Air sale
BACKSTORY: Policy set now could decide fate of city's skyline
JIM CLARK / The Portland Tribune
Architects Gary Reddick (left) and Jeff Lamb of Sienna Architecture designed the proposed Allegro tower. A transfer of air rights from the Lloyd District to Goose Hollow helps make the high-rise possible, but many question the crosstown trade.
Hey buddy, want to buy some air?
It’s for sale throughout Portland’s central city. In fact, there’s a growing market, albeit a shadowy one, for developers who know it’s one thing to buy a piece of property, and quite another to buy the air space above a piece of property that will allow them to build larger, more profitable buildings.
In a developer’s world, the air in question is called FAR, short for floor-to-area ratio. In general terms, it helps the city define how to limit the total floor area of a building regardless of the number of stories it has.
The goal: By controlling the mass of buildings, the city can dictate the amount of light and view that filters through neighborhoods.
Land zoned for a 5-1 FAR, for example, means the total floor space of the property’s building, regardless of height, can be no more than five times the size of the property’s dimensions. It means that if builders want to build taller, they have to build skinnier. If they want to build bulkier, they have to build shorter.
What’s new in the past few years is that developers who don’t have enough FAR to construct the bulkier condominium towers they’d like have learned they can buy or transfer FAR from smaller buildings somewhere else — buildings not using all of their allowable FAR.
That’s exactly what M. David Paul and Associates, lead developer of the proposed Allegro Condominiums in Goose Hollow in Southwest Portland, plans to do. They want to nearly double the bulk of the building than otherwise would be allowed.
And as far as Portland’s Bureau of Development Services is concerned, the deal is perfectly legitimate.
But a number of people, inside and outside city government, have begun to question whether the trend is good for the city. And the Allegro, because its developers have proposed a bolder FAR transfer than Portland has seen before, has become the lightning rod for a public policy battle that could shape the city’s skyline for years to come.
Critics say the buying and selling of FAR has gotten out of hand and threatens to undo the way Portland neighborhoods are supposed to look.
“It undermines all the planning documents,” says Patricia Gardner, an architectural designer and chairwoman of the Pearl District Neighborhood Association planning committee. “It really starts messing up the look of the city and the intentions behind everything.”
The Allegro’s proposed transfer of FAR from across the city — instead of from buildings in its immediate vicinity — certainly raises the stakes for developers.
“No one has ever been so brazen as to suggest the law means what they’re saying it means here,” says attorney Jim Francesconi, the former city commissioner who currently is working for developers who own property next to the Allegro site and who want the project stopped. “We’re creating a whole market out there for developers, and the city’s not getting anything for it.”
In the life of a city the ebb and flow of development can take the form of a game of civic leapfrog. Long-range planning documents guide development, setting height limits and zoning designations. Developers familiarize themselves with the rules and push the boundaries. And then a test case appears.
Tomorrow, when the City Council considers an appeal from the Goose Hollow Foothills League neighborhood association on the Allegro plans, it will be considering one of those test cases.
Francesconi, for one, thinks the council must at least impose some sort of temporary restrictions on developers transferring FAR while a larger, more comprehensive central city development plan is considered.
“The council has to act now,” Francesconi says.
The developers of the Allegro, a 21-story luxury condominium planned across the street from Lincoln High School on Southwest 18th Avenue, want to build the most massive building yet seen in Goose Hollow.
But mass requires air rights. And the size of the condo tower Sienna Architecture wants to build requires more FAR than the property’s zoning allows. City planning documents have the site maxed out at 9-1 FAR, and the Allegro is designed at 13-1.
As of two weeks ago, the developers’ solution, approved by the bureau of development services, was to buy 50,000 square feet of FAR from a smaller building in the Lloyd District that had not used all of its air space.
In fact, the Lloyd District building, Cascadian Court Condominiums, was developed and built by the same group that is developing the Allegro. So they in essence bought the FAR from themselves.
According to Matt Sloan, one of the Allegro’s developers, when they finished the Cascadian Court in 2000 they knew the building’s unused FAR would become valuable. The developers sold the Cascadian Court within a year of building it, but made sure the sale stipulated they retained rights to the excess 50,000 square feet of FAR.
That FAR now has transferred to the Allegro site, which Allegro developers have agreed to purchase from TriMet. But an even bigger chunk of excess FAR to be used by the Allegro is being bought from TriMet, which has plenty of unused air space on another piece of property two blocks away from the Allegro site.
Until now, most if not all FAR transfers in the city took place within a neighborhood, usually among buildings close to one another. But taking FAR from one neighborhood and moving it to another has the potential to change the rules of the development game in Portland, the Pearl District’s Gardner says.
City plans envision that someday the Lloyd District, now undervalued, will become ripe for new development, condo towers and all. So property there is zoned for FAR up to an enticing 12-1. But if property owners in the Lloyd District sell off their FAR now, they may never see the development the city hopes to encourage.
“That’s really changing the lay of the land,” Gardner says. “The Lloyd District is meant to be very dense and high-rise, and you’re taking that ability away from that neighborhood and putting it in another place in town.”
Cross-town transfer got nod
Gil Kelley, Portland’s director of planning, says he has told the City Council that he disagrees with the Bureau of Development Services ruling allowing the FAR transfer from the Lloyd District to the Allegro.
But Kelley thinks the FAR transfer from the TriMet site within Goose Hollow makes sense. Allowing the Allegro to build up to its proposed size might be allowable, Kelley says, because the overall building space within the neighborhood would stay the same.
“You’re not increasing the overall density of a neighborhood; you’re shifting it around,” Kelley says.
The barrage of criticism has the Allegro’s developers reconsidering the Lloyd District transfer. A week after the Portland Tribune first talked to members of the development team about the issue, they said they would be willing to drop the Lloyd District transfer.
