What City Observatory Did This Week
The Business Climate is “terrible”–so what’s new, and who cares. For years, local businesses have been complaining about Oregon’s business climate–but businesses always complain about the business climate pretty much everywhere. Even though three-fifths of the state businesses told survey researchers that the state’s business climate was bad and getting worse in 2018, over the past decade or two, the state’s economy has continued to out-perform the nation. Productivity growth ranks seven in the country since 1997, per capita income, as a percent of the national average is now as high as it has been in the past two decades.
Brookings Institution ranked three of the state’s four metro areas among the top ten compared to their peers in prosperity in its 2026 Metro monitor. Oregon was even a net gainer in business relocations according to the latest BLS data. Businesses will always complain about taxes they pay and regulations they obey, and assume that they have it worse than businesses in other states–they’re sure the grass is always greener. But perceived business climate has little to do with having a successful state economy.
How should Portland pay for streets? Let’s not tax houses to subsidize cars, especially non-resident’s cars. Once again, the City of Portland is saying it doesn’t have enough money to maintain or repair city streets, and just as a decade ago, officials are floating the idea of a flat monthly household fee. It’s a bad idea. The fee bears no relationship to how much demand households place on the street system, and loads none of the cost on those who drive from outside the city. A majority of those working in Multnomah County live in other counties, meaning that much, if not most of peak hour commute traffic is non-residents, who would pay nothing.
In addition, thousands of out-of-state cars are parked on city streets every day, not to mention permanently parked vehicles with expired registrations, or no plates at all. Instead of a flat household fee, it makes more sense to raise the gas tax (which directly corresponds to driving and damage to streets) and implement a system of charging for using the streets to store private automobiles.
The Trail Blazers’ $600 Million Shakedown Has a Legal Name — Two of Them. Extortion is a crime, and what new Blazer owner Tom Dundon is running arguably violates both antitrust law and the federal RICO statute. The NBA’s deliberate restriction of franchise supply — coordinated among 30 separately owned teams — pits city against city, extracting public subsidies that shift costs to taxpayers while profits flow to owners. Oregon, Portland, and Multnomah County, all financially strapped, are handing a Texas billionaire $600 million while Dundon contributes nothing to the cost of modernizing the Moda Center.
Two laws offer recompense. The Sherman Act — which bans conspiracies in restraint of trade and allows treble damages — could translate that $600 million into $1.8 billion. RICO applies because months of private lobbying used implicit relocation threats and likely fraudulent economic projections to extract hundreds of millions from public treasuries. The Oregon Attorney General has standing to act. The question is whether Oregon has the political will to call this what it is.
Must Read
Joe Gyourko on Housing Affordability. This Brookings Institution expert has a diagnosis and prescription for the US housing market. His analysis is that we have a shortage of housing.
. . . deficient supply of new housing—not some problem on the demand side of the market—is the driving force behind the country’s deteriorating affordability conditions. . . . policy should help increase the number of new housing units delivered to the market. If that does not happen, the policy is likely to be irrelevant and possibly counterproductive.
That diagnosis leads Gyourko to recommend strongly against measures that focus on stimulating demand, such as additional subsidies to buyers, like down payment assistance for first time buyers. These demand side solutions–giving people more buying power, are unlikely to solve the affordability problem, but instead are likely to lead to bidding up rents and home prices unless supply increases. As he says
. . . trying to make housing more affordable by subsidizing demand in one way or another simply shifts out that demand along an almost fixed supply. That results in higher prices, which exacerbates the affordability problem.
Instead, the solution to affordability has to come from supply side measures, although these will take time to work. Gyourko recommends that we work to change or overcome the incentive problems associated with our system of excessive control, either by providing financial incentives to local governments to encourage more housing, or to shift more of the authority for allowing housing from the local to the state level, and by replacing discretionary approval processes with clear and objective approval standards, and “by-right” administrative approvals.
Vancouver’s First Nation’s people show how to do “Missing Massive.” More than a century ago, some of the last indigenous people were unceremoniously–and illegally–dispossessed from the last remnant of their land in Kitsilano, just across the water from downtown Vancouver. The provincial government, after decades of delay, agreed to at least partially redress that wrong by returning the land to the First Nations. With their sovereignty restored–and, critically, unencumbered by local and provincial zoning laws, the Squamish nation chose to intensely develop the land for housing.
As the Vancouver Sun reports, their first towers are nearly complete. When it the project is finished in several years, Senakw will provide 6,000 homes, nearly all of them classed as affordable, in the heart of one of North America’s most livable, and most expensive metropolitan areas. It is a signal example of what Alex Armlovich has called “missing massive” housing. Building for high levels of residential density where there is obvious demand is a much faster and more effective solution to getting more housing quickly than incremental strategies, like gradual up-zoning or allowing accessory dwelling units or duplexes in single family zones.
Data Center spending surpasses spending on office construction. Joseph Politano has a fascinating tid-bit the captures two trends going in opposite directions: the rise of AI–fueled by, and fueling changes in the workplace–and a massive decline in commercial office construction. In the latest quarter, the annualized value of data center construction surpassed the value of commercial office construction
If anything, that actually vastly understates the investment in AI; the construction of data centers doesn’t include the value of the computers installed in them, which is vastly higher. Collectively, AI-related spending, including data centers, computers and peripherals and software, are approaching $1 trillion per year. The chart seems like a metaphor for post-Covid trends, offices are emptying out, and Internet use, and especially AI are expanding. Whether this is a new epoch, or a bubble, remains to be seen.
In the News
Bike Portland published an op-ed by Joe Cortright challenging claims that Oregon and Washington have actually “downsized” the Interstate Bridge Project.