Enhancing Portland's Business Environment

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6-27-2008 Enhancing Portland’s Business Environment: A Public — Private Enterprise

City Club of Portland (Portland, Or.)

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City Club of Portland Bulletin, Vol. 90, No. 56, June 27, 2008

City Club members will vote on this report on Friday, June 27, 2008. Until the membership votes, City Club of Portland does not have an official position on this report. The outcome of the vote will be reported in the City Club Bulletin dated July 11 and online at www.pdxcityclub.org. The mission of City Club is to inform its members and the community in public matters and to arouse in them a realization of the obligations of citizenship.

Additional copies of this report are available online at www.pdxcityclub.org or by contacting the City Club office:

City Club of Portland 901 S.W. Washington St. Portland, OR 97205 503-228-7231 • 503-228-8840 fax [email protected] • www.pdxcityclub.org Table of Contents

Executive Summary ...... i Introduction ...... 1 Terminology ...... 2 Background ...... 3 Discussion ...... 6 Factors that Impact Portland’s Business Environment ...... 6 Workforce ...... 8 Public Eduction K-12 ...... 9 Higher Education ...... 11 Transportation ...... 13 Capital Availability ...... 17 Housing ...... 18 Quality of Life ...... 20 Effective Government ...... 21 Relations between City Government and the Business Community . . 21 Taxation ...... 24 Economic Development Programs ...... 28 Public Safety ...... 32 Urban Construction Costs ...... 33 measuring Progress ...... 34 Conclusions and Recommendations ...... 36 Conclusions: The Condition of Portland’s Business Environment . . . . . 36 Recommendations ...... 38 Acknowledgements ...... 39 Citations ...... 40 Witnesses ...... 45 Bibliography ...... 47

Executive Summary

In undertaking a study of Portland’s business environment, City Club of Portland sought to answer important questions that have long been the subject of local de- bate: What makes a “friendly” business environment? How friendly is the business environment in Portland? How can the business environment be made better? These questions have even greater urgency today as the national and local economy slow and concerns about a recession gather.

After two years of study, including testimony from a broad cross-section of witnesses from both the private and public sectors, your committee has concluded that Portland’s business environment — the conditions that impact business formation, recruitment, growth, and success — is reasonably good and many aspects of it have improved in recent years. Overall, the area’s quality of life — its outstanding natural setting, vibrant urban core, rich cultural offerings, and civic values — is a competitive advantage for the city and region, attracting both young, highly educated workers, and experienced retirees. The city’s business services, including the availability and quality of accounting, legal, communications, and consulting support, is strong, and the availability of capital for investment is adequate.

Compared with other benchmark cities, the overall tax burden on Portland businesses is competitive. Recent reforms to Portland’s business income tax, along with efforts to improve the city’s permitting process, have been well received by many in the business community. However, taxes paid by businesses within the city continue to be higher than those paid in neighboring jurisdictions, which should remain a concern for the Portland City Council and the Multnomah County Commission. Nonetheless, in spite of often-cited claims that high taxes have caused a significant flight of businesses from the city to the suburbs, your committee found little evidence to support this claim.

Portland’s tax structure and its (and the region’s) economic development efforts favor businesses that export goods and services from the region. Your committee believes that favoring these “traded-sector” businesses is a sound strategy for long-term economic growth, because without the cash infusion produced by such businesses, the retail sector, service industry, and other local companies that sell to customers within the region would suffer.

Enhancing Portland’s Business Environment: A Public — Private Enterprise i Strained relations between business and government, which were a concern when City Club began this study in January 2006, have been easing. Business and government leaders have made efforts to address underlying causes of disagreement and are working together more frequently to resolve issues rather than attack each other publicly. City officials also have been actively reaching out to businesses to improve mutual understanding.

However, the city and region face a number of challenges to the health of the local business environment that are not being adequately addressed. These include a transportation infrastructure that is severely stressed as the region’s population and businesses continue to grow, lack of stable funding for public education at all levels, a shortage of skilled workers in certain industry sectors, and a growing lack of affordable housing within city limits for working families. These are areas of common concern that deserve the attention of both city officials and business leaders.

Homelessness also has a negative effect on downtown business. In late 2006 the city introduced new steps to reduce homelessness and control its impact on business. It is not yet possible to draw conclusions on the effectiveness of these efforts on Port- land’s business environment.

Although the recent formation of a private-sector economic development organization for the region is a positive sign, improvements are needed in coordinating economic development programs at the state, regional, and city levels.

Many government services that impact the local business environment, including public education and public safety, require stable levels of funding throughout the economic cycle. Your committee believes that waiting until an economic downturn occurs, and then applying tax surcharges and fee increases to raise needed revenues, is not a good practice. Economic cycles are here to stay; local and state governments must prepare in advance to fund needed services during lean times.

Your committee was surprised to find how incomplete the empirical data are to measure the health of the city’s business environment. Indicators at the state and regional level are more readily available. Compiling the necessary data for the city should be a higher priority.

Business and government leaders at the city and regional levels should work with their state counterparts to plan the programs to address these challenges, to build public awareness and support for solutions, and to find funding to implement them. These are thorny problems; strong leadership is needed, and a solid public and private partnership is essential. ii City Club of Portland While your committee believes there is room for incremental improvement with regard to all aspects of the business environment, we believe that the following recommendations will have the greatest potential impact:

Relations between City Government and the Business Community 1. City officials and business leaders should recognize that a cooperative working relationship is the single greatest factor in the city’s business environment. Specifically: a. City officials should make frequent site visits to businesses and meet often with business leaders. b. Business leaders and city officials should be more judicious in using the power of the media to leverage decisions in their favor.

Economic Development Programs 2. The city of Portland should join with businesses to create an economic development plan that takes into consideration the economic development plans for the state and the region, and that is evaluated and updated annually.

Workforce 3. City Council, the Portland Development Commission, and Metro should continue to support the development of affordable housing, with a greater emphasis (including incentives for builders and developers) on building more family-friendly housing that medium- and low-income workers can afford. 4. A taskforce of business and education leaders should be formed to propose training programs to ensure that Portland’s workforce skills better match industry needs, to raise awareness among students and workers about career and training opportunities, and to monitor progress in meeting labor force needs.

Public Education 5. The Oregon Legislature should fund primary and secondary education in a consistent, sustainable manner and at the level recommended by the Quality Education Model. 6. The Oregon Legislature should increase levels of funding for public higher education to at least match per student funding in Washington and California, our two west coast competitors, so that: a. Course offerings support completion of a degree at a community college in two years and at a university in four years. b. Faculty salaries are competitive with public colleges and universities in Wash- ington and California. c. Tuition at public universities and community colleges in Oregon is comparable to tuition in Washington and California. 7. Portland State University and Oregon Health and Science University should continue to develop strong research centers for the region, and both the public and private sectors should support this effort. The Oregon Legislature should increase investment and should enact further measures to support transforming innovations from university laboratories into profitable business enterprises.

Enhancing Portland’s Business Environment: A Public — Private Enterprise iii Transportation 8. Metro, in working with the states of Oregon and Washington to create the 2035 Regional Transportation Plan, should assure that the plan does the following: a. Considers overall needs when prioritizing projects. b. Identifies funding sources and considers strategies for building public support for public funding. c. Identifies how best to maintain and improve bridges throughout the region. 9. City Club should initiate a comprehensive study to determine the best administrative structure and oversight authority for regional transportation planning and implementation.

Taxation 10. So long as business tax rates in the city of Portland and Multnomah County significantly exceed those paid in other jurisdictions in the region, Portland and Multno- mah County should only undertake new local government spending initiatives with exceptional justification. 11. Because revenue from business income taxes is volatile, the city of Portland and Multnomah County should establish rainy day funds that are sufficient to avoid tax increases, surcharges, and fees during economic downturns.

Measuring Progress 12. The city auditor’s office should be provided with the resources that would make possible tracking the entire range of metrics that assess the condition of the city’s business environment, including information on economic development spending of competitor cities.

iv City Club of Portland Introduction

In January 2006 your committee began Meetings were also held with Mayor identifying factors that affect Portland’s Tom Potter and with City Council mem- business environment and analyz- bers Sam Adams, Dan Saltzman, Erik ing significant differences of opinion Sten and Randy Leonard, with the city’s regarding the condition of the business Bureau of Planning Director Gil Kelly, environment. Your committee also be- Metro Council President David Bragdon, gan examining the city’s strengths and City Auditor Gary Blackmer, and with weaknesses relevant to doing business officials from the Portland Development in Portland, and deliberating actions Commission, including its executive that should be taken to improve the director, Bruce Warner. city’s business environment. Your committee also met with econo- Portland is part of a larger economic mists and experts in measuring business region that bridges two states. As such, environments, experts in education and this study is concerned with the eco- workforce preparedness, pollsters whose nomic environment of the entire region. research is relevant to the business environment, and experts in business However, this report focuses primar- taxation. ily on the city of Portland’s economic health, and consideration of the larger Between early 2006 and early 2008 region is somewhat limited. The report — the period that we undertook this addresses individual cities and counties study — Portland’s economy improved within the region only as they relate to significantly and only near the end of Portland. the study appeared to be on the verge of a slowdown. For the most part, markets Your committee compared Portland strengthened for business goods and with the ten metropolitan areas identi- services; unemployment rates fell; inter- fied as competitor regions in Portland’s est rates dropped; and housing values 2002 Economic Development Strategy rose significantly. This improvement (Austin, Denver, Las Vegas, Minne- during most of the period of the study apolis-St. Paul, Phoenix, Sacramento, had an impact both on the data that Salt Lake City, San Diego, San Jose and your committee analyzed as well as on Seattle). the tone of the witness testimony and media coverage that your committee To ensure a broad spectrum of perspec- observed. tives, your committee interviewed 65 witnesses. Specifically, your commit- This report discusses a range of factors tee heard from panels of CEOs and that contribute to Portland’s business senior executives from the following environment, examines other studies business sectors: manufacturing and that evaluate Portland as a place to do metals, sports apparel and athletic gear, business, identifies areas of concern, professional services, creative services, and draws conclusions and recommen- retail, sustainable (green) industry, high dations. The report is not a snapshot technology, biotechnology, and health in time, rather it reflects trends over a sciences. Your committee also met with period of several years. leaders of the Portland Business Alliance and the Oregon Business Council, and with local venture capitalists.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 1 Te r m i n o l o g y

A common definition of key terms is essential to understanding the topic:

Business environment — The confluence of conditions in a city or region that impact business formation, recruitment, growth, and success.

Traded and non-traded sectors — Businesses in the traded sector sell their goods and services primarily to customers outside the region, bringing in outside income that is circulated locally, prompting growth through a multiplier effect. In contrast, businesses in non-traded sectors primarily sell to customers within the region, and their collective growth is largely tied to population growth in the region.

Portland region — Except when specifically indicated otherwise, this term refers to the federal government’s Portland Metropolitan Statistical Area (MSA), which includes Multnomah, Clackamas, Washington, Columbia, and Yamhill counties in Oregon, and Clark and Skamania counties in Washington.

The city of Portland — The incorporated city.

Competitors — Other cities or regions that compete with Portland for location of business facilities. The Portland region and the city of Portland each have distinct sets of competitors.

Competitors of the Portland region are other economic regions, in the United States and in foreign countries. This study focused on ten domestic regions identified in the city of Portland’s economic development strategy: Austin, Denver, Las Vegas, Minneapolis-St. Paul, Phoenix, Sacramento, Salt Lake City, San Diego, San Jose, and Seattle.1

Competitors of the city of Portland are other local jurisdictions within the Portland region where businesses moving into the region may locate, or where businesses currently in the region may decide to relocate. The city of Portland’s economic development strategy identifies the following ten local competitors: Beaver- ton, Camas, Clackamas County, Clark County, Gresham, Hillsboro, Multnomah County, Tualatin, Washington County, and Vancouver.2

Participants in the business environment — Whether speaking of the region or the city, the business environment includes businesses (including utilities and financial institutions), business organizations, government (all branches), educational institutions, the news media, and the general public.

2 City Club of Portland Background

The Portland region, with a popula- ing employment essentially level since tion of about 2.1 million in 2006, 1990. Residential building construction spans two states and contains almost more than doubled. Education services half the entire population of Oregon.* (up nearly 80 percent), health care and Between 2000 and 2006 the region’s social assistance (up nearly 60 percent) total population grew at an annual rate and amusement, gaming, and recreation of 1.7 percent. The Washington seg- (up over 80 percent) have all grown sub- ment of the region grew fastest during stantially. Software producers increased that period (3.1 percent). In Oregon, 260 percent (though only to 5,400 jobs Washington County grew at a rate of in 2005). Business support services almost 2 percent (nearly double the rate grew 225 percent (7,800 jobs). of Multnomah County) and Clackamas County grew at a rate of 1.4 percent. As of December 31, 2007, half (12) of the 25 largest employers in the Portland Total employment increased over 35 metropolitan area were in manufactur- percent during the period 1990-2005 ing and retail. Four others were health (while population increased about 27 care providers, seven were institutions 3 percent). During this period of growth of public education, and the remaining the region’s economy changed dramati- two were other units of government.4 cally. Metropolitan area employment in the state’s traditional sectors dropped, The Washington state segment of the with natural resources and mining region, with 19.5 percent of the popula- down nearly 24 percent, wood product tion, accounted for only 12.7 percent of manufacturing down 24 percent, paper private employment in 2006. manufacturing down 33 percent, and primary metals manufacturing down Historically, the unemployment rate 28 percent. Even electronic equipment in the Portland region has swung more manufacturing employment dropped by widely between the extremes of the over 40 percent; another big loser is tra- economic cycle than it has nationally. ditional wired communication carriers, down over 46 percent. During the recession at the beginning of this decade, the Oregon state por- These employment losses are far out- tion of the region suffered an extended numbered by gains in other sectors. In downturn as private non-farm employ- the manufacturing sector, growth as ment declined from 747,378 in 2000 to high as 123 percent (for semiconduc- 705,931 in 2003, an annual decline of tor and electronic components) helped 1.9 percent, higher than the national offset losses, leaving total manufactur- annual fall of 1.7 percent during that period. In contrast, between 2003 and * Population and employment information in 2006 the Oregon portion of the region this section is based on analysis of statistics from the Oregon Labor Market Information grew in employment at an annual rate of System of the Oregon Employment Department 2.7 percent, compared with the national and the Bureau of Labor Statistics of the U.S. rate of 1.7 percent. Department of Labor. The Oregon Employ- ment Department cautions that a change in definition of sectors makes the data before While employment figures are not 2000 not strictly comparable with the data after 2000, especially with respect to employment in available strictly for the city of Portland government sectors. (a finding discussed in the body of the

Enhancing Portland’s Business Environment: A Public — Private Enterprise 3 report), during the 2000-2003 down- center for the region, and is home to the turn Multnomah County was hit much region’s primary venues for perform- harder than the rest of the region. Em- ing arts and sporting events, as well as ployment fell almost 3 percent annually, many tourist attractions. compared with a decline of 1.1 percent for Washington County and only 0.3 During the course of this study, your percent for Clackamas County. Unfortu- committee also observed signs of rejuve- nately, during the recovery Multnomah nation in Portland. In March 2007 The County also lagged, growing at an an- Oregonian lauded downtown Portland’s nual rate of only 1.5 percent, compared “biggest transformation in 60 years.”7 with nearly 4 percent in Washington Macy’s undertook a major renovation and Clackamas counties. Over this en- of the former Meier & Frank flagship tire 2000-2006 period, private employ- store, Nordstrom embarked on major ment dropped by a total of 17,079 jobs upgrades to its downtown store and in Multnomah County while 31,055 jobs Brooks Brothers opened its first Port- were added in Washington and Clacka- land store in The Galleria in November mas counties. 2007. The downtown retail market was cited as being the strongest it has These statistics, combined with the been in a long time, and the strength presence of boarded-up windows on extended throughout the city, according some downtown streets and worries to one downtown real estate broker.8 that light-rail construction on Fifth and Sixth avenues would cause busi- A similar trend was occurring in office ness disruption, led several witnesses space during the course of this study. to question the health of the core Downtown vacancy rates are lower than downtown business district. Indeed, they have been in years, and rents are a January 2007 article in the Portland increasing.9 In the third quarter of 2007 Business Journal noted that “downtown the vacancy rate for the central business has seen a torrent of empty storefronts district dropped to 5.9 percent, down — at least 40 vacancies — in the last six 0.9 percent from the second quarter, months.”5 In that same month, the Port- while the local suburban market’s land Business Alliance released a state- vacancy rate increased 0.5 percent, from ment that “while downtown Portland 13.2 to 13.7 percent.10 By comparison, development is the envy of many cities, the office vacancy rate in downtown San downtown retail is not keeping pace Jose, California, one of Portland’s com- with outlying and adjacent competitive petitor regions, was 21 percent.11 markets.”6 In January 2007, developer Tom Moyer Your committee considered these con- announced plans to build a 35-story cerns significant because Portland is the high-rise combining office, retail, and hub of the metropolitan region. Port- condominium space on the block im- land has the most concentrated density mediately west of Nordstrom. One and diversity of citizens and businesses downtown property owner said that in the region. It contains the major he had “never been this excited about intersections of the region’s transporta- downtown,” and compared the outlook tion network, including the internation- for the area to “the 1950s heyday when al airport, sea and rail freight, interstate downtown was the place to be.”12 In highways, and mass transit. The city also March 2007, the Portland Development serves as the cultural and entertainment Commission adopted the Downtown

4 City Club of Portland Portland Retail Strategy Update (prepared by the Portland Business Alliance in January 2007), and the PDC budget for 2007-08 earmarked over $12 million for improvements to the city-owned parking garage at SW Tenth and Yamhill, renovating The Galleria, and offering other assistance in retaining and attracting businesses to the downtown area.

