Am I alone in thinking that this seems like good news, if only because it seems like the last thing you want across the street from your brand new urban park is a hulking multi-story parking garage (regardless of whether or not it is a podium for a tower or two)? And especially if the cash-out results in the affordable housing on Block 49 going forward?
OHSU delays parking lot, scraps affordable housing
By Ryan Frank, The Oregonian
December 06, 2009, 5:00PM
Amid a financial crunch, Oregon Health & Science University is close to a deal with the city of Portland to again delay construction of a big parking garage in the South Waterfront District.
The agreement would also scrap a proposal for two affordable apartment towers above the garage. The apartments had been central to the city's push for lower income housing in a neighborhood dominated by expensive condos.
As part of the new deal, the city could lose one-third of the $6 million it spent on the proposal so far.
Lew Bowers, central city division manager for the city's urban renewal agency, said his goal is to quickly cash out the taxpayers' investments in the site -- known as Block 33. The money the city recovers in the deal would go toward the construction of a separate affordable apartment project down the street, Bowers said.
"It's the best deal we can get at this point in time," Bowers said.
The board of the Portland Development Commission is scheduled to approve the deal at its Wednesday meeting.
The delay is another setback for South Waterfront. The neighborhood has battled cost overruns, delays and a crippling recession since 2005.
The parking garage was a small piece of the $2 billion real estate deal that launched South Waterfront's development.
In 2003, then-Mayor Vera Katz and the Portland City Council endorsed a plan to turn a largely vacant former industrial district into a riverfront high-rise neighborhood.
City Hall pledged local, state and federal tax money to build parks, streetcar tracks and an aerial tram. In exchange, OHSU and investors led by Homer Williams agreed to build medical offices, condo towers and apartments.
OHSU was originally supposed to start building the garage at Block 33 in 2005 to serve its expansion from Marquam Hill into South Waterfront.
The city, under pressure from housing advocates, wanted to use the garage as a podium for the neighborhood's first affordable housing towers.
The 2003 agreement required OHSU to build the parking garage only if it could afford it.
But Mark Williams, who has led OHSU's South Waterfront development, said the university couldn't afford the garage in 2005 and can't afford it today. It was estimated to cost about $75 million, with 1,100 parking stalls.
OHSU also hasn't needed the garage. The university, which has battled financial setbacks, delayed its expansion into South Waterfront after its first tower, the Center for Health and Healing.
City pays toward garage
Despite the delays, the Portland Development Commission has spent $6 million to nudge the garage along. That money came from property tax revenues.
It included $3 million the commission paid OHSU in 2005 to reserve parking spaces for the future apartment renters. At the time, the League of Women Voters of Portland, a watchdog group, criticized the payment as payback to OHSU for covering most of the budget overruns on the aerial tram.
Before the commission could build apartments above the garage, it had to buy control of the air rights -- that is, the right to build into the airspace over the site -- that Williams' group, North Macadam Investors, had purchased previously. In 2006, the commission paid Williams' group $3 million for those rights.
The city made the deal despite an appraisal that valued the air rights at half that amount, $1.5 million. A more recent appraisal done for the PDC pegged the value of the rights at $1 million.
Repayment plan?
As part of the new agreement up for a vote Wednesday, OHSU would repay $3 million to the city over the next year. That refund includes no interest accrued since the city made the payment four years ago.
The city will also sell the air rights to OHSU for $1 million in credits toward future transportation system development charges.
Those two payments will provide the commission $4 million back on the $6 million it has spent.
If OHSU happens to sell Block 33 in the next five years, the city would also collect 10 percent of the profits.
Despite the delay, Bowers said, the OHSU parking garage will probably get built at Block 33.
"There will be a need for additional structured parking," he said. "The timing on that is fuzzy because of the financial markets."
-- Ryan Frank
Prev
Linear Mode
