Where affordability still lives

Its future looks bright with resources pouring in from nonprofits and the city. But can it rise up and still remain affordable?

Thursday, September 07, 2006
By Su-jin Yim and Erin Hoover Barnett
The Oregonian

On the southern fringe of the city, beyond the manors and sloping lawns of Eastmoreland, past the tidy hardware, video and coffee shops of Mount Scott, east of 82nd's strip-mall clutter, sits Lents.

Interstate 205 slices through it. The freeway hovers above the low-lying flood plain. The white noise of traffic drones through block after block of working-class homes. The center of the neighborhood at Southeast 92nd Avenue and Foster Road, once thriving with a pharmacy, a florist, appliance stores and medical offices into the early 1980s, is now a crossroads of hard-luck bars.

Lents is one of the city's last chances to stay affordable. Many families, including immigrants and former renters, find the inner city a place only the affluent can buy into. Lents, in other words, remains a place to save us from becoming the next San Francisco.

But change is coming to Lents, too.

A large storefront fixed up with Portland Development Commission money stands ready to lease. Trillium Artisans Center set up shop in a vintage building and boasts earth-friendly arts and crafts. A banner over a vacant lot advertises the revived farmers market. New condos are coming to the mouth of I-205 at Woodstock.

The number of burglaries, larcenies and auto thefts -- fueled by the methamphetamine trade -- was climbing until last year, when a crackdown on meth helped lower the rate. Million-dollar homes multiply in Happy Valley, the upscale Clackamas County community on the hills above, improving the pocketbook profile prospective businesses like. Light rail will roll through in 2009.

And Lents has emerged as a do-gooders' nirvana. Longtime activists in the housing arena from REACH to ROSE community development corporations have been there for years. Joining them are everyone from Americorps volunteers to a Robert Wood Johnson Foundation-funded healthy lifestyles program.

Says Noelle Dobson, who runs the healthy lifestyles program, "It's kind of like the perfect storm."

People shift in their seats, their eyes blank, their arms crossed. Some sigh. Others avoid eye contact. The back-and-forth over the neighborhood association's bylaws has taken its toll of the more than 40 people gathered in the Seventh-day Adventist church for an evening meeting.

But the change to the bylaws themselves, which a committee hammered out weeks before, isn't the issue. It is the bickering. Over who was allowed at the committee meeting. About why no one brought a copy of the old bylaws this evening. About how officers handled the process. Questions coated in distrust born of change.

Finally, Becca Stavenjord, a brand-new board appointee, raises her hand.

The twentysomething starts, her brow furrowed behind her brown eyeglasses. She isn't sure exactly what to say. But she knows this: "The last few meetings have been really frustrating. The last few meetings make it hard to show up because of conversations like this." Conversations where people lob unconstructive criticism at the board and refuse to hear reasonable explanations.

"We're all trying to make progress here," the new Lents resident says.

"The progress is too fast," Gary Sargent shoots back.

And so it goes for much of the August meeting of the Lents Neighborhood Association. The tension is just another link in a chain of frustration after last fall's elections brought in a new board, many of its members recent transplants to the neighborhood.

The split gets personal between former chairwoman Judy Welch and current chairwoman Kris Nord, who live a few blocks from each other but are miles apart.

Welch, a Lents resident for 45 years, complains that newcomers wrested power and now ignore the wisdom of longtimers. Welch still lives in the house she and her husband bought more than four decades ago for $11,375. A stay-at-home mom most of her life, she dedicated untold hours to the neighborhood association.

Nord bought her first house two years ago in Lents, desperate to get into the Portland housing market. Nord insists she only wants the best for the neighborhood but is constantly stymied by Welch and her supporters. Nord grew up outside of Salem on a hops farm her family has owned for 100 years, graduated from Oregon State University, then worked in real estate. At 32, she doesn't plan to live in Lents forever.

"I could see myself selling in a couple years and investing somewhere else," she says. "But while I'm here I'd like to help move this community toward revitalizing."

The two sides met with the Office of Neighborhood Involvement to mediate their differences earlier this summer. The mediation failed. Now, it looks as though the association is lining up in a standoff of old versus new. Later this month, the neighborhood will hold annual board elections. The current board wants at least two candidates for every seat. Welch says she and her allies also are organizing.

