Friday, March 19, 2010
Post office deal nears
Officials ready to allocate $64 million to buy downtown site
Portland Business Journal - by Wendy Culverwell Business Journal staff writer
The city of Portland is ready to set aside $64 million in bond financing to buy the downtown area’s massive 13-acre post office.
The news comes a week after the Portland Development Commission extended a deal to hold exclusive talks with the U.S. Postal Service about buying the property.
If city leaders close the deal, it could provide a much-needed boost to the lagging economy. The land could accommodate a sprawling corporate headquarters and thousands of high-paying corporate jobs.
Selling the property would also allow the cash-strapped Postal Service, which faces a $238 billion budget deficit by 2020, to move to a modern facility that more closely suits its needs.
The post office, 715 N.W. Hoyt St., sits in the Portland Development Commission’s River District urban renewal area.
The agency’s primary source of funding is cash generated from rising property tax revenues in 11 such urban renewal areas.
The PDC wants to set aside $64 million in the River District urban renewal area to buy the post office site. The money would be raised between now and 2015.
Portland Development Commission officials declined further comment on the state of negotiations with the Postal Service, but said they’re hopeful the deal will get done before the new agreement expires on March 31, 2011.
A 2007 appraisal by Integra Realty Resources pegged the site’s value, absent environmental cleanup, at $45.5 million.
Under terms of the agreement between the PDC and the Postal Service, the city agreed to pay 150 percent of the appraised value of the property in exchange for having the exclusive right to bid on it.
The post office offers an “unbelievable” opportunity, said Scott Andrews, PDC chairman and president of Melvin Mark Properties, because the 13.4-acre property isn’t cut up into small 200-foot- by-200-foot blocks, like the majority of downtown real estate.
“It’s large enough to be a mousetrap to capture a corporate headquarters,” said Brian Owendoff, managing director for the Portland office of CB Richard Ellis, a commercial real estate brokerage.
That’s exactly what the city hopes to accomplish.
Although the property was previously mentioned as a candidate for a Major League Baseball stadium, that’s no longer a consideration. And given the flood of condos on the market, the city’s not interested in new residential development either.
Instead, the city hopes to market the site as a commercial hub.
Steven Shain, development manager for the Portland Development Commission, said the site could support as many as 10,000 jobs.
The property includes a 402,936-square-foot office and warehouse that serve as the mail processing hub for Oregon and Southwest Washington.
There’s also a 54,528-square-foot parking structure.
The structures could be renovated or razed to make way for new development.
Before automated equipment was installed to process mail, the Postal Service employed as many as 3,000 workers at the site. There currently are 400 to 500 employees there.
The city doesn’t want to lose the post office jobs, but rather relocate the processing center to a modern industrial site with freeway access.
“We want them to relocate in the city,” Shain said. “There are sites that work.”
Negotiations with the Postal Service formally started in March 2008 when the two sides entered an unusual agreement.
At the time, the PDC, the city’s economic development arm, placed $2 million in escrow to show its commitment to the deal.
Under terms of the agreement, the Postal Service is paid from that fund when negotiations hit critical steps.
To date, $500,000 has been transferred. The balance, which will go toward the final price, will be paid when the final deal is reached.
wwculverwell@bizjournals.com | 503-219-3415
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