The discussion at Tuesday night's Troutdale Urban Renewal Agency work session took an unexpected twist. The discussion at the meeting was to be focused on an update on prospective developers of Troutdale's Riverfront Renewal site and a discussion about possible incentives to developers. This discussion took place as planned.
Consultant Abe Farkas gave a report on his efforts to find interested developers for the Riverfront Renewal site. Farkas told the Urban Renewal Agency that he contacted 24 firms within the Northwest region, focusing on what he termed "quality developers". Of the 24 firms he contacted, several companies toured the Riverfront Renewal site. One firm spent a 1/2 day in Troutdale with their architect and engineers.
Unfortunately, nearly all the developers told Farkas they were not interested in pursuing the site at this time. Reasons given by developers for their lack of interest should be common knowledge by anyone reading the news: the current economic situation. Some developers indicated their individual financial circumstances prevented their taking on another project. Some developers indicated times were tough- so tough that they have laid off up to 30-40% of their staff.
Farkas said three companies have not gotten back to him with a yes/no verdict yet.
The discussion then moved to a sample list of economic incentives that other cities/urban renewal agencies have used to encourage quality development. (Click here to see the list).
We went through the list point by point, discussing the pros and cons of each type of economic incentive. Each type of incentive had its own unique risk/reward proposition. We didn't decide whether to pursue any of these incentives, but we asked city staff to come up with more details, specifically the financial risks to the city.
At that point in the meeting, a surprising discussion popped out. We began to talk about our negotiations with Chelsea Group, owners of the Gorge Premium Outlet Mall. The city had previously negotiated a deal with Chelsea for an option to purchase of a right of way through the outlet mall in order to gain access to the Riverfront Renewal site. (In case you aren't familiar with the Riverfront Renewal site, it's behind and directly to the east of the outlet mall. The site has no public access. It is landlocked. No public access, no development opportunities). The city already paid approximately $300,000 to purchase the option for the right of way from Chelsea. However, that option expires at the end of 2008. When we negotiated for this purchase option 18 months ago, we assumed we would have found a developer by now. But the economy took a turn for the worse.
To make a long story short, someone ( I don't remember who) asked consultant Abe Farkas if he would pay more money to extend the option for another year. Farkas said he wouldn't spend that kind of money for another year on the option, which could cost the city another $300-350,000. Farkas said the city already has the power of eminent domain. When we need the road, we can condemn the piece of property we need for the public access through the outlet mall, and save ourselves the $350,000 today.(Note:Any future condemnation would still cost the city the appraised value of the condemned property plus any legal costs.)
Although we previously used the threat of condemnation with Chelsea to get them to the bargaining table to complete a deal for the first option agreement, with no interested developer coming into play for the foreseeable future, what is the rush to spend more city money for another option? In addition, several sources, including Mr. Farkus last night, told us that during talks with developers over the past year, many of them contacted Chelsea directly to see if Chelsea might be interested in selling the mall. The sources told us that Chelsea has indicated to these developers that this particular outlet mall is one of their smallest, and least profitable.
So it turns out that some developers could eventually be interested in doing something with the combined outlet mall/Riverfront Renewal properties. If a developer came along that wanted to do this, there would be no need for the city to purchase a right of way through the Chelsea property. This scenario is (unofficially, my impression only) what the Urban Renewal Agency would like to see regarding the entire property. And why not? The current negotiated price to complete the purchase of the right of way is about $2.2 million. And Troutdale doesn't have that kind of cash to waste on something that might be unnecessary. However, if we let the current option expire, the city loses its original $300,000 payment for the option. Gone. vanished. What will Troutdale taxpayers think if we let the option expire?
An opposing train of thought also came up. There was discussion about a Troutdale developer who was "slightly" interested in the developing Riverfront Renewal site, but he/she wanted assurances that the city would actually purchase the right of way, because he/she apparently has no interest in purchasing the Chelsea property.
Why not bring this developer to the table now and tell them the time is now to fish or cut bait? Come to agreement before the city's option for the right of way expires, and the city will agree to buy the right of way. But the clock is ticking. December 31, the option may vanish.
These are the options on the table for the Urban Renewal Agency/City Council to consider between now and December 31:
Let our option expire. $300,000 of the city's option money gone without anything to show for it. But save the city another $300,000 by not renewing the option. Then doggedly track down all potential leads, however long it takes, and successfully close a deal with a developer who wants to develop both the outlet mall and the Riverfront Renewal site together, saving the city the $2.2 million purchase price for a no longer needed public access through the outlet mall. If necessary, the city could still go through eminent domain to purchase public access through the outlet mall if the chosen developer didn't want to include the outlet mall property in the project.
Or renew the option for another year, for another $300,000, with no guarantee of an improved economy or an interested and willing to sign on the dotted line developer.
Or attempt to close a deal with the previously mentioned Troutdale developer before December 31st's option expiration date.
There is a lot of taxpayer money already on the table. There could be much, much more taxpayer money at risk. But there are also potential rewards for Troutdale and the the entire region. A revitalized downtown Troutdale. A public riverwalk along the Sandy River. New places to live, work, and play in our city.
Comments and thoughts are welcome. It's your money, Troutdalians. What would you like us to do with your public property and your tax dollars?