"We don't want them to know too much about our plan ahead of time," says Welch, who plans to run again but hasn't decided for which position. Her only official duties now are organizing an ice-cream social and Founder's Day, both ceremonial, social events, both a far cry from meatier tasks involving urban renewal funds and working with police against drug houses.

"Everything I ever did they've basically taken away from me," Welch says.

Nord says she probably won't run for chairwoman again but hopes to work on neighborhood projects. She urges those who turn out to vote not to vanish afterward.

"Don't just come to get Judy back into the chair," she says, "and disappear again."

High stakes and huge potential fan the infighting. The Portland Development Commission has recommitted to Lents, which it named an urban renewal area in 1998, and will funnel $75 million to it. Property values are rising. Homes once viewed as bottom of the barrel now list for more than $200,000. Business owners in the town center who've weathered the lows -- such as Tom Nekvapil of Wishing Corner antiques -- are suddenly thinking they should buy their buildings.

Such forces spawn fear and resentment among residents who have felt kicked around for decades -- from forced annexation and hookup to the city sewer to relocating homes to make way for the freeway -- and whose family budgets leave little slack to absorb higher property taxes or rents.

"There is a problem when people feel like they have no power," says Richard Bixby, executive director of the East Portland Neighborhood Office. "There is a sense of 'They will do what they want regardless of what we say, so why bother.' The feeling of futility is pretty present, pretty dominant."

But many argue that Lents will not become the next North Mississippi Avenue or Alberta Arts District -- areas that seemed to flip from African American stronghold to white hipster enclave overnight. Lents doesn't have the quaint storefronts on walkable streets or vintage homes simply in need of a little TLC. Plus, the presence of the Johnson Creek flood plain discourages pricey redevelopment. Barring massive bulldozing and rebuilding, the modest homes and infill may be what keeps the neighborhood affordable to a wider range of people.

Even the Portland Development Commission's efforts are on a humble scale.

Whereas PDC boosted mass new development in the Pearl and South Waterfront, its work in Lents is about paving streets and adding sidewalks and parks. PDC's symbol of resurrection: a pending deal with Assurety Northwest, a Gresham insurance company that plans to move its 50 employees next summer to Foster between 89th and 92nd. Its new headquarters would include retail space on the bottom floor.

And while Lents is becoming a destination for creative types -- such as artist Sean Casey and his family, who could no longer afford to rent in the Pearl -- it remains a place for beginnings for the traditional working class. Housing activists now vie to preserve its affordability. And they've got the ear of the city. A majority of the City Council wants to dedicate 30 percent of money in urban renewal areas to ensure affordable housing, and will vote on it soon.

Crystal Andrews and her family plan to move close to Lents Park after winning money through the Lents Homeownership Initiative, a new coalition promoting home buying. With the $2,000 grant, Andrews and her husband, Abel Balderas, bridged the gap in the down payment for their three-bedroom, one-bathroom home. The couple -- Andrews is a stay-at-home mom and Portland Community College student, her husband drives a bread route for Oroweat -- paid $202,000.

"I know it's not the best of neighborhoods," Andrews, 27, says about the crime, which police still consider a significant problem. "But people are really trying to work together to make it the best."

Under a merciless sun on the hottest day of July, vendors set up shop on the vacant lot in the Lents Town Center for the neighborhood's farmers market.

The market's vibe is decidedly inclusive. The Lents Food Group -- a collection of old and new neighbors -- revived the market to address a chief concern that a majority of residents identified in a survey: Lents has little choice in food markets. It's bound to get worse with Albertsons' decision to close its neighborhood store.

The Food Group decided to play off the neighborhood's diversity, setting its market apart from others. So it's the Lents International Farmers Market. On the inaugural day, there's an African-crafts peddler. An urban farmer offering to deliver his organic produce by rickshaw. And an Asian American family selling flowers that are wilting in the heat.

Laura Bouma, with 2-year-old son Aspen cavorting about the grounds, got involved with the food group and the market because she wanted a place to buy locally grown food. She and her husband, who is working on his Ph.D., run a home day-care business. They moved to Lents two years ago from Gresham. The family has no car, so its members walk, bike or bus everywhere. Bouma likes the laid-back nature of her new neighborhood, a refreshing change from the experience in suburbia.

