamed on
marital issues, was mysterious, as most people
believed he would have easily been re-elected
and probably gone on to the U.S. Senate.
Portlanders later learned that the woman he
had seduced when she was a teenager was seek-
ing a settlement—he eventually paid her
$350,000—and he feared the statutory rape
would be made public.12
Out of office, Goldschmidt immediately
started a political consulting firm that eventu-
ally became known as Goldschmidt Imeson
Carter. Early clients included Bechtel, Nike,
and Weyerhaeuser. Goldschmidt used his
many federal, state, and local political contacts
to grease the skids for those companies to
operate in Oregon’s regulatory environment.
Goldschmidt also used his political muscle to
have friends, relatives, and political protégés
appointed to various high offices.
The resulting light-rail mafia shaped
Oregon’s integrated land-use and transporta-
tion planning system to favor Goldschmidt’s
clients and friends. Some of the members of
the mafia included:
•Bechtel Corporation—Goldschmidt arranged
for Bechtel to receive a no-bid contract to
build an extension of Portland’s light-
rail line to the city’s airport. Under the
contract, Bechtel was paid $95 million
and given a 99-year lease to 120 acres of
valuable land near the airport.
•Tom Walsh—Longtime Goldschmidt
friend and co-owner of Walsh Construc-
tion, which specializes in building high-
density housing projects. Goldschmidt
arranged for Walsh to be appointed gen-
eral manager of Portland’s transit





agency. From that position, Walsh hand-
ed out millions of dollars in subsidies to
high-density, transit-oriented develop-
ments, many of which were built by
Walsh Construction.
•Homer Williams—Goldschmidt arranged for
hundreds of millions of dollars of federal
and local subsidies to an urban-renewal
area popularly known as the Pearl
District. Goldschmidt client Homer
Williams built many of the develop-
ments in the Pearl and, later, the North
Macadam District.
•Schnitzer Group and Zidell Marine—Owners
of a large block of former industrial lands
on Portland’s Willamette River waterfront
south of downtown, an area called either
the North Macadam or South Waterfront
district. They hired Goldschmidt to help
them plan a low-rise residential develop-
ment, but Goldschmidt persuaded them
to go for a high-rise development instead.
The development, which is being built by
Homer Williams, is enjoying nearly $300
million in public subsidies.
• Oregon Health Sciences University—
Goldschmidt served on the board of
directors of this nominally public
school that operates a hospital two-
thirds of a mile away and 500 feet above
the Schnitzer-Zidell land. Goldschmidt
persuaded the hospital to build an aer-
ial tramway to access offices and clinics
in the waterfront development and
convinced the Portland city council to
help subsidize this tram, whose cost
ballooned from Goldschmidt’s initial
$5 million estimate to $57 million.13

Goldschmidt’s efforts were not entirely
directed to land-use and transportation issues.
In 2003, he was involved in a shady deal to take
over Portland General Electric, a utility that
served two-thirds of Portland’s residents.14 The
State Accident Insurance Fund paid him a mil-
lion dollars to help shield the government
agency from private competition. Goldschmidt’s
wife was superintendent of Portland’s schools,
which hired Goldschmidt’s brother in a lucra-



4







tive consulting contract. His wife was also a
vice-president of Pacific Power & Light, Oregon’s largest electric utility.15
All in all, Goldschmidt was easily the
most powerful man in Oregon.16 In
response to that power, “the city and the Portland Development Commission went crazy,” observes Lewis & Clark law profes-
sor (and popular blogger) Jack Bogdanski, “throwing money at Goldschmidt clients like there was no tomorrow, making all sorts of dubious deals.”17
Was Portland’s land-use and transporta-
tion planning system nothing more than a
giant real estate scam for Goldschmidt’s
clients and cronies? To help answer that ques-
tion, this paper will first examine some of the
benefits claimed for Portland’s planning sys-
tem and then look at some of the costs.

The Portland Myths
Portland planners and officials have done their best to promote claims that their inte-
grated planning process is successful. In par-
ticular, they say that

1. Investments in transit and land-use
changes promoted by planning rules
have significantly reduced auto use;
2. Transit-oriented developments have
proven commercially successful and
have moved many people out of their
cars;
3. Rail transit has, in turn, stimulated
billions of dollars of land-use devel-
opments;
4. The urban-growth boundary and
other planning rules have significantly
reduced sprawl; and
5. Portlanders love their plans.

Myth #1:
Portland Loves Transit
“Car junkies like me are becoming an
endangered species,” enthused a reporter vis-





iting Portland for the BBC.18 Portland “loves
to ride” transit, said the New York Times.19 But the sad truth is that Portland’s transit num-
bers are little better than mediocre.
More than 97 percent of all motorized passenger travel (and virtually all freight
movement) in the Portland area is by auto-
mobile. Though transit’s share of passenger
travel has fluctuated between 1.8 and 2.6 per-
cent over the past 35 years, it has never made a significant dent in auto usage.
Portland’s transit agency, TriMet, accu-
rately brags that Portland transit usage grew
faster than driving in the 1990s. But it fails to
mention that transit’s share declined in the
1980s, when the region’s first light-rail line
was under construction. In 1980 more than
2.6 percent of motorized passenger travel in
the Portland area used transit. By 1990, that
had fallen to 1.8 percent. Over the next 12
years, it slowly climbed to 2.3 percent but still
remained well below the 1980 level. Since
2002 it has stagnated or slightly fallen.20
Even if it were still increasing, the difference between 1.8 and 2.6 percent means taking less than 1 percent of cars off the road.
Because transit’s major market is com-
muters, many prefer to measure transit by its
share of commuting rather than of total pas-
senger travel. During the 1970s, TriMet made
many improvements in bus service, including
building a downtown transit mall, increasing
bus frequencies, and providing commuters
with park-and-ride stations. Between 1970
and 1980, total transit ridership tripled and
the share of commuters taking transit to work increased from 7.0 to 9.8 percent.21
After construction began on Portland’s
first light-rail line, however, cost overruns
forced TriMet to raise bus fares and reduce
service. By 1990, four years after the light-rail
line opened, only 6.7 percent of commuters
rode transit to work—less than in 1970.
Ridership recovered in the 1990s, but by
2000 the share of commuters using transit
was still only 7.7 percent, well under the 1980
rate. By comparison, buses in Portland’s rival
to the north, Seattle, carried a smaller per-
centage of travel than Portland in 1980, but

were ahead of Portland’s bus-and-light-rail
system in 1990 and 2000.22
Transit works best at taking commuters
to centrally located jobs. In 2001, TriMet was
proud to say that 46 percent of all downtown
Portland workers rode transit to work. Only
11 percent of Portland-area commuters work
downtown, so on a regional level this is not
very important. But transit did help relieve
congestion and parking problems in the
downtown area. By 2005, however, the num-
ber of downtown workers commuting by
transit declined by more than 20 percent,
while the number driving to work increased.
The result was that transit’s share of down-
town commuting fell to just 38 percent.23
One reason for this decline is that TriMet
had to make service cuts due to the 2001
recession. The high cost of new rail lines and
inflexible light-rail mortgage payments
forced the agency to cut deeper than would
have been necessary if it operated a debt-free,
bus-only system.24
High gas prices in 2006 led to record rid-
ership levels for many transit agencies.25 But
due to budget and service cuts, Portland
transit ridership grew by an anemic 0.1 per-
cent.26
Even with adequate budgets, Portland
planners themselves do not predict that their
plans will lead to a huge shift in travel habits.
A 1997 regional plan called for a 70 percent
increase in population densities within the
urban-growth boundary and the construc-
tion of 125 miles of rail transit and scores of
high-density, transit-oriented developments.
Planners projected that these actions would
reduce the share of trips taken by automobile
from 92 percent in 1990 down to 88 percent
in 2040. Since planners also anticipate a 70
percent population increase during that
time, the small decline in driving’s share of
travel would not prevent a huge increase in
traffic congestion.27
In short, Portland’s integrated land-use
and transportation planning has not pro-
duced any miracles for transit. If transit plays
a slightly greater role in regional travel than
in some other cities, it plays a smaller role





than in Portland’s closest peer, Seattle, which
until 2000 had no rail transit.

