Developer seeks tax relief again for new housing

Downtown Trammell Crow plans a new condo tower and resubmits an earlier idea
Tuesday, October 25, 2005
RYAN FRANK
The Oregonian

Trammell Crow Residential is charging back into the dicey world of Portland's public-private real estate deals.

In August, the City Council turned down the company's bid to use a property tax waiver to build a high-rise apartment building in the South Waterfront district.

On Wednesday, the company will go before the Portland Development Commission seeking its OK to use public subsidies to plant a 26-story condo tower in a part of downtown where affordable housing rules.

Trammell Crow and the commission hope the 160-unit tower will draw investors focused on the Pearl District south of Burnside Street and onto the waterfront. If it all goes as planned, the project would knit together downtown's retail core with a planned revival near Saturday Market's site, said John Warner, senior development manager at the Portland Development Commission.

For the $48 million Oak Tower, this would be the project's third concept since the development commission bought the quarter-block site in 2002.

"It's a catalyst site for the neighborhood, so we stuck with it," said Tom DiChiara of Trammell Crow Residential Development.

It started as a mixed-income housing tower with some market rate and some affordable apartments. Earlier this year, the project called for a market rate apartment tower with $3.3 million in public subsidies and a 10-year property tax abatement. That included a $1.5 million loan from the commission.

The subsidies proved too costly, Warner said. So, under the new proposal, the tower would be for-sale condos and wouldn't require a loan from the commission.

The subsidy would be $500,000 to demolish the old jail on the site and clean up contaminated soil. The commission also would donate the land, which it bought in 2002 for $1.2 million.

The land donation is tied to an appraisal this summer that valued the land at below zero, given its requirements for high-density construction, among others. The appraiser said the cost to buy the land and build the tower would exceed its value at the end, Warner said.

Another sticking point: A third party owns the rights to 36 parking stalls underground. Trammell Crow Residential plans to buy the underground parking, plus the bottom floor of a next-door parking garage, for $3.5 million, DiChiara said.

The building's narrow design would be one of the first "point towers" in the city. The architecture is common in downtown Vancouver, B.C. Its floors would cover 8,000 square feet. That's compared with the traditional slab towers with floors of 20,000 square feet.

With the Oak Tower set for a vote Wednesday, Trammell Crow Residential also is pushing again for a tax waiver on its South Waterfront apartment tower.

The council turned down the original 10-year waiver by a 3-2 vote. Commissioner Dan Saltzman, the swing vote, said the building and its 48 studios for moderate-income renters didn't provide enough family friendly units for those with restricted incomes.

Trammell Crow Residential turned in a new proposal last week, one day before the council imposed a six-month halt to the program. The new plan calls for a seven-year waiver and 32 apartments for moderate-income renters, or 10 percent of the total. That includes eight two-bedroom units, said Barbara Sack of the Bureau of Planning.

The development commission, planning commission and City Council all must approve the abatement. And all three must waive policies that require at least 15 percent of the units to be income-restricted.