Overall, non-traded-sector businesses make up a majority of the region’s private sector employment. These businesses (retail trade, health care, and professional services) and government agencies employ two-thirds to three- quarters of the region’s workers.13 But the growth of these businesses is largely tied to the rate of population growth of the region.

In contrast, businesses in the traded sector bring in new money from customers outside the region and serve as an economic engine for the region’s entire employment base. These businesses rep- resent segments, or “clusters,” of the region’s economy that have been changing significantly over the last few decades, due to both macroeconomic forces (such as globalization, industry consolidation, and the outsourcing of manufacturing jobs to foreign countries); and concerted public and private sector efforts to diversify our local and regional economy so that it is less dependent on a single industry or employer.

The region’s diverse set of evolving and emerging employment clusters include the following: sports apparel and athletic gear; high technology; manufacturing and metals; distribution and logistics (including warehousing, truck operations, and businesses that support and benefit from traffic through the Port of Portland); sustainable “green” industries; creative services; professional and financial services; and food processing. Your committee interviews representatives from most of these sectors. Photo by Susan Shepperd

Enhancing Portland’s Business Environment: A Public — Private Enterprise 5 Discussion

Fa c t o r s t h a t Im p a c t attractions, and a public commitment to preserving these and other Po r t l a n d ’s Bu s i n e s s amenities. En v i r o n m e n t 8. Quality and responsiveness of government, including: a. The degree to which elected lead- Evaluating Portland’s business envi- ers understand and appreciate ronment required identification of businesses and the challenges quantifiable measures of its health, and that businesses face. assessment of their relative importance. b. The degree of cooperation be- Your committee asked witnesses to tween government and business. identify the most important factors that c. The fairness of taxes, and wheth- contribute to the business environment, er they provide an adequate and and to indicate those that most need reliable flow of revenue for public improvement. services. d. Well-funded and effective eco- From those discussions and a reading nomic development programs. of relevant literature, your committee e. Public safety services (fire, police, identified the following factors that are health, etc.). important to the health of Portland’s f. A reasonable and effective regula- business environment: tory environment.

1. Adequacy of local support and ser- Your committee considered whether vices, including: some of these factors are more impor- a. Professional services (account- tant than others, and the extent to ing, legal, management consult- which these factors are inter-related. ing, etc.). Looking first at the question of im- b. Availability of land and utilities. portance, most witnesses agreed that c. Availability of utility services. a skilled workforce and a high-quality 2. Availability of a workforce with ap- public education system are two of the propriate skills and education. most critical factors affecting the health 3. Stable and adequate funding neces- of the business environment. However, sary for high-quality public education those who shared this view also ex- (K-12, community colleges, univer- pressed different preferences depending sities — both undergraduate and on their business sector. graduate). 4. Transportation infrastructure, High technology and professional including: service employers, for example, recruit a. Freight transport by road, rail, nationwide to hire highly specialized staff. The source of their skilled work- air, and water. force extends beyond the local region. b. Transportation options for cus- Consequently, for the purpose of adding tomers and workers, including to their workforce, the most important public transportation and public factors within the region are quality parking. of life considerations that help them 5. Availability of investment capital. attract workers from a nationwide 6. Availability of affordable housing. pool. Other factors include continuing 7. Neighborhood livability, recreational education opportunities at the graduate and scenic opportunities, cultural level for employees, and the quality of

6 City Club of Portland local public schools for the children of in doorways of businesses), but wit- employees and prospective employees. nesses from other sectors, even some operating in the central city, do not In contrast, sectors that recruit locally share this concern. are more interested in the degree to which public schools, community colleg- Even these few examples make it clear es, and universities directly impact the that no single prioritized list of factors local labor pools from which they hire determines the health of Portland’s their employees. Community colleges, in business environment. Witnesses from particular, frequently are seen as valu- different business sectors offered dif- able providers of training programs for ferent lists of prioritized factors and, employees. in some cases, two or more witnesses within a single sector cited different “[F]actors that make up the factors depending on their company’s specific strategic and operational re- business environment are quirements. As witness Joe Cortright, inter-related and sometimes a consulting economist, replied when in tension with each other… asked for his prioritized list: “One size A mutually beneficial does not fit all.”* relationship clearly exists between a high-quality Moreover, factors that make up the business environment are inter-related public education system and sometimes in tension with each and a well-prepared other. One key set of positive interac- workforce possessing the tions revolves around public education skills required by various and the workforce. A mutually beneficial local industries… [But] relationship clearly exists between a growing congestion and high-quality public education system rising housing prices, which and a well-prepared workforce pos- are frequently byproducts sessing the skills required by various of increased business local industries. A high-quality public activity and vitality, can education system also can enhance busi- [also] weigh heavily on both nesses’ ability to recruit skilled workers from outside the area, whether recruit- the business environment ing workers with school-age children and the city’s broader or those who seek continuing and/or quality of life.” graduate education opportunities.

Several factors did not rate highly over- At times, however, the various factors all, but are very important to certain that affect the business environment industries. Professional and creative are in tension with each other. Growing services firms value ease of domestic congestion and rising housing prices, and international air travel, but are less which frequently are byproducts of concerned about freight transport. Lo- increased business activity and vitality, cal taxation is a critical factor for some witnesses, while others simply regarded * The inability to prioritize definitively the it as a cost of doing business and not a factors affecting the business environment is not unique to your committee’s assessment of significant consideration. Downtown Portland. Similar conclusions were reached in retailers are concerned about public a paper by Dr. Peter Fisher, Professor of the safety, and especially about issues relat- Graduate Program in Urban and Regional Plan- ing to the homeless population (e.g. ning at the University of Iowa; “Grading Places,” Economic Policy Institute, Washington D.C., panhandling, public urination, sleeping 2005.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 7 can weigh heavily on both the business for over 68,000 businesses, and about environment and the city’s broader 135,000 are self-employed.14 quality of life. Elected officials can frequently be placed in the difficult posi- The Portland region’s workforce is well tion of balancing the need to invest in educated; 36 percent of the population maintaining that broad quality of life (in aged 25 and over has an associate’s a growing city with an aging infrastruc- college degree or higher level of educa- ture) while stimulating and supporting tion, compared to a national average the local economy. This, in turn, can of 24 percent.15 The percentage with a create a conflict between maintaining bachelor’s degree or higher is almost 10 low taxes and fees, which might be good percentage points above the national for business, and maintaining and grow- average.16 This young, educated talent ing services and infrastructure, which is pool is highly valued by most business required for business success. Similarly, sectors, especially apparel and sporting business leaders are frequently forced to goods and creative services, which are balance the pursuit of profits in the near among Portland’s strongest sectors. term with support for community investment that keeps Portland a magnet In a recent study, economist Joe for talented workers over the long term. Cortright noted that “in a knowledge- based economy the skills and abilities Keeping in mind the way the various of a region’s residents have become the factors making up the business environ- decisive factor in shaping economic ment can affect one another, this report prosperity.” While Portland ranked 22nd continues with a more in-depth discus- out of the 50 cities studied for “young sion of the factors your committee con- and restless” (25- to 34-year olds with siders most important. Of the factors at least a four-year college degree), it listed on page 6, only the availability of experienced a 50 percent increase in this professional services is not considered desirable demographic between 1990 in greater detail, because none of the and 2000, which ranks fourth highest witnesses interviewed by your com- among the 50 largest U.S. metropolitan mittee, nor research we conducted, regions.17 Cortright says, “We empha- indicated a deficit in this area. size the change variable because it picks up the direction the economy is headed, Wo r k f o r c e and we still have opportunity to grow this demographic group.” As noted earlier, nearly all witnesses identified the same two factors as most Nationwide, much has been made about important to the business environment: loss of manufacturing jobs, whether to a trained workforce and a good public globalization and relocation to lower- education system. Witnesses comment- wage countries or to increased produced that the region’s economic prosperity tivity and automation. Therefore your is linked to the skills of its workforce committee was surprised to learn that and said that one of Portland’s biggest Portland-area manufacturing firms are draws is its deep pool of talent. short of skilled workers and fear the situation will become worse. Norm Eder The population of the Portland met- of the Manufacturing 21 Coalition told your committee that “a huge percentage ropolitan region in 2006 was just over of workers in manufacturing are ap- 2.1 million people, with a labor force of proaching retirement and no one knows about 1.1 million workers. They work

8 City Club of Portland where their replacements will come continuing education and training, and from.” Numerous witnesses in industry match unemployed or underemployed and education echoed his concerns that workers with openings. the local employment pipeline (high schools and community colleges) for u b l i c d u c a t i o n these skilled, family-wage manufactur- P E ing jobs is nearly empty. Manufacturing jobs pay an average of $42,000 annu- The public education system, which in- ally in Oregon, in contrast with a state cludes K-12 public schools, community average of $36,200 for all private non- colleges, and universities, was the sec- farm occupations, yet manufacturing ond factor consistently cited by business companies increasingly turn away work witnesses as important to the business because they lack sufficient numbers of environment.* skilled workers.18 Public education affects the business environment in three ways: “Manufacturing jobs pay an average of $42,000 annually 1. It provides businesses with a supply in Oregon, in contrast of young people prepared to enter the with a state average of workforce. $36,200 for all private 2. It provides workers with opportuni- non-farm occupations, yet ties to update existing skills and to manufacturing companies add new skills in a rapidly changing increasingly turn away work business environment. because they lack sufficient numbers of skilled workers.” 3. It is a factor for attracting companies and individuals considering relocation to the region. The health sector is also facing a major shortage of nurses, primary While employers differ on which of care physicians, and other health care these three factors is most important, professionals. According to the Or- all agree that the public education sys- egon Employment Department, health tem is a very important component of care employers will need 59,000 new the business environment, and they are employees to fill job openings between concerned by recent trends. 2004 and 2014. About half of the health care openings will stem from growth in K-12 demand, the other half will come from retirements.19 But local health care edu- To better understand the financing of cation programs, like nursing, cannot K–12 schools in Portland, your commit- accommodate the volume of qualified tee recommends the excellent report applicants. on that topic published by City Club * We do not ignore the many fine private Your committee found that the cali- schools and colleges in the Portland area. These ber of the Portland area’s workforce is schools and colleges do an excellent job of serving their students. Private schools in the currently a competitive advantage. To Portland region, however, serve only a small remain so, the city and region must fraction of the total student population, less maintain a skilled workforce in di- even than in many cities of comparable size. Consequently only public educational institu- verse fields, provide opportunities for tions are considered in this report.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 9 in March 2007.20 The report provides funding for excellence in education.21 information about the five public school The Oregon Legislature, however, has districts in Portland (Portland, Cen- consistently violated its own legisla- tennial, David Douglas, Parkrose, and tive mandates. According to the latest Reynolds), documents the sequence of available statistics from the U. S. Census events that moved a significant portion Bureau, Oregon ranked 31st among the of school funding in Oregon from the 50 states and the District of Columbia local level (paid primarily by property in terms of per pupil K-12 funding in taxes) to the state level (paid primar- 2005–2006, down from 16th in 1992. ily by income taxes), and reports that When measured as a percentage of the the result has been highly unstable average personal income of the state’s funding that negatively affects school citizens, Oregon’s national standing operations. The report also explains the dropped even more precipitously, falling Quality Education Model, which was from 11th in 1992 to 39th in 2004.22 adopted by the 1995 Oregon Legislature to guide school funding decisions. It The Quality Education Model, men- should be noted that the legislature has tioned above, was established as a never funded K-12 education at the level metric-based formula to determine the recommended by the Quality Education level of spending required to provide Model. high-quality public education in the state. In December 2006 Oregon’s Your committee offers another view of public schools were being funded at a the issue, that of public education’s ef- level more than $1.2 billion below that fect on the business environment and of indicated by the QEM.23 the changes needed in education funding to improve the business environment (which are fully consistent with the changes recommended in City Club’s 2007 school funding report). While your committee recognizes that increased and stable funding will not guarantee improved educational outcomes, we also recognize that state funding for public education in Oregon is far below the level recommended by the Quality Photo by Cheryl Juetten Education Model. This low and unstable funding creates, at the very least, a perception among business leaders that the Besides receiving less funding than state is neither sufficiently committed indicated by the QEM, Portland Public to providing a quality public education Schools itself faces numerous challeng- nor adequately preparing the state’s es, compared to other school districts future workforce. in the state, which place additional financial strains on its schools: a com- Since the state assumed a significant paratively higher proportion of students portion of the responsibility for funding with special needs, older buildings public K-12 education, three different that are costly to maintain, and a large legislative assemblies (1991, 1995 and proportion of more experienced teach- ers with higher-than-average teacher 2000) enacted either laws or a constitu- 24 tional amendment mandating sufficient salaries.

