Urban Renewal is About Choices

I was bemused by this tweet from Sam Adams today:

This coming on the heels of the new urban renewal district (to which I was opposed) which will divert funds to schools.  

I was similarly bemused by this little piece of propaganda from the Dean of the B-School at PSU. In which he claims that investing in a renovated building is a 'good investment.'  

The expansion and renovation of the SBA is a $50 million project, and the urban renewal portion will contribute only a fraction of that total. Leveraging that $2 million from urban renewal will enable us to nearly triple our footprint, add 11 classrooms and 25 team study rooms, enhance space for student services and add space for our centers in real estate, sustainability, retail, and innovation and entrepreneurship. The innovation and entrepreneurship center -- a collaboration with PSU's Maseeh College of Engineering and Computer Science -- will spin off new technology and businesses across the region.

The return on investment is obvious. Attracting more top students and providing them with a better experience will produce better leaders. That means more alumni like Greg Ness, CEO of The Standard; Rick Miller, CEO of Avamere; Becky Gratsinger, CEO of R.V. Kuhns; and Bill Stoller, CEO of Express Employment Professionals. These business leaders make decisions weekly that create jobs and drive our economy.

Which is, of course, entirely beside the point.  The fact that it is a good investment is neither here nor there because the cost of the project is not $2 million but the forgone opportunities that $2 million represents.  There a thousands of good investments in the Portland area that public money could be used to fund, the challenge is figuring out which ones we should invest in - we don't lack for good investments.

Like, for example, art education in schools.  Which one is a better investment, art education or a renovated B-School building?  I don't know but before I rushed headlong into a new URD I would have figured it out.  Economists understand that costs include opportunity costs, the cost of opportunities forgone by undertaking a specific action.  That is the discussion policy makers should be having to evaluate the worthiness of a new URD.  That fact that Adams would push a new URD and then, a couple of weeks later lament the lack of art instruction in Portland schools suggests a disturbing disconnect.   The new URD is expected to divert about $60 million from PPS over its 30 year life.

I am a supporter of both urban renewal districts and funding public higher education.  But URD are a powerful and seductive tool for city governments who only have to think about the tax hit to themselves and not to the county or special taxing districts (like fire districts) and are at risk of being overused.  It is all about the trade offs...