Myth #2: Transit-
Oriented Development
One of the highlights of any tour of
Portland offered by planning officials is a
visit to one of the many transit-oriented
developments that have sprung up all over
the region. These high-density, mixed-use
developments are supposed to herald a new
lifestyle that uses less land and resources
because people live in multifamily housing or
in homes on tiny lots, walk to shops, take
transit to work, and generally drive far less than people living in traditional suburbs.
Many transit-oriented developments, or
TODs as planners call them, are built right
next to light-rail stations. A typical develop-
ment is four to five stories tall, with shops and
offices on the ground floor and apartments or
condos above. One famous transit-oriented
village, Orenco, was built when a light-rail line
was constructed across prime farmland with
the express purpose of subdividing that land
into a high-density development.
Tour guides usually neglect to mention
several important points about Portland
TODs:

1. They are heavily subsidized, many
receiving tens of millions of dollars of
support in the form of tax breaks,
infrastructure subsidies, below-market
land sales, and direct grants.
2. Despite the subsidies, vacancy rates are
often high, particularly in areas desig-
nated for shops.
3. While these developments may attract
some people who prefer not to drive,
there is little evidence that they have
significantly changed people’s travel
habits.

As previously noted, when Portland’s first
light-rail line opened for business in 1986,
the city zoned much of the land near light-



6







rail stations for high-density development.
Ten years later, city planner Mike Saba sadly
reported to the Portland city council, “we
have not seen any of the kind of develop-
ment—of a mid-rise, higher-density, mixed-
use, mixed-income type—that we would’ve
liked to have seen” along the light-rail line.
City Commissioner Charles Hales noted,
“We are in the hottest real estate market in
the country,” yet city planning maps revealed
that “most of those sites [along the light-rail
line] are still vacant.”28 To correct this, Hales
convinced the council to offer developers 10
years of property tax waivers for any high-
density housing built near light-rail stations.
Over the next decade, the city experienced a
boom in high-density developments, virtually
all of which were subsidized. Even with the
subsidies, planners and developers soon
learned that so-called transit-oriented develop-
ments only work if they have plenty of parking.
For example, the state of Oregon owned
land next to a light-rail station in east
Portland. In 1998, the state sold the land to
developers at below-market prices and develop-
ers received a total of $13 million in subsidies to
build a $31-million, high-density project called
Center Commons. The development provides
less than two-thirds of a parking space per
dwelling unit, but residents handle that by
freely parking on the sidewalk and in areas
clearly marked as fire lanes.29
Despite those problems, the city considers
the project a success. When asked for a defini-
tion of success, an official replied, “When the
construction was completed, the project
became a success.” In other words, “it’s not just
a matter of ‘build it and they will come,’” com-
ments John Charles of the Cascade Policy
Institute; “simply building it is enough.”30
Another development called The Round
is located in the Portland suburb of
Beaverton. Beaverton gave $12.4 million in
subsidies to the developer, who was supposed
to build a retail-office-housing complex sur-
rounding a light-rail station.31 Yet banks
were unwilling to finance a development
with inadequate parking, so the developer
went bankrupt and the project sat half-com-





pleted for several years. Finally, the city found
a new developer who finished it—on the con-
dition that the design would be modified to
include 700 parking spaces. “The key compo-
nent is parking,” said the developer.32 Yet
vacancy rates remained high after construc-
tion, partly because the development still had
parking shortages.33
Another development, Beaverton Creek, is
located next to a huge light-rail park-and-
ride lot. But the parking is open only to light-
rail riders. With little or no parking available
to customers of the ground-floor retail
shops, nearly all of those shops remain
vacant several years after it was completed.
Parking problems also plagued Orenco,
the pride and joy of Portland-area planners.
Planners allowed only limited parking in the
areas closest to the light-rail station, and
more parking further away. As a result, the
areas near the station were the last to be
developed, so most of the residences are not
within walking distance of the station.34 The
developer who built much of Orenco called it
“our nonprofit wing,” implying that his com-
pany only built it so it could get permits to
build more lucrative developments of single-
family homes on larger lots.35
A survey of Orenco residents by Lewis &
Clark College researcher Bruce Podobnik
found that most of them liked the develop-
ment but that few had changed their travel
habits. “Though some have increased their
reliance on mass transit for occasional trips
since moving into Orenco Station, most resi-
dents of the neighborhood report using
alternative modes of transportation far less
than do their counterparts in Northeast
Portland,” says Podobnik. “A key objective,
that of significantly altering resident trans-
portation habits, therefore remains to be achieved in Orenco Station.”36
One of the most embarrassing failures of
Portland’s transit-oriented planning was
Cascade Station, an office-and-retail park
that was supposed to be built on the 120
acres of land given to Bechtel in exchange for
the company building the airport light-rail
line. Because the land was immediately adja-


7




































Even when they
are next to
light-rail stations, transit-oriented developments
only work when they have plenty of parking.






If light rail works
so well, why was a
new garage
needed and in
what sense did
rail stimulate its
construction?





cent to the airport, it was not suitable for res-
idential use, but planners zoned it for small-
box retail—shops no larger than 60,000
square feet—because big-box retail (stores of
100,000 to 300,000 square feet) would be too
“auto dependent.” Although the city spent
$28 million on parks, utilities, streets, and
sidewalks, no one wanted to lease a small
shop or office on a site that was miles from
any residential areas, so the area remained
vacant for five years after the light-rail line
opened in 2001.37
Rail skeptics were amused that every light-
rail car going to and from the airport duti-
fully stopped at both of Cascade Station’s rail
stations, even though no one wanted to get
on or off. Apparently, not stopping would
have disrupted the schedules. Critics were
even more amused when a passenger did
board the rail car one day: a coyote looking
for solitude aboard one of TriMet’s empty
trolley cars.38
Finally, planners caved in to developers
who insisted that small-box retail made no
sense at the site. Instead, the city has persuad-
ed Ikea to build a 280,000-square-foot store on
the site and hopes to attract at least one other
big-box store (though not one headquartered
in Bentonville). Apparently, cheap Asian-made
goods sold by a Scandanavian retailer are
more politically correct than cheap Asian-
made goods sold by an Arkansas retailer.
Though Ikea will deliver purchases to any cus-
tomers who arrive by light rail or stow their
bikes in one of the mandated 75 bike racks,
the store expects most of its customers to use
one of its 1,200 parking spaces.39

Myth #3: Development-
Oriented Transit
Portland planners believe in the “field of
dreams”: “Build it, and they will come.”40
TriMet claimed that Portland’s first light-rail
line stimulated more than $1 billion worth of
development.41 After Portland built a down-
town streetcar line, planners claimed that it
stimulated $2.3 billion worth of develop-





ment.42 And after Portland’s aerial tram was
built, planners claimed it generated $1 bil-
lion worth of development.43
The first problem with these claims is
planners’ assumption that correlation proves
causation. In counting developments sup-
posedly “stimulated” by transit, planners
simply added up all the value of develop-
ments within a few blocks of transit lines or
stations. They made no attempt to insure that the developments really had anything to do with transit.
Measured by value, the vast majority of
the $1 billion of investments supposedly
stimulated by the light rail consists of gov-
ernment buildings, some built in response to
executive orders by President Clinton and
Oregon’s Governor Barbara Roberts that all
federal and state agencies should relocate to
downtown areas.44 One government-funded
building supposedly stimulated by the light-
rail line was a $5 million downtown parking
garage. If light-rail works so well, why is a new
garage needed and in what sense did light rail
stimulate the construction of that garage?
The second problem with claims that tran-
sit stimulated new development is that they are
based on double counting. For example, the
streetcar and aerial tram both serve the same
area, so all of the $1 billion in development
supposedly stimulated by the aerial tram is
included in the $2.3 billion in development supposedly stimulated by the streetcar.45
The biggest problem with the claim that
transit stimulates development is that most of
the private developments themselves received
huge subsidies. The Portland Development
Commission (the city’s urban-renewal agency)
uses tax-increment financing and federal
grants to subsidize developments in urban-
renewal areas. In recent years, those areas have
focused on transit zones and corridors. (For a
description of how tax-increment financing works, see “Problem #3” below.)
The Portland streetcar, for example, trav-
els almost entirely within the River, South
Park Blocks, and North Macadam urban-
renewal districts. New developments in these
districts received more than $665 million of



