Posted Mar 4, 2016, 5:29 PM
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Post office deal offers massive windfall for developer
By Brad Schmidt | The Oregonian/OregonLive
on March 04, 2016 at 5:01 AM, updated March 04, 2016 at 7:42 AM
http://www.oregonlive.com/portland/index...fice_deal_offers_massiv.html#incart_2box
Quote:
Portland's plan to revive a dozen city blocks in the Pearl District hinges on moving the main post office to a sprawling field near the airport – and paying double what that property is worth.
The land, 5 ½ miles from the Pearl, has an estimated value of $17 million to $20 million. But the city has agreed to pay way more: $34.7 million.
City leaders could save taxpayers millions of dollars by condemning the property and paying fair market value. But officials say condemnation – essentially seizing the property – is politically impractical. Instead, they have agreed to pay a massive premium to secure the rare 47-acre parcel of undeveloped industrial land.
If the deal moves forward, a Texas-based development company stands to make a huge profit. Trammell Crow bought the industrial site in 2014. The parcel was once part of the former Colwood National Golf Course but had been rezoned to allow for business development.
The purchase price: $6 million.
Details of the complicated land swap, and Trammell Crow's windfall, haven't been made public until now. They offer new insight into the fine print of what may become Portland's most expensive urban renewal project in city history.
"Nobody should be making a six-fold profit in a matter of years," said Bob Sallinger, conservation director for the Audubon Society of Portland, which reluctantly supported the now-significant zoning change that protected the rest of the golf course from development.
But shifting the post office from one location to another, without adding new industrial jobs, amounts to a bait and switch to benefit Pearl District redevelopment, Sallinger said. "It's the environment that pays the price, it's the developers that walk away with a big pile of cash and it's the public that gets screwed."
City leaders defend the deal. They say it needs to be reviewed in full context.
To pull off the land swap, Portland will pay the U.S. Postal Service $88 million for its Pearl District campus. In turn, the federal agency will contribute an additional $69 million to buy the airport land and build a new facility. That adds up to a total of $157 million.
The post office's $157 million project includes the cost of upgrading the property, building new facilities and installing new equipment. Land expenses of $34.7 million represent less than a quarter of the total project cost.
And moving the post office to a fallback location in Troutdale would cost just as much, according to city estimates. Meanwhile, other potential but undisclosed locations weren't ideal for the post office, said Patrick Quinton, executive director of the Portland Development Commission.
In the end, Portland officials will get the prime property they've wanted for decades – 13.4 acres in the Pearl District, which later will be resold to developers who will build apartments and offices. Officials expect to recoup their $88 million investment when the land is sold.
"This is one of those historic moves that really makes sense for us as a city," Portland Mayor Charlie Hales said. "It also has to work as a real estate deal. And it does."
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