Published: Thursday, April 14, 2011, 8:33 PM Updated: Thursday, April 14, 2011, 8:37 PM
By Brad Schmidt,
The Oregonian
Attempts by the city to buy the Pearl District post office -- what would be the most expensive project in Portland's most lucrative urban renewal district -- finally may be coming to fruition after three years of negotiations.
Redevelopment officials confirmed Thursday that they hope to have a purchase agreement ready by summer and are budgeting nearly $64 million over five years to pay for the 13.4-acre site, the largest parcel in the central city primed for redevelopment.
What's changed in the past year: Instead of the city offering the U.S. Postal Service 150 percent of the appraised value, postal officials would produce construction estimates for a building at a new site, perhaps near Portland International Airport south of Cascade Station. The city's urban renewal agency, the Portland Development Commission, would cover the cost of the new facility in exchange for the old one.
That approach, officials say, would lead to a more concrete price tag more quickly.
"I think this has real possibilities," said Scott Andrews, the PDC's board chairman.
For nearly 25 years, city leaders have salivated at the prospect of redeveloping 715 N.W. Hoyt St. because of its size and location. Major League Baseball supporters thought the site could be perfect for a ballpark, and city leaders saw its potential as an employment hub.
After years of unsuccessful courting, officials entered exclusive negotiations with postal authorities in March 2008. But a deal never jelled, and deadlines moved to 2009, then 2010 and eventually to this past March 31. That deadline came and went, and redevelopment officials now say they are extending it another year. But this time, they expect to replace the letter of intent with a purchase and sale agreement in June or July.
Ron Anderson, a postal spokesman in Portland, said he had not heard of the latest developments but noted that real estate transactions are handled out of state. "I guess we'll have to wait and find out," he said.
A purchase agreement would not prompt an immediate sale, however. It would establish another nine-month window to finalize details. And even that timeline could prove optimistic.
The biggest issue is price. When the PDC was willing to pay 150 percent of the appraised value, officials said the price accounted for future zoning changes that would make the property more valuable.
Old appraisals pegged the property at about $52.5 million, or $78.75 million after the premium, said Steven Shain, who manages the River District urban renewal area for the PDC. But that number was supposed to be reduced by environmental cleanup costs, which are unknown. And postal authorities were willing to sell only if they incurred no cost to build a new facility.
The new model calls for postal authorities to buy or option land and complete construction plans -- with cost estimates -- for a new building, expected to be smaller than the existing processing and distribution center. Then PDC officials would use that number to buy the Pearl District building. Shain said officials expect it to be lower than under the old model.
If a binding deal is reached in 2012, redevelopment officials would allow post office operations to continue for several years while a new facility is built.
The PDC originally budgeted $34 million for the post office, hoping to raise the rest with federal or state dollars. Then officials increased the district's debt capacity -- paid for by property taxes collected from growth -- from $225 million to almost $490 million, putting them in position to pay for the whole project.
Officials may be willing to spend so much because of the property's size and location. They picture the property being transformed into some sort of employment campus with accompanying shops and housing, in the central point between the Pearl, Old Town, downtown and the Rose Quarter.
"Jobs," Andrews said, "is always the big driver."
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