8







tax-increment financed subsidies from the
Portland Development Commission. The
North Macadam District, which received at
least $289 million of these subsidies, is also
the location of the aerial tram. It is fair to say
that the subsidies played a much larger role
in redevelopment than a 7-mile-per-hour
streetcar line or 13-mile-per-hour tram.
Other subsidies include Federal Transit
Administration grants to transit-oriented
developments; U.S. Department of Transpor-
tation grants for “congestion mitigation,” and
(as previously mentioned) below-market land
sales and 10-year tax waivers for high-density
housing.46 When tax-increment finance dis-
tricts aimed at supporting new light-rail lines
are added, subsidies to Portland-area transit-
oriented developments probably come close to
$2 billion, not counting the cost of light rail,
streetcars, or other transit projects.
Portland’s story of spending $90 million
on a streetcar line to get $2.3 billion of devel-
opment, or $57 million on an aerial tram to
get $1 billion of development, sounds attrac-
tive to officials from other cities. It might not
sound so attractive if Portland admitted that
it really had to spend $665 million, in addi-
tion to the cost of the streetcar line and tram,
not to mention 10-year tax waivers on at least
$100 million of development, to get that $2.3
billion worth of development.
“It is a myth to think that the market will
take care of development along transit corri-
dors,” said Portland City Commissioner
Charles Hales in 1996, when he proposed to
subsidize such developments.47 “The $55
million streetcar line has sparked more than
$1.5 billion (and growing) in new develop-
ment,” said consultant Charles Hales 10
years later, working to sell streetcars to other
cities and conveniently forgetting about the
subsidies he promoted when he was on the
city council.48
“Look at all the cranes in the city,” says
developer Homer Williams. “Outside of two or
three exceptions, it’s all because of the street-
car.”49 Yes, because of the streetcar and the
hundreds of millions of dollars in subsidies in
the areas served by the streetcar. While transit





may be a catalyst for subsidies to develop-
ment, it is not itself a catalyst for development.

Myth #4:
Portland Curbed Sprawl
Even if Portland’s integrated land and
transportation planning is not changing
people’s travel habits, planning advocates
content themselves with the thought that
Portland is at least preserving farmland and
curbing sprawl. After all, according to the
Census Bureau, between 1990 and 2000, the population density of the Portland urbanized area increased by 10.6 percent.50
One problem with this reasoning is that
many urban areas that have no urban-growth
boundaries increased their densities by even
more than 10.6 percent. During the 1990s,
Kansas City’s density increased by 39 percent;
Phoenix’s by 34 percent; Dallas-Ft. Worth’s by
33 percent; San Antonio’s by 26 percent; Houston’s by 20 percent; and Orlando’s by 13 percent.51 One reason for these increases is
that the Census Bureau changed its definition of urbanized area so as to eliminate vacant lands that had previously been included.
Another reason for Portland’s increased
density is that much of the growth took place
as “infill” on prime farmlands, such as
Orenco, that happened to be inside the
region’s urban-growth boundary. This sug-
gests that planners are not so much protect-
ing farmlands as determining which farmers get to enjoy windfall profits because they are inside an imaginary line.
At the same time that newcomers
increased the Portland area’s density, large
numbers of other people escaped Portland’s
planning system by moving to Vancouver,
Washington; Salem, Oregon; and other com-
munities outside the reach of Portland plan-
ners. As land-use rules drove up housing
prices, many people with Portland-area jobs
moved to communities outside the bound-
ary. “Middle-class people are moving to the suburbs for bigger houses,” admits Portland city commissioner Erik Sten.52


9




















Rail transit is not
a catalyst for
development; it is a catalyst for
subsidies to
development.





































Thanks to
planning-induced
housing
shortages, the
fastest growing
city in the
Portland area is
Vancouver,
Washington.





Between 1990 and 2000, Portland grew by
21 percent, while its Oregon suburbs such as
Beaverton and Gresham grew by 30 to 40 per-
cent. Meanwhile, Vancouver, Washington—
directly across the Columbia River from
Portland but beyond the reach of Portland
planners—grew by 210 percent.53 Though
Vancouver started the decade with barely 10
percent of Portland’s population, it actually
gained more new residents during the 1990s
than the city of Portland.
Meanwhile, 45 miles south of Portland,
Salem grew fast enough to overtake Eugene as
Oregon’s second-largest city in 2001. Like all
Oregon cities, Salem has an urban-growth
boundary, but planners there were less aggres-
sive than in Portland and so Salem’s housing
market has remained more affordable.54
Rather than preventing sprawl, Portland’s
planning has to some degree accelerated it.
Instead of leading people to drive less, the
plans are forcing people to commute long
distances to find affordable housing.

Myth #5:
Portlanders Love Planning
Portland’s planning represents “true
direct democracy in action,” says the BBC.55 Hardly: Several recent elections and other events have seen defeats for the planners, but they continue to plan anyway.
• In 1995, planners began rezoning
neighborhoods to higher densities. The
first neighborhood targeted for densifi-
cation was Oak Grove, where I lived at
the time. When planners held public
hearings to find out how residents felt
about the plan, they were confronted by
hundreds of angry homeowners. Local
government officials reluctantly asked
Metro, Portland’s regional planning
agency, to take Oak Grove off the list of
neighborhoods slated for rezoning, say-
ing “there is no community support”
for the plan.56 Metro and other local
governments responded by not holding





public hearings in most other neigh-
borhoods slated for densification.
Instead, plans were written by commit-
tees consisting of a few neighborhood
residents who were prescreened to
insure they supported Portland’s densi-
fication, along with many more nonres-
idents, such as officials representing
TriMet and other government agencies.
• In 1997 voters in the Portland suburb
of Milwaukie recalled their mayor and
a majority of their city council from
office because the council had
approved a plan to rezone part of the
city for higher densities.57 Planners
were greatly relieved when no other city
followed the suburb’s example.
• Public hearings held in 1998 on light-
rail expansion plans revealed planners’
lack of commitment to the democratic
process. At the first few hearings, plan-
ners intimidated anyone who attempt-
ed to distribute anti-light-rail litera-
ture, even just copies of their testimo-
ny, by threatening them with arrest for
“criminal trespass.”58 Metro changed
this policy after it realized that the First
Amendment allowed people to express
their opinions at public hearings.
• In November, 1998, Portland-area vot-
ers rejected, by 47-to-53, the proposed
expansion to the light-rail system. Yet
TriMet is expanding anyway, using tax-
increment financing—the only way
local officials in Oregon can use prop-
erty taxes without a public vote—to
finance the new lines.
• In 2002 planning opponents put a mea-
sure on the ballot that would forbid
Metro, Portland’s regional planning
agency, from requiring that more neigh-
borhoods be rezoned to higher densities.
Having already densified dozens of
neighborhoods, Metro responded with
its own measure that put a moratorium
on densification through 2015.
Planning advocates claimed victory
when Metro’s measure won—but if they
had really believed that voters supported



10







their density plans, they would simply
have opposed the original anti-density
measure.
• In 2004 property-rights activists put
measure 37 on the ballot, allowing any-
one whose property values had been
reduced by planning and zoning to ask
for either compensation or to have the
rules waived. Planning advocates spent
$2.7 million to argue that this would
destroy Oregon’s land-use planning
system. Though measure 37’s support-
ers spent barely a third of that amount
promoting it, the measure passed by 61
percent, winning a majority of the votes
in every county in the Portland area.
• In 2005 Portland’s incoming mayor,
Tom Potter, announced a “VisionPDX”
process that would allow Portland resi-
dents to “create a vision for Portland
for the next 20 years and beyond.”59
After collecting people’s opinions for
more than a year, a draft report revealed
significant uneasiness with the
Portland’s plans. Respondents “worry
about a growing gap between
Portland’s haves and have-nots—in
schools, health care and the priorities
of city government,” says the draft. In
particular, many people think “the
tram/South Waterfront/North Macadam
development (not to mention the Pearl,
which seems to have become a verb, as
in ‘to Pearlize’) was a total waste of
money.”60

Far from representing direct democracy in
action, Portland’s programs are a classic
example of arrogant government planners
doing their best to sidestep the public’s wish-
es. “Portland-area residents have not know-
ingly consented to be willing research sub-
jects in a radical experiment,” warned a
Portland State University professor of urban
studies in 1995.61 The Goldschmidt affair
revealed that, not only was Portland’s plan a
radical experiment, it was manipulated by
special interests to maximize the profits of
selected developers and rail contractors. The





only question left is how Portlanders will
overturn the dominant paradigm.