10 City Club of Portland One negative outcome of the reduced Higher Education funding has been a reduction in the length of the school year. Most states, Your committee found that investment including California and Washington, in higher education also provides strong require schools to provide at least 180 economic returns. Businesses such as days of instruction per year. In contrast, Nike, A-dec, CH2M Hill, Leatherman the average Oregon high school student Tools, Umpqua Bank, Wieden+Kennedy, is in school about 165 days per year. Reser’s Fine Foods, and Columbia Students in Portland Public Schools are Sportswear were all founded by gradu- about 100 hours short of even the sub- ates of Oregon’s public universities. The standard Oregon minimum, or about 18 25 same is true of cultural and social ser- days short of national school practice. vice institutions. Care, Oregon Bach Fes- tival, New Avenues for Youth, Oregon In a year with high revenue projections, Shakespeare Festival, and Friends of the Governor Kulongoski and the 2007 Children were all founded by graduates legislature increased funding for the 2007-2009 biennium by 18 percent, af- of Oregon’s public universities. Wit- ter several years of reduced funding. Ac- nesses cited the faculties of Portland cording to the governor, “after adjusting State University and Oregon Health and for inflation and enrollment growth… Science University as major economic [this increase]… will put Oregon back assets that bring federal tax dollars to on par with the national average of per our city, as well as a cadre of talent. student investment.”26 But here, once again, trends are disturb- This roller-coaster approach to school ing. Oregon’s investment in higher funding negatively affects Portland’s education has fallen dramatically since business environment by 1) reducing 1990. In 2006, Oregon’s contribution the readiness of students to enter the per student to the Oregon Univer- workforce, 2) raising red flags for pro- sity System was $3,858 — down from spective employees and companies as $4,292 in 1990. In contrast, in 2006, they consider locating in Portland, and Washington’s per student funding was 3) creating an unpredictable taxation $8,164.27 Adjusting the 2006 Oregon system disliked by most businesses. figure for inflation, expenditures (in constant dollars) per student fell from “This roller-coaster $4,292 in 1990 to $2,442 in 2006, a 43 approach to school funding percent cut.28 negatively affects Portland’s business environment by At the beginning of 2006, Oregon ranked 46th among the states in per- (1) reducing the readiness student higher-education funding, of students to enter the while Washington ranked 21st and workforce, (2) raising California ranked 24th.29 The legislature red flags for prospective provided only 17 percent of Oregon’s employees and companies higher education budget, down from 27 as they consider locating in percent ten years ago. This decline led Portland, and (3) creating to dramatic tuition increases.30 Average an unpredictable taxation annual tuition and fees for an Oregon system disliked by most student aiming to graduate in four businesses.” years increased 47 percent since 2001, to $5,520 for 2006-2007.31 Comparing

Enhancing Portland’s Business Environment: A Public — Private Enterprise 11 higher education spending in Oregon the past 10 years, far below the rate of with that in other states where the Port- inflation.35 That year’s higher education land region’s primary competitors are funding was an important step in this located — Arizona, California, Colorado, direction, but it will be meaningful only Nevada, Minnesota, Texas, Washing- if it is a starting point for a consistent ton, and Utah — only Colorado spends commitment to quality. less than Oregon. In 2005, California spent $299 per capita and Washington Witnesses also expressed their opin- spent $225 per capita, while Oregon’s ion that the Portland region needs a spending per capita in 2005 was $172.32 Witnesses expressed concern that the “world-class university,” citing Boston’s quality of Oregon’s public universities Route 128, built around Harvard and are falling behind other states due to MIT; Silicon Valley, built around Stan- Oregon’s comparatively low educational ford University; and North Carolina’s expenditures per capita and that this in Research Triangle Park, built around turn is having an increasingly negative universities in that region. Your com- impact on Portland’s business environ- mittee concluded that the Portland ment. region is indeed moving in that direction, given the University of Oregon’s Earning a degree is also taking longer recent expansion in Portland and the for many students. A recent survey of impressive development of Oregon 4,300 community college and university students indicates that about 30 percent Health and Science University and are unable to earn their degree within Portland State University over the past the traditional schedule (2 years for 30 years, especially considering the very community college; 4 years for univer- unstable and diminishing public funding sity) because of an insufficient number of the past decade. The 2007 legislature of required course offerings.33 enacted Senate Bill 582 allowing state universities to establish and administer Governor Kulongoski initially requested venture capital funds. Your committee that the 2007 legislature fund a 17 hopes this legislation will help Portland percent increase for higher education. State University and Oregon Health At the time, Governor Kulongoski pro- Science University to better profit from posed to establish “a stable path to grow and restore the losses of the last 25 the intellectual capital of their faculty. years, which will help recruit and retain Both the legislature and regional busi- quality faculty, make higher education nesses should commit to continue this more accessible and affordable for more progress. students, and ensure Oregon’s universities provide our students with an Top “knowledge workers” in our area education that prepares them for a 21st require continuing educational oppor- 34 century workforce.” tunities to remain at the peak of their fields. While a number of programs Early in the session the legislative have been established over the past few leadership responded with a far more decades, many workers still must travel modest increase, but major public outcry and an unexpectedly favorable elsewhere to access the post-graduate revenue projection allowed the legisla- training they need. Your commit- ture to enact an 18 percent increase. Put tee believes Portland universities and in perspective, however, the new figure consortia should expand local offerings is an increase of only 15 percent over of this kind.

12 City Club of Portland In summary, Oregon must provide to transportation or heavily reliant on stable funding for public education at all it, and the proportion is higher in the levels and through all phases of the eco- Portland region.37 nomic cycle. Failing to do this damages the business environment of Portland, According to the 2005 downtown busi- as well as the rest of the state. It also ness census conducted for the Portland threatens the quality of the workforce. Business Alliance, 49 percent of those Other states (especially our West-Coast employed in downtown Portland resided competitors) are doing much better outside Portland’s city limits, but within than Oregon in funding public educa- Multnomah, Clackamas, Clark, and tion, and this is an area where many of Washington counties.38 Forty-eight our international competitors also are in percent of all downtown workers drove the lead. to work alone, while an equal number used mass transit, walked, or biked to Your committee emphasizes as strongly work. By this measure, the city and the as it can that providing adequate and region’s foresight in investing in mass stable funding for public schools and transit and alternative forms of trans- for higher education is essential to a portation has served the city well. healthy business environment. The business community’s support for redirect- “The region’s patchwork ing the 2007 “corporate kicker” to a approach to transportation rainy day fund is a strong statement to decision making and that effect. funding may have served the region in the past, but Tr a n s p o r t a t i o n there are strong signs that it will not continue to be Portland is located at the confluence of sufficient in the future.” two navigable rivers, offering businesses access to ports anywhere on the Pacific Rim. It has two interstate highways and Increasingly, the pattern of living in major rail lines running north, south, the suburbs and working downtown is and east. The city’s businesses are also expanding to living and working in the served by relatively inexpensive hydro- suburbs, often involving suburb-to- electric power, oil, and natural gas pipe- suburb commutes. Suburb-to-suburb lines running north and south, and the commuting accounts for 41 percent of only international airport within 150 metro area rush hour traffic. Because miles. As a consequence, Portland is a Portland’s system of mass transit is key domestic and international gateway designed primarily to move people and freight hub. between suburbs and the city center, a suburb-to-suburb commute that can be driven in 30 minutes often can take Moving both freight and people into, 39 from, and through Portland is of more than two hours on mass transit. enormous importance to the business environment. As Michael Powell of Authority and oversight for the region’s Powell’s Books said at a City Club Friday transportation infrastructure is highly Forum, “we will be in a ton of hurt if our fragmented. The city of Portland has surprisingly little control over the traffic systems fail.”36 One out of five transportation infrastructure on which jobs in Oregon is either directly related

Enhancing Portland’s Business Environment: A Public — Private Enterprise 13 it depends. Authority and budget over- expenditures for maintenance, owing in sight for most of the region’s highways part to increases in cost of materials.40 and waterways are at the state and federal level. Air and water transporta- City officials have attempted to con- tion fall under the Port of Portland, trol automobile-induced air pollution and mass transit under TriMet. Metro without harming economic vitality, and prepares a regional transportation plan they continue to experiment with how every five years, and allocates federal best to meet these sometimes conflict- transportation funds to local govern- ing objectives. In addition to subsidiz- ments. Multnomah County maintains ing short-term parking in Smart Park five of the bridges across the Willamette garages, replacing many coin-operated River, while the Oregon Department of parking meters with “smart card” Transportation is responsible for main- meters, and improving mass transit, tenance and operation of the St. Johns, the city is now beginning to experiment Ross Island, Marquam, and Fremont with eliminating painted parking spaces bridges. Union Pacific Railroad owns the on the street. According to Ramon Co- rona, the city’s parking control manager, Steel Bridge, which is a critical nexus for the practice will increase the number of the region’s transit system. Responsibil- cars parked in a city block from 8 or 9 to ity for the I-205 Glenn Jackson and I-5 as many as 13, depending on the size of Interstate bridges, which link Oregon the cars.41 and Washington, is shared by the two states. The region’s patchwork approach to transportation decision making and funding may have served the region in the past, but there are strong signs that it will not continue to be sufficient in the future. A recent Port of Portland and Metro study indicated that traffic chokepoints in the region currently include I-5 across the Interstate Bridge, I-84 between downtown Portland and I-205, Oregon 99E from the Ross Island Bridge to Oregon City, Highway 26 west Photo by Cheryl Juetten of Portland, and Highway 217 to its 42 Only city streets are under the direct south. control of city government. In fiscal 2005-06, Portland city workers were re- Mayor-elect Sam Adams, who, as a city commissioner, oversees the city’s sponsible for 3,941 lane miles of surface transportation bureau, has said, “We’ve streets, which often include the impor- got dozens of bridges that could col- tant “first mile” from the business or the lapse right now or liquefy during an “last mile” to the customer. According earthquake. Add to that the 600 miles to Portland’s city auditor, in 2006-07 of streets needing repairs and intersec- the backlog for street maintenance tions where people are dying in acci- was 627 miles, continuing a seven-year dents on a regular basis and we’ve got trend of increases. The backlog remains real needs that have to be addressed.”43 far higher than the Portland Bureau of The estimated costs to address these Transportation’s goal of 250 miles. In problems run to the hundreds of mil- short, street maintenance backlog is lions of dollars, but only $14 million was increasing, despite consistent operating made available in the 2007-08 budget.

14 City Club of Portland Multnomah County Commissioner to relocate warehousing and support Maria Rojo de Steffey has proposed operations at a cost (independent closing the Sellwood Bridge, which has of construction) of $1-1.5 million in a federal sufficiency rating of only 2 out 2006-07. of 100 (compared with 50 out of 100 for •• OrePac increased inventories by 7 to the Minneapolis bridge that collapsed in 8 percent to compensate for conges- 2007). The county is currently studying tion delays, representing a lost oppor- whether to repair or replace the bridge, tunity for other investment. with projected costs nearing $450 mil- • 44 • PGE spends an estimated $500,000 lion. Yet Multnomah County Chair- per year in additional maintenance man Ted Wheeler recently said that the labor costs due to transportation county, which is responsible for several delays. Willamette River bridges, does not have, and never will have sufficient resources to maintain them. Wheeler proposes creation of a regional bridge authority.45

Other studies, including the City of Portland 2005 Freight Master Plan, the Metro 2035 Regional Transportation Plan, and the TPAC Workshop on Febru- ary 12, 2007, all concluded that traffic congestion is already costing money in lost time, fuel, and missed sched- ules, and will only get worse if the city, county, state, and federal authorities do not start now to address the situation. Portland Business Alliance members concurred with this assessment in a recent survey where they ranked congestion just behind education as the biggest problem facing Portland’s business community.46

Photo by Cheryl Juetten A 2005 study commissioned by the Port- land Business Alliance, Port of Portland, The study also cautioned that if trans- and Oregon Department of Transporta- portation gridlock were to become a daily tion noted that the region’s population reality, businesses would not be able to is growing faster than the capacity of function, leading to large-scale business the transportation systems to carry failures, layoffs, or relocations. The result people and freight within the region.47 would be a loss of up to $844 million annually by 2025 ($782 per household in The report cited specific ways that trans- the region) and 6,500 jobs. Pointing out portation congestion has negatively that additional regional investment in affected Portland businesses: transportation would generate a benefit of at least $2 for every dollar spent, •• Providence Health Systems reported the study also cautioned that currently that congestion has routinely slowed planned transportation investments will medical deliveries, requiring them not keep pace with traffic growth.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 15 Predictions for one million more rail and rapid transit.50 The Oregonian people in the region by 2025 will add has reported that while these cities are 48 percent more cars and 116 percent thinking ahead about new leaps in scale, more trucks to the region’s roads.48 If the Portland region consists of “collec- improvements are not made, businesses tions of separate constituencies that of- will become prisoners of traffic conges- fer unconnected dreams.” Congressman tion. Earl Blumenauer cautioned that “other communities are stepping up… on a The division of responsibility for scale of local investment that we don’t transportation in the Portland region even contemplate any more.”51 has at least two negative consequences. First, jurisdictions often try to use the Business leaders have called on the planning and funding allocation process legislature to spend an extra $350 mil- to achieve their own narrow objectives lion a year on highway improvements rather than embracing a more holistic to prevent congestion, but legislative approach. Commissioner Adams claimed leaders have been unwilling to raise the this has caused the Metro transporta- taxes required.52 Based on proposals tion planning and funding allocation developed by Portland’s Safe and Sound process to be more a program for “divid- Streets Stakeholder Committee, the city ing the spoils” than a strategic long- 49 of Portland and Multnomah County term plan. Second, this fragmented have proposed new revenue sources, approach makes it difficult to assemble including a county vehicle registration resources to leverage major invest- fee and a city street maintenance and ments. safety fee (in water and sewer bills) that will include “green discounts” that will Your committee believes that meeting offset up to 30 percent of the fee. The the region’s transportation challenges city and county held a series of meet- will require holistic assessment, effective prioritization, creative thinking, ings to gather citizen feedback, and City and cooperative problem solving. Local, Council is expected to make a decision regional, and state government of- by July 2008 as to whether to refer the ficials must think regionally and put revenue-generating measure to voters in 53 behind them the assumptions used by a the 2008 general election. generation of transportation planners. Government and business leaders must Important questions to be answered work together to educate the public include the following: about the need for large-scale investment in the region’s transportation •• Is a regional bridge authority the infrastructure — whether through tax best approach? How would it relate increases, fees, or toll options. Unless to other regional transportation this is done, our patchwork-approach agencies? to transportation planning will have a major negative impact on Portland’s •• Who can best lead the effort to at- business environment. tract federal and state funding, to persuade all the units of government Competitor cities, including Denver to pay their share, and to educate and and Phoenix, are moving ahead with persuade the public to accept new multi-billion dollar transportation taxes, fees, or tolls if they are shown investments in freeways and roads, light to be necessary?