"I thought that this would be the neighborhood where we could afford to buy a house and the neighbors wouldn't come and complain if we didn't mow our lawn for two days," says Bouma.

A few weekends later, volunteers from New Hope Community Church slurp on snow cones with neighbors at a block party.

Phyllis Rice, who has lived on the block for 30 years, greets neighbor Guadalupe Ponce and lets Ponce's children pet her Great Dane.

When Ponce and her family moved to the block six years ago, they didn't know anyone. "Now we do," pipes up her 9-year-old, David Uribe, taking in the dunk tank.

Rice, 56, moved in when mostly retired people lived on the block. She watched the freeway come and saw the recession of the early 1980s take its toll.

"It's coming back up now," says Rice. "I've just been waiting for a long time for this to come around."

She falls into conversation with Rodney Nelson, 51, and Marilyn Payne, 55, who videotapes the festivities. They talk about the moniker "Felony Flats" that over time has been used to refer to parts of Lents.

Rice asks: Where is Felony Flats?

"We're standing on it," Payne says.

Two years ago, police chased and shot a suspect in the front yard of the house they're standing in front of. But on this day, there are no cops. Neighbors munch hot dogs and kids weave through on their bikes as soft-rock music rises into the summer air.

City bets on condos to help pay for district

Projected revenue shortfalls show the money for South Waterfront is no sure thing
JEFF MANNING and RYAN FRANK
The Oregonian

The Portland City Council is expected to officially push the South Waterfront District back on track today with another $43 million in city money.

But what's been lost in the debate so far is that the district probably won't generate as much property tax revenue in its early years as first expected.

Despite a spurt of condo construction, South Waterfront tax revenues will fall 13 percent short between 2007 and 2009, according to new city projections.

Driving the drop: a falling tax rate in Portland and a quirk in state law that depresses the condos' tax values even as Multnomah County's housing market heats up, said Eric Johansen, the city's debt manager.

The anticipated shortfalls are relatively small -- $546,719 over two years -- and city officials say they do not pose a financial problem. Still, the shortfalls illustrate the risk the city took on when it approved South Waterfront's $2 billion redevelopment in 2003, the largest project of its kind in city history.

If the council approves a new funding plan today, taxpayers would be on the hook for $113 million in public improvements -- the tram, streets and parks -- through 2011. The city expects to borrow money for its share, then rely on property taxes paid by new South Waterfront construction to cover its bills. OHSU, a major South Waterfront landowner, is a nonprofit and doesn't pay property taxes.

The city will lean hardest on the posh riverfront condos to pay off its debt. It's a multimillion-dollar gamble that the high-end condo market will continue unabated for five years, even as evidence mounts elsewhere that the market is cooling.

"Most of the (anticipated) improvements in South Waterfront are tax-exempt or are condominiums," said Doug Blomgren, a Portland lawyer and secretary of the Portland Development Commission. "I was alive in 1983. There are times when the condo market has negative growth. Their market value can go down. That's why there's some reason to have some concern."

The good news: South Waterfront's condo market is booming so far.

The bad news: Oregon's tax structure.

Property tax payments rest on a simple formula: a home's tax-assessed value multiplied by the tax rate. With South Waterfront, both figures are moving in the wrong direction.

The first condo towers are expected to be worth a market value of $135 million. But state tax law caps the condos' tax values at a fraction of the market value.

South Waterfront's projections were based on a cap of about 70 percent. That figure has dropped as home prices jumped in recent years.

The cap is set annually based on the ratio of the county's housing tax values to its market values. Voter-approved Measure 50 caps tax values at 3 percent growth annually. But market values have rocketed in recent years, growing by 11 percent this year.

The growing divide between the two has artificially depressed new housing's tax values. In 2007, the divide is expected to drive tax values to just 53 percent of market values.

The result: A $1 million condo would be taxed at $530,000 instead of $700,000. That's a one-quarter drop in tax collections for the city.

On top of the depressed values, Portland residents are paying a lower property tax rate after Portland Public Schools dropped a temporary levy. For South Waterfront, that translates into a projected drop in the rate to $19.37 per $1,000 of tax value in 2007.