Problems with
Portland’s Plans
The previous discussion has already hinted
at some of the major drawbacks of Portland’s
integrated land-use and transportation plan-
ning. These include the following:

1. Increasingly unaffordable housing
prices.
2. Increased traffic congestion.
3. Higher taxes or reduced urban services
as tax revenues are diverted to rail tran-
sit and transit-oriented development.
4. A reputation for having an unfriendly
business environment, leading to
higher unemployment.

Problem #1:
Unaffordable Housing
During the 1990s, housing affordability
declined by more in Portland than in any other
urban area in the United States. Today, Portland
remains more affordable than most California
housing markets, but it is far less affordable
than many less-regulated housing markets,
such as Atlanta, Raleigh, and Houston.
A standard measure of a region’s affordabil-
ity is median home price divided by median
family income. A price-to-income ratio of 2 or
less is very affordable, whereas markets with
ratios above 3 verge on unaffordable. At cur-
rent interest rates and a price-to-income ratio
of 3, a family devoting a quarter of its income
to mortgage payments would need 17 years to
pay it off. At a ratio of 4, it would need 32 years,
and at a ratio of 5, it could never pay it off.
The decennial census estimates both medi-
an family income and median home value for
the year prior to each census. Census data reveal
that almost all U.S. regions outside of Hawaii
(which passed growth-management planning
legislation in 1960) had affordable housing in


11




Far from
representing
direct democracy in action,
Portland’s
programs are a classic example of arrogant
government
planners doing their best to
sidestep the
public’s wishes.














In 2005, planners
were elated to
find that, thanks
to housing that
they made
unaffordable,
developers were
voluntarily
tearing down
suburban homes
and replacing
them with
high-density
housing.





1969. During the 1970s, many counties in
California imposed urban-growth boundaries and other growth-management tools. By 1979, most California housing prices had become as unaffordable as those found in Hawaii.
Oregon urban-growth boundaries were imposed in 1979-85, but a severe recession that caused the state to actually lose popula-
tion during some years in the 1980s kept housing affordable through 1989. As the state’s economy recovered after that year, prices rapidly accelerated.
Growth boundaries limit the supply of
land available for new home construction. In
1990, builders could buy an acre suitable for
residential use in the Portland area for
$25,000.62 By 1997, the cost of the same acre
was between $150,000 and $200,000. Because
median incomes had not increased signifi-
cantly, the National Association of Home
Builders ranked Portland the second-least
affordable housing market in the country.63
Growth boundaries are not the only cause
of unaffordable housing. Other problems
include impact fees and an onerous permitting
process that allows anyone in the state to chal-
lenge a proposed development without hiring
an attorney. One result of this regulation is
reduced competition in the housing market.
“The urban growth boundary has really been
our friend,” says a leading Portland home-
builder. “It kept the major builders out of the
market.”64 Of course, in this case what is good
for homebuilders is bad for homebuyers.
In 1989, Portland’s value-to-income ratio
was less than 2. By 1999, it had increased to
more than 3. It was no fluke that this increase
was greater than that of any other U.S. urban
area: the second- and third-greatest increases
were in Salem and Eugene, Oregon. Today, as
noted in the discussion of Mayor Potter’s
VisionPDX, housing affordability is a major
concern for many Portland-area residents.
Unaffordable housing hits low-income
families particularly hard. With the growth
boundary limiting new home construction,
many young families are gentrifying low-
income neighborhoods in Portland, pushing
former renters in those neighborhoods out





of single-family homes and into multifamily
housing.65 “People who don’t have choices are getting pushed out as rents go up,” says city commissioner Eric Sten.66
Although planners never actually said they
wanted to increase housing prices, it is not
clear that they see high prices as a problem. “If
people want a compact urban area,” said
Metro’s chief land-use planner in 1996, “some
increase in the price of housing is going to
occur.”67 Higher prices would discourage peo-
ple from living in homes with large yards and
encourage more people to live in multi-family
housing, which planners considered to be a
good thing. In 2005, planners were elated to
find that land and housing prices had gone so
high that—without any subsidies—developers
were tearing down suburban homes and
replacing them with high-density housing.68
Yet high housing prices cause several serious
problems. First, they deny low-income families
the opportunity to achieve the American dream
of homeownership. “Insidiously, the burden of
site-supply restrictions will fall disproportion-
ately on poor and minority families,” says
Portland economist Randall Pozdena. Pozdena
estimates that if Portland’s planning measures
had been applied nationwide during the 1990s,
more than a million young and low-income families would have been prevented from buy-
ing homes.69
High housing prices may create windfall
profits for some homeowners—but it is mere-
ly a paper profit unless they plan to sell and
then move to a lower-cost region or a smaller
home. However, this windfall, too, is
inequitable, as the people buying their first
homes tend to be less wealthy than those who already own their homes.
High housing prices also slow the growth of
urban areas. Silicon Valley saw an exodus of
firms to the Portland area in the early 1990s,
when Portland was still affordable. But by
2000, Portland’s high housing prices led many
potential employers to look to Boise, Omaha,
or other affordable communities.
Research in Britain, which has practiced
growth management since 1947 and suffers
from some of the highest housing prices in



12







the world, found that neighborhoods with
high homeownership rates tend to have
higher unemployment rates than communi-
ties with high rental rates.70 High housing
prices make the cost of moving unaffordable,
effectively immobilizing the population.
Harvard economist Edward Glaeser has
found that growth management makes both
housing prices and local employment rates
more volatile. “In the long run, firms general-
ly leave high-cost areas,” says Glaeser, so
“places with rapid price increases over one
five-year period are more likely to have
income and employment declines over the
next five-year period.”71 It is not surprising,
then, that in much of 2001 and 2002
Portland had some of the highest unemploy-
ment rates of any major metropolitan area.72

Problem #2: Congestion
Between 1982 and 2003, the amount of
time the average commuter wasted in traffic
increased more rapidly in Portland than in
Atlanta, Boston, Denver, Los Angeles, New
York, Phoenix, or San Francisco—more, in
fact, than in almost any other U.S. urban
area.73 This was not an unintended conse-
quence of Portland’s planning—in fact, it was part of the plan.
Increased congestion will “signal positive
urban development,” says a 1996 report from
Portland’s Metro.74 Three years later, Metro’s
regional transportation plan declared, “trans-
portation solutions aimed solely at relieving
congestion are inappropriate.”75 In fact, Metro
has decided that “level of service F”—the trans-
portation engineer’s term for near gridlock—is
“acceptable” during rush hour throughout
most of the Portland area. Why? Because, says
Metro’s leading transportation planner, relieving
congestion “would eliminate transit ridership.”76
Following are just a few examples of how
Portland planners are letting congestion increase.
• The biggest bottleneck in the Portland
area is on Interstate 5 between Portland
and Vancouver, just south of the bridge





crossing the Columbia River, where the
three southbound lanes shrink to two
lanes for just 0.8 miles. The result is
huge traffic backups as all the Portland
workers who found affordable housing
in Vancouver try to get to work each
morning. Metro’s 1995 transportation
plan estimated that it would cost only
$10 million to add a third lane to this
segment, but to this date nothing has
been done.77 In 1998, Henry Hewitt,
chair of the Oregon Transportation
Commis-sion, told a legislative commit-
tee that Metro had asked the depart-
ment not to fix the bottleneck.78
• U.S. Representative David Wu (D), who
represents west Portland, earmarked
federal funds to expand state highway
217, which may be the second-most
congested freeway in the Portland area
after I-5. Metro turned the money
down, saying it had other priorities.79
• Portland’s 82-year-old Sellwood Bridge,
the busiest two-lane bridge in Oregon,
is structurally failing and was closed to
trucks and buses in 2004. The Bechtel
Corporation offered to replace the
bridge by 2010, but Metro and
Multnomah County (which owns the
bridge) turned them down. Due to
their lengthy planning processes, they
don’t even expect to begin construction
before 2010.80 When they finally do,
they almost certainly will not add
capacity for anything except bicycles.
• Rather than increase roadway capacity,
Portland is actively reducing the capac-
ity of many arterials and collectors to
handle traffic. Speed humps and curb
extensions have been added to such
collectors as Belmont and Stark streets,
while arterials such as Sandy, Barbur,
and McLoughlin have been slated for
boulevarding, also known as arterial
traffic calming, which means removing
right- and left-turn lanes.