16 City Club of Portland In response to the second question, Fund, managed by Credit Suisse’s Cus- possible lead agencies include: 1) Metro, tomized Fund Investment Group. with a revised charter to expand its authority, 2) TriMet, expanding its role According to the fund’s Web site, the Or- from only mass transit to a broader egon Investment Fund commits capital regional transportation authority, or 3) to private equity and venture capital a newly created regional transportation funds that in turn invest in companies commission. located primarily in Oregon, as well as in the Pacific Northwest. In addition, Your committee recommends that City a percentage of the assets of the fund may be invested directly in operating Club initiate a comprehensive study to companies alongside the fund’s private address transportation issues in the equity and venture capital managers.55 Portland region. The OIF encourages its member funds to use “commercially best efforts” to Ca p i t a l Availability invest in Oregon and Pacific Northwest companies, while honoring its fiduciary Your committee recognizes that the responsibility to earn the best return on availability of capital is a key ingredi- investments. ent in business growth and prosperity. Although some witnesses worried that An Oregon Investment Fund manager young businesses requiring growth capi- noted that in addition to a direct invest- tal may not have adequate local access to ment in Kryptiq (an Oregon company), private equity from individual investors as of late 2007 the partner funds had or venture capital firms, most witnesses invested approximately $53 million in were not concerned about a lack of local eight Oregon or Pacific Northwest com- capital. It is your committee’s view that panies that employ 1,900 workers in Portland has an array of capital resourc- the Pacific Northwest (including 367 in es that is adequate and typical for a city Oregon). He also pointed out that other of its size. syndicate members of the venture capital partners had invested an additional The relative strength of Portland’s $30 million in these companies.56 real estate market has had a positive impact on home equity loans (typically In 2007, the legislature followed recom- $200,000 or less), which are a common mendations from the Oregon Innova- source of capital for launching new busi- tion Council by enacting Senate Bill 579, nesses. The average value of property allowing the Oregon Growth Account, in the Portland region increased by 68 an investment account of the Education percent from 2002 to 2007, making Stability Fund, to “make investments capital available to many.54 in or provide seed capital for emerging 57 In July 2003, the legislature passed growth businesses.” By statute, the Or- House Bill 3613 to encourage the egon Growth Account must concentrate growth of small businesses in Oregon. its investments within Oregon despite The legislature tasked the Oregon the possibility of reduced returns. On Investment Council with designing and a related front, Senate Bill 582 allows implementing a program to accomplish state universities to establish and ad- this mandate, using $100 million from minister venture capital funds, allowing the Oregon Public Employees Retire- more capital to flow into projects that ment System. OIC chose to develop a can have long-term positive gain for “fund of funds,” the Oregon Investment both the state and Portland.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 17 “Angel investors” are high-net-worth Based on the information your commit- individuals who typically invest in tee has gathered, most regional compa- companies near where they live and nies are able to obtain sufficient funding work. ThePortland Business Journal, saw to meet their capital needs. The area “a noticeable increase” in local angel where the need is greatest — funding investment in 2006 and 2007.58 The for small companies — is now the area Portland Venture Group is a group of receiving the most legislative and pri- angel investors who are constantly look- vate sector attention. Your committee ing at investment opportunities in the concludes that current capital resources region. Portland Angel Network and the are adequately meeting the investment Women’s Investment Network, which needs of businesses in the region. are part of the Oregon Entrepreneurs Network, are also active in the community. OEN sponsors Angel Oregon, an annual contest in which start-up companies compete to win as much as $200,000 in funding from angel investors. In early 2007, Portland Angel Net- work and Women’s Investment Network created the Oregon Angel Fund where members pool their money and seek to invest in two to four early-stage growth Photo by Cheryl Juetten companies per year. Ho u s i n g About a dozen venture capital companies are located in Oregon, most in the The availability of housing that is not Portland region. Some, including Capy- only affordable, but also adequate for bara Ventures and Northwest Venture working families with children, is a Partners, are seed funds that invest in concern for many businesses. One busi- a manner similar to angel investors. ness leader told your committee that Intel Capital, which is one of the world’s “our young employees did not move to largest venture capital firms, has its Portland to live in a 400-square-foot main office in Hillsboro, yet it invests a condominium,” and other witnesses relatively small percent of its capital in expressed concern that the perceived Oregon companies. trend in Portland away from the traditional house-and-yard style of living Venture capital investments in Oregon might have a negative impact, in the companies declined significantly in the long run, on Portland’s livability. first half of this decade. In 2006, Oregon had six venture-capital-funded start- Title 7 of Metro’s Functional Plan gives ups, totaling $18.4 million. In contrast, Metro the mandate to ensure that all Washington state had eight start-ups cities and counties in the region provide funded for a total of $32 million in the opportunities for affordable housing for first quarter of 2006 alone. However, households of all income levels, with the Oregon startups raised more venture intent of creating housing opportunities capital in the first nine months of 2007 commensurate with wage rates across the region and reducing concentrations than the state attracted in any of the of poverty. prior five years.59

18 City Club of Portland Figure 1: Portland Metro Area1 Residential2 Home Prices

Item 2002 2003 2004 2005 2006 2007 Average Sales $213,900 $222,500 $246,000 $282,900 $332,600 $342,000 Price

Median Sales 176,900 185,000 204,500 237,500 $270,500 $290,000 Price

Average Price 4.8% 5.6% 10.6% 15.0% 14.1% 6.3% Appreciation3 Median Price 4.9% 10.2% 16.1% 13.9% 7.2% Appreciation4

1 The metro area includes the following Oregon counties: Clackamas, Columbia, Multnomah, Washington, and Yamhill. It does not include Clark County in Washington state.

2 Residential includes detached single-family homes, condos, townhomes, manufactured homes, and multi-family units when one of the units is sold.

3 Average price appreciation based on a comparison of average price to the previous year average price.

4 Median price appreciation based on a comparison of median price to the previous year median price.

Source: Regional Multiple Listing Service (RMLS™)

home price dropped to $285,000 in Housing prices in Portland have histori- April 2007, down from $286,200 in cally been lower than in other major March. That was the first March-April cities on the West Coast. Recently, drop since 2001.62 Still, on a year-to- however, home prices have been rising year basis, prices in the city were up in significantly, as can be seen in Figure 1. October 2007, though there were drops in some parts of the region.63 And while Even with these recent increases in annual appreciation has topped 12 housing prices, Portland continues to percent in parts of the city, the median attract new residents because of its home price in some parts of Portland comparably affordable housing. The (North and Southeast) remains below city auditor’s year-end report for 2007, the median price elsewhere in the region however, highlighted concerns about (Beaverton, Gresham, Tigard, Hillsboro, rising housing prices. The auditor also and Clark County).64 reported that “the percent of homeown- ers and renters who spend more than Housing costs in Portland have gener- half of their incomes on housing has ally been lower than most competi- reached a new high.”60 Portland Public tor regions, particularly those on the Schools attributes its declining enroll- West Coast. Should the cost of housing ment in large part to a lack of affordable continue to rise in the region, however, housing within its boundaries.61 it will become an increasing concern for businesses. Housing could easily tip According to the Regional Multiple List- from a competitive advantage to neutral ing Service, the Portland-area median or negative. As trends signal reason for

Enhancing Portland’s Business Environment: A Public — Private Enterprise 19 concern, attention from developers and and the eighth fastest growth rate in public officials is needed to maintain this age group regardless of education.66 this advantage. Many of these newcomers are attracted Qu a l i t y o f Li f e by Portland’s downtown and central city neighborhoods, which are vibrant and walkable, and offer convenient mass Historically, Portland’s high quality transit, good restaurants, active arts of life has included short commutes, scenes, and civic festivals. affordable housing, and quality public schools. As discussed earlier in this report, all of these attributes are currently threatened. In this section we consider a number of additional quality-of-life factors. These factors impact Portland’s business environment, either directly or because they make the area attractive to prospective employees and businesses.

Businesses thrive in communities where people want to live, and increasingly so, people want to live in Portland. Or- egon’s natural assets of mild climate and scenic outdoors, along with the city’s rich cultural life and robust intellectual environment, contribute to Portland ranking very high in surveys of the most livable cities in the United States, especially those emphasizing factors that appeal to members of the young creative class. Portland was recently ranked in the top five metropolitan areas in at- Photo by Cheryl Juetten tracting what demographers are calling Many witnesses highlighted Portland’s “the young and restless,” 25- to 34-year- natural beauty and outdoor recreational olds who are increasingly viewed as a 65 opportunities. Proximity to Mount city’s economic future. Hood, the Columbia Gorge and the Pacific ocean beaches, and a wealth of Attracting and keeping the young parks and green spaces make the region creative class in this age range is key to attractive. These assets contribute to a building and supporting a knowledge- clean, fertile, green environment that based economy. As noted earlier, supports citizens who live their values Portland is doing very well in this by recycling, biking, and supporting regard. While this demographic declined other environmentally-friendly prac- nationally from 1990-2000, Portland, tices. In June 2006 Portland was ranked by contrast, posted remarkable gains. first in a widely publicized survey of Portland experienced the fourth fastest 50 American cities for sustainabili- growth rate in the nation for attracting ty.67 More recently, the 2007 Oregon 25-34 year olds with a college education business leadership summit identi-

20 City Club of Portland fied sustainability as one of Oregon’s environment, and all working together unique and competitive advantages and to improve it. Your committee believes encouraged further development of the that the absence of such a relationship is sustainable business sector.68 the root of both the dissatisfaction that we heard from witnesses and character- A number of actions have been taken izations of Portland as “unfriendly to to maintain or improve the region’s business.” While much of the blame for livability: Metro has a voter-approved the absence of such a relationship may charter and an urban growth manage- result from a combination of inexperi- ment plan, with green corridors along ence, insensitivity, and inaction on the transportation routes to nearby cities to part of local government leaders, the control development. In 2006 voters ap- business community also shares respon- proved $227.4 million in bonds to fund sibility. Fortunately, the situation has more than 100 projects to protect water been turning around, with both govern- quality, improve parks, preserve natural ment and business contributing to the areas, and provide access to nature. improvement.

Besides the direct impact on the retail, “One essential requirement restaurant, entertainment, and tour- for a healthy business ism sectors, the city’s cultural ameni- environment is an effective ties contribute to a positive business environment by helping attract and working relationship retain workers in the area. A number of between business leaders witnesses commented that Portland’s and government officials, breadth of cultural offerings is remark- each understanding the able for a city of its size and that such important role of the other offerings serve as an incentive when in the overall business recruiting prospective employees. environment, and all working together to For all of the above reasons, state, improve it.” regional and city governments, businesses, and individual citizens should recognize that Portland’s quality of life Some concerns relating to the city’s is an important competitive advantage reputation are substantive: taxes are too to be developed and maintained. high, or the permitting process is slow and cumbersome. Most of the witness testimony, however, was subjective. A Eff e c t i v e Go v e r n m e n t significant number of business leaders interviewed by your committee Relations between City mentioned the city’s image as hostile to Government and the Business business. Some believe that city officials Community have not cared much about whether businesses locate or succeed in Portland. One essential requirement for a healthy Many in the business community feel business environment is an effective there has been no “welcome mat” for business at City Hall. working relationship between business leaders and government officials, Witnesses cited Columbia Sportswear’s each understanding the important role decision to move its headquarters out of the other in the overall business

Enhancing Portland’s Business Environment: A Public — Private Enterprise 21 of the city as symbolic of poor relations Citizens clearly see some advantage between city government and the busi- to Portland’s “divided government” ness community. This incident may have structure, as indicated by recent voter been a wake-up call for city officials. rejection of two “strong mayor” charter When Tom Potter became mayor in proposals in 2002 and 2007. None- January 2005, he attempted to improve theless, a “divided government,” with relations between the mayor’s office and agencies reporting to different “bosses,” the business community, and convened demands special attention to assure that a business summit in June 2005 as part businesses see a single face when deal- ing with the city. Insufficient attention of that effort. ThePortland Business to providing a seamless point of contact Journal editorialized that the event was for businesses contributes to the percep- “more a feel-good event than a business 69 tion, at least for some in the business summit.” But feel-good events have community, that city bureaus exist to their place, especially in a city in which enforce rules, not to help businesses. there has been a perception of antago- Portland commissioners should ensure nism between city officials and many that they and their agencies provide business leaders. that seamless point of contact, and not leave it to businesses to negotiate the While numerous witnesses remain interfaces that are required. dissatisfied with relations between city government and the business community, others said that relations have improved over the last three years. Mayor Potter meets each month with the Portland Business Alliance, and Commissioner Adams’s commitment to visit “100 businesses in 100 days” after he took office in January 2005 generated a mostly positive response from witnesses. Commissioners Leonard and Saltzman, and former commissioner Sten, also made efforts to reach out to the business community.

Yet no matter how business friendly a mayor or city commissioner may be, numerous witnesses argued that the structure of Portland’s government makes it difficult to coordinate between bureaus. According to the city’s charter, the mayor’s authority is coequal with that of the four commissioners; his only Photo by Kenneth Aaron Photography additional authority comes from his During the course of this study, Port- ability to assign city bureaus to the indi- land’s City Council took action on four vidual commissioners. The result of such fronts that were frequently criticized a structure is often a lack of consistency by witnesses: (1) referring reforms to and accountability. the police and fire disability system

22 City Club of Portland (adopted by voters), (2) restructuring ness entrances, and (4) a pizzeria that the Business Income Tax to reduce the had to pay “exorbitant” fees to relocate impact on many small businesses (ad- its business across the street. Had your opted by council), (3) adopting the SAFE committee conducted interviews later in committee recommendations for im- 2007, the city’s failed attempt to rename proving downtown street and sidewalk a street for Cesar Chavez likely would access (currently being implemented), have made the list. and (4) referring a charter amendment to replace the “divided government” These examples emphasize two more described above with a “strong mayor” important issues regarding the business form of government with all bureaus climate: first, that perceptions are often under a single elected official (defeated as important as facts, and second, media by voters). coverage can reinforce perceptions.

With respect to the concerns about the Your committee found that, in each permitting process, in the city audi- of these high-profile incidents, the tor’s 2006-2007 annual report on city situation was not as black and white government performance, 72 percent as witnesses claimed or as the media of the “customers” surveyed about the portrayed them. The facts and nuance of each situation were sometimes over- timeliness of building permit reviews looked. considered the city’s effort “good” or “very good,” compared with only 61 per- Business leaders themselves, by their cent in 2001-02.70 However, businesses own public statements, help create the surveyed reported only 36 percent image of Portland as a favorable or unfa- satisfaction on the overall quality of vorable place to do business. The media Portland’s building permit services, is quick to report business criticism of up from 29 percent in 2001-02. City government and too often is used by Planning Director Gil Kelley asserted stakeholders as a substitute for face-to- that “ there has been a big turnaround face discussion. One business leader told in recent years. The city has made great your committee that steady criticism of strides in improving the permitting pro- government by businesses discourages cess.” In his State of the City address in customers from patronizing business. January 2007, Mayor Potter noted that He encouraged businesses to criticize “permitting has been streamlined, and government officials in private meetings developers and the community can now rather than through the media. expect a single point of contact within 71 the city.” More broadly, your committee found widespread public perception that the Nevertheless, there is still room for business community does not shoulder improvement. City Council members set its fair share of the Oregon tax burden, a a tone for the city, and their rhetoric has point that pollsters interviewed said was impact. Witnesses commonly cited four examples of anti-business attitudes: (1) evident in their polling. A letter to the the failed effort by the city to purchase editor published in The Oregonian illus- Portland General Electric, (2) the city’s trates the point: “Business leaders say responsibility for cost overruns in build- Oregon’s average schools and student ing the aerial tram, (3) lack of respon- success aren’t good enough,” the writer siveness to complaints about homeless said, and then went on to point out people who interfere with access to busi- that on the previous day the paper had

Enhancing Portland’s Business Environment: A Public — Private Enterprise 23 published an article stating that Oregon this type of shared leadership is more ranks 50th of 50 states for the share of common. state budget paid by corporations. The writer concluded that “perhaps business Fortunately, recent trends show im- leaders need to put their money where provement. It appears that both city their mouths are and be part of the officials and business leaders appear to solution.”89 In 2007 business leaders have a genuine desire to move in the made an excellent move in the right direction of greater collaboration. It direction by supporting creation of a is important that this trend continue, state rainy-day fund and the diversion even be accelerated. of $300 million in scheduled corporate kicker rebates into the fund.90 An important element in the effort to improve Portland’s business environment is education and communication, Dialogue is a two-way street, and your something City Club of Portland does committee believes that city govern- well. However, an analysis of City Club ment and the city’s business leaders Friday Forums over a recent 30-month should be making greater efforts to period showed what while there have engage in productive dialogue. For too been many programs related to the long, city government and the business business environment (e.g. economic community have regarded each other forecasts, education report cards, devel- with suspicion. Both sides have seemed opments at the Port of Portland, discus- more eager to criticize the other than to sions of public ownership of utilities, work together to find practical solutions traffic congestion, affordable housing, to issues that face the city. and public safety), there have been few programs that offer specific business perspectives on such issues. “Dialogue is a two-way street, and your committee City Club could help improve public believes that city dialogue regarding the business environ- government and the city’s ment by incorporating more business business leaders should perspectives into their Friday Forums be making greater efforts and focusing more attention on address- to engage in productive ing points of friction between business dialogue. ” and government. Shortly before publi- cation of this report the Club presented a program on regional economic development with the CEO of Greenlight Some witnesses from the business Greater Portland, which is the type of community wondered why local busi- program your committee encourages. ness executives are not more active in government. Portland has historically Taxation had individuals from the business community visibly engaged through their According to experts interviewed by your committee, taxes are not the participation in the many boards and primary consideration in deciding commissions making public policy deci- where to locate a business. Issues such sions. Your committee feels it would be as access to raw materials, availability a positive development for city and busi- of adequately trained workers, access to ness leaders to create a climate where transportation, and proximity to mar-

