Portland Mayor Ted Wheeler plans to seize an unusual opportunity to start rebuilding Portland's crumbling roads and deteriorating infrastructure.

A prime feature of the city budget Wheeler will propose Monday, the initiative would have the city issue bonds to be repaid over the next 20 years in order to spend $50 million repairing roads, parks and other projects starting as soon as 2018.

"This is what people are asking us to do," Wheeler said in an exclusive interview with The Oregonian/OregonLive Thursday. "Not a day goes by that somebody doesn't say, 'Why the heck aren't you investing in streets, projects, bridge maintenance, park infrastructure?'...People say, 'Why aren't you prioritizing these core, basic things?'"

Wheeler plans to repay the bond debt primarily with tax revenues that will be freed up as various urban renewal areas that the city has created within its bounds expire. Once such an area hits its expiration date, taxes that have been diverted to pay for improvements in the area once again flow to the city's general fund. If the mayor gets his way, that money would largely go to pay off the bonds for the project he's calling Build Portland.

The urban renewal taxes won't start flowing back to the general city coffers until 2020, however, or in big numbers until 2026. So Wheeler's budget proposal will include allocating $2 million a year of general funds to pay interest on the bond debt.

If this City Council agrees to issue $50 million in bonds, future councils will have no choice but to repay the money.

Larger payments wouldn't start until 2026—six years after Wheeler's first term ends. These would be the first payments toward the principal. His proposed bond repayment plan projects the city will spend $4.7 million a year from 2026 through 2038 to retire the debt.

City estimates show that by 2035, upwards of $47 million a year in taxes from expired urban renewal areas will flow into its general fund.

The money will come from Portland's 10 urban renewal areas, districts where the city puts a cap on the amount of property taxes it collects for its general fund and uses any taxes on top of that cap to develop the area. Once developed, the areas yield higher property taxes for the city, which is how the city justified diverting taxes specifically to those areas for a period of intense improvement.

The City Budget Office estimates the first urban renewal area set to expire, Airport Way, will return $517,000 a year to the general fund starting in 2020. That alone won't come close to covering the bond's debt payments. Larger revenues aren't expected to come in until 2024, when the River District expires and starts yielding $11 million annually for the general fund, according to city estimates.

That is why the city's proposal for repaying the $50 million "backloads some of those repayment amounts to the later years when we're receiving that revenue," City Budget Officer Andrew Scott said.

The mayor said he plans to also designate tax revenue other than bond proceeds for infrastructure investments in his proposed budget for next year.

The city wouldn't issue the bond for more than a year, but this action would lock in a "strong and dedicated source of funding," Wheeler said.

"Rather than allowing that to be spent on pet projects or the issue de jour, we want to lay out a clear strategy today that focuses on this long neglected basic investment in infrastructure," Wheeler said.

Patching Portland's many deep potholes and paving over Northwest 23rd Avenue every year is merely a Band-Aid on a bigger problem, and that's not good enough, Wheeler said.

A report released earlier this month by City Auditor Mary Hull Caballero called for greater investment in the city's transportation infrastructure, most of which the report said is in "fair to poor condition."

The city faces a $281 million annual gap when it comes to funding infrastructure improvements. Transportation requires the most investment to repair at $285.3 million.

As road conditions deteriorate, the cost of the repairing the streets dramatically increases.

Roads in poor condition cost the city around $500,000 per mile to replace, while roads in fair condition cost about $150,000 per mile, City Budget Office Director Andrew Scott told the Portland City Council at a budget work session in March.

Wheeler's envisions his proposed $50 million bond is part of a long-term initiative under which he envisions the city issues $500 million worth of bonds over the next 20 years to continue to invest in infrastructure.

The mayor acknowledged that he has no way of ensuring that future city councils continue to invest windfalls from renewal areas into infrastructure bonds. But he hopes his first such bond will demonstrate the ability it brings to fund major projects on basic infrastructure that "in the absence of this source, wouldn't get done."

Commissioner Nick Fish said he supports the mayor's proposed investment in infrastructure, but that he expects the council will debate whether to endorse future councils spending urban renewal money in the same way beyond the mayor's first $50 million bond.

Fish said he'd like to see urban renewal money allocated to affordable housing and spent on local contractors.

"I'm not giving the mayor a blank check in terms of spending all the revenue going forward, but I think he has identified a need, a revenue source and a significant downpayment in our transportation infrastructure, and I do support that."

If Wheeler's grandiose $500 million plan were to happen, the city would not have to spend more than 70 percent of urban renewal money on the proposed infrastructure bonds at any point, said Scott, the city budget officer. The rest could be used for affordable housing or other city priorities, he said.

Transportation Commissioner Dan Saltzman said that while he hasn't seen specifics on the proposal, he supports the idea.

"We have a crying need to catch up on our infrastructure needs," Saltzman said.

Commissioner Chloe Eudaly called it "promising" and said it is the right choice. "We can't continue to put off our backlog of maintenance," she said via a text. "While it's not something people are excited about spending money on, it's one of the top concerns citywide."

Commissioner Amanda Fritz declined to comment, saying she didn't know enough.

Wheeler said he's confident that the infrastructure boost will be so popular that it will put political pressure on future councils to follow through on his long term plan.

"It will be very difficult for future city councils to unravel this," Wheeler said.

Update: This story has been updated to more accurately reflect potential uses for urban renewal area revenue. It could be used for a number of city priorities in addition to affordable housing.

--Jessica Floum

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