Financial
Sustainability Plan

While Advance Portland, the City of Portland’s five-year strategy for inclusive economic development, sets a course for fostering economic opportunity, its practices and funding must continue to evolve in alignment with its financial context and new strategic objectives. The agency’s primary funding tool, tax increment financing (TIF), will precipitously decline as urban renewal areas (URAs) around the city sunset over the next five years. Moreover, given the human- and business-centered nature of these challenges, Prosper Portland must continue to develop and apply a new suite of more flexible financial tools and programs. The Financial Sustainability Plan creates a framework to guide the agency’s financial and business practices in support of these strategic priorities.

In July 2018, Prosper Portland’s Board of Commissioners adopted the Ten-Year Financial Sustainability Plan (FSP), a blueprint to guide the agency’s financial and business practices in the context of declining TIF revenues and the need for more flexible resources to support inclusive economic prosperity. This new, multipronged approach aimed to fund an annual operating budget of $30 million and to maintain levels of service across Prosper Portland’s business lines.

Then came 2020, a year of public health crisis and cultural upheaval with both immediate and enduring economic repercussions. The central city, commercial corridors, and public entities at all levels experienced major economic impact. And many of the FSP’s projected income drivers diminished as well, with significant impact to Prosper Portland’s financial forecast.  Prosper Portland experienced immediate financial losses with lower property income from garages, a hotel, and ground floor retail spaces, alongside modifications of lending agreements and significantly higher property management costs. Additionally, updated development timing and other factors on the Broadway Corridor project reduced $4 million in annual revenue that was anticipated by the mid-2020’s.

In this context, the Prosper Portland Board enabled investment of reserves to maintain near-term levels of service and reevaluated the original plan’s assumptions to ensure a viable path forward. At the same time, staff continued to pursue key elements of FSP with the implementation of new loan products, pursuit of new TIF districts and dedicated returning tax increment revenue, and administrative cost containment. The result an updated Financial Sustainability Plan that was developed and adopted by the board in March 2023.

The updated framework is structured around the following four updated objectives:

  1. Leverage community-based TIF district investments to deliver on community-defined priorities and secure financial return of the dedicated tax increment funds and related assets.
  2. Optimize both public benefits and financial return of non-TIF restricted resources.
  3. Research and identify new funding sources for programmatic, operational, and capital investment priorities from public and private sources.
  4. Secure additional public resources to maintain key business lines and to deliver activities that achieve public priorities.

Staff annually review performance on these goals, which helps inform the annual budgeting process.

Prosper Portland New Business Model

Figure 1: Prosper Portland Updated Framework