Paying People to Stay in Portland: Smart Growth Secret
Noting that “families have been priced out of inner city neighborhoods due to increased housing prices,” and declining enrollment, the city of Portland has announced a “Schools, Families, Housing Initiative.” The purpose is to stabilize enrollment in inner city areas, where the city indicates that the losses have been the greatest.
In a “request for proposal,” the city indicates that enrollments are increasing in areas outside the inner city (read “suburbs”). The city of Portland has large expanses of modern suburban areas and, indeed, nearly all growth in the city of Portland since 1980 (or for that matter since 1950) has been in these areas — principally in areas of annexation. The core area, like virtually all urban cores except Los Angeles, has lost population.
Propping Up a Failing School District
The program would provide first home buyer grants and rental assistance to encourage residents to stay in the inner city sections of the Portland School District rather than moving to the suburbs or elsewhere. Right away, there is a problem, because Portland’s smart growth policies were to have strengthened the core and discouraged the continual shift to the suburbs. Inner city enrollments should be increasing relative to enrollments in the metropolitan area. Education mirrors the trends in population growth and employment growth, where suburban growth overwhelms core and city growth.
The city of Portland partially attributes declining inner city enrollments to insufficient education funding. Yet, this very same city has found the money to support urban renewal projects (such as the “Pearl District”) to the tune of $225 million in bonded indebtedness, 10 year tax forgiveness for new development near light rail stations, and “gift certificates” for developers in the form of development fee waivers in favored areas. Portland has the money to pay for what it values. Kids come after architecture.
Naively, the city’s misses what may be the most important factor — that suburban systems provide better education than the Portland School District. This is not just a Portland phenomenon. Central city public school systems throughout the nation generally perform more poorly than average. The same deficiency, however, is not exhibited in the large parochial systems (principally Roman Catholic) in large cities such as Chicago and Philadelphia.
Another connection not made by the city is between smart growth and house cost increases. In the last 10 years, the median price house in the Portland area has risen 60 percent relative to median household incomes. This drives people away and keeps others from moving in.
Smart Growth’s Ultimate Externality: Destruction of Housing Affordability
Everyone knows that smart growth land rationing policies are the principal cause of escalating house prices, though the planners (and agencies like Portland’s Metro) are in denial. Where smart growth land rationing policies do not exist, housing prices have remained near the historic 3.0 Median Multiple (median house price divided by median household income). In Portland, the Median Multiple in 2006 was 5.0.
Paying Themselves by Moving to Atlanta
By comparison, in the high-income world’s fastest growing metropolitan area, Atlanta, the Median Multiple was 2.9 in 2006. This difference is the ultimate cost of smart growth — now $250,000 per household buying the median priced house, including mortgage interest. The median income Portland household moving to Atlanta receives a reward of more than four years income, not to mention a larger lot and house. Overall, the median house in Atlanta is 15 percent larger than in Portland, while the average lot size is more than three times as large. Moreover, this is for the entire housing stock and does not consider the decline in house size and lot size in the Portland area that has been driven by smart growth policies in recent years.
Of course, there are also the incentives of the larger house and lot sizes and better education systems in Clark County and Columbia County — outside the reach and control of Portland’s Metro.
The city of Portland simply does not have enough money to pay people to stay in the face of such lucrative incentives.
Voting with their Feet Against Smart Growth
Portland has a real problem in maintaining its population. Between 2000 and 2005, the city’s overall population growth has accounted for only 2.5 percent of the growth in the metropolitan area. Just released Bureau of the Census data indicates that a net 28,000 “domestic migrants” moved out of Multnomah County (which includes Portland) between 2000 and 2006. Domestic migrants are people who move within the United States. Multnomah County’s slow population growth results from an excess of births over deaths and immigration (international migration).
Indeed, people are voting with their feet against Portland, Multnomah County and the smart growth of the Portland region. Since 2000, 80 percent of the population growth in the Portland metropolitan area has been outside Portland’s famous (or infamous) urban growth boundary. Portland’s “smart growth” has been a boon to growth in Clark County, Washington and in the exurban counties of Columbia and Yamhill in Oregon.
The city of Portland, along with state and regional officials would do well to drop their ideology and look at reality. So long as their policies make the declining standard of living in Portland hideously more expensive, people will be attracted away to Clark County, Columbia County, Indianapolis and Atlanta. You can’t pay them to stay.
Demographia | Wendell Cox Consultancy – St. Louis Missouri-Illinois metropolitan region
Visiting Professor, Conservatoire National des Arts et Metiers, Paris
New Books & Publications
WAR ON THE DREAM: How Anti-Sprawl Policy Threatens the Quality of Life
Information & Orders:
DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY SURVEY (http://www.demographia.com/dhi-ix2005q3.pdf)