The Texas Transportation Institute esti-
mates that congestion cost Portland-area


13

































When U.S.
Representative
David Wu (D)
earmarked funds
to expand one of
the most congest-
ed freeways in
Oregon,
Portland-area
planners turned
the money down.






“While some
poor mentally ill guy lay there with
his life ebbing
away,” blogger
Jack Bogdanski
scathingly
comments,
“the big-shot
real-estate
sharpie sat with
his cloth napkin
on, eating his
braised veal
ravioli with
truffles.”





commuters more than $500 million in wast-
ed time and fuel in 2003, a 1900-percent
increase from 1982.81 A study prepared for
Metro and the Portland Business Alliance
estimates that the cost of congestion to busi-
nesses is of the same order of magnitude.82
In its 2020 regional transportation plan
(published in 2002), Metro predicted that its
plans would increase the amount of time
Portlanders waste sitting in traffic more than
6.6 times.83 Congestion would increase despite
all of the region’s land-use and transit plans
because those programs, predicted planners,
would attract no more than about 4 percent of
auto drivers to other modes of travel.84 When
asked about those predictions, which were in
his own agency’s report, Mike Burton, Metro’s
elected executive, told a legislative committee,
“Nobody believes those numbers.”85
In 2007, the Federal Highway Administra-
tion chastised Metro for its anti-auto trans-
portation plans. “It is difficult to find the
transportation focus” in Metro’s regional
transportation plan. Metro “should acknowl-
edge that automobiles are the preferred mode
of transport by the citizens of Portland,”
added the agency. “They vote with their cars
every day.”86 Based on that “vote,” “The trans-
portation solution for a large and vibrant
metropolitan region like metropolitan
Portland should include additional highway
capacity options.”87

Problem #3:
Increased Taxes/Reduced
Urban Services
On September 17, 2006, developer Homer
Williams was eating dinner on the patio at
the Bluehour, the ritziest restaurant in the
Pearl District, when he saw police subdue a
man on the sidewalk outside. Williams later
told police he was struck by the “casualness”
of the situation.88
It was anything but casual for James
Chasse, the man in custody. A talented musi-
cian who had schizophrenia, Chasse was fine
as long as he took his medications. But a





nonprofit mental health clinic received a
report on September 15 that he was not eat-
ing and had probably stopped taking his
medicine. When someone working for the
clinic tried to find him, Chasse fled in panic.
Two days later, police officer Christopher
Humphries saw Chasse and assumed he was
drunk or on drugs. When Humphries tried to
approach, Chasse ran away. Humphries tack-
led him and, according to witnesses, punched
and kicked him several times.89 While in cus-
tody, Chasse died of chest injuries.
Portland mental health advocates were
outraged that many of the programs that
could have saved Chasse’s life had suffered
recent budget cuts: community policing,90 a
crisis triage center,91 and the city’s mental
health program.92 Yet the city continues to
spend tens of millions of dollars a year subsi-
dizing high-density developments. “So while
some poor mentally ill guy lay there with his
life ebbing away,” blogger Jack Bogdanski
scathingly comments, “the big-shot real-
estate sharpie sat with his cloth napkin on,
eating his braised veal ravioli with truffles.”93
Between 10-year property tax waivers for
high-density housing and tax-increment
financing for transit-oriented developments,
Portland has diverted tens of millions of dol-
lars of tax revenues a year from schools,
police, fire, public health, and other urban
services. This has contributed to funding
crises for many of those services, even as
developers like Homer Williams continue to
enjoy hundreds of millions of dollars in sub-
sidies for their projects.
As of 2003 nearly $1.4 billion worth of property had received tax waivers in Multnomah County (where most of
Portland is located). About $214 million of
that was specifically for Portland’s high-den-
sity or transit-oriented plans, representing
lost tax revenues of about $4 million per year.
Another $600 million is for improvements
and renovations to historic properties. About
60 percent of these improvements, by value,
are near the light-rail or streetcar lines, and
many were counted by Portland planners as
developments stimulated by rail transit.94



14







Portland has 10 urban-renewal districts, at
least 7 of which were created specifically to sup-
port rail transit and transit-oriented develop-
ments. The city uses tax-increment financing
(TIF), a technique first developed to promote
urban renewal in California in 1953. Since
then, TIF has become the primary means of
financing urban renewal in every state but
Arizona. Tax-increment financing provides the
funds used for eminent domain in urban-
renewal areas; without TIF, cases like Kelo v. City
of New London would never have happened.
Originally, urban renewal was supposed to
be a way for cities to kick-start development in
areas so blighted that property owners and
developers would not invest in improvements.
Today, it is often used by planners to shape
development in areas that developers would
gladly invest in without subsidies.95 Planners
use the TIF money to subsidize developments
that are less marketable but more politically
correct than the ones developers would build
without subsidies. Often, that means high-
density, mixed-use developments.
Under tax-increment financing, the exist-
ing property taxes collected from an urban
renewal district are frozen, meaning they are
distributed, as before, to schools and other
services. All property taxes collected on new
improvements—the increment—are used to
subsidize those improvements. In most cases,
planners estimate the revenues they will get
from those improvements, then sell bonds
that will be repaid by those revenues. The
bonds are used to pay for infrastructure,
below-market land sales, and sometimes
direct grants to the developers.
Portland has authorized the sale of $1.7 bil-
lion worth of TIF bonds to support its 10 urban
renewal districts. About $1.2 billion of the
bonds are for the seven districts created specifi-
cally for rail and transit-oriented development.
They include the River District (created for the
streetcar and the Pearl; $234 million), Airport
Way (created for the airport light rail and
Cascade Station; $73 million), North Macadam
(created for the South Waterfront/aerial
tram/streetcar; $289 million), Interstate (creat-
ed for the Interstate light-rail; $335 million),





Gateway (created for the airport light-rail; $164
million), Lents (created for a proposed light rail
to Clackamas County; $75 million), and
Central Eastside (created for a proposed light-
rail line and transit-oriented developments; $66
million).96 It is likely that bonding authority for
the Central Eastside and Lents districts will
increase as plans for those areas progress.
At least some of the money spent on the
districts not created specifically for rail tran-
sit and TODs has still gone to support those
activities. The streetcar was built with the
help of $7.5 million of the $144 million in
bonds for the South Park Blocks District.97
Many of the improvements in that district
and the Convention Center District ($168
million) were counted by planners as invest-
ments generated by rail transit.98
According to Multnomah County, the actu-
al taxes diverted to Portland urban renewal
totaled $66 million in 2006, $41 million of
which went to the rail-TOD districts.99 That
amounts to about 6 to 7 percent of total prop-
erty tax collections in Multnomah County.100
Many of Portland’s suburbs, including
Gresham, Wilsonville, and Tualatin, have their
own urban-renewal districts used to subsidize
their own transit-oriented developments.
The Chasse tragedy symbolized the many
problems caused by the diversion of funds
from schools, police, public health, and other
services. Portland’s schools are particularly
squeezed by tax breaks and urban renewal.
Due to Portland’s high housing prices, a
disproportionate number of families with chil-
dren have moved to suburban or exurban areas
where they can afford a house with a yard. As a
result, only 21 percent of city of Portland resi-
dents are under the age of 18, compared to 27
percent of Portland’s suburban residents.101
While suburban school districts are building
new schools, Portland’s is closing five to seven
schools per year. Despite the closures,
Portland’s school district projected a $57 mil-
lion shortfall in its 2007 budget. Such short-
falls are only driving more families with chil-
dren to the suburbs.102 When Portland’s mayor
suggested a city income tax to help schools, the
idea sank like a lead aerial tram.103


15


















Tax-increment
financing
provides the money for
eminent domain
in urban-renewal
areas; without
TIF, cases like
Kelo v. City of New London would
never have
happened.




