24 City Club of Portland kets are more important. Nevertheless, taxes, although 0.5 percent of the local taxes are viewed as a cost of doing busi- sales tax supports C-Tran. ness, sometimes influencing business decisions regarding where to locate. The Additionally, in Oregon, businesses decision by Genentech in 2006 to locate organized as sole proprietorships, or a packaging and distribution facility in “pass-through” entities such as S cor- Hillsboro, as opposed to a locality in porations or partnerships, pay taxes on another state, was attributed in part to their profits as reported on the personal recent changes allowing Oregon corpo- income tax returns of their owners. rations to use a “single sales factor” to determine its corporate tax liability.* “… Oregon has the tenth Businesses also rely on tax-supported most favorable state public services, such as public education, transportation systems, and police and business tax climate in the fire protection. In some Portland neigh- nation; Washington, which borhoods, businesses have voted to includes two counties in establish Local Improvement Districts the Portland region, ranks where additional taxes are collected for eleventh.” provision of additional services. For instance, the downtown Portland LID pays for services like extra police patrols State Taxes and more frequent street cleaning. According to the Tax Foundation, a nonpartisan organization that educates Since the Portland region spans two tax payers about tax policy, Oregon and states, multiple counties and cities, busi- Washington have favorable tax climates ness taxes vary by locale. At the state for business. The Tax Foundation’s State level, the tax systems of Oregon and Business Tax Climate Index compares Washington have markedly different states in five areas of taxation impacting approaches. While both states collect businesses: corporate taxes, individual property taxes, Oregon relies heavily on income taxes, sales taxes, unemploy- personal and corporate income taxes, ment insurance taxes, and taxes on as well as fees, to fund public services. residential and commercial property. Washington, on the other hand, has According to this criteria Oregon has neither a personal nor a corporate the tenth most favorable state business income tax, relying heavily on a sales tax climate in the nation; Washington, tax and a business and occupation tax. which includes two counties in the Port- Businesses on the Portland side of the land region, ranks eleventh.74 Columbia River pay transportation taxes to TriMet. Businesses on the Vancou- A 2007 study prepared by Ernst and ver side of the river do not pay TriMet Young for the Center on State Taxa- * The recently enacted “single sales factor” tion reported that Oregon and North formula is an alternative to the prior method by which Oregon determined the share of the na- Carolina are tied for the lowest effective tionwide profit of a corporation upon which it business tax rates among all 50 states. levied its corporate income tax. The single sales factor formula determines that share solely The effective tax rate is the ratio of state with reference to the share of the corporation’s and local business taxes to private sec- nationwide sales located in the state, with the location of sales considered to be the state tor gross state product (that is, the total where the goods are delivered to purchasers. value of a state’s annual production of

Enhancing Portland’s Business Environment: A Public — Private Enterprise 25 goods and services, excluding the public percent higher than Clackamas County. sector). The average effective tax rate This represents not only an increased across all states is 5.1 percent; the effec- cost of doing business, but also an tive tax rate in Oregon and North Caro- increased cost of housing for employees lina is 3.9 percent.75 Oregon’s minimum who want to live in Portland.76 tax on corporations, unchanged since it was reduced to $10 in 1931, is now the “Property taxes, which lowest in the nation among states that impact all property owners, tax corporate income. are significantly higher in Portland than surrounding Nationally, none of Portland’s competitor regions contain tax jurisdic- communities.” tions with such contrasting state tax systems as Oregon and Washington. The current Business Income Tax rate is Most economists interviewed by your 2.2 percent for the city of Portland and committee believe the close proxim- 1.45 percent for Multnomah County; ity of such contrasting tax systems is a both are administered by the city.77 In competitive advantage for the region. the fiscal year ending June 2007, the Business owners can choose to locate in city collected almost $76 million in Busi- Washington to avoid the capital gains ness Income Tax revenue, $22.9 million tax on the sale of their business, or in above budget and far above the $37 Oregon to take advantage of the lack of million collected during the last eco- a sales tax. While some complain that nomic downturn in 2002-03.78 To deal such moves lead to tax avoidance, the with this volatility, in March 2003 the money stays in the region either way. city added a surcharge of 1 percent and made it retroactive to January 1, 2002.79

Local Taxes From 2003 through 2007, the surcharge ranged from .07 to .40 percent, with the Portland businesses pay two principal exception of 2005 when there was no taxes to the city: property taxes and the surcharge imposed. Business Income Tax. In addition, in May 2003 Multnomah In 2002 the Portland Development County voters approved a three-year Commission hired ECONorthwest 1.25 percent personal income tax to to study the competitive impact of support schools, public safety, and Portland’s Business Income Tax, and health services during a period of total local taxes collected, both within state funding shortfalls.80 While public the region as well as across competitive education and public safety are both regions. This is the only comprehensive important to the business environment, study of local taxes that your committee the approval of this tax meant that the located, and though it is more than six owners of “pass-through” businesses in years old, its findings are revealing. Multnomah County had to pay both the Property taxes, which impact all prop- Business Income Tax and the temporary erty owners, are significantly higher in county personal income tax on revenues Portland than surrounding communi- from their businesses — just as the local ties. According to the study, the rate per economy was attempting to rebound. thousand for property taxes in Portland was 3.5 percent higher than Vancouver, As Oregon faces another economic 10.7 percent higher than Gresham, 39.2 downturn — possibly a recession — in percent higher than Beaverton, and 42.2 2008, Portland has not yet adequately

26 City Club of Portland institutionalized a way to continue and county services that are subsidized stable funding for essential services by other businesses whose sales are other than by imposing temporary tax within the region. However, traded sec- increases, which could retard recovery. tor businesses drive the local economy, In January 2007 the Portland City and assessing the Business Income Tax Council adopted amendments to the on them would put them at a com- Business Income Tax that: petitive disadvantage relative to their competitors outside the city and county. •• Raised the deduction for owners’ Your committee supports exempting compensation from $60,000 to traded sector businesses from the Busi- $80,000 initially, and to $125,000 ness Income Tax on sales made outside within five years. the county. •• Raised the gross revenue level None of Portland’s competitor cities, below which businesses are exempt inside or outside the region, has a busi- from $25,000 to $50,000. ness income tax. However, competitor •• In 2008, would impose a revised cities outside Oregon collect a variety minimum tax.81 of sales taxes, and some of our region’s other local tax jurisdictions impose The combined effect of these changes taxes that are not paid by Portland busi- reduced revenues collected from the nesses (such as gas taxes or utility and Business Income Tax by approximately road maintenance fees, and the city of 5 percent. These changes to the Busi- Vancouver’s recently enacted business ness Income Tax addressed some of the license fee). objections about equity and fairness that your committee heard from some Although some witnesses expressed witnesses. A new administrative rule concern that the Business Income Tax adopted in November 2007 by both has caused businesses to leave the the city and Multnomah County also city (and The Oregonian echoed such a created equal treatment among all concern in a 2006 editorial based on diversified investment funds, by adding anecdotal evidence not cited in the venture capital firms to the pre-existing piece),83 your committee found limited Business Income Tax exemption for evidence to support that concern. The diversified investment funds.82 Your 2002 ECONorthwest study points out committee believes that these steps are that a large law firm, for example, could positive, and have somewhat improved not move from Portland to Camas the business environment in Portland. without reducing net sales. Eric Fruits, a senior economist involved in the study, Businesses located in Multnomah said, “I don’t think I’d really pin people County pay the Business Income Tax leaving (Portland) on the Business only on income generated from sales Income Tax.”84 within the county. The exemption of income from sales outside the county Further, in February 2007 Mayor Pot- favors businesses in the traded sector, ter testified to your committee that in insofar as businesses whose income is 2004 only 86 businesses moved out derived from sales outside the county of Portland (less than one percent of do not pay their proportionate share the city’s nearly 35,000 licensed busi- for services received from the city or nesses), resulting in a loss of $25,000 county. In a sense they are receiving city of tax revenue (compared to 550 that

Enhancing Portland’s Business Environment: A Public — Private Enterprise 27 closed their doors and 350 that merged or reorganized). Commissioner Adams “…on balance, the total stated that, in contrast, between 2000 tax burden borne by and 2004 Portland registered a net gain businesses in the Portland of 6,000 new business licenses for a 5 region, relative to other percent annual growth.85 While some regions nationally, is a on your committee speculate that the competitive advantage, imposition of Business Income Tax which should be protected. surcharges and the county’s temporary For businesses located income tax (along with higher prop- within Multnomah County, erty taxes) may have slowed Portland’s higher property taxes economic recovery and contributed to some loss of jobs in the city during this and business income period, your committee could not verify taxes result in a cost a causal relationship. disadvantage, when compared with surrounding Information from the U.S. Census cities within the region.” Bureau indicates that taxes paid by businesses in Portland are higher than those paid in neighboring jurisdictions, Economic Development more so than in many comparable urban Programs 86 areas. Some of these higher taxes stem Federal, state, regional, and local gov- from decisions made decades ago, such ernments often invest in programs to as establishing a pay-as-you-go disabil- stimulate economic growth by investing ity and retirement system for fire and in infrastructure, promoting the ben- police officers. City Club recommended, efits of a certain area, or offering incen- and in 2006 voters approved, much- tives for businesses to invest in an area. needed reforms that will reduce the Results of these programs seem minor costs of this system (while maintaining if viewed as a percentage of the region’s benefit levels) over the long term, but total economy, yet they have significant will increase the tax burden in the short impact on a region’s economic growth. term.87 Siltronic Corporation, which employs about 900 people in the Portland area, Your committee concludes that, on is an example of a large employer that located in Portland as a direct result of balance, the total tax burden borne the city’s economic development efforts. by businesses in the Portland region, relative to other regions nationally, is a Responsibility for recruiting, retain- competitive advantage, which should be ing and developing business in the city protected. For businesses located within of Portland is currently shared by the Multnomah County, higher property Portland Development Commission, the taxes and business income taxes result mayor and commissioners, and private in a cost disadvantage, when compared sector business groups. PDC does much with surrounding cities within the of this work and is now being aided by region. Until this imbalance can be ad- Greenlight Greater Portland, a new, pri- dressed, City Council members should vate sector, regional economic develop- be cautious about undertaking major ment organization. PDC relies on public new spending initiatives. and private leaders to be responsive to

28 City Club of Portland Figure 2: Economic Development Plans, Scope, and Creators

Plan Scope Driving organization The Oregon Business Plan State Initiated by the Oregon Business (2002; updated Dec. 2007) Council, run by Oregon Business Plan steering committee CEDS — The Comprehensive Regional The Regional Partners for Business, Economic Development Strat- a consortium of local governments egy for the Portland-Vancouver Metropolitan Region (April 2005) Portland Regional Business Regional Initiated by the Portland Business Plan (2006; updated Jan. 2007) Alliance, run by the Regional Busi- ness Plan steering committee Portland Economic Develop- City “Blue Ribbon Panel” convened by ment Plan (2002) Mayor Vera Katz1

1 Mayor Katz selected representatives from business associations, non-profits, and government. requests for assistance in courting busi- 1. Private business leaders involved nesses considering locating in Portland. their government counterparts in developing the plan, which led to The following section discusses econom- a sense of co-ownership during implementation. ic development planning and implemen- 2. The planning team focused on de- tation efforts for the city and region, veloping a set of specific initiatives and examines how they relate to PDC’s with clear goals and ways to measure responsibilities for urban renewal. success. 3. An annual leadership summit was Economic Development Planning established to bring constituents together each year to review progress Between 2002 and 2007, several groups and to update the plan. published plans to spur economic development for the city, state and region. In contrast to the Oregon Business Plan’s statewide effort, the Portland The table in Figure 2 lists these econom- region has two separate economic devel- ic development plans and their creators. opment plans, one created by the public sector and the other by the private sec- The Oregon Business Plan, which has be- tor. To qualify for a federal grant, which come the model for several other plans mandates submission of a Comprehen- within the state, has motivated several sive Economic Development Strategy, a state-level efforts, including innovative plan was commissioned by the Regional microtechnology and nanotechnology Partners for Business (established by research, road and bridge improve- thirty municipalities and six counties). ments, a forest health bill, expansion of In the private sector, the Regional development-ready industrial lands, and Business Plan was published only a few a coordinated state branding campaign. months after the CEDS plan. While the The methods that led to these accom- Regional Business Plan acknowledges plishments include the following: that linkages with its partners in gov-

Enhancing Portland’s Business Environment: A Public — Private Enterprise 29 ernment and non-profit organizations Your committee is concerned that the are essential to implementation, most city does not have a team of local busi- of the government witnesses who met ness leaders regularly reviewing and with your committee testified that they informing its economic development were not adequately involved in this strategy. The city should also establish plan’s development. ongoing economic development planning that is linked with regional and The Portland Business Alliance, which state efforts and that is evaluated and manages the Regional Business Plan, updated annually. has stated that it is improving collaboration with its partners. The CEDS plan Implementation Efforts outlines a goal of eventually combining the two plans into a single public-pri- PDC implements programs for attract- vate regional plan that integrates with ing new businesses, encourages business the economic development plan for the startups, and helps existing businesses state. thrive and grow, both at the city and regional levels. While cooperating with neighboring jurisdictions on the “Your committee is region’s economic development, it is concerned that the city essential that PDC not lose sight of the does not have a team of importance of retaining and recruiting local business leaders family-wage jobs in the city of Portland. Your committee echoes one of the in- regularly reviewing and terviewees quoted in the regional CEDS informing its economic plan, “No one wants a hollowed-out development strategy. The Portland.” 89 city should also establish ongoing economic A new private-sector organization, Greenlight Greater Portland, was development planning that is linked with regional formed in 2007. It has raised over $1 million to market the region (Multno- and state efforts and that mah, Clackamas, Washington and Clark is evaluated and updated counties), retain businesses, and attract annually.” new businesses.90

PDC’s business retention and recruit- The city of Portland’s last economic de- ing teams measure results based on the velopment plan was published in 2002 processing of contacts and leads. Ac- after being developed by a “blue ribbon cording to a 2006 city auditor’s report, panel” assembled by former Mayor PDC set a goal in 2004 to recruit five Vera Katz. The resulting plan has been new businesses. It actually recruited 10 used since as the working plan of the out of the 30 that indicated an inter- Portland Development Commission. No est in relocating to Portland. Between updates have been published, and this mid-2004 and early 2006, PDC assisted document does not use the framework 710 businesses that contacted PDC for of the state or regional plans.88 PDC support. A follow-up survey found that did, in 2006, release a plan for target 15 percent of respondents were dissatisfied, while 68 percent were satisfied industry clusters, but it has a regional or very satisfied with PDC’s business focus and does not specifically address services. When asked to rate PDC’s help the city’s economic development. in retaining or expanding their business,

30 City Club of Portland 61 percent said “important” or “very Portland, but PDC did not have data to important.”91 support the claim. Your committee also was unable to verify the claim. These results seem acceptable, but your committee believes other measures may also be important: (1) the number of leads that PDC generates, and (2) the percentage of leads that are converted into business sitings and investments.

