ECONOMIC TECHNICAL ADVISORY COMMITTEE MEETING RECORD

November 25, 2002 – 2:00 p.m.

Metro Regional Center, Room 370 A&B

Committee Members Present: Chair Andy Cotugno, Robert Anderson, Al Burns, Ron Carley, Cindy Catto, Brent Curtis, Rob De Graff, Eric Hovee, Greg Jenks, Tom Kelly, Gene Leverton, Patti McCoy, Terry Morlan, Noelwah Netusil, Dennis Yee

Also Present: David Crouse, Johnson Creek Watershed Council; Elizabeth Daly, Portland State University; Paul Fishman, Fishman Environmental Services; Elissa Gertler, Portland Development Commission; Mary Gibson, Port of Portland; Kelly Hossaini, Miller Nash; Jim Karlock, SanePortland.com; Steve Kountz, Portland Planning Bureau; Jim Labbe, Citizen; Mike Lehne, Real Estate Appraiser; Susan McLain, Metro Council; Liz Ohlmann, Citizen; Bonnie Sabel, Citizen

Metro Staff Present: Suzanne Myers Harold, Justin Houck, Paul Ketcham, Carol Krigger,
Stuart Todd, Mark Turpel

Andy Cotugno, Metro Planning Director and ETAC Chair, called the meeting to order at 2:08 p.m.

1.  Member Self-Introductions

Those present introduced themselves.

2.  Approval of Minutes: September 9, 2002

Chair Cotugno asked for additions, deletions or revisions to the September 9, 2002, meeting minutes. There were none.

3.  Presentation of Staff Work on Economic Ranking

Mark Turpel, Manager, Metro Long-Range Planning, gave a presentation on “Metro’s Fish & Wildlife Program: A Regional Approach to Goal 5 Economic Analysis.” A copy of his presentation slides is included in the meeting record.

Al Burns, Portland Planning Bureau, noted two map corrections to the Brooklyn Yards and Albina Yards on slides 20 and 26. He had spoken to Carol Hall, Metro Principal GIS Specialist, about the errors. Ms. Hall had said that Metro had a new version of the software that did not necessarily grab all the industrial sites in the Title 4 map, which was the base map.

Mr. Turpel noted that both the Brooklyn Yards and Albina Yards were intermodal facilities. If anyone was interested, he could supply a list of all the intermodal facilities in the region. The intent was to capture all the intermodal facilities, as they were at the highest tier.

Patti McCoy, Columbia Corridor Association, asked if there would be opportunities to review the maps and submit map corrections.

Mr. Cotugno said yes, this presentation was intended to address methodologies and principles, not corrections. He noted that the methodology described in slide 32, “Creating a Density Surface,” was fundamental to the rest of staff’s work on economic ranking. The methodology was intended to reflect the economic importance of an area, and was a way of describing the economic importance of nearby undeveloped resource land.

Justin Houck, Metro Associate Regional Planner, continued the presentation.

Mr. Burns said the economic data driven approach would seem to overrate the central city because of its built form of office towers and structured parking. There were very important facilities located on the city’s edge, but they were more campus-like with surface parking and landscaping. It seemed that employment density per acre would discount the very real value of industry clusters in outlying areas.

Ron Carley, Audubon Society of Portland, asked if payroll density could be translated into average wages per capita for an area, in order to distinguish between minimum wage and livable wage jobs.

Mr. Houck said he thought he could, but was not sure how at this time. He would look into it further. He noted that locations in which a number of jobs were concentrated would show up as high points on the map, even if the jobs were relatively low in wages, and vice versa.

Gene Leverton, Gene Leverton and Associates, asked if the payroll and employment information was based on place of work or headquarters buildings.

Mr. Houck said he used both because it was not always possible to discreetly map jobs. For example, jobs at the airport were distributed over a large piece of land, however the airport had one address. Wherever possible, staff tied the exact payroll to the location of the employee. In the case of the Portland School District, only one number was reported so staff assumed a split among all the locations.

Mr. Burns said the land and improvement value map (slide 35) made more sense intuitively, but ignored public infrastructure such as marine terminals, airports, railroads and freeways. These were massive public investments worth billions of dollars.

Greg Jenks, Clackamas County, said he had argued for the creation of a land and improvement map. An old rule of thumb in determining the economic importance of primary industries was to look at the investment to employment ratios. He agreed with Mr. Burns’s comment that public infrastructure was not valued under any of the scenarios. Was there a way to overlay the land and improvement values map on the number of employees map? That would yield an investment per job number.

Mr. Houck said yes that would be possible. Staff had not yet done a comparison directly between those two maps.

Ms. Catto said she was surprised that the Columbia Corridor values were not higher. The area was comprised of concentrated, high-value industry.

Mr. Houck said the lower ranking could be partially explained through edge effect from the Columbia River. Another reason could be that the industry in the Columbia Corridor was fairly land extensive.

Ms. McCoy said the committee needed to look for other ways to value the economic contribution of places like the Columbia Corridor.

