Portland’s light-rail mafia: the Neil Goldschmidt machine

I’ve been researching Portland’s light-rail system. I want to know what the real financial statements are — what did it cost, what are the annual operating profits/losses including capital costs? How much money has been diverted from schools and other public services by the tax-increment financing (TIF) financing scheme? If you know a source for the answers, please comment with a link.

One persistent story I’ve come across is that the LRS and downtown high-density development was old-fashioned crony-capitalism, where property developers make a speculative profit on land and later buildings, which projects are sister-brother with the to be built light-rail service. I still don’t know how much of that story is true. This June 22, 2006 Thoreau Institute article gives more of the details Portland: A Model for How Not to Run a City, but again I don’t know how much of it is true:

Portland, Oregon likes to call itself “the city that works,” a slogan it ironically appropriated from the first Mayor Daley’s Chicago. Under Daley’s twenty-one-year reign, Chicago was known for cronyism and authoritarian rule, a tradition that continues today under his son.

Like Chicago, Portland had its own authoritarian ruler who maintained power by passing favors and contracts to powerful allies and building selected constituencies at the expense of others who were less wealthy and less powerful. But most Portlanders did not realize who this ruler was until 2004, when a scandal rocked the very foundations of the city.

(…) Though Goldschmidt became famous for “saving” Portland, all he really did — even when he was mayor — was save downtown Portland and its immediate surroundings. Which is to say that he saved and boosted the property values in those areas at the expense of both property values and taxes paid by people in the rest of the city. Goldschmidt exploited a zero-sum game: Portland was growing, but by directing growth to certain places he made a few people very rich and they, in turn, made him rich and powerful.

Which means that even old Mayor Daley was more ethical than Goldschmidt. As Mike Royko noted in his biography of Chicago’s major, all Daley wanted was power, while Goldschmidt, the former reformer, wanted both power and money. Now that he has lost his power, the schemes by which he and his cronies gained their money are revealed for everyone to see. This may help bring down the entire planning hierarchy that Portland has touted to the world for so many years.

The above article does not have an author citation, so I will assume it is by Randal O’Toole, author of Gridlock, a researcher who has evolved to be an anti-planning advocate. Another related O’Toole article is Debunking Portland The City That Doesn’t Work.

(…) For Goldschmidt, the big advantage of light rail was that it was expensive, easily costing enough to absorb most of the federal funds that had been allocated to the Mt. Hood Freeway and (as it turned out) much more. Rail construction also provided lots of jobs and profits for local contractors. At the time, few observers noted the irony that an urban transit technology was selected precisely because of its high cost.

I don’t know if Goldschmidt “invented” this popular strategy — it has certainly been widely exploited: transit systems are VERY expensive and thus quickly soak up the federal transportation subsidies (mostly diverted from gasoline taxes that were supposed to fund road maintenance and construction).

(…) Portland planning did not start out as a real estate scheme aimed at enriching Neil Goldschmidt and his friends and clients, but it ended up that way. Portland’s planning process was conceived by ideologues who dis- liked the automobile and wanted to preserve all of Oregon’s abundant open space no matter what the cost. It was endorsed by politicians who refused to believe, or simply ignored, pre- dictions that it would hugely increase conges- tion and housing costs. And it was manipulat- ed by a cabal of politically connected business- es seeking to divert the flow of tax dollars into their own pockets. The opportunities for such manipulation were so obvious that, if Neil Goldschmidt had not started the light-rail mafia, it would have been someone else; and if it were not for Goldschmidt’s statutory rape, many Portland-area residents never would have learned about this cabal.

The results have been a disaster for the average Portland-area resident. The light-rail and streetcar lines, vibrant downtown streets, and scenic vistas outside the urban-growth boundary may seem attractive to visitors. But residents have to live in unaffordable housing, creep along in traffic congestion, and pay higher taxes or suffer reduced urban services so that the region’s political leaders can fund their rail transit and transit-oriented development schemes.

2 thoughts on “Portland’s light-rail mafia: the Neil Goldschmidt machine

  1. You all should read a Cato Institute report written about three years ago titled “Debunking Portland” It explains the “saving” of downtown and the light rail myth.

  2. Thanks E Pat — I actually linked in the middle of this post to the report you cite “Debunking Portland The City That Doesn’t Work”. That is a great piece of work by Randal O’Toole. It’s truly shocking what has been done to Portlanders by their “rulers”.

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