While commending PDC for its interest in greater tracking and accountability (especially since PDC requested the audit), the 2006 city auditor’s report found “PDC lacks clear goals, measures Photo by Cheryl Juetten and data it needs to continually improve its decision-making processes and bet- In 2005-06 the city’s General Fund con- ter link its investments to community tribution to PDC for economic develop- results.”92 The report made recommen- ment, excluding urban renewal areas,* dations for improving the outcomes was approximately $870,000, which that PDC tracks. was only 0.4 percent of PDC’s overall budget.93 Your committee views the Recruiting efforts also depend on the city’s June 2008 decision to contribute city to provide a highly attractive busi- $2.3 million for economic development ness environment. Therefore, feedback efforts as a positive sign. to the city from PDC (and Greenlight Greater Portland) is important to The Impact of Urban Renewal on give city managers insight into what Economic Development prospective businesses are saying about City Club’s 2005 study of PDC noted city services, features, strengths, and that its greatest contribution to eco- weaknesses. Such a feedback loop allows nomic development is through its urban the city to respond and improve. renewal activities.94 PDC seeks to rede- velop and increase the vitality of an area City Investment in Economic by using financing methods that rely on Development the expected increase in tax value of the In 2007, only five PDC staff members redeveloped property in that area. supported seven major industry clusters while also responding to requests for as- The city auditor’s report showed that sistance from Portland businesses. Your these urban renewal efforts are indeed committee finds this level of staffing having a positive impact: “The Urban inadequate. PDC should strengthen its Renewal Areas did not see the decline in efforts to support key industry clusters jobs experienced city-wide. In addition, and expand efforts to track and commu- wages and the market value of real es- nicate the economic contributions made tate in those areas clearly outpaced the by key sectors to the city and the region. city as a whole.” It noted that wages paid by jobs in URAs increased by 25 percent PDC officials told your committee that * PDC’s major areas of operations include many competitive cities invest more housing, urban renewal, and economic develop- money in economic development than ment..

Enhancing Portland’s Business Environment: A Public — Private Enterprise 31 compared to an 8 percent increase in Federal Bureau of Investigation, Port- the rest of the city and a 14 percent land ranks higher than some competitor decline in the control areas.* “Persons cities in certain kinds of crimes, and living in poverty decreased by 6 percent below those same cities in other kinds in the URAs compared to no change in of crimes.96 Such rankings can be mis- the control areas and a 2 percent decline leading, but in any event, your commit- city-wide. The ratio of building-to-land tee found no evidence that crime rates increased 49 percent in the URAs versus have any material influence on decisions 2 percent in the control areas.”95 by businesses to locate in the Portland metropolitan area rather than in some In summary, your committee be- other city.** lieves that the city of Portland should cooperate with businesses to create an According to data from the Portland economic development plan for the city Police Bureau, the incidence of crime that takes into consideration the eco- in downtown Portland has decreased nomic development plans for the state in recent years. The number of crimes and the region. It is imperative that against persons in Portland’s central such an economic development plan precinct, which includes downtown also be assessed and updated annually. and the Pearl District, declined by 36 percent between 2000 and 2005.97 The Public Safety number of property crimes increased in the years immediately following 2001, Owners of downtown businesses told perhaps as a result of a change in policy your committee that their customers regarding the manner in which inci- are concerned about crime levels in the dents of theft were compiled, but even downtown area. Downtown businesses with that change, property crimes in the have voted to establish (and to fund central precinct decreased by 7 percent through extra taxes) a Local Improve- from 2000 to 2005.98 A city auditor’s ment District, in part to provide extra report indicates that the crime rate has security patrols. Some business owners reached a new low and residents gener- told your committee that they moved ally feel safer in their neighborhoods.99 from downtown locations to suburban National statistics released in June 2007 communities in part because of their confirmed a continuing drop in crime concern for the safety of their customers in Portland as a whole, but indicate a and employees. Such concerns caused your committee to look at public safety new and disturbing trend: while murder issues as a component of the business and arson continue to drop, robberies environment. rose 14 percent from 2005 to 2006, and street robberies jumped 25 percent in Statistics do not show a significant dif- the same period.100 ference in crime rates between Portland and other competitive urban regions. Indeed, crime in the downtown area According to the annual reports of the remains a concern to many Portland * The auditor selected three separate “control residents. Citizens surveyed in 2007 areas” with land use patterns similar to the for the city auditor’s annual report felt URAs that did not receive major government investment during the comparison period, as ** The FBI itself warns that its rankings “lead indicated in the auditor’s report; Portland City to simplistic and/or incomplete analyses that Auditor, “Portland Development Commission: often create misleading perceptions adversely Economic development efforts effective, but affecting cities and counties, along with their improvements needed to measure and manage residents;” http://www.fbi.gov/ucr/05cius/ future success,” June 2006, p. 6, map on p. 13. about/variables_affecting_crime.html.

32 City Club of Portland far less safe walking alone in downtown Urban Construction Costs Portland at night (27 percent) than dur- Some witnesses complained that ing the day (68 percent), although they constructing or remodeling a business generally felt slightly safer in 2007 than facility in Portland typically costs 20 101 they did two years earlier. percent more and takes longer to build than an identical project in suburban The incidence of crime is not the only areas such as Beaverton or Hillsboro. factor that contributes to public safety It was implied that unreasonable and concerns on the part of business owners costly regulations placed by the city and the public at large. Panhandling and of Portland on projects within the city other unsavory activities often associ- constitute the major reasons for these ated with homelessness — rightly or differentials. wrongly — are often cited as factors that may lead businesses to move away Your committee contacted two local from the downtown area. architects and a cost estimator to determine whether such a cost differential ex- The city has made several important ists and, if so, what factors contribute to improvements with respect to the the differential. These experts confirmed quality of life in downtown Portland. In that projects in the city often, though December 2006, business owners, civil not always, cost more and take more rights lawyers, homeless advocates, and time to build, for the following reasons: the police bureau agreed on a plan to reduce the number of homeless people •• Land costs usually are higher in on downtown streets. The plan, labeled urban areas than in suburban loca- “Street Access for Everyone” (SAFE), tions. proposed a day center for homeless people, additional street benches, and •• Density in urban areas often results additional public restrooms in the in less available staging area for downtown area.102 In addition, as construction projects, raising costs Mayor Potter noted in his State of the for materials and equipment stor- City address in January 2007, the city’s age, and increasing the frequency new sidewalk obstruction ordinance, of moving materials, which must be adopted in late 2006, “will keep our done in smaller loads. business areas welcoming to all by pro- hibiting anyone from sitting or lying on •• Office space must be rented in adja- a public sidewalk in downtown Portland cent buildings. or the Lloyd District between 7 a.m. and 9 p.m.”103 •• More traffic on streets and side- walks place more restrictions on Your committee supports this policy but closures, raising costs of working has concerns about its implementation around the pedestrian and vehicu- and enforcement. To be successful it will lar traffic. require full funding and close monitor- ing of its effectiveness. The city auditor •• Buildings in suburban areas are should publish data illustrating the built out; in urban areas they are policy’s effect on the incidence of crime built up. Multi-story buildings are and homelessness on downtown streets. more costly. In particular, buildings

Enhancing Portland’s Business Environment: A Public — Private Enterprise 33 taller than 75 feet are required to process — an “economic dashboard” have more extensive and expensive designed to provide measurements fire and life-safety systems. of Portland’s economic health. Your committee encourages further work on •• Even when buildings in urban areas that front to help measure progress and are not higher, they are more often identify where attention is needed. built adjacent to other buildings, which can raise construction costs Each year the city auditor issues a report due to fire protection requirements on the performance of city government. for perimeter walls. Suburban In December 2007 the city auditor buildings can be spaced farther apart, eliminating the need for issued the seventeenth such report, these costs. which summarized the city’s progress in accomplishing its major goals: (1) ensur- •• Buildings constructed in urban set- ing a safe and peaceful community; tings are often designed for longer (2) operating and maintaining an effec- life, requiring higher costs for tive and safe transportation system; materials and construction. (3) improving the quality of life in neighborhoods; (4) protecting and In some cases additional costs occur enhancing the natural and built environ- in suburban locations due to provi- ment; (5) promoting economic vitality sion of utilities, construction of roads, and opportunity; and (6) delivering and other factors less often required efficient, effective, and accountable in urban settings. During the course of municipal services.105 this study, concerns about permitting grew in some outlying communities. The Portland has established a host of Oregonian columnist Jerry Boone noted, benchmarks that relate to the local “some disgruntled developers contend economy, environment, health and Beaverton paves its permit process with families, urban vitality, education, speed bumps and potholes. They say a governance, civic participation, and project that might take six months in public safety. The city auditor’s office has Hillsboro can take two or three times that in Beaverton — all as the inflation responsibility for tracking and reporting meter continues to run.”104 outcomes for these benchmarks. Unfor- tunately, 19 of the benchmarks remain On balance, the experts interviewed by unmeasured “because data are incon- your committee stated that there is too sistent, unreliable or unavailable at the much variation from project to project county level; or the benchmark requires that cannot be attributed to urban vs. further research to determine the most suburban regulatory requirements. appropriate data to track and report.” Some of the untracked benchmarks with key relevance to the business environ- Me a s u r i n g Pr o g r e s s ment include: total taxation, per capita dollars spent for local government ser- Measuring and tracking progress on vices, timeliness of government permit the entire range of factors that affect issuance, small business failure rate, job Portland’s business environment is im- training, export activity, industrial land portant. In 2005 Commissioner Adams availability, and job growth in down- began work on a project that is still in town Portland.106

34 City Club of Portland Your committee found it difficult, and in some cases impossible, to assess city performance on economic factors because data were not available nor reasonably easy to access. For example, in late 2007, PDC was just beginning to look at what competitor cities spend on economic development, but no data are as yet available. Such data is an example of information important for justify- ing an appropriate level of spending for Portland’s program. Similarly, your committee was unable to obtain data on how many for-profit jobs have come and gone in the city, or data on jobs in the city by neighborhood, industry, pay scale, or education requirements.

Measurement is clearly important to identify shortfalls, gauge improvement, and rectify false perceptions, which your committee often uncovered when comparing testimony to factual evidence. While the city auditor provides a level of analysis not found in most other cities, it is nevertheless imperative that the city auditor be provided the resources to better track data assessing the condition of the city’s business environment.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 35 Conclusions and Recommendations

Co n c l u s i o n s : Th e Co n d i t i o n o f Po r t l a n d ’s Bu s i n e s s En v i r o n m e n t

Your committee found many dimensions to Portland’s business environment and little agreement among businesses on how they should be prioritized. This lack of consensus makes it impossible to assign a meaningful quantitative grade to Portland’s business environment or to quanti- tatively compare it with the business environments of other cities. And “[Y]our committee believes even if everyone agreed on a univer- that compared with sal set of factors, we could not rate competitor cities in the some of them because reliable data is United States, the local often not available at the city level. business environment is relatively good and has While your committee cannot give improved over the course the condition of Portland’s business of this study.... Yet your environment a numeric score, we believe that compared with competitor committee sees warning cities in the United States, the local signs, and some of them business environment is relatively are serious.” good and has improved over the course of this study. A strong overall economy — the current national economic downturn notwithstanding — deserves much credit, but the business environment also has benefited from efforts by city officials to improve it, and because business leaders have pursued a more collaborative approach to resolving issues with city government.

Portland’s Business Income Tax has been modified by city ordinance, addressing an issue that was particularly problematic to many businesses. Permitting processes have been improved and attitudes are being tracked to ensure that “customers” are finding these processes less burdensome. A private-sector, regional economic development organization has been formed, and new steps are being taken to address some of the impacts of loitering and homelessness on business.

Yet your committee sees warning signs, and some of them are serious. Portland’s quality of life provides an important competitive advantage. At one time, available and affordable family housing, short commute times, and good public schools were among the city’s greatest assets. Over the past decade these aspects of Portland’s generally high quality of life have been challenged. A rapid rise in housing prices,

36 City Club of Portland increased traffic congestion, and unstable school funding have put at risk some of the attributes that have drawn people and businesses to our region. It is essential that business and government leaders and others recognize the importance of quality-of- life factors to the business environment, before the problems undermine Portland’s competitive advantage.

Although Portland’s ability to attract young, highly educated workers is a competitive advantage compared to other regions, there is a shortage of local workers with training in a number of key industries, including manufacturing, construction, and health care. And Portland risks losing its younger talent pool as they mature, if affordable family-friendly housing and high-quality public schools are not in adequate supply.

Businesses in the city of Portland and Multnomah County pay higher property and business income taxes than businesses in other jurisdictions within the region, which places them at a competitive disadvantage.

Information important to identifying problems and setting priorities must be gathered and tracked, and further improvement is needed in coordinating economic development planning and programs at city, regional, and state levels.

Many of the problems that should be addressed are out of the hands of local decision makers and will require cooperation among stakeholders throughout the region. Some transportation problems can be addressed by better organizing regional activities, but a great deal of the effort to resolve major transportation issues will require a better structure for making decisions and funding levels that are sufficient to deal with Portland’s traffic congestion and maintenance shortfalls.

The quality of public education is a prime concern for businesses considering locating in Portland and workers considering relocating to jobs in the area. The legislature must stabilize education funding overall and invest more in higher education.

Other problems stem from the region’s growth and success. For instance, the economic vitality of the region has also contributed to traffic congestion, and an increasingly severe shortage of developable land within city limits negatively affects both industrial development and housing costs.

Your committee believes that local government and business leaders can best serve city businesses not with divisive rhetoric, but by forging partnerships and finding common solutions to the city’s and the region’s serious problems, working with state and federal decision makers, and leading the public through the difficult decisions that must be made and the implementation steps that will be required.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 37 Re c o m m e n d a t i o n s

While your committee believes there is room for incremental improvements with regard to each aspect of Portland’s business environment, we believe that the following recommendations will have the greatest potential impact: Relations between City Government and the Business Community 1. City officials and business leaders should recognize that a cooperative working relationship is the single greatest factor in the city’s business environment. Specifically: a. City officials should make frequent site visits to businesses and meet often with business leaders. b. Business leaders and city officials should be more judicious in using the power of the media to leverage decisions in their favor. Economic Development Programs 2. The city of Portland should join with businesses to create an economic development plan that takes into consideration the economic development plans for the state and the region, and that is evaluated and updated annually. Workforce 3. City Council, the Portland Development Commission, and Metro should continue to support the development of affordable housing, with a greater emphasis (including incentives for builders and developers) on building more family- friendly housing that medium- and low-income workers can afford. 4. A taskforce of business and education leaders should be formed to propose training programs to ensure that Portland’s workforce skills better match industry needs, to raise awareness among students and workers about career and training opportunities, and to monitor progress in meeting labor force needs. Public Education 5. The Oregon Legislature should fund primary and secondary education in a consistent, sustainable manner and at the level recommended by the Quality Education Model. 6. The Oregon Legislature should increase levels of funding for public higher education to at least match per student funding in Washington and California, our two west coast competitors, so that: a. Course offerings support completion of a degree at a community college in two years and at a university in four years. b. Faculty salaries are competitive with public colleges and universities in Wash- ington and California. c. Tuition at public universities and community colleges in Oregon is comparable to tuition in Washington and California. 7. Portland State University and Oregon Health and Science University should continue to develop strong research centers for the region, and both the public and private sectors should support this effort. The Oregon Legislature should increase investment and should enact further measures to support transforming innovations from university laboratories into profitable business enterprises.

38 City Club of Portland Transportation 8. Metro, in working with the states of Oregon and Washington to create the 2035 Regional Transportation Plan, should assure that the plan does the following: a. Considers overall needs when prioritizing projects. b. Identifies funding sources and considers strategies for building public support for public funding. c. Identifies how best to maintain and improve bridges throughout the region. 9. City Club should initiate a comprehensive study to determine the best administrative structure and oversight authority for regional transportation planning and implementation.

Taxation 10. So long as business tax rates in the city of Portland and Multnomah County significantly exceed those paid in other jurisdictions in the region, Portland and Multnomah County should only undertake new local government spending initiatives with exceptional justification. 11. Because revenue from business income taxes is volatile, the city of Portland and Multnomah County should establish rainy day funds that are sufficient to avoid tax increases, surcharges, and fees during economic downturns.

