ECONOMIC TECHNICAL ADVISORY COMMITTEE MEETING RECORD

July 29, 2002 – 2:00 p.m.

Metro Regional Center, Council Annex

Committee Members Present: Chair Andy Cotugno, Robert Anderson, Beverley Bookin (Columbia Corridor alternate), Al Burns, Cindy Catto, Brent Curtis, Rob Degraff, Mike Houck, Greg Jenks, Jerry Johnson, Tom Kelly, Gene Leverton, John Mitchell, Terry Morlan, Noelwah Netusil, Shelly Parini, Tom Potiowsky, Kelly Ross, Dick Sheehy, Grant Zadow

Also Present: Ed Whitelaw, EcoNorthwest

Metro Staff Present: Paul Ketcham, Michael Morrissey, Jeff Stone, Mark Turpel, Dennis Yee, Malu Wilkinson, Karen Withrow

Chair Andy Cotugno, Metro Planning Director, called the meeting to order at 2:00 p.m. and reviewed the agenda.

Approval of Minutes

Chair Cotugno asked for additions, deletions or revisions to the June 17, 2002 meeting minutes. Hearing none, minutes were approved as presented.

Context for ESEE work

Mark Turpel, Manager, Metro Long-Range Planning, handed out a “Summary of Goal 5 Rule Requirements for Conducting the ESEE Consequences Analysis” to provide context for Mero’s Goal 5 work and ESEE analysis specifically.

Mr. Turpel indicated that there are three basic steps to this process:

1.  Look at current and future conflicting uses

2.  Identify impacts on resources and conflicting uses (this is yet to be defined)

3.  Determine the best approach to various consequences – allowing, prohibiting or limiting uses

Review of local economic analyses

Malu Wilkinson, Metro Associate Regional Planner, provided a handout titled, “Local Government Economic Analyses (July 29, 2002)” that summarizes local jurisdiction studies that are already completed. To date, local jurisdictions have not completed a complex economic analysis as part of their Goal 5 process yet their processes have held up at the state level and in the courts. As a result, there is a very reasonable standard for this type of work. In many cases consultant have done the entire ESEE analysis rather than just a portion of the ESEE. Metro expects to be able to meet or surpass that standard.

Mike Houck, Audubon Society of Portland, said a difference between Metro’s work and that of local jurisdictions is that Metro is connecting this work to the larger 2040 growth concept, a kind of macro-level ESEE analysis.

Chair Cotugno said there is a connection to the UGB in that we have to keep a 20-year supply of land and it is Metro’s job to do that. If land is removed and “replaced” somewhere else this may have an economic impact but not the same as a total loss would have. He sees the 2040 Growth Concept as the starting point for the ESEE analysis work but now the details need to be worked out. He suggests that when there is debate in the details, we should err on the side of growth in centers and err on the side of resources in less dense areas.

Al Burns, City of Portland Planning Bureau, said a local government, when amending its comprehensive plan, does look at all the state land use goals. The bigger question is what can a regional analysis do that a local one cannot. He believes that it can provide an understanding of region-wide benefits and identification of what works well, better and best.

2040 Hierarchy

Chair Cotugno said the committee will identify the economic impact of protecting the many resources that have been mapped. After developing a scale of significance of impacts, we can begin to create a trade-off hierarchy to help develop policies about protection. This will allow for relatively consistent application of protection across the region though it will never be completely the same due to specific circumstances of given areas.

By definition, we are most often evaluating places that are defined as a resource. This usually means that they are undeveloped and “on the edges”. However, developed floodplains are included as one point on a 25-point scale (e.g. this could be a parking lot) and these would be treated differently than actual, quality resource land. There may be factual corrections to the map to account for the fact that something is really developed rather than undeveloped. In another example, a tree canopy could cover undeveloped land or low-density housing. These would be treated differently. In no case are we talking about tearing out buildings, rather about preserving or allowing other uses.

Jerry Johnson, Johnson Gardner, asked if we are trying to create a decision criteria matrix.

Chair Cotugno said yes and it needs to have economic integrity so that council can use it to make policy decisions.

Terry Morlan, Northwest Power Planning Council, asked how resource lands outside the boundary are impacted. He wonders if lands are better protected outside the boundary or inside.

