Prosper Portland Fights For Continued City Funding

As the city council met Wednesday in a marathon session to approve the city’s annual budget, the future of Prosper Portland appeared to hang in the balance.

It is the first such budget process under the city’s new form of government, and the now 12-member council had more than 120 proposed amendments to consider before the midnight deadline. One of the most contentious of those amendments was put forward by councilors Jamie Dunphy and Mitch Green: to defund what was formerly known as the Portland Development Commission, and which now serves as the city’s economic development and small business support branch.

“We’re just in a very tight and frankly temporary budget deficit created by the mayor’s shelter plan,” Councilor Mitch Green told The Skanner.

Jamie Dunphy (photo courtesy Portland City Council)Mitch Green (photo courtesy Portland City Council)“This is a one-time affair. Frankly, the mayor’s pitch was also supposed to be temporary. He sold it to council on the presumption that this is a surge strategy, we’re going to get folks shelter and then we’re going to get them homed and then we’re going to get them placed into services and then we’re going to scale down. My expectation is that we will restore (Prosper Portland’s) funding on an ongoing basis next year.”

But Prosper Portland, its partners and supporters argue that such a move would be counterproductive to the city’s mission of inclusive economic development. The agency’s citywide programming includes the Inclusive Business Resource Network, the Neighborhood Prosperity Network, the Office of Film and Events, My People’s Market and the new Office of Small Business. Prosper Portland also offers workforce development programs, technical and financial assistance for small businesses and initiatives to attract employers who pay livable wages.

“If we are outside of ongoing funds, we automatically are not a part of the formula that the city budget office would build for next year,” Chabre Vickers, director of equity, policy and communications for Prosper Portland, told The Skanner. “So our team now needs to also look at, how can we reasonably work with a staff who don’t know if they’re going to have a job or not? It throws everything into disarray.

Chabre Vickers (photo courtesy Prosper Portland)“Not to mention, we have multi-year partnerships with folks like in our inclusive business resource network, and we fund direct jobs across dozens of partners that come from these dollars, so they too are wondering. These are staffers that are embedded across the community that wonder if they have a job.”

Deep Cuts

The first cohort of the new city council has an unenviable task in refining Mayor Keith Wilson's $8.5 billion budget proposal, which addresses a general fund gap that could be as much as $100 million.  Inflation and a persistent housing crisis have strained the city’s resources, and Wilson’s proposals included cutting 180 positions in permitting and parks and recreation.

Dunphy and Green’s proposed amendment would end the city’s ongoing general fund allocation to Prosper Portland, which would amount to about $11 million in the coming year. Prosper Portland said that this change, alongside another $3.7 million in funding changes from the city, would mean a $14.7 million cut to their organization.

“My amendment is about asking Prosper Portland to use their savings to this year help us bridge a gap so that we don’t have to cut parks maintenance and we don’t have to cut permit issuance,” Dunphy told The Skanner. 

“I’m really worried about the permitting bureau. 

"If the economic development agency is wildly successful, we will not have anybody in the permitting bureau to go and issue the permits for those new businesses or those new apartments or whatever it’s going to be, because of the scale of these cuts.”

Prosper Portland has pushed back, arguing that business licenses contribute about $220 million to the general fund and that under Dunphy and Green’s proposed amendment, none of that money would fund support for small businesses.

Prosper Portland also took issue with Dunphy’s characterization of their strategic investment fund (SIF) as a simple savings account or, as Dunphy has referred to it on social media, a “slush fund.”

“Even if we put some SIF dollars there, the SIF corpus would be depleted as the year goes by,” Vickers said in response to Dunphy’s suggestion. “You take ongoing (financing) and replace it with one-time, and every year it continues to go down and you lose not only staff capacity and expertise, but these other programs that they’re saying are going to happen in different places – we just don’t know how they’d work that out.”

TIF And SIF

Prosper Portland oversees tax increment financing (TIF) districts throughout the city -- neighborhoods that may suffer from deteriorating facilities and lagging resources. Through this process, the agency oversees upgrades to parks, streets and community areas and centers.

TIF funds can only be used within such districts. Vickers explained that a strategic investment fund (SIF) has allowed Prosper Portland to serve the 85% of the city not in a TIF district.

“Our SIF fund goes even further than that because it allows us to make loans through our community that also allow them to purchase and acquire real estate,” she said. “So for us it really is about how we ensure that folks can get access to the market, that we can ensure that we’re utilizing all of our tools in both a responsible way and a way that I feel like is reflective of community request, and responsive to council request as well.”