Respectfully submitted,

Roger Eiss Charles Hinkle William Holmer Mary Ann Huff Dwayne Johnson Karl Johnson Joanne Kahn Sharon VanSickle-Robbins, chair

John Moreland, research adviser Tony Iaccarino, policy director

Acknowledgements

Your committee would like to thank the staff at the Oregon Employment Depart- ment and Joe Cortright, Consulting Economist at Impreza Consulting, for responding generously to our numerous requests for information and for assistance in helping us interpret complex data.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 39 Citations

1. Portland Development Commission, “Economic Development Strategy for the City of Portland,” Oct. 2002. 2. Ibid. 3. Institute of Portland Metropolitan Studies, Metropolitan Briefing Book 2007, p. 19. 4. Portland Business Journal, “2008 Book of Lists,” 2008. 5. “All downtown needs is $150 million,” Portland Business Journal, Jan. 26, 2007, p. P3. 6. Portland Business Alliance, “Downtown Portland Retail Strategy Update,” Jan. 2007, p. 4. 7. Fred Leeson, “Retail challenge of malls drives downtown changes,” The Orego- nian, March 8, 2007. 8. Mark New of New & Neville in “Space for lease,” Daily Journal of Commerce, Nov. 7, 2006. 9. Dylan Rivera, “Office space in a squeeze,”The Oregonian, Nov. 9, 2006, p. C1; and “Office market heats up,”Portland Business Journal, Jan. 26, 2007, p. 10. 10. Cushman & Wakefield “Marketbeat Snapshot,” Third Quarter 2007, Office Overview for Portland, Oregon; available online at https://www.cushwake.com/ cwglobal/docviewer/Portland%20OFF%203Q07.pd?id=c11300123p&repositor yKey=CoreRepository&itemDesc=document&_requestid=175381. 11. “Downtowns: Where the lights aren’t bright,” The Economist, March 3, 2007, p. 39. 12. Dylan Rivera, “Tower may signal renaissance,” The Oregonian, January 20, 2007, pp. A1, A6. 13. Institute of Portland Metropolitan Studies, Metropolitan Briefing Book 2007, p. 19. 14. Ibid. 15. Portland Development Commission and Portland Regional Partners for Busi- ness, Portland Metropolitan Region Fact Book, p. 10. 16. Ibid. 17. Joe Cortright, “City Vitals,” a report prepared for CEOs for Cities, 2006, pp. 12–15 18. Brent Hunsberger, “Manufacturing jobs go begging,” The Oregonian, April 22, 2007, p. W11. 19. Patrick O’Neill, “It’s code red for health care,” The Oregonian, April 22, 2007, p. W53. 20. “Writing a New Chapter: A City Club Report on School Funding,” City Club of Portland Bulletin, Vol. 89, No. 11 (March 16, 2007). 21. ORS 329.035(3); ORS 329.035(4)(a); “Writing a New Chapter,” p. 23; and Or. Const., Art. VIII, § 8(1). 22. U.S. Census Bureau, “Public Education Finances 2006,” p. 11; and U.S. Depart- ment of Commerce, Economics and Statistics Administration, Census Bureau, “Government Finances — Public Education Finances,” 1992 Census of Govern- ments, Vol. 4, No. 1 (Government Finances—Public Education Finances) 24 (2005), (“1992 Census Report”) (Ex. 4), p. 25. 23. Quality Education Commission, “Quality Education Commission Report 2006,” Dec. 2006, p. 15.

40 City Club of Portland 24. “Writing a New Chapter,” p. 12. 25. Amy Hsuan, “For many, school let out weeks ago,” The Oregonian, June 15, 2007, p. B1. 26. Ted Kulongoski, “The Governor’s Hope and Opportunity Budget 2007–2009,” p. 14; available online at http://www.governor.state.or.us/DAS/BAM/docs/Publi- cations/GRB0709/2007-09_Budget_Summary.pdf. 27. David Sarasohn, “Bernstine’s exit underscores the erosion in higher education,” The Oregonian, April 22, 2007, p. E4. 28. David Sarasohn, “Subtracting higher ed,” The Oregonian, April 29, 2007, p. E1 29. “An assignment for higher ed,” The Oregonian, Nov. 19, 2006, p. B1. 30. John von Schlegell, “Higher ed: Luxury or wise investment?,” The Oregonian, June 13, 2006, p. B9. 31. Bill Graves, “Goal: Get, keep more kids in college,” The Oregonian, p. W50. 32. Oregon Business Plan and Oregon Progress Board, “2007, Competitive Index: Indicators of Oregon’s Global Economic Competitiveness,” Table 24, “Student Resources.” 33. Bill Graves, “Class scarcity drags out college,” The Oregonian, March 28, 2007, p. B1. 34. Ted Kulongoski, “The Governor’s Hope and Opportunity Budget 2007–2009,” p. 14; available online at http://www.governor.state.or.us/DAS/BAM/docs/Publi- cations/GRB0709/2007-09_Budget_Summary.pdf. 35. Editorial, Eugene Register-Guard, June 9, 2007, p. A12. 36. Ann Gardner, Jay Waldron, and Michael Powell, “The Cost of Congestion: How Traffic Jams Waste More Than Just Your Time,” City Club of Portland, March 31, 2006. 37. “Step on it, Oregon,” The Oregonian, March 25, 2007, p. E4. 38. http://www.portlandalliance.com/pdf/2005census.pdf. 39. James Mayer, “Mess transit: A two-hour slog,” The Oregonian, May 20, 2007, p. C1. 40. Portland City Auditor’s Report, Fiscal Year 2006; Portland City Auditor, “City of Portland Service Efforts and Accomplishments: 2006-07, Seventeenth Annual Report on City Government Performance”; available online at http://www. portlandonline.com/shared/cfm/image.cfm?id=175246. 41. Janet Goetze, “Downtown parking: Spots are open, really,” The Oregonian, April 22, 2007, p. W46. 42. James Mayer, “Traffic flows, except at rush hour,”The Oregonian, April 22, 2007, p. W47. 43. Jim Reddin, “Bridge repairs add to budget crunch,” Portland Tribune, Oct. 24, 2006. 44. Arthur Gregg Sulzberger, “Official pushes to close aging Sellwood Bridge,”The Oregonian, March 19, 2008, p. E1. 45. Ted Wheeler, “State of Multnomah County,” City Club of Portland, Jan. 25, 2008. 46. Portland Business Alliance membership survey conducted by Davis, Hibbitts & Midghall, Dec. 2005. 47. Economic Development Research Group, Inc., “The Cost of Congestion to the Economy of the Portland Region: A Report to the Portland Business Alliance, Metro, Port of Portland and Oregon Department of Transportation,” Dec. 2005. 48. Ibid.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 41 49. Nick Budnick, “Destination unknown: Our transportation future,” Portland Tribune, Nov. 28, 2006. 50. Randy Gragg, “Running on empty,” The Oregonian, May 20, 2007, p. E1. 51. Ibid. 52. James Mayer, “Business leaders: Keep traffic moving,”The Oregonian, March 23, 2007, p. D1. 53. http://www.portlandonline.com/transportation/index.cfm?c=45278. 54. Regional Multiple Listing Service, Sept. 2007. 55. http://www.oregoninvestmentfund.com/about_oif.htm. 56. Conversation wtih David Almodovar of Credit Suisse, Nov. 27, 2007. 57. http://www.ost.state.or.us/divisions/investment/OGA/OGA_Policy_0907.pdf. 58. “Angels spread wings,” Portland Business Journal, Feb. 1, 2008, p. 1. 59. Mike Rogoway, “Startups step out of the shadows,” The Oregonian, Nov. 2, 2007, p. B1. 60. Portland City Auditor, “City of Portland Service Efforts and Accomplishments: 2006-07, Seventeenth Annual Report on City Government Performance,” p. 2; available online at http://www.portlandonline.com/shared/cfm/image. cfm?id=175246. 61. Portland Public Schools, Annual Budget, 2007–2008, p. 39. 62. Dylan Rivera, “Home prices slip, supply up,” The Oregonian, May 18, 2007, p. C1. 63. Ryan Frank, “While sale prices of U. S. homes fall, the Rose City’s still rise,” The Oregonian, Nov. 17, 2007 p. D1. 64. Ibid. 65. “Cities compete in hipness battle to attract young,” The New York Times, Nov. 25, 2005, p. A1. 66. Joe Cortright and Carol Coletta, “The Young and the Restless,”Portland Business Journal, June 21, 2004, p. 26. 67. “SustainLane’s 2006 US City Sustainability Ranking;” available online at http:// www.sustainlane.us/overview.jsp. 68. “Portland named ‘most sustainable city,” Daily Journal of Commerce, June 5, 2006, p. 5. 69. Editorial, “Business summit misses the mark,” Portland Business Journal, July 1, 2005, p. 47. 70. Portland City Auditor, “City of Portland Service Efforts and Accomplishments: 2006-2007,” p.7; available online at http://www.portlandonline.com/shared/ cfm/image.cfm?id=175246. 71. Mayor Potter’s speech available online at http://portlandcityhall.blogs.oregonlive.com/uploads/444391-Clean-STATE-OF-CITY-20074.doc. 72. The Oregonian, Sept. 25, 2006. 73. Betsy Hammond, “Voters may settle corporate rebate fate,” The Oregonian, Feb. 20, 2007. 74. The Tax Foundation, “Oregon’s State and Local Tax Burden, 1970-2007,” April 2007; available at http://www.taxfoundation.org/research/show/336.html. 75. Ernst & Young LLP and Council on State Taxation, “Total State and Local Business Taxes: 50 State Estimates for Fiscal Year 2006,” available online at http://www.statetax.org/Template.cfm?Section=Studies,_Articles_ and_Special_Reports&template=/ContentManagement/ContentDisplay. cfm&ContentID=7978.

42 City Club of Portland 76. ECONorthwest, “Business Income Tax Analysis,” Portland 2002 Strategy for Economic Vitality, Appendix 2-6, Business Income Tax Analysis. 77. City of Portland Business Licenses and Multnomah County Business Income Tax, Frequently Asked Questions and Info; available online at http://www.portlandonline.com/shared/cfm/image.cfm?id=41285. 78. City of Portland; “2007 Comprehensive Annual Financial Report,” pp. 24, 96; available online at http://www.portlandonline.com/shared/cfm/image. cfm?id=180644. 79. School Funding Surcharge Frequently Asked Questions, available online at http://www.portlandonline.com/cmf/index.cfm?a=hehii&c=eedbb. 80. City of Portland Business Licenses and Multnomah County Business Income Tax, Frequently Asked Questions and Info; available online at http://www. portlandonline.com/shared/cfm/image.cfm?id=41285; and conversation with Karen Johnson, Auditor, Operations Division, Portland Bureau of Revenue, Feb. 22, 2008. 81. Portland City Council Ordinance No. 180863, approved April 4, 2007; available online http://www.portlandonline.com/auditor/index.cfm?c=28807. 82. Andy Dworkin, “County is better risk to venture capitalists,” The Oregonian, Nov. 30, 2007, p. C1. 83. “Soften the blow for small businesses,” The Oregonian, Dec. 8, 2006, p. B4. 84. ECONorthwest, “Business Income Tax Analysis,” Portland 2002 Strategy for Economic Vitality, Appendix 2-6, Business Income Tax Analysis. 85. Ryan Frank, “Taxes Don’t Drive Businesses from Portland, Adams Says,” The Oregonian, Feb. 11, 2007, p. D1. 86. U.S. Census Bureau, “Employment, Payrolls, Average Earnings in Individual Municipal and Township Government Having 25,000 or More Population by State: March 2002.” 87. “Portland’s Fire and Policy Disability and Retirement Fund: Time for Change,” City Club of Portland Bulletin, Vol. 87, No. 36 (Feb. 3, 2006). 88. Portland Development Commission, “Economic Developement Strategy for the City of Portland,” Oct. 2002. 89. ECONorthwest and Impresa Consulting, “Comprehensive Economic Develop- ment Strategy for the Portland-Vancouver Metropolitan Region,” June 2005, p. E14. 90. Conversation with Jim Mark, President of Greenlight Greater Portland, Jan. 2008; and Jonathan Brinckman, “Private business starts 4-county development group,” The Oregonian, Jan. 4, 2007, p. C1. 91. Portland City Auditor, “Portland Development Commission: Economic development efforts effective, but improvements needed to measure and manage future success,” June 2006. 92. Ibid. 93. Ibid. 94. “Portland Development Commission: Governance, Structure and Process,” City Club of Portland Bulletin, Vol. 86, No. 34 (Jan. 25, 2005). 95. Portland City Auditor, “Portland Development Commission: Economic development efforts,” p. i. 96. The most recent report is “Crime in the United States 2005,” available on the FBI’s website at http://www.fbi.gov/ucr/05cius/.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 43 97. The data are available at on the Portland Police Bureau website, at http://www. portlandonline.com/police/index.cfm?&a=28136&c=29800. 98. Ibid. 99. Portland City Auditor, “City of Portland Service Efforts and Accomplishments: 2006-07,” p. 2; available online at http://www.portlandonline.com/shared/cfm/ image.cfm?id=175246. 100. Nick Budnick, “Robberies rise as other crimes fall,” Portland Tribune, June 8, 2007. 101. Portland City Auditor, “City of Portland Service Efforts and Accomplishments: 2006-07,” p. 19. 102. The plan is described in “A better plan for vagrancy?”The Oregonian, Dec. 10, 2006, p. B1; and “Downtown prospects called bright,” The Oregonian, Dec. 3, 2006, pp. B1 and B3. Mayor Potter also described the plan in his January 2007 State of the City address to the City Club. That speech is available online at http://portlandcityhall.blogs.oregonlive.com/uploads/444391-Clean-STATE- OF-CITY-20074.doc. 103. Mayor Potter’s January 2007 “State of the City” speech is available online at http://portlandcityhall.blogs.oregonlive.com/uploads/444391-Clean-STATE- OF-CITY-20074.doc. 104. Jerry Boone, “Speculations are rife over the ‘king’,” The Oregonian, April 16, 2007, p. B1. 105. Portland City Auditor “City of Portland: Service Efforts and Accomplichments: 2006–2007,” Dec. 2007. 106. Ibid.