Though there was
no light rail near
Columbia
Sportswear’s
proposed office
building and
voters turned
down funds to
build it, Portland
planners wanted
to build it anyway
so they told the
company it could
not provide
surface parking
because “it’s a
light-rail station.”





All of these diversions have raised the ire
of the public employees’ unions and others
who work for or rely on the services that are
being cut. These groups are engaged in “a
huge battle for the control of the Rose City,”
observes writer Phil Stanford, author of
Portland Confidential, a book about corrup-
tion in the 1950s and ‘60s. “What’s left of the
old Neil Goldschmidt machine,” says
Stanford, is “struggling to maintain the hold
it’s had on the city’s purse strings.”104
One of the leading opponents of the
Goldschmidt program, City Commissioner
Randy Leonard, represented firefighter unions
before being elected. Since Portland firefight-
ers get more than 90 percent of their funds
from property taxes, they are understandably
concerned about tax-increment financing.105
Another opponent, Amanda Fritz—who chal-
lenged an incumbent Goldschmidt supporter
for city council in 2006—has represented nurs-
es unions. Although Fritz did not win, Leonard
survived a strong challenge from a Goldschmidt
supporter in the same election.
Most recently, groups ranging from the
League of Women Voters to the chair of the
Multnomah County Commission are oppos-
ing an extension of the Portland streetcar that
would require more TIF money. The League
worries that TIF saps spending on schools and
social services. Multnomah County says that
urban renewal costs it $14 million per year.106
In any case, says Stanford, “it looks like the
political machine that’s called the shots in
Portland for almost 50 years is crumbling.”107

Problem #4: Business-
Unfriendly Environment
Columbia Sportswear, one of Oregon’s largest companies, was headquartered in North Portland but wanted to relocate to a larger space. In 2000 it found a location in the Central Eastside urban-renewal district, and the city of Portland was pleased to wel-
come the company there.
After making plans for the new office, how-
ever, the company was told by Portland plan-





ners that it could not have any surface parking
at the site because “it’s a light-rail station.”
There is no light-rail line anywhere nearby,
and voters had turned down funds to build
such a line, but the city hoped to eventually
build the line anyway, so it declared the park-
ing rule to be “nonnegotiable.”108 The compa-
ny moved to suburban Washington County instead, and its CEO blasted the city for its anti-business climate.109
Homer Williams may find Portland to be
a business-friendly environment. But for
those who cannot hire a Neil Goldschmidt to
smooth their way to riches, the cost of doing business in the Portland area is high. That cost includes
• The high cost of land for office, indus-
trial, or retail operations;
• The cost of overcoming Oregon’s
lengthy and onerous land-use planning
process when siting such operations;
• The cost of congestion, especially for
businesses that make daily deliveries of
goods and materials;
• The cost of paying workers enough so
that they can afford housing and other
consumer costs; and
• The high tax rates needed to support rail
transit and other expensive programs.

Portland seemed to have a business-friend-
ly environment in the early 1990s. Housing
was still very affordable, especially when com-
pared to housing in California. In 1993, the
state legislature was prompted by Intel to pass
a law allowing cities and counties to tax only
the first $200 million of the value of chip-mak-
ing plants, which were often worth $1 billion
or more. This seemed reasonable to many
because such factories did not consume any more public services than, say, sawmills or other pre-silicon plants.
As a result, at least 10 chip factories located
in the Portland area, each employing thousands
of people. Between 1992 and 1998, the region
gained nearly 200,000 new jobs, a 26-percent
increase. Then job growth slowed as high prices
for land and housing led employers to look to



16







Boise and other low-cost regions to site new
facilities. At its peak, in December 2000, the Portland area had just under a million jobs. By January, 2004, employment had fallen nearly 8 percent to less than 920,000 jobs. Since then, employment has recovered but today stands only slightly above the 2000 peak.110

Conclusions and
Recommendations
Portland planning did not start out as a real
estate scheme aimed at enriching Neil
Goldschmidt and his friends and clients, but it
ended up that way. Portland’s planning
process was conceived by ideologues who dis-
liked the automobile and wanted to preserve
all of Oregon’s abundant open space no matter
what the cost. It was endorsed by politicians
who refused to believe, or simply ignored, pre-
dictions that it would hugely increase conges-
tion and housing costs. And it was manipulat-
ed by a cabal of politically connected business-
es seeking to divert the flow of tax dollars into
their own pockets. The opportunities for such
manipulation were so obvious that, if Neil
Goldschmidt had not started the light-rail
mafia, it would have been someone else; and if
it were not for Goldschmidt’s statutory rape,
many Portland-area residents never would
have learned about this cabal.
The results have been a disaster for the
average Portland-area resident. The light-rail
and streetcar lines, vibrant downtown streets,
and scenic vistas outside the urban-growth
boundary may seem attractive to visitors. But
residents have to live in unaffordable hous-
ing, creep along in traffic congestion, and pay
higher taxes or suffer reduced urban services
so that the region’s political leaders can fund
their rail transit and transit-oriented devel-
opment schemes.
Portlanders always hoped that planning
would save their region from becoming like
Los Angeles, the nation’s most congested,
most polluted urban area. When Portland
planners were in the midst of writing their
plan for densifying and railifying the region,





they examined the nation’s 50 largest urban
areas to see which was closest to the vision they had for Portland.
It turned out that one region almost pre-
cisely matched that vision. The nation’s dens-
est urban area was also the major urban area
with the fewest number of miles of freeway
per capita. That same area also happened to
be spending billions of dollars building new
rail transit lines. Which urban area was that? Why, Los Angeles.
Despite the popular belief that Los
Angeles is the epitome of urban sprawl, it is
actually the densest urban area in America—
about one third denser than the New York
urban area (which includes southwestern
Connecticut and northeastern New Jersey).
The Los Angeles urban area (which includes
Pasadena and much of Orange County) also
has only about 53 freeway miles per million
residents, compared with a national urban
area average of 108 miles. Los Angeles is con-
gested because it packs so many people into a
small area and doesn’t have enough roads for them to drive on. It is polluted because cars pollute the most in stop-and-go traffic.
“In public discussions we gather the gen-
eral impression that Los Angeles represents a
future to be avoided,” wrote Metro in 1994.
Yet “with respect to density and road per
capita mileage it displays an investment pat-
tern we desire to replicate” in Portland.
Rather than see this as a sign that there
might be something wrong with their plan,
planners merely attributed this to a differ-
ence between “perception and reality.”111
Portland and Oregon can take several steps to remedy Portland’s problems before they get any worse:
• Portland-area voters should dissolve
Metro, the regional planning agency,
and return planning functions to local
governments.
• The state legislature should repeal the
land-use planning laws that are driving
up housing prices and immobilizing
the region’s transportation systems.
• As an intermediate step, the state should


17




The
opportunities for
manipulating the
system were so
obvious that, if
Neil Goldschmidt
had not started
the light-rail
mafia, someone
else would have.























People who want
to see their
regions remain
livable should
look at Portland
only as an
example of how
not to plan.





pass legislation requiring Metro or local
governments to make enough land avail-
able for development at marketable densi-
ties to maintain a 20-year supply of land.
Similar legislation is currently being con-
sidered by the California legislature.112
• As suggested by University of Maryland
public policy professor Robert Nelson,
the state could also pass legislation giv-
ing groups of homeowners and
landowners the ability to opt out of local
land-use planning and zoning by creat-
ing a homeowners’ or landowners’ asso-
ciation that writes its own plans and pro-
tective covenants.113
• The state should also create a regional
tollroads authority that can sell bonds
backed to tolls to build highways to
meet the demand as measured by
motorists’ willingness to pay tolls that
are priced to minimize congestion.
• The region should halt construction of
rail transit lines and other transporta-
tion projects that are not cost effective
in relieving congestion.
•The legislature should eliminate or strict-
ly limit the ability of local governments
use tax-increment financing. At the very
least, such financial support should be
provided to developers only if an area is so
blighted that no development would take
place without initial financial support.