In a letter to the city council, Prosper Portland board chair Gustavo Cruz and interim executive director Shea Flaherty Betin warned that cutting the $11 million general fund allocation from their agency’s budget, and asking them to make up the difference from their SIF, would mean a loss of 19 small business and commercial property loans they would normally be able to offer within the city. If the city were to decline providing general fund allocations in the future, Cruz and Flaherty Betin said the SIF would be fully spent within three years.

Dunphy had a different view.

“Those are tax dollars that should have been invested in those communities,” Dunphy told The Skanner. “It wasn’t meant to be used to continue the process of what Prosper has been doing, which is deeply unaccountable.”

Tony Barnes (photo courtesy Prosper Portland)Tony Barnes, chief financial officer at Prosper Portland, told The Skanner the SIF was funded by repayments on loans that had been given in TIFs. 

“The concept of building this TIF is that over time it was intended to take some pressure – from the increased cost to deliver programs – off of future general fund increases,” he said. “SIF allowed us to fare better.”

“Many councils in the past have asked agencies and bureaus to consider diversifying revenue models to be less reliant on the general fund,” Vickers said. “So Prosper put together a financial sustainability plan that really looked at our investment opportunities and that’s what (SIF) is built from.”

Prosper Portland reported that SIF has allowed them to fund $12 million in loans since 2023. Those 22 loans have largely been to small businesses that struggled to find financing, and include McTavish Shortbread, women’s sports-focused venue The Sports Bra, Pan’s Mushroom Jerky, Vitalidad Movement Arts Center and Javelina Restaurant, an indigenous cuisine restaurant.

Prosper Portland also reported that 64% of loans supported BIPOC business owners.

Eyeing An Overhaul?

Alongside concerns about balancing the budget, Dunphy and Green criticized Prosper Portland’s somewhat unique structure: the former development commission is run by an executive director who reports not directly to the city but to a volunteer board of five local citizens who are appointed by the mayor and who must be approved by city council.

“Prosper Portland is not our government,” Dunphy said.

“That is a separate legal government with their own volunteer, appointed board and their own governance structure, and they have told us they do not listen to us. It’s the same as if we were trying to prioritize a $13 million grant for Portland Public Schools, or to Multnomah County.”

Vickers would disagree.

“I grew up in inner Northeast Portland; my family too was impacted by what the former (Portland Development Commission) and the processes that used to occur,” Vickers said. “One thing I think is really great about our model and our board is they are in fact volunteer community members. Across the state TIF is (often) administered behind the elected mayor and/or city council. And we’ve seen, time and again, community members mention that feels incredibly opaque. And so we have, right now, a board filled with diverse folks – with regard to expertise, experience, perspective, lived experience – who are involved in economic development or small business, who are sitting on our board.

They’re Portlanders who care about our city and they help make decisions, alongside council and many different efforts.”

She added, “TIF districts action plans get vetted and approved by city council. We see it as working alongside council.”

Green explained his frustration with Prosper Portland, citing Dunphy’s assessment that the agency maintained an “arm’s length relationship” with the city.

“I tend to refer to it as a ‘lack of democratic oversight’ relationship,” Green said. “The only touchpoint I have as an elected leader to bring forth questions of accountability and oversight that my constituents raise, is through the budget-setting process, so I think that’s a problem.”

Programs At Risk

During a May 8 city council session, the council heard from a number of Prosper Portland supporters who had benefited from their range of programming or their support of partner organizations’ programs. Elena Dubrovsk, a Ukrainian refugee, talked about resettling in Portland and trying to re-establish her career in ophthalmology. Through Prosper Portland-supported programs she was able to study English, obtain textbooks and study materials for a licensing exam, pay for the exam and obtain references from her native country, she said, then quickly landed a job in her field. 

Ernesto Fonseca, CEO of Hacienda Community Development Corp., told The Skanner that the proposed cuts to Prosper Portland would mean the end of one of his organization’s successful small business programs.

“For communities of color, many of us don’t choose the path of college. So either you can be a blue collar worker, or you can start your own business,” he said. “Right now, we are serving at maximum capacity, about 53 small business owners that are graduating this year. They have been incorporated, they are doing business, they are just pulling through. (What the cut would mean to us) is that we won’t be able to welcome anybody else within the community. What it means to those individuals is that about 53 families at least, in only that one program, won’t have a chance to get that kind of help.”

He added, “I would rather see a couple of pot holes here and there than not see investment in economic development. It is one of the biggest things that we need to double down on supporting.”

The Portland City Council aims to finalize its draft of the annual budget by midnight. 

Editor's note:

UPDATE: Read a summary of the budget amendment actions here.