44 City Club of Portland Witnesses

Sam Adams, Commissioner, City of Portland Susan Anderson, Director, City of Portland Office of Sustainable Development Rebecca Armstrong, Managing Director, Johnson Cowhan Hanrahan Advertising David Atiyeh, President, Atiyeh Brothers Gary Blackmer, Auditor, City of Portland David Bragdon, President, Metro Council Steve Buckstein, Senior Policy Analyst, Cascade Policy Institute Tim Boyle, President & CEO, Columbia Sportswear Matt Chapman, founder, CFI Software David Chen, Partner, OVP Venture Partners Bonnie Choruby, Senior VP of Merchandising, Lucy Activewear Inc. Jay Coalson, Principal, Green Building Services Joe Cortright, Consulting Economist, Impresa Consulting Pat Donaldson, President, Forbes & Associates; President, Alliance of Portland Neighborhood Business Associations Norm Eder, Executive Director, Manufacturing 21 Coalition Wayne Embree, Managing Partner, Cascadia Ventures Paul Ehrlich, VP of Business Affairs, Adidas Jim Francesconi, former Commissioner, City of Portland; Acting Executive Director of Construction Apprenticeship and Workforce Solutions (CAWS) Initiative Kevin Jeans Gail, Director, Portland Workforce Alliance Scott Gibson, Vice Chairman, OHSU Board of Directors; co-founder, Sequent Tim Greve, President, Carl Greve Jewelers Tim Grewe, Chief Administrative Officer, City of Portland Lisa Grove, Principal, Grove Insight Doug Henne, Partner, Isler & Company; President, Oregon Society of CPAs Tim Hibbitts, Partner, Davis, Hibbitts & Midghall Gordon Hoffman, Managing Director, NW Technology Ventures Steve Holwerda, COO, Ferguson Wellman Capital Management Bill Hostetler, Commercialization Officer, Portland State University Jim Johnson, CEO, Tripwire Gil Kelley, Director, City of Portland Bureau of Planning Jill Powers Kirk, President, Portland Schools Foundation; Vice President, Oregon Business Council Randy Leonard, Commissioner, City of Portland Rochelle Lessner, Policy and Public Affairs, Portland Development Commission Carl Marker, President, IMS Capital Management Sheila Martin, Director, Institute of Portland Metropolitan Studies, Portland State University Rob Mawson, Vice President, Heritage Consulting Group; Senior Program Manager, Alliance of Portland Business Associations Bob McCarthy, COO, Tripwire Sandra McDonough, President and CEO, Portland Business Alliance Andrew McGough, Executive Director, Worksystems, Inc. Brock Metcalf, Managing Partner, Cascadia Ventures Jennifer Nolfi, Small Business Advocate, Portland Development Commission

Enhancing Portland’s Business Environment: A Public — Private Enterprise 45 John Noordwijk, CEO, Sapa Steve Olczak, Director of Secondary Education, Portland Public Schools Bob Packard, Managing Partner, Zimmer Gunsul Frasca Architects Bobbie Parisi, Vice President of Marketing, Keen Footwear Roger Pollock, CONTECH Stormwater Solutions Nan Poppe, President, Extended Learning Campus of Portland Community College Tom Potter, Mayor, City of Portland Steve Pratt, Chairman and CEO, ESCO Corporation Mike Riley, Research Director, Riley Research Michael Roach, Owner, Paloma Clothing; President, Hillsdale Business Association John Russell, President, Russell Development Patricia Ryan, Senior Manager of Economic Development (Industry Clusters Specialist), Portland Development Commission Dan Saltzman, Commissioner, City of Portland Joe Schneid, CPA, Aldrich Kilbride & Tatone LLC Chuck Sheketoff, Executive Director, Oregon Center for Public Policy Bert Sperling, President, Sperling’s Best Places Lynn Spruill, COO, Arnerich Massena Erik Sten, Commissioner, City of Portland John Tapogna, Senior Policy Analyst, ECONorthwest David Thorpe, Creative Director, Ziba Design Chris Van Dyke, President, Nau, Inc. Thom Walters, Partner, Coraggio Group Bruce Warner, Executive Director, Portland Development Commission Duncan Wyse, Executive Director, Oregon Business Council

Witness Panels

Activewear and Gear—Choruby, Ehrlich, Parisi, Van Dyke Business Organizations—Wyse, McDonough Creative Services—Armstrong, Packard, Thorpe, Walters High Tech/Life Science—Chapman, Embree, Johnson, McCarthy, Metcalf Metals—Eder, Noordwijk, Pratt Market Research—Grove, Hibbitts, Riley Professional Services—Henne, Holwerda, Marker, Spruill Retail Businesses—Atiyeh, Donaldson, Greve, Mawson, Roach Sustainable/Green Industries—Anderson, Coalson, Pollock Taxation—Buckstein, Schneid, Sheketoff, Topagna Venture Capital and Technology Transfer—Chen, Gibson, Hoffman, Hostetler Workforce Training—Francesconi, Gail, Kirk, McGough, Olczak, Poppe

46 City Club of Portland Bibliography Reports

Buckstein, Steve. “Prosperity or Portland? Remove Portland’s Business Income Tax to Improve the City’s Economy.” Cascade Policy Institute. Nov. 2005.

Cortright, Joe. “City Vitals.” A Report Prepared for CEOs for Cities. 2006.

Cushman & Wakefield. “Marketbeat Snapshot.” Third Quarter 2007, Office Overview for Portland, Oregon. 2007.

Davis, Hibbitts & Midghall. “Portland Business Alliance Membership Survey.” Dec. 2005.

Economic Development Research Group, Inc. “The Cost of Congestion to the Economy of the Portland Region: A Report to the Portland Business Alliance, Metro, Port of Portland and Oregon Department of Transportation.” Dec. 2005.

Economic Development Research Group, Inc. “The Cost of Highway Limitations and Traffic Delay to Oregon’s Economy: A Report to the Oregon Business Council and Portland Business Alliance.” March 2007.

ECONorthwest. “Business Income Tax Analysis.” Portland Strategy for Economic Vitality. July 2002.

ECONorthwest and Impresa Consulting. “Comprehensive Economic Development Strategy for the Portland-Vancouver Metropolitan Region.” Prepared for the Regional Partners for Business and the CEDS Strategy Committee. June 2005.

Ernst & Young LLP and Council on State Taxation. “Total State and Local Business Taxes: 50 State Estimates for Fiscal Year 2007.” 2008.

Fisher, Peter. “Grading Places.” Economic Policy Institute. Washington D.C., 2005.

Impresa, Inc. and Portland Business Alliance. “Regional Business Plan for Multno- mah, Washington, Clackamas and Clark Counties.” Jan. 2006.

Impresa, Inc. and Portland Business Alliance. “Regional Business Plan Progress Re- port.” Jan. 2007.

Institute of Portland Metropolitan Studies. Metropolitan Briefing Book 2007. Portland State University. 2007.

Oregon Business Plan. “Moving Forward: 2008 Oregon Business Plan Policy Play- book/Initiative Guide.” Presented at the 6th Annual Oregon Leadership Summit. Dec. 3, 2007.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 47 Oregon Business Plan and Oregon Progress Board. “2007 Competitive Index: Indica- tors of Oregon’s Global Economic Competitiveness.” 2007.

Portland Business Alliance. “2005 & 2006 Downtown Portland Business Census & Survey.” Dec. 2005, 2006.

Portland Business Alliance. “Downtown Retail Strategy Update.” Jan. 2007.

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Portland Development Commission. “Economic Development Target Industry Plan, Fiscal Year 2006-2007.” March 2007.

Portland Development Commission. “Strategic Plan 2008-2012: Celebrating Our Past and Embracing Our Sustainable Future.” Feb. 2008.

Portland Development Commission. “Target Industry Fact Sheets (Bioscience, Cre- ative Services, Distribution & Logistics, Footwear/Activewear/Outdoor Gear/Cycling, High Tech, Metals, Professional Services, Specialty Foods, Sustainable Industries).” July 2007.

Portland Development Commission and Portland Regional Partners for Business. Portland Metropolitan Region Fact Book. 2007.

SustainLane. “2006 U.S. City Sustainability Ranking.” 2006.

The Tax Foundation. “Oregon’s State and Local Tax Burden, 1970–2007.” April 2007.

The Brookings Institution. “Portland in Focus: A Profile from Census 2000.” Nov. 2003.

Government Documents

City of Portland Business Licenses and Multnomah County Business Income Tax. Fre- quently Asked Questions and Information; http://www.portlandonline.com/shared/ cfm/image.cfm_id=41491.

City of Portland Office of Transportation. “Safe, Sound and Green Streets Proposal.” 2008.

48 City Club of Portland Kulongoski, Ted. “The Governor’s Message: A Great Opportunity.” The Governor’s Hope and Opportunity Budget. 2007-2009.

Metro Joint Policy Advisory Committee on Transportation. “2035 Regional Transpor- tation Plan, Final Draft for USDOT Review.” Jan. 18, 2008.

Portland City Auditor. “Financial Condition in the City of Portland: 1997-2006.” April 2007.

Portland City Auditor. “Portland Development Commission: Economic Development Efforts Effective, but Improvements Needed to Measure and Manage Future Success.” June 2006.

Portland City Auditor. “Service Efforts and Accomplishments: 2006-07, Seventeenth Annual Report on City Government Performance.” Dec. 2007.

Portland City Auditor and Multnomah County Auditor. “Students, Spending, Ser- vices, and Accomplishments, Multnomah County School Districts.” 2005.

Portland Multnomah Progress Board. “Benchmarks.” http://www.portlandonline. com/auditor/index.cfm?c=27358.

Quality Education Commission. “Quality Education Commission Report 2006.” Dec. 2006.

Tax Supervising & Conservation Commission. “Local Government Finance in Multno- mah County: 2007-08 Annual Report.” Jan. 2008.

United States Census Bureau. “Employment, Payrolls, Average Earnings in Individual Municipal and Township Governments Having 25,000 or More Population by State.” March 2002.

United States Census Bureau. “Public Education Finances 2006.” 2006.

United States Department of Commerce, Economics and Statistics Administration. “Government Finances – Public Education Finances.” Vol. 4. No. 1. 1992 Census of Governments. 2005.

News Articles and Editorials

“A better plan for vagrancy?” The Oregonian, Dec. 10, 2006.

“All downtown needs is $150 million.” Portland Business Journal, Jan. 26, 2007.

“An assignment for higher ed.” The Oregonian, Nov. 19, 2006.

“Angels spread wings.” Portland Business Journal, Feb. 1, 2008.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 49 Boone, Jerry. “Speculations are rife over the ‘king’.” The Oregonian, Apr. 16, 2007.

Brinckman, Jonathan. “Private business starts 4-county development group.” The Oregonian, Jan. 4, 2007.

Budnick, Nick. “Destination unknown: Our transportation future.” Portland Tribune, Nov. 28, 2006.

Budnick, Nick. “Robberies rise as other crimes fall.” Portland Tribune, June 8, 2007.

“Business summit misses the mark.” Portland Business Journal, July 1, 2005.

“Cities compete in hipness battle to attract young.” The New York Times, Nov. 25, 2005.

Cortright, Joe, and Carol Coletta. “The young and the restless.”Portland Business Journal, June 21, 2004.

“Downtown prospects called bright.” The Oregonian, Dec. 3, 2006.

“Downtowns: Where the lights aren’t bright.” The Economist, Mar. 3, 2007.

Dworkin, Andy. “County is better risk to venture capitalists.” The Oregonian, Nov. 31, 2007.

Frank, Ryan. “Taxes don’t drive businesses from Portland, Adams says.” The Orego- nian, Feb. 11, 2007.

Frank, Ryan. “While sale prices of U.S. homes fall, the Rose City’s still rise.” The Orego- nian, Nov. 17, 2007.

Gragg, Randy. “Running on empty.” The Oregonian, May 20, 2007.

Graves, Bill. “Class scarcity drags out college.” The Oregonian, Mar. 28, 2007.

Graves, Bill. “Goal: Get, keep more kids in college.” The Oregonian, April 21, 2007.

Goetze, Janet. “Downtown parking: Spots are open, really.” The Oregonian, Apr. 22, 2007.

Hammond, Betsy. “Voters may settle corporate rebate fate.” The Oregonian, Feb. 20, 2007.

Hsuan, Amy. “For many, school let out weeks ago.” The Oregonian, June 15, 2007.

Hunsberger, Brent. “Manufacturing jobs go begging.” The Oregonian, Apr. 22, 2007.

Leeson, Fred. “Retail challenge of malls drives downtown changes.” The Oregonian, Mar. 8, 2007.

50 City Club of Portland Mayer, James. “Business leaders: Keep traffic moving.”The Oregonian, Mar. 23, 2007.

Mayer, James. “Mess transit: A two-hour slog.” The Oregonian, May 20, 2007.

Mayer, James. “Traffic flows, except at rush hour.”The Oregonian, Apr. 22, 2007.

O’Neil, Patrick “It’s code red for health care.” The Oregonian, Apr. 22, 2007.

“Office market heats up.”Portland Business Journal, Jan. 26, 2007.

“Portland named ‘most sustainable city’.” Daily Journal of Commerce, June 5, 2006.

Redden, Jim. “Bridge repairs add to budget crunch.” Portland Tribune, Oct. 24, 2006.

Rivera, Dylan. “Home prices slip, supply up.” The Oregonian, May 18, 2007.

Rivera, Dylan. “Office space in a squeeze.”The Oregonian, Nov. 9, 2006.

Rivera, Dylan. “Tower may signal renaissance.” The Oregonian, Jan. 20, 2007.

Rogoway, Mike. “Startups step out of the shadows.” The Oregonian, Nov. 2, 2007.

Sarasohn, David. “Bernstine’s exit underscores the erosion in higher education.” The Oregonian, Apr. 22, 2007.

Sarasohn, David. “Subtracting higher ed.” The Oregonian, Apr. 29, 2007.

“Soften the blow for small businesses.” The Oregonian, Dec. 8, 2006.

“Space for lease.” Daily Journal of Commerce, Nov. 7, 2006.

“Step on it, Oregon.” The Oregonian, Mar. 25, 2007.

Von Schlegell, John. “Higher ed: Luxury or wise investment?” The Oregonian, June 13, 2006.

City Club Reports and Friday Forums

“A City Club Report on Ballot Measure 26-91; Amends Charter: Changes Form of City Government.” City Club of Portland Bulletin. Vol. 89, No. 16 (April 20, 2007).

Doug Blomgren, Randy Leonard and John Russell, “The Long-Term Future of the Portland Development Commission,” City Club of Portland, June 17, 2005.

David Bragdon, “A New Look at the State of the Region,” City Club of Portland, June 30, 2006.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 51 Rex Burkholder and Gail Achterman, “Transportation for the 21st Century.” City Club of Portland, June 29, 2007.

Susan Castillo, “Are Oregon’s Schools Making the Grade? The State of Public Educa- tion.” City Club of Portland, Dec. 9, 2005.

Joe Cortright, Jerry Johnson, and John Mitchell, “Economic Forecast for 2007,” City Club of Portland, Jan. 5, 2007.

Ann Gardner, Jay Waldron, and Michael Powell, “The Cost of Congestion: How Traffic Jams Waste More Than Just Your Time,” City Club of Portland, March 31, 2006.

John Fregonese, Gil Kelley and Ruth Scott, “Is Downtown in Trouble? A Frank Discus- sion,” City Club of Portland, Sept. 8, 2006.

Fred Hansen, “TriMet on Track?” City Club of Portland, Dec. 7, 2007.

Sandra McDonough and John Carroll, “Downtown Portland: The Next Iteration,” City Club of Portland, May 18, 2007.

Vicki Phillips, “What’s Going on with Portland Public Schools?” City Club of Portland, Mar. 9, 2007.

Royce Pollard, Bart Phillips, and Patrick McDonnell, “Vancouver at 150,” City Club of Portland, June 22, 2007.

George Pernsteiner, Timothy Nesbitt, Gretchen Schuette, and Edward John Ray, “Higher Education in Oregon: Aligning Opportunity with the Needs of the Knowledge Economy,” City Club of Portland, May 20, 2005.

“Portland Development Commission: Governance, Structure and Process,” City Club of Portland Bulletin. Vol. 86, No. 34 (Jan. 21, 2005).

“Portland’s Fire and Police Disability and Retirement Fund: Time for Change,” City Club of Portland Bulletin. Vol. 87, No. 36 (Feb. 3, 2006).

Tom Potiowsky and Randy Pozdena, “2008 Economic Forecast,” City Club of Portland, Jan. 4, 2008.

Tom Potter, “2007 State of the City Address,” City Club of Portland, Jan. 19, 2007.

Tom Potter, “2008 State of the City Address,” City Club of Portland, Jan. 18, 2008.

Tom Potter, Sheila Martin, Tom Hughes, and Jensine Larson, “Two Mayors, Two Vi- sions: How Conversations Can Change Communities,” City Club of Portland, July 14, 2006.

Mark Rosenbaum and Erik Sten, “State of the Portland Development Commission,” City Club of Portland, Mar. 2, 2007.

52 City Club of Portland Ken Wade, “Housing Troubles on the Horizon?” City Club of Portland, Dec. 14, 2007.

Ted Wheeler, “State of Multnomah County,” City Club of Portland, Jan. 25, 2008.

“Writing a New Chapter: A City Club Report on School Funding.” City Club of Portland Bulletin. Vol. 89, No. 11 (March 16, 2007).

Bill Wyatt, “Connecting Portland to the Global Economy: Trade, Transportation and the Port,” City Club of Portland, July 21, 2006.

Enhancing Portland’s Business Environment: A Public — Private Enterprise 53 Notes Notes Notes Notes Notes Photography by Cheryl Juetten Photo of City Hall by Kenneth Aaron Photography Photo of Portland Building & the Hawthorne Bridge by Susan Shepperd All photos used with permission City Club of Portland 901 SW Washington St., Portland, OR 97205 503-228-7231 | 503-228-8840 fax [email protected] | www.pdxcityclub.org