Until these changes are made, cities outside the Portland area should scrutinize Portland’s claims with skepticism. People who want to see their regions remain affordable, uncongested, and livable should look at Portland only as an example of how not to plan.

Notes
1. William Yardley, “City That Loves Mass Transit Looks to the Sky for More,” New York Times, January 29, 2007, p. A15, tinyurl.com/3byffn.
2. Sayeeda Warsi, “Where the Car Is Not King,”
BBC News, August 15, 2006, tinyurl.com/2mmku4.
3. Alan Ehrenhalt, “The Great Wall of Portland,”






Governing, May 1, 1997, pp. 20-24.
4. Auditor’s Office, City of Portland, Oregon, “City
Slogan: ‘The City That Works,’” tinyurl.com/
3yf287.
5. U.S Census Bureau, 1990 Census, Table P107A (median-family incomes) and Table H061A (median home values).
6. George M. Smerk, The Federal Role in Urban Mass Transportation (Bloomington: Indiana University Press, 1991), pp. 120-21.
7. Susan Brody, director, Department of Land
Conservation and Development, “Status of
Transportation Planning Rule,” memorandum to Governor Goldschmidt, July 31, 1989, p. 1, tinyurl.com/3ey585.
8. 1000 Friends of Oregon, “Making the Connec-
tions: A Summary of the LUTRAQ Project,” 1997, pp. 8-10.
9. Land Conservation and Development Commis-
sion, Transportation Planning Rule, Salem, OR:
LCDC, 1991-012-0035(4). A 1998 amendment re-
duced the 30-year goal to 15 percent, tinyurl.com/ 2gyf4c.
10. Transportation Planning Rule, Land Conserva-
tion and Development Commission, OAR 660-012-
0045.
11. John W. Frece, “Twenty Lessons from Maryland’s Smart Growth Initiative,” Vermont Journal of Environ-
mental Law 6 (2004-2005), tinyurl.com/8sj28.
12. Nigel Jaquiss, “Who Knew: Long Before Neil
Goldschmidt’s Secret Became Public, Many Influen-
tial Oregonians Knew Something About It,”
Willamette Week, December 15, 2004, tinyurl.com/ yoxcuy.
13. Jim Redden, “Neil’s Network,” Portland Tribune, May 21, 2004, tinyurl.com/2lcesn.
14. Nick Budnick, “Power Connection: Kulongoski’s
Appointment for Powerful Investment Council Raises
Questions,” Willamette Week, June 7, 2005, tinyurl.com/
29fmkx.
15. Redden, “Neil’s Network.”
16. Bob Young, “Big Dog,” Willamette Week, August 26, 1998, tinyurl.com/2n4gah.
17. Jack Bogdanski, “You See This Sign?” Jack Bog’s Blog, March 20, 2007, tinyurl.com/36v2j7.
18. Warsi.



18








19. Yardley.
20. Federal Transit Administration, “Service Supplied and Consumed,” National Transit Database (Washington: U.S. Department of Transportation, various years); Federal Highway Administration, Highway Statistics (Washington: U.S. Department of Transportation, various years), table HM72.
21. U.S. Census Bureau, 1970 Census, table 82, “means of transportation to work,” for urbanized areas; U.S. Census Bureau, 1980 Census, table 118, “means of transportation to work,” for urbanized areas.
22. U.S. Census Bureau, 1990 Census, table P049, “means of transportation to work,” for urbanized areas; U.S. Census Bureau, 2000 Census, table P30, “means of transportation to work,” for urbanized areas.
23. Portland Business Alliance, “2005 Downtown Portland Business Census and Survey” pp. 3, 11, tinyurl.com/29l38p.
24. Nick Budnick, “TriMet Feels Its Own Squeeze,”
Portland Tribune, June 6, 2006, tinyurl. com/27t6z6.
25. American Public Transportation Association, “Americans Take More Than 10 Billion Trips on Public Transportation for the First Time in Almost Fifty Years” press release, March 12, 2007, tinyurl.com/35a36h.
26. American Public Transportation Association, “APTA Transit Ridership Report: Fourth Quarter 2006,” p. 25, tinyurl.com/2kgt8y.
27. Portland Metro (Metro), “Recommended Alterna-
tive Technical Appendix,” 1994, transportation tables.
28. Quotes from the October 23, 1996, city council meeting are taken from a videotape of that meeting made by the city of Portland, a synopsis of which is available at tinyurl.com/2nhgnj.
29. John Charles, “The Mythical World of Transit-
Oriented Development,” Cascade Policy Institute Policy Perpective no. 1019, October 2001, tinyurl. com/336pt6.
30. Ibid.
31. Aaron Fentress, “Beaverton Pays to Save Round,” The Oregonian, July 23, 1999, p. C1.
32. Richard Colby, “Stalled Project Gets Another Chance,” The Oregonian, June 13, 2001, p. C1.
33. David Anderson, “Opposite Angles on the Round,” The Oregonian, September 21, 2006, p. 12.






34. John Charles and Michael Barton, The Mythical
World of Transit-Oriented Development: Light Rail and the
Orenco Neighborhood, Cascade Policy Institute,
Portland, Oregon, April 2003, tinyurl. com/2kh6s.
35. Randy Gragg, “The New Urbanism: Laboratory Portland,” The Oregonian, June 11, 2000, p. E10.
36. Bruce Podobnik, “Portland Neighborhood Survey
Report on Findings from Zone 2: Orenco” (Portland,
Oregon, Lewis & Clark College, 2002), p. 1,
tinyurl.com/2hhmwo.
37. Kennedy Smith, “Cascade Station Stops Short of New Urbanism,” Daily Journal of Commerce, December 5, 2005.
38. “Wandering Coyote Booted from Airport Hops a Train Instead,” The Scoop, February 15, 2002, tinyurl.com/2gmtat.
39. Jennifer Anderson, “Welcome to Portland? Many
Eagerly Have Awaited Ikea, But Some Critics Say
Any Big-Box Store Is a Bad Idea,” Portland Tribune,
March 27, 2007, tinyurl.com/38k3ke.
40. G. B. Arrington, “At Work in the Field of Dreams:
Light Rail and Smart Growth in Portland”
(Portland, OR: TriMet, 1998), tinyurl. com/394bsd.
41. G. B. Arrington, “Beyond the Field of Dreams,” TriMet, 1996, tinyurl.com/2umsjv.
42. Portland Office of Transportation, “Portland
Streetcar Development Oriented Transit,” 2006,
p. 1.
43. Hal Bernton, “Portland Tram Takes Off,” Seattle Times, January 27, 2007.
44. William J. Clinton, Executive Order no. 12988, Civil Justice Reform, February 5, 1996, and Executive Order no. 13006, Locating
Federal Facilities on Historic Properties in Our
Nation’s Central Cities, May 21, 1996; Barbara
Roberts, Executive Order no. 94-07, Siting State
Offices in Oregon’s Community Centers, June 7, 1994.
45. City of Portland, Office of Transportation, pp. 10-13.
46. Charles.
47. Quoted from the October 23, 1996, city coun-
cil meeting taken from a videotape of that meet-
ing made by the city of Portland. Transcript avail-
able at tinyurl.com/2nhgnj.
48. Charles Hales and Robert Cone, “Streetcars Bring-
ing People, Businesses Back to the City,” HDR



