A risky shell game Portland can’t afford
The Portland City Council is being asked to advance a billion-dollar multi-theater plan it can’t afford, using money it doesn’t have to leverage limited, contingent state dollars before anyone knows what the project will actually cost or how it will be paid for. Meanwhile, there is an alternative plan that's practical, affordable and costs less than $20 million.
Portland needs to take care of what it already owns before building new things it can’t afford.
The city just cut more than $160 million from its budget and is staring down another projected $100 million deficit. It also faces roughly $336 million in deferred maintenance at existing city-owned performing arts venues, plus hundreds of millions more for the Moda Center.
So why exactly is the city taking steps to build a new 3,000 seat Broadway theater at Portland State University and renovate the Keller Auditorium with a downsized theater?
Based on two-year-old cost estimates, Portland taxpayers would be responsible for at least $450 million to build the new Broadway theater at PSU, followed by another roughly $290 million to renovate and downsize the Keller. That puts the city’s potential responsibility for the two theaters alone at approximately $740 million. Add the broader PSU development envisioned around the new theater including a parking garage and publicly subsidized hotel – and total public investment then approaches $1 billion.
Yet after years of discussions and meetings, there is still no credible, comprehensive funding plan. No current architectural design or reliable cost estimate. No market analysis proving a smaller Keller would be financially viable. And no guarantee that the Keller renovation would actually ever happen.
Yet PSU has already asked Portland for $44 million by Dec. 1.
For what?
According to PSU officials, the $44 million from the city is a "down payment" PSU needs to “unlock” $130 million in state bonds for portions of its broader campus development, including parking garages and classrooms. Those bonds do not pay for the new Broadway theater itself.
This isn’t a serious financing plan. It is a lobbying shell game with public money.
Here’s how it works. Promises of future city funding leverage state bonds. Those bonds put the larger development in motion. Talk of private fundraising adds another layer of supposed financial credibility. And with each incremental commitment, the next request for public money becomes harder to reject.
You’d think Portland would have learned the risks of this approach from the ill-fated Old Town Shoe Factory, now under state investigation.
Thankfully, some city councilors recognize the financial risks. Before giving city staff and PSU until Dec. 1 to produce a detailed funding plan, they added safeguards making clear the city has not committed to funding the project. More tellingly, several openly questioned whether Portland could ever afford it.
Those safeguards are important, but don’t solve the underlying problem. In fact, the well-intended amendments create the illusion that city staff and PSU lobbyists can continue moving ahead at no cost to taxpayers. The opposite is true.
Advancing the proposal commits city staff and resources, allows PSU to tout Portland’s support to state lawmakers and keeps an enormously expensive project moving toward taxing, bonding and spending decisions.
The city has given itself and PSU until Dec. 1 to produce answers to extraordinarily complicated questions about design, costs, financing, market demand and taxpayer exposure.
But one answer is already available. Portland is broke.
No financing scheme changes that fundamental fact. Before Portland uses one pot of taxpayer money to unlock another, it should first determine whether this is a project taxpayers should be financing at all.
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