Mr. Turpel there were two problems with the economic data driven approach. One was the issue raised by Ms. Catto and Ms. McCoy. Another problem was that industrial vacant lands were potentially downplayed.

Mr. Houck agreed and added that the map showed a snapshot in time, rather than the land’s potential.

Ms. McCoy asked if it would be double counting or whether it would be valuable to overlay the value of public infrastructure, such as transportation corridors.

Mr. Houck said he thought the public infrastructure information was incorporated into the land use map. He said Ms. McCoy raised a good concern.

Mr. Burns said a good proxy for tax-exempt infrastructure investment might be to run just the value of the land without improvements. That would address the problem of mapping potential value, and public investment would probably be reflected in the increased value of adjoining lands.

4.  Committee Discussion and Recommendations

Mr. Burns asked to call on Steve Kountz, Portland Planning Bureau, to share information with the committee. Chair Cotugno agreed.

Mr. Kountz spoke in favor of using the land use classification system rather than the payroll, employment and land value classification system. One significant way of looking at economic value would be to look at the region’s economic base. Traded sectors were firms that competed nationally and in global markets, and could be located in Portland or elsewhere. Theoretically at least, they tended to drive long-run economic growth in the region. Many traded sectors were industrial, and the payroll, land value and employment classification system seemed to underemphasize industrial land because the sites were larger and had lower land values.

Chair Cotugno noted that staff had attempted to map traded sectors at the last meeting. If the committee would like staff to revisit traded sectors, he would like direction on which classifications to categorize as traded sectors.

Mr. Houck added that the general distribution of traded sectors generally looked like the distribution of employment.

Mr. Kountz noted that West Hayden Island was a potential future facility that was shown on the map as having almost no economic value. However, it held very strategic economic value to the region because it was the only marine terminal site larger than 100 acres.

Chair Cotugno said the site ranked low on the economic value map because there was nothing there and it was not near any facilities. Its value in the land use scoring system was due to its underlying zone as rural, even though its 2040 design type was a mixture of industrial and greenspaces. The question was whether that site should be treated as industrial zoning that was not reinforcing central city, or if it should be treated as industrial zoning that was an industrial sanctuary. The two different scenarios would yield opposite scorings.

Mr. Carley added that there was a facility in Port Vancouver that was perhaps equally suitable as West Hayden Island, with less impact on natural resources. The question was how to best show the value of future potential.

Mr. Leverton said he liked the combination of land use and economic data. Looking at just one or the other resulted in sites being omitted that had great value according to the marketplace, such as the widening of Highway 26, the addition of a new substation in Beaverton or Hillsboro, and improvements to the airports. The land use classification system seemed to be one way to pull those factors back into the valuing process. From a market perspective, the land use approach also recognized the value of the Columbia Corridor and the industrial land along the Willamette River going north from downtown.

Brent Curtis, Washington County, noted that people were anticipating the upcoming changes to the urban growth boundary and beginning to make economic choices.

Mr. Houck agreed and noted that one limitation to the approach was that it used the assessors’ database, which did not reflect current market value in some areas.

Eric Hovee, E.D. Hovee and Company, said he preferred the combined approach, but it led to anomalies such as the Central Eastside Industrial Area. He recommended using a system that recognized existing investments. For example, they could compare the employment and density model to the land use model, and decide which model produced the best score for a particular area, either in terms of present value or potential value.

Mr. Houck asked if he meant weighting each approach equally and then taking the best score, rather than the sum of the scores. Mr. Hovee said yes.

Mr. Curtis said it seemed that the economic data approach, by its very nature, was based on data from this point of time. The land use approach was an approximation of what the region expected would happen. He thought they could go back 20 years and get the economic data (employment, payroll, tax values) and compare the region then and now. This would demonstrate where the economy had emerged and interject a temporal notion. While the central city would not change very much, the suburbs would show tremendous change. Perhaps there was some way of analyzing the larger land use trends, such as the movement away from industrial use in the Central Eastside. He did not want the analysis to lose the importance of what had really happened to the economy over the last ten or fifteen years. Another way of looking at it was the importance of vacant land versus industrial refill land. Where were high-payroll density jobs really created? In his opinion the land use plans had worked: a lot of shaping of the economy had occurred in the region. While they knew what was important and what they wanted to say from a policy point of view, he was afraid the same realization did not exist from the economic point of view.

Ms. McCoy noted that economic data had changed dramatically since yearend 2001. In the Columbia Corridor alone, there were 12,300 less jobs now than a year ago. While the Columbia Corridor was worse hit than most areas in the region, 12,300 jobs out of 88,400 total jobs was a significant difference.

Mr. Burns recommended using the land use method because the economic approach double or triple counted the value of the central city. The economic approach also ignored the way the region’s economy actually functioned. Something like a warehouse and distribution facility or a power substation might have low job density or low land value, but without it the economy as a whole would not function. The model also did not capture the value of public investments. From what he had seen today, any economic adjustments to the land use model resulted in a worse model. One approach that might work would be intermodal transportation facilities and just the land value. The best approach might be the one used in the habitat inventory, in which an objective ranking scale captured 80 to 90 percent of the valuable resource land, and was then supplemented with a separate database to add important areas that were missed. The economic data approach might work best as a supplement to the land use value approach.