“It’s not our intent to shove this down anybody’s throat,” Sloan says.
But whether the Allegro developers choose to drop the FAR transfer from the Lloyd District or not, the precedent has been set. City planners approved the deal.
The developers have been offered not only FAR by TriMet, but land for the Allegro as well. And TriMet’s bottom line on the deals — one deal for the land on which the Allegro will sit and another deal for FAR rights over TriMet land two blocks away — provides an eye-opening look at development value in Portland.
TriMet has agreed to sell the Allegro developers the land for $1. But TriMet has priced the extra FAR needed to build the condo project — which comes from the unused TriMet air space over a MAX station two blocks away from the Allegro, across the street from PGE Park — at $1.4 million. The air, clearly, is more valuable than the land.
At the Casey, views ensured
Jeff Joslin, who oversees Portland FAR transfers as land-use manager with the Bureau of Development Services, estimates that up to 24 FAR transfers have occurred over the past two years, including a number in the Pearl District, where developers have been transferring FAR among their own properties. But Joslin has no way of knowing which involved trades and which were sales.
Developer Mark Edlen of Gerding/Edlen Development Co. says his firm bought FAR on its 16-story Pearl District condominium tower, the Casey. The Casey, at Northwest 12th Avenue and Everett Street, is under construction, right next to the Bullseye Gallery.
Edlen says he wanted to ensure that someday another developer didn’t buy the Bullseye property and erect a tower that could block the view of the Casey’s residents. His solution? Gerding/Edlen not only bought the Bullseye’s FAR, but the Bullseye’s view easement as well, so that nobody would be tempted to buy the Bullseye property and buy back FAR from some other building. Edlen isn’t saying how much he paid for the combination.
The Allegro provides the first glimpse into the cost of FAR in Portland. TriMet has offered to sell its 105,000 square feet of FAR to the Allegro developers for $1.4 million. And TriMet has a great deal of unused air space it could potentially sell, according to Jillian Detweiler, TriMet senior land development planner.
But critics say the prospect of a public agency selling FAR to a private developer raises serious questions of public policy.
Preservation’s made easier
Rick Pruetz, a Hermosa Beach, Calif., specialist in the transfer of development rights, says different cities around the country have different rules governing FAR. But generally, he says, FAR selling has been used as a tool to keep landmark buildings from being bought and demolished by developers.
Short historic buildings can sell their unused air space as a way of warding off the wrecking ball. First, money from the FAR sale can be used to maintain the building. Even more critical, if a landmark building downtown sells off its FAR, it has also sold off the reason someone might want to purchase and develop it. With no air rights, the property loses its appeal as a site for a larger, more profitable building.
Daren Duke, a commercial broker at Colliers International, who brokers FAR for Portland clients, says TriMet’s selling FAR undermines the city’s goal of protecting landmarks and shelter hotels. If developers can buy their FAR from a public agency, Duke says, they won’t have to buy from the buildings that need protection.
“What’s to stop ODOT (the Oregon Department of Transportation) from transferring all the FAR from all the properties it owns under bridges and rights of way, and moving it all around?” Duke says. “If the city is going to create incentives, it has to create protections for incentives.”
Duke says one of his clients currently has 100,000 square feet of FAR rights that were retained when an old single-resident-occupancy hotel downtown was bought and renovated. His client retained the air rights and he’s looking to sell, Duke says.
As for the cost of FAR, Duke says TriMet’s price tag on the Allegro FAR sounds reasonable. “Ten bucks a square foot, that’s in the ballpark,” he says.
According to Duke, the shadowy aspect of FAR selling is at least partially intentional. “Buyers don’t want sellers to know (the FAR price) because they don’t want the price to go up,” he says. “It’s a hard-to-define market at this point.”
The intention of FAR zoning is fairly clear.
FAR and other types of zoning are meant to encourage development according to a citywide vision. The central city master plan for the west side of the Willamette River calls for smaller buildings along the river growing larger toward the heart of downtown and receding again toward the West Hills. So, for instance, some property downtown is zoned 12-1 FAR, but toward Goose Hollow 6-1 and 4-1 designations are more common.
At 13-1 the Allegro defies that overall plan. But its developers say the Allegro site is ideal for such a dense urban project — right on the MAX line. The Bureau of Development Services agreed when it granted the equivalent of a zoning variance to the developers.
Joslin at development services sticks by the bureau’s decision to approve the Allegro plans to transfer FAR from the Lloyd District. “The code reads pretty simply,” he says. “FAR can be redistributed.”
Shadow, precedent rankle
Opponents think the planned structure is very inappropriate, claiming it will dwarf its Goose Hollow neighbors.
Jerald Powell, who chairs the neighborhood association planning committee, worries that the Allegro’s shadow will cover the neighborhood. And he is concerned that if the Allegro is allowed to develop at 13-1 FAR, the owners of three other blocks nearby could be allowed to do the same.
According to Powell, four blocks at 14-1, which is Powell’s estimate of the Allegro, would add up to nearly 6 million square feet of development. Powell says the neighborhood doesn’t have the infrastructure to handle development on such a large scale.
Developers of the Allegro say their building emphasizes exactly what the city claims as its priority — urban density. Jeff Lamb, designer at Sienna Architecture, says the Allegro is likely to be the first of many such high-rises in Goose Hollow.
“It’s time this neighborhood grows up with the rest of Portland,” Lamb says. “It’s coming, and it’s going to be good because it’s going to keep people downtown and along the MAX line.”
Detweiler, TriMet’s planner, thinks the final chapter in the Allegro story has yet to be written.
But Wednesday’s City Council hearing will certainly advance the plot.
“Precedents are set in cases like this,” she says.
peterkorn@portlandtribune.com
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