Chair Cotugno said that lands would be subject to Goal 5 protections when they are brought in.

Beverly Bookin, Columbia Corridor Association alternate, suggested the committee evaluate the impact of replacement land because where it is located and/or how well-equipped it is will determine the costs associated with using it instead of the original piece. Others agreed.

Mr. Burns suggested making a simplified combined resource map before comparing it against an economic analysis.

Chair Cotugno said that Metro is hoping to complete its riparian and wildlife inventory soon. Once that is done, it may be important to simplify both maps.

Mr. Houck spoke to the question about whether land outside the boundary is more important than land within. He feels that the 2040 Growth Concept says that natural resources as important as other functions (commercial, residential, etc.) within the boundary.

Mr. Johnson asked if the social and energy analysis will have equal weight and whether it is being worked on now. He wonders if the committee will be involved where impacts overlap.

Dennis Yee, Metro Chief Economist, said staff is working on it now.

Mr. Turpel said the committee will have a chance to look at the weight of each ESEE category.

Chair Cotugno said numerical weights for the categories have not yet been established.

Ms. Wilkinson presented the “Revised 2040 Hierarchy and Economic Priorities Table”. The revisions were made based on how we want to see centers work. In order to accomplish this, various density levels were defined and assigned scores. She described the resulting map (“Preliminary Concept Map for ESEE Economic Priority Categories”) that shows scoring in a visual way. Most properties get a “C” or low density score.

Tom Potiowsky, Oregon Office of Economic Analysis, asked for a definition of economic development.

Ms. Wilkinson said it is residential, industrial or commercial land development not recruiting for new employment.

Chair Cotugno said land uses may be different if you look at local zoning versus Metro land classifications. For instance, Metro would give a high grade to high-density residential and/or high-density industrial in centers versus low-density residential or low-density industrial in the same place. The same low density could have a high score if located outside a center.

Mr. Yee thinks that a park or openspace would still be allowed in a commercial area as part of an urban renewal with high score if the commercial density is high (maybe in a center) though the zoning may be all commercial.

Mr. Houck said thank you for the map noting that it is a place to start. As we go, we can add in the areas protected by Title 3 and other layers, along with economic information.

Cindy Catto, Associated General Contractors, said economic development is a term of art. She suggested using “development” by itself instead.

Chair Cotugno and others agreed.

Kelly Ross, HomeBuilders Association of Metropolitan Portland, is concerned low-density residential always having low score.

Chair Cotugno asked if he means we are missing the value of residential homebuilding as an industry (jobs, industry income, etc.). He feels the analysis should be neutral to the overall economic impact of various industries but there will be different scores based on how densities interplay with location.

Mr. Johnson dislikes scoring being based current zoning that may not be the highest, best use.

Mr. Potiowsky said the matrix does not show economic value, rather it is meant to clarify the definitions of the zoning definitions.

Chair Cotugno said that the matrix also shows priority. When the best use currently exists, it would receive the highest score.

Mr. Yee suggested changing some “C” classifications to “A” based on this discussion.

Mr. Burns said that the matrix should remain neutral and be solely based on design types so that the highest value would go to those uses which comply with the 2040 Growth Concept (e.g. supportive, neutral, conflicting).

Brent Curtis, Washington County Planning Manager, clarified that the highest value of all would go to areas in centers and other key places identified in the growth concept.

Chair Cotugno said Mr. Burns’ concept could work if based on an underlying hierarchy to address the 2040 priorities.

Ms. Bookin asked if inner and outer neighborhoods are included. If so, then no residential area is as highly valued and that doesn’t create quality neighborhoods.

Mr. Yee said yes and agreed with her conclusion. He said the matrix may need more changes.

Greg Jenks, Clackamas County, questioned the difference between scoring on employment centers and industrial sanctuaries and why they score “C”.

Chair Cotugno said employment centers are specifically designated as such rather than just an industrial area that may have jobs. The scoring is based on the priorities in the growth concept.

Mr. Burns said there are two concepts in the matrix: what is the best fit and what is the hierarchy.

Noelwah Netusil, Phd., Reed College, suggested a second matrix that shows the economic values. To her, economic value is the hierarchy. Separating them out would help her understand the difference between the various judgements.

Chair Cotugno suggested clearer scoring to show best use (hierarchy), whether local zoning supports that (best fit). The primary, secondary, other categories are intended to show higher order importance based on the growth concept.

Mr. Kelly asked how the matrix scoring will be used. He continues to be concerned because it seems that environment will always trump residential housing and this has significant aggregate economic impact.

Chair Cotugno said it will eventually be compared to scoring of environmental, social and energy before a decision is made about what to do.

Ed Whitelaw, EcoNorthwest, said Mr. Potiowsky’s comments get to units of measure and Ms. Netusil’s get to the many variables we are trying to look at. We cannot create a formula to address all these units of measure in a way we can understand. By simplifying into composite indices that we can make sense of, we lose something and will need to find a language in common to discuss the tradeoffs associated with the impacts. As consultants they will try to define a common analytical framework that can be discussed in order to get a detailed consequences.

Mr. Johnson requested dis-aggregated matrices to show the pieces, in addition to the aggregate one. Others agreed.

Ms. Bookin said, as a point of information, that there was a comparable process on the riparian side to score the categories. She feels that a common rating system is important when we get to the next step of comparing across categories (ESEE).

Chair Cotugno said that A, B, C alone might work where A = best use, local zoning supports, B = neutral, C = best use, local zoning doesn’t support, D = conflicting use.

Gene Leverton, Gene Leverton and Associates, wonders about the scoring for industrial, specifically whether it includes the Central Eastside Industrial Center.

Chair Cotugno said Central Eastside is included in the Central City and the city zoning is industrial sanctuary. Metro would like this area to be higher density. Part of the question is what to classify as higher order of importance in term of industrial uses.

Jobs and Market Data

Mr. Yee gave a brief overview of the regional forecast and Metroscope as well as the traded/non-traded sector jobs. Metro develops the regional economic and population forecasts internally for the five county region (Multnomah, Clark, Yamhill, Clackamas, Washington) for 20 years from now. Drivers are national and regional. In addition there is an input/output factor that accounts for play between sectors. Further details were sent via email and are available on Metro’s web site.

The economic and population forecast data feed into Metroscope and allocate it to the region by census tract, a smaller geographic unit. The model converts this information into data that projects housing demand (e.g. middle income, baby boomer wants “x” housing type). The economic data is used to project demand for industrial, commercial and employment and other (medical, government) lands and to identify the need for building space. A report about Metroscope is also available on the web site.

Mr. Whitelaw asked who has read the regional forecast and the Metroscope report. Several members raised their hands.

Traded/Non-traded Sector Jobs

Mr. Yee said that a traded-sector job is a term of art. He interprets traded to be a basic industry that brings money into a region and non-traded to be non-basic. He provided a sample list of “Traded Sector Jobs by SIC” that mostly includes manufacturing and agriculture.

John Mitchell, US Bank, said he would include retail, artistic and creative industries on the list.

Mr. Yee explained that he included or didn’t include some industries in order to remain consistent with the definitions in the industrial land study which tend to be done by groupings of SIC codes.

Chair Cotugno said some industries are designated as traded because they are a higher order. Metro wants to use that as another classification, along with the 2040 design types, that would work when measuring because we measure with 4-digit SIC data whereas forecasts are done with 20 SIC categories.

Mr. Mitchell said reports he’s seen show that the service industry is expected to grow in the long term and that doesn’t seem to be reflected here. Portland is often different that other parts of the nation.

Mr. Burns had similar questions asking if codes “39 and up” are traded goods while “40 and below” are traded services.

Mr. Turpel pointed out a map that shows the location of traded-sector jobs. He suggested distinguishing between growing, stable and declining industries in case there is a need to protect some more than others did. For instance basic industries that are growing may be the best to support/protect.

Shelly Parini, City of Gresham, supports the idea of sound definitions about economic development and other terms. She said the list needs to include emerging industries. She wants to see the committee keep job generation as a key factor in economic development.

Mr. Jenks asked for a second look at several categories as fitting the definition of traded sectors. He suggested other industries that should be considered for inclusion.

Mr. Yee said the list is not final. Also, all industries get included as durable and non-durable in the model.

Mr. Mitchell said there will soon be a new way of coding these jobs.

Mr. Yee is aware of this.

Chair Cotugno said there are three key questions:

1. In trying to create a hierarchy of higher and lower order to compare to environmental scoring, then is identifying traded and non-traded sectors a way to do that?

2. If the answer to #1 is yes, then what are the key traded and non-traded industries to consider?

3. How do we define what belongs in the traded sector category?

Mr. Whitelaw said that basic/non-basic is a short-run concept where the forecasts are for the long run.

Mr. Mitchell said other factors, related to sales or other taxes, will also be important to consider.

Mr. Burns asked if we can identify the industries that bring wealth into the region versus those that just move wealth around.

Mr. Whitelaw said that it might be possible if a time frame were identified.

Mr. Johnson and others said it would still be difficult with only that information.

Mr. Whitelaw said we do have information about how wealth-building industries will act once they get into the region. He is not sure it is important to name those industries by SIC code or by name.

Ms. Bookin said naming them would be helpful for an economic development plan (e.g. attracting one industry over another) but not for the purpose of determining what to protect or not protect.

Mr. Burns asked how this relates to multipliers.

Mr. Jenks said traded industries tend to have higher multipliers. He agrees with scoring those as higher order but is not sure how to show the economic impact. He doesn’t feel SIC codes or key industries will work.

Mr. Burns feels key industry identification will lead to conflict over who is on the list.

Chair Cotugno said if we have a hierarchy designed around 2040, the highest level will always be important. The key will be to place value on something that is lower order as it relates to 2040 but yet it supports an important industry. For instance OHSU is outside central city so it is scored low but it is important.

Mr. Johnson said the status of OHSU (or any other current industry) could change in the future.

Mr. Whitelaw said part of what should come out of this process is a way to learn, to develop criteria to use in future work.

Ms. Catto said that the “important jobs” (traded sector or whatever we call them) are important in the employment centers because there is not an industrial or commercial zoning that is already valued. That is where we have to somehow identify important jobs.

Mr. Burns said we cannot just look at conflicting uses in zoning, we also need to look at transportation.

Mr. Mitchell said traded and non-traded sector industries tend to come in pairs.

Ms. Parini said that one feeds the other and asked how we can rate one more highly that the other.

Chair Cotugno said this is true of the environmental scoring as well.

Consultant Scope of Work

Chair Cotugno said staff has revised the consultant scope of work and the overall framework for the ESEE analysis. The consultant contract has been signed through the methodology portion.

Mr. Whitelaw reviewed the “Draft Outline of the ESEE Report” with the group, stopping for questions. EcoNorthwest will interact with staff as they draft each chapter.

Chapters 1 and 2 deal with launching the process.

Chapter 3, Purpose of the Analysis, indicates a two-fold purpose: to address the economic analysis portion of the work and to help create a framework to address the tradeoffs between the various categories (technically sound and jargon free). None of the categories (ESEE) can be viewed as totally independent but rather as pieces of the whole.

The method for economic analysis will be to trace out the impacts which will go both ways (impacts on economy by environment and vice versa). In order to complete this “allow”, “prohibit” and especially “limit” will need to be fully defined.

The kinds of things that will result from the analysis will deal with the two-way relationships between resources and housing and resources and jobs. Various criteria will help to address tradeoffs as the process proceeds (see lists on pages 2-3).

The length of the planning horizon impacts the determination of resource protection being better inside or outside the UGB. They will rely on the professional literature to determine what others have done and to help establish a local scheme for making the decisions around this issue.

A short-term versus long-term viewpoint impacts the UGB question and the traded versus non-traded sectors issue. EcoNorthwest’s job will be to make the issues clear when it is critical to decision-making. The committee will need to define over what time period the consultant is to identify consequences.

The literature review is meant to inform each section of the work and is it not as limited as it may seem in this draft.

Chapter 4 deals with regional recommendations and will be written jointly.

Chapter 5 addresses sub-watershed analysis. To do a site-by-site analysis would be time-consuming and cost prohibitive and it would be hard to interpolate the results to the whole region. The reverse is also true but a regional framework (while not able to be applied to specific areas) will be useful in regional decision-making.

Mr. Leverton asked how sub-watershed is defined. He suggested using the economic priorities on the map as the basis for a sub-analysis.

Ms. Wilkinson said the analysis will be two-tiered:

1.  All economic priority areas will be treated the same (e.g. burgundy or lime green)

2.  Economic priority areas could be treated differently based on location, then criteria would be developed to meet that need for special circumstances

Mr. Curtis said that the Tualatin Basin is charged to look at smaller parcels. That information can feed this process and vice-versa.

Mr. Burns said this level of detail is similar to habitats of concern so maybe we will end up with developments of concern.

Mr. Johnson said this is a kind of manual override function.

Mr. Burns cautioned that doing a parcel by parcel analysis can lead to bad decisions, it is often better to look at groupings.

Mr. Curtis, speaking about economic relationships, said that the 2040 Growth Concept has made value judgements about growth and forecasts based on that. He wonders if this will really happen. He feels the long run we are working with is 20 years (to 2040). He wonders about the relationship between the high tech industry and how these choices impact that industry here. Mr. Whitelaw said he will look at this.

Chair Cotugno said we did not hire EcoNorthwest to look at the larger questions of how much industrial land we need or where we expand the UGB.

Mr. Whitelaw said there are both benefits and costs to each choice but it is probably impossible to determine the net effect.

Mr. Curtis said they know a lot about the high tech industry – where they came from, what their needs are, how they relate among themselves and what makes them want to stay. There are important sectors of the economy that will either grow and be an economic driver or not and we need to know about those to determine their relative importance.

Mr. Whitelaw is interested in looking at what industries have greater potential to last, grow and/or have a positive economic impact relative to others.

Mr. Jenks is satisfied with looking at tradeoffs but it continues the economy versus environment mentality. He would like to spend more time thinking about how to create a win/win for both but maybe the only way is in a site-by-site analysis.

Chair Cotugno said this is a good way to think about it, look for mitigation on both sides when you identify the limiting definition/solution. Maybe there is a “restoration equivalent” in economic terms.

Ms. Catto asked if looking for win/win solutions will occur in phase 3, program development.

Ms. Bookin, speaking to the sub-watershed analysis, said the analysis will be similar to that done on resources (and hopefully social and energy too) so that a final comparison can be determine what trumps what. Then the committee can develop criteria to look more specifically at individual sites using this framework as a starting place. Tualatin Basin will do one-third of the region.

Chair Cotugno said Metro will do the remaining two-thirds as an essential part of this work.

Mr. Burns asked what “site” means. Several agreed that it could be a lot or parcel or slightly larger.

Chair Cotugno said the goal is not to look at specific sites but rather at factors that can be applied to various sites.

Ms. Wilkinson said the factors for each sub-watershed (yet to be defined) will determine the size of the “site”.

Ms. Bookin said if we don’t go to the same level on economic as we did on environment, we need a mechanism for people to appeal what is happening on their property.

Chair Cotugno said the goal is to come up with a safe harbor plan as an option for local jurisdictions in addition to developing guidelines that local governments would use to create their own program at the local level. At the ESEE adoption time, there will be public input that may require map corrections and/or adjustments to the scope.

Ms. Catto asked where we are in terms of process and time line. She wonders if we are at or near the end of phase one of EcoNorthwest’s two work phases.

Ms. Wilkinson said we’re about half done.

Chair Cotugno said that work will continue to reframe materials based on committee comments. He asked when they want to meet again. In order to have materials available before the next meeting, late August is reasonable.

Ms. Catto asked if we can meet in early September so that there is time to do quality work and have a good group attend the next meeting (after summer vacations).

Members agreed to meet next on September 9, 2002 at 2 p.m.

Mr. Curtis asked if the phase two timeline can still be met.

Mr. Whitelaw said that it is possible.

Mr. Curtis asked how long Metro expects the sub-watershed analysis to take.

Chair Cotugno said we haven’t defined how long it will take because we haven’t defined the work.

Ms. Catto said that means that the program could be finalized near the end of 2003.

Chair Cotugno said yes.

Written comments on drafts provided can be given to Ms. Wilkinson.

There being no further business before the committee, Chair Cotugno adjourned the meeting at 5:15 p.m.

Respectfully submitted,

Karen Withrow