Chair Cotugno explained that with the natural resource mapping, they used ecological characteristics to produce a score. They then added specifically delineated areas, called Habitats of Concern, that the basic methodology had not adequately identified.

Mr. Leverton said he preferred to modify something, as Mr. Burns suggested. However, would the decision be more defensible and easier to understand if they protected all the areas that were identified as valuable in each approach, rather than adding on a long list of places they thought were valuable?

Chair Cotugno said the weakness of taking “all of the above” was that it would not provide very much gradation. They needed to provide gradation because they had varying degrees of economic importance that needed to be compared against varying degrees of natural resource importance.

Mr. Morlan questioned at what point they should stop trying to refine the regional measures and leave it to the sub-watershed analysis. They could try every possible permeation of measures, but at the sub-watershed level, exceptions would still need to be made.

Mr. Turpel said if there was interest in the land use model in particular, staff might need to return with a more detailed land use model. For example, employment areas were shown at the third level, but there were some employment areas that might need to be elevated. Staff could return to ETAC with a matrix to establish land use values and ask if the committee agreed that the approach made sense on a regional basis.

Mike Lehne, Real Estate Appraiser, said today’s entire presentation and discussion focused only on commercial and industrial property. However the majority of the property affected by the potential protection was residential, either vacant or occupied. He questioned the committee’s focus and noted that there was little or no resource land to protect in downtown Portland or the Columbia Corridor. He was concerned that there appeared to be no representation of the residential property owner. He understood that Metro’s challenge under Goal 5 was to identify “regionally important” wildlife and habitat areas. Perhaps it would be best to narrow the picture and simply remove the city center, airports and industrial and commercial lands from the equation, unless significant wildlife or riparian habitat abutted their parking lots.

Chair Cotugno said this was the Economic Technical Advisory Committee, which was why it had a distorted focus on the economic side of the equation. At this point, Metro had identified the location of natural resources. They were now trying to develop a methodology to evaluate conflicting use of those resources, whether for economic purposes or social purposes. Other factors, such as housing, schools, and parks, would be evaluated under the social part of the evaluation. While residential land was part of the economic importance and included in the data, it was not as important economically as industrial and commercial land. The overall picture had to cover all the bases: economic, environmental, energy and social. Metro was trying to divide it into pieces.

Mr. Jenks said the composite approach seemed to give the best picture. Intermodal facilities could be added to almost all the overlays. He would still be curious to learn the investment to job ratio, because he thought it would show the location of primary industries. However, he did not think the results would differ greatly from the treatments already seen.

Mr. Turpel distributed ECONorthwest’s review and comments on Metro’s economic ranking approach, a copy of which is included in the meeting record. He reviewed the concerns raised by ECONorthwest concerning double counting employment, compiled rankings, sensitivity analysis, time horizon, complete rankings, and overall analysis.

Chair Cotugno asked for committee direction. How did members want to conclude this discussion? Did they want to make a recommendation now, or do more testing first?

Mr. Turpel said they had heard a number of different suggestions, such as using whatever received the highest ranking. Staff could also provide additional information on the land use ranking and further investigate that. He suggested returning to ETAC with this information before asking for a recommendation.

Liz Ohlmann, citizen, said she understood that this was an economic committee and that they had a hierarchy of values and that residential land received a low score on that hierarchy. However, residential land did have some value. Was Chair Cotugno suggesting that there would be no economic analysis for single-family residential properties in the economic, social, energy and environmental (ESEE) analysis?

Chair Cotugno said no, he was not saying that at all. The resolution adopted by the Metro Council called out a special recognition that a portion of this inventory was, in fact, the backyards of single-family, developed residential sites, and that those needed to be treated differently than larger resource areas. The analysis of single-family residential properties would happen later in the overall ESEE analysis process. Anything with an economic relationship would be addressed by ETAC, and ETAC would be informed of any work occurring on the non-economic fronts, such as the social analysis.

5.  Schedule Next ETAC Meeting

The committee agreed to meet again on January 13, 2003, from 2:00 to 4:00 p.m. Chair Cotugno said he would send out an update of staff’s work in mid-December so that members could react to the work prior to the next meeting.

Mr. Jenks said he had CD-ROM copies available of a fifteen-minute video they presented at the Eastside Economic Engine Conference on November 18, 2002. The video, “The Eastside Economic Engine: Investing in a Unique Place. Clackamas County, Oregon,” reviewed the economics and demographics of the Eastside. Anyone interested in a copy should contact him.

There being no further business before the committee, Chair Cotugno adjourned the meeting at 4:23 p.m.

Respectfully submitted,

Suzanne M. Harold

Executive Office

ATTACHMENTS TO THE RECORD FOR NOVEMBER 25, 2002

The following have been included as part of the official public record: