Portland’s LRT “economic development” was buoyed by billions in subsidies
- Reality Check
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- March 15, 2012
Recently, the City of Surrey (including Mayor Dianne Watts) has pointed to Portland’s MAX Light Rail and streetcar as proof that at‑grade LRT sparks billions in transit‑oriented development (TOD). Surrey’s LRT promotional materials have even claimed Portland saw “$8 billion in development” around MAX stations, with Mayor Watts herself claiming that the number is closer to “$31 billion”.
However, a closer look at Portland’s actual development record shows that most of this growth was not caused by LRT at all—it was driven by government subsidies, tax‑increment financing, and public‑sector relocation mandates.
Portland's misleading definitions of "LRT-driven development"
Portland’s oft‑repeated development numbers were not based on verified cause‑and‑effect. Instead, they are often total numbers in the amounts of any type of development built nearby—with no defined relation between this value and whether it was caused by transit or not. A policy analysis by the Cato Institute found that a large share of development attributed to Portland’s streetcar consisted of government buildings, and not projects that were initiated by private developers.[1]
But it seems that the biggest factor behind Portland’s TOD boom was not the LRT—it was direct financial subsidy for practically every single “transit-oriented development” project that was actually initiated by a private developer.
Cato Institute also points out that the Portland Development Commission (PDC) used tax‑increment financing and federal grants to subsidize private development in designated urban‑renewal zones. Because many of these zones overlapped with transit corridors, the resulting projects were later marketed as “LRT‑driven,” even though they were funded by public money, not market demand.
In other words:
Portland didn’t get development because it built LRT. Portland got development because it paid for it out of the public purse.
As an example, for the “$2.3 billion” in development gathered by the Portland Streetcar and Aerial Tram in the downtown zones, at least $665 million in subsidies may have been granted through the PDC.[1][2]. And, on top of this, many other projects have given huge property tax exemptions and waivers by Portland City Council, possibly in order to incentivize their development.[2][3][4][5]
Why This Matters for Surrey
Surrey’s LRT advocates frequently cite Portland as a model, but the comparison breaks down once subsidies are accounted for. Furthermore, despite the billions spent on MAX, transit mode-share in Portland remains at a stand-still.
Portland’s development outcomes cannot be replicated without:
- Massive tax‑increment financing districts
- Large‑scale public‑sector relocation
- Federal and state grants targeted at downtown redevelopment
- Urban‑renewal designations tied to subsidy programs
Surrey does not have these tools—and even if it did, it would practically defeat the purpose of pursuing LRT for “shaping growth” as suggested by Mayor Watts. Instead, we should evaluate transit technology based on real performance, real costs, and real outcomes.
Following this criteria is what will enable us to shape communities—it’s why SkyTrain is so successful at doing so.
Footnotes
- Debunking Portland: A City that Doesn’t Work — p.8-9 —Myth #3: Development-Oriented Transit[↩][↩]
- Debunking Portland: A City that Doesn’t Work — p.6-8 —Myth #2: Transit-Oriented Development[↩][↩]
- Example of property tax exemption posters for LRT “TODs” in Portland — Saveportland.com[↩]
- The Mythical World of Transit-Oriented Development: Light Rail and the Orenco Neighborhood, Hillsboro, Oregon — John A. Charles, Cascade Policy Institute[↩]
- HOUSING NEAR LIGHT RAIL GETS INCENTIVE – The Oregonian, Oct 24 1996, p.29 — viewable via online archives[↩]
Pictured in header: Portland MAX light rail train crossing a road at-grade
Reality Check
Reality Check is the online blog run by the founder of SkyTrain for Surrey, a BC-based community organization that has advocated for the expansion of the Vancouer SkyTrain system, including our successful advocacy for the under-construction Surrey Langley SkyTrain extension.
Media Contact: Daryl Dela Cruz – Founder, SkyTrain for Surrey ・ Phone: +1 604 329 3529, [email protected]