19








TransitLine, 2006, tinyurl.com/2nx6x5.
49. Andy Guy, “The Little Trolley That Could . . . and Did,” Michigan Land Use Institute, November 29, 2006, tinyurl.com/39wt3o.
50. U.S. Census, 1990 Census, table CPH-1 for
urbanized areas; U.S. Census Bureau, 2000
Census, table GCT-PH1 for urbanized areas.
51. U.S. Census Bureau, 1990 Census , table CPH-
1 for urbanized areas; U.S. Census Bureau, 2000 Census, table GCT-PH1 for urbanized areas.
52. Clifton R. Chestnut and Shirley Dang, “Suburbs Drain City Schools,” The Oregonian, October 12, 2003, p. A1.
53. U.S. Census Bureau, 1990 Census, table P-001 for places; U.S. Census Bureau, 2000 Census, table P1 for places.
54. Randal O’Toole, “The Planning Penalty: How Smart Growth Makes Housing Unaffordable,” American Dream Coalition, 2006, p. 44, tinyurl. com/24eksw.
55. Warsi.
56. Judie Hammerstad, chair, Clackamas County Commission, letter to Metro regarding Oak Grove, July 24, 1996.
57. R. Gregory Nokes, “Milwaukie Recall Wake-Up Call for Region’s Planners,” The Oregonian, December 22, 1997, p. A14.
58. I was threatened with arrest for passing out my testimony at a hearing on April 8, 1998. Metro plan-
ners called sheriff ’s deputies, but by the time they arrived I had given a copy to everyone who wanted one. At the next hearing, on April 13, Metro denied that it threatened anyone with arrest.
59. City of Portland, “Welcome to VisionPDX,” tinyurl.com/3d43kp.
60. Joseph Rose, “Survey Finds Have, Have-Not Gap,” The Oregonian, February 15, 2007.
61. Ken Dueker, “Portland’s Love Affair with Light Rail: Assessing the Risk Factors,” Portland State University Center for Urban Studies Discussion Paper no. 95-6, 1995.
62. Foster Church, “Portland Becomes Pricey,” The Oregonian, July 31, 1995, p. A1.
63. R. Gregory Nokes, “Portland Housing Ranks as 2nd Least Affordable in U.S.,” The Oregonian, July 19, 1997, p. A1.






64. Jonathan Brinckman, “Builder Thrives within
Boundaries,” The Oregonian, September 1, 2005.
65. Portland Coalition for a Livable Future, “Displace-
ment: The Dismantling of a Community,” 1999, p. 21.
66. Chestnut and Dang, p. A1.
67. R. Gregory Nokes, “Battle Builds on House Prices,” The Oregonian, April 13, 1996, p. A1.
68. Dana Tims, “Land Value ‘Tipping Point’ Hits Suburbs,” The Oregonian, October 20, 2005.
69. Randal J. Pozdena, “Smart Growth and Its Ef-
fects on Housing Markets: The New Segregation,”
National Center for Public Policy Research,
November 2002, p. 40, tinyurl.com/38ybkt.
70. Andrew Oswald, “Theory of Homes and Jobs,” working paper, University of Warwick, September 18, 1997, tinyurl.com/2pfwvv.
71. Edward Glaeser, “The Economic Impact of Re-
stricting Housing Supply,” Rappaport Institute, 2006, p. 1, tinyurl.com/rmynm.
72. Bureau of Labor Statistics, “Metropolitan Area Employment and Unemployment: January 2002,” tinyurl.com/2eeq9b.
73. David Schrank and Tim Lomax, “The 2005 Urban Mobility Report,” Texas Transportation Institute, May 2005, p. 18, tinyurl.com/3bbr79.
74. Metro, Regional Transportation Plan Update, 1996, p. 1-20.
75. Metro, 1999 Regional Transportation Plan, 1999, p. 638.
76. Metro, “Minutes of the Metro Council Transpor-
tation Planning Committee Meeting,” July 18, 2000,
p. 7.
77. Metro, Regional Transportation Plan, 1995, p. 5-17.
78. Henry Hewitt, chair, Oregon Transportation Commission, Testimony before the State Senate Natural Resources Committee, April 1, 1998.
79. James Mayer, “Wu’s Offer of Highway Money
Creates a Pileup,” The Oregonian, July 3, 2006, p. E1.
80. Anna Johns, “This Bridge Is Building Bridges,” Portland Tribune, November 28, 2006, tinyurl.
com/yoewq3.
81. David Schrank and Tim Lomax, “Performance Measure Summary for Portland,” Texas Transpor-
tation Institute, 2005, p. 2.



20








82. Economic Development Research Group, “The
Cost of Congestion to the Economy of the Portland Region,” December 2005, p. ES-1.
83. Metro, 2020 Regional Transportation Plan, 2002, p. 5-4.
84. Metro, Region 2040.
85. Mike Burton, executive officer, Metro Regional Government, Testimony before the State Senate Natural Resources Committee, April 1, 1998.
86. James Mayer, “Where Are the Roads? U.S. Asks Metro,” The Oregonian, January 30, 2007.
87. Jim Redden, “Metro at Odds with Officials on
Highways,” Portland Tribune, February 13, 2007.
88. Portland Police Bureau, “Death Investigation:
Interview with Homer Williams,” tinyurl.com/
22czks.
89. Steve Duin, “The Fix Is In,” The Oregonian, Octo-
ber 21, 2006; tinyurl.com/ 2rzcnm.
90. City Club of Portland, “Community Policing in Portland,” 2003, p. iii; tinyurl.com/yh9jk6.
91. Rosie Sizer, “The Death of James Chasse Jr.,” The
Oregonian, October 25, 2006, tinyurl.com/yme6bz.
92. Maxine Bernstein, “Files Detail Chasse’s Final Days,” The Oregonian, November 10, 2006, tinyurl. com/y5oeu6.
93. Jack Bogdanski, “Tale of Two Cities,” November 13, 2005, tinyurl.com/2wqyto.
94. Multnomah County, Oregon, Assessor’s Office,
“Specially Assessed and Tax-Exempt Properties,”
2006.
95. Jennifer Lang, “New Urban Renewal in Colorado’s
Front Range,” Independence Institute, 2007, p. 5.
96. Portland Development Commission, “Urban Re-
newal History Appendix, 2006, tinyurl.com/yo2zde.
97. City of Portland, “Portland Streetcar Capital and
Operations Funding,” 2007, p. 1, tinyurl.com/32jruj.






98. Portland Development Commission.
99. Multnomah County Tax Supervising and Conservation Commission, Annual Report 2006-
07, pp. 49-53, tinyurl.com/366rm4.
100. Ibid.
101. Census Bureau, 2000 Census, table QT-P1 for
Portland and Portland-Vancouver urbanized area.
102. Paige Parker, “Middle Class Losing Faith in
Schools, City,” The Oregonian, March 5, 2006, p. A1.
103. Jim Parker, “Portland Public School Leaders Back Away from Mayor’s School Tax Plan,” KGW News, February 9, 2006, tinyurl.com/2qzzfp.
104. Phil Stanford, “Bitter End Is Near for Political Machine,” Portland Tribune, March 3, 2006, tinyurl. com/26ly33.
105. Multnomah County Tax Supervising and Conservation Commission, p. 19.
106. Nick Budnick, “Adams’ Plan Has Critics,” Portland Tribune, March 13, 2007, tinyurl.com/ 27ttt4.
107. Stanford.
108. Jim Pasero, “The City That Shrinks,”
BrainstormNW, March 2002, tinyurl.com/7kpql.
109. Helen Jung. “Tim Boyle Faces Off with Tom Potter over the City’s Business Climate,” The Oregonian, May 19, 2005, A1.
110. Bureau of Labor Statistics, Portland-Vancouver-
Beaverton MSA Nonfarm Employment, series SMU4138900000000001, tinyurl.com/2mubygb.
111. Metro, “Metro Measured,” May 1994, p. 7.
112. Housing Affordability Act, S303, February 16, 2007, tinyurl.com/2d2jzm.
113. Robert Nelson, “Privatizing the Neighbor-
hood: A Proposal to Replace Zoning with Private
Collective Property Rights to Existing Neighbor-
hoods,” George Mason Law Review 7, no. 4
(Summer 1999), pp. 827-80.












21






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592. The Corporate Welfare State: How the Federal Government Subsidizes U.S.
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591. The Perfect Firestorm: Bringing Forest Service Wildfire Costs under
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588. Escaping the Trap: Why the United States Must Leave Iraq by Ted Galen
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587. Why We Fight: How Public Schools Cause Social Conflict by Neal
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