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PSU, Hales wrangle new renewal deal

City redraws districts; university will get millions in subsidies


by: TRIBUNE PHOTO: JONATHAN HOUSE - PSU spokesman Scott Gallagher talks about future plans for the lot where the University Place Hotel is located. The four-acre parcel is the centerpiece of an alternative plan for urban renewal near PSU. PSU urban renewal is getting a redo.

Gone is former Mayor Sam Adams’ vision of using urban renewal to subsidize an EcoDistrict, energy efficiency projects, and the Oregon Sustainability Center, among other projects.

In its place: a more traditional vision by successor Charlie Hales, focused on spurring real estate development of PSU properties along the MAX light-rail line and the university’s eastern boundary. The centerpiece is the University Place Hotel south of Lincoln Street, one of four PSU properties that could be redeveloped along Southwest Fourth Avenue.

When Hales announced a major initiative in February to redraw the city’s urban renewal districts — and put more property back on the tax rolls — Portland State University President Wim Wiewel dug in his heels at Hales’ proposal to scrap the fledgling Education Urban Renewal Area conceived by Adams. “I made it very clear that I thought it was a terrible idea,” Wiewel says.

But now the PSU president says he’s “very pleased” with an alternative development plan negotiated with Hales’ staff and the Portland Development Commission, the city urban renewal agency. Wiewel says he foresees no problem agreeing to a final deal by fall, which could clear the way for Hales to win final City Council approval for his broader plan to nix two urban renewal districts, shrink two others and expand two others, to take advantage of new development opportunities on the downtown waterfront and inner-east side.

Adams’ Education Urban Renewal Area adopted in 2012 would devote $169 million over the next 30 years to the university district surrounding PSU. But only about $50 million would go to PSU-related projects — and only $12 million in the first decade — with the rest going to low-income housing, a county human services building, redevelopment of Lincoln High School, and PDC overhead.

Hales proposes to scrap that urban renewal district while expanding the existing waterfront urban renewal district to enfold some of PSU’s property. That would enable the city to funnel more than $25 million in subsidies for PSU properties.

“That ends up being a better deal” for PSU, says Patrick Quinton, PDC executive director, because that money can be spent in the next five to 10 years. Most of the money from the Adams plan was “back-loaded,” Quinton says, and the inflation-adjusted value of dollars in the new plan is about the same.

“We got what I would consider to be equivalent benefits,” Wiewel says.

Legacy at stake?

Wiewel says the very name of the Education Urban Renewal Area was significant. “It was a wonderfully symbolic message that city government had an interest in having a strong university,” he says. He also wanted to “leave a legacy” for his successors at PSU.

But much of the money wouldn’t be available until the “distant future,” Wiewel says. “I liked being able to leave a legacy, but I like being able to do some things while I’m still around.”

Aside from the environmental projects in Adams’ plan, there also were several to expand PSU buildings, which Wiewel had said were vital to cope with the university’s fast-growing enrollment.

But enrollment has been flat the last three years, easing some pressures on the university’s capacity issues, Wiewel says.

And, because of subsequent court and state administrative rulings, there’s a new sensitivity at City Hall that city property taxes can’t be spent on PSU academic buildings, because that might reduce property taxes for public schools, due to state tax limitations. The new Hales plan takes pains to note that city funds will not be used directly on PSU classrooms and other education facilities, but to expand commercial opportunities and lure new businesses.

Linking two campuses

Quinton calls University Place Hotel one of downtown’s top five redevelopment sites. Soon there will be a new light-rail stop on the MAX line being built across the street — connecting the PSU campus to OHSU’s waterfront campus — and the property is adjacent to Interstate 405 and an easy jaunt to Interstate 5. Quinton envisions office or lab space for business startups and other spinoffs, or companies that want to locate near the two universities.

“It’s kind of the hole in the doughnut between the Portland State and the OHSU campus on the waterfront,” says Scott Andrews, PDC board chairman and president of Melvin Mark Properties, a big downtown developer and landlord.

PSU bought the four-acre former Red Lion Hotel from the PDC in 2004 for $23.2 million, promising to redevelop it. At the time, PSU had a pressing need for student housing and thought that was a prime site, says university spokesman Scott Gallagher. But when PSU got around to plotting a project on the site, the Great Recession hit and crippled state funding. Meanwhile, two other student housing projects were built by private interests.

Running the hotel as a conference center and place for university guests has been a money drain for PSU.

Under the new deal, the PDC would free the university from paying $400,000 a year in lieu of property taxes for the site, giving PSU instant budget relief. The PDC also committed to provide $13 million within the next seven years, plus development assistance to help procure a mixed-use commercial complex.

A study will be completed in July on the best uses of the property, and PSU likely will put out feelers to developers this summer, Wiewel says. PSU would like to keep a smaller hotel there, but other uses might be office, retail or, perhaps, senior housing. Student housing could be developed elsewhere, Wiewel says, though it’s not being ruled out.

by: TRIBUNE PHOTO: JONATHAN HOUSE - PSU President Wim Wiewel worked with Mayor Charlie Hales to reconfigure an urban renewal district that included the university. The changes will help development in downtown while aiding campus projects.

Other subsidies for PSU

The PDC also is offering to give the university the Jasmine Block, a surface parking lot valued at $4 million southeast of Fourth Avenue and Montgomery Street. The site, leased by PSU for parking, once was intended for the Oregon Sustainability Center, since abandoned.

The PDC also agreed to acquire and hand over to PSU the Budget Rent-a-Car block, catty-corner from University Place Hotel, on the northwest corner of Fourth and Lincoln Street. That property, worth $2 million, was a staging area for construction of the MAX line, and is now fenced off and unused. Wiewel foresees using that site to redevelop and expand the university’s adjacent School of Art and Design.

As part of the deal, the city would commit to leasing 30,000 square feet of office space from PSU, or perhaps buying that amount of space. Having a rent-paying tenant could enable PSU to land matching funds from the state to build an office at the XSB block northwest of Southwest Park Avenue and Mill Street, or perhaps the Jasmine Block or Budget Rent-a-Car properties.

The PDC also is committing to give PSU at least $2 million to develop commercial space in the Fourth Avenue Building at 1930 S.W. Fourth Ave. That building includes some of PSU’s engineering classes, and Quinton hopes to lure businesses that want to co-locate with the technical programs.

There’s only one project in the original Education Urban Renewal Area included in the alternate plan, a $2 million contribution to PSU’s new School of Business on Harrison Street. The agreement specifies the money will go toward retail or commercial space, not academic facilities.

If all goes according to plan, Hales’ staff and the PDC will draw up new boundaries to expand the waterfront and inner-east side urban renewal areas and shrink those in the Pearl District and Airport Way, and bring his overall plan to the City Council for final approval this fall.

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