The first condo tower, the Meriwether, is expected to help generate $1.25 million in new property tax revenue in 2007, nearly $200,000 less than initially anticipated.

The next year, when the John Ross tower goes on the tax rolls, revenue is pegged at $2.28 million, $349,313 less than first expected.

In 2009, property taxes should surpass initial expectations for the first time.

OHSU's status no help

Another factor adds to South Waterfront's uncertainty: OHSU's status as a tax-exempt public corporation.

OHSU is the third major player in the new neighborhood, along with the city and North Macadam Investors. It envisions the neighborhood as a natural place to expand its campus, which is bulging at the seams atop Marquam Hill.

But most of OHSU's development won't generate property taxes.

That means the city won't see any tax benefit to OHSU's first $145 million South Waterfront building, the Center for Health & Healing.

The impact of tax-exempt properties has already hit the North Macadam urban-renewal district, which includes South Waterfront. Even with the red-hot housing market, the North Macadam district's total assessed value fell by $9 million in 2005 to $270 million.

Two major property transactions drove the decline: Portland State University, which also doesn't pay property taxes, took possession of the former DoubleTree Hotel site on Southwest Lincoln Street. And the Schnitzer family donated 20 acres just south of the Marquam Bridge to OHSU.

City Commissioner Erik Sten voted against South Waterfront's new funding plan in part because of his concern about the tax-exempt land. "There are a number of reasons I didn't support this agreement," Sten said. "One of them is that the city is bearing an inordinate share of the risk."

Deal with developers

Portland Development Commission officials think they eliminated much of that risk.

Under the proposal, North Macadam Investors would guarantee to build five condo towers so the city would have enough tax revenue to pay its bills. If they don't follow through, North Macadam must pay the difference or give its land to the city.

But even with a tax shortfall in the early years, North Macadam Investors won't have to cut the city a check.

That's because the developers are only required to build enough condos to exceed $288 million in market value, a level they will easily meet. If the oddities of Oregon tax law limit the actual tax payments to the city, that's not North Macadam Investors' problem, according to the 2003 deal.

Johansen, the debt manager, said he's not concerned. He said as long as the developers build condos, the city should overcome the depressed tax values and collect enough cash to cover its debt payments.

Trouble comes only if the condo market tanks in the next five years. No one has that crystal ball, but even some of South Waterfront's biggest backers acknowledge some qualms.

"You've got to wonder how much the market will support," said Bob Scanlan, whose company ScanlonKemperBard helped fund North Macadam's construction. "I'm not so worried about the condo demand disappearing. I'm more worried about the condo buyers' ability to sell their house. Therein lies the $64 million question."

Penthouse offer at new high for market

73 condominium units coming to Northwest Portland will top out at $1,000 a square foot

Tuesday, May 03, 2005
DYLAN RIVERA
The Oregonian

So you think the Pearl District or the South Waterfront, the upcoming waterside neighborhood with its 21st-century slender towers, has set the high end for condo sales in the Portland area?

There's a new contender. Developer Marty Kehoe on Monday bought a 1.62-acre sliver of Northwest Portland that will offer nine penthouse units asking from $565 to $1,000 a square foot -- as much as $3.5 million for a 3,500-square-foot unit with the most amenities. That could surpass the penthouse prices of about $600 to $700 a square foot in the city's two newer urban neighborhoods.

"It gives you the best of the old and the best of the new," said MJ Steen, principal broker listing the condos with Windermere Cronin & Caplan Realty Group Inc. "You'll be coming out of Northwest Heights and overlook the Pearl District and the city."

Though the project, called The Cambridge condominiums, has not yet been publicly marketed, word of mouth has produced 90 nonbinding reservations for the building's 73 units, Steen said. The team said it is trying to limit sales to future residents rather than investors.

The building won't be ready for residents to move in until early 2007, Steen said.

Real estate observers said the project could meet its lofty goals if the developer can meet the increasingly exacting standards of Portland's top condo buyers. Spacious living areas, custom cabinetry and Mount Hood views are some of the basic elements. Two potential buyers so far have asked for built-in espresso makers, saunas and combination steam-room showers that are pushing prices to a new level.

Kehoe on Monday paid $3.3 million for the land he bought from the Drake family of Portland. The site is part of the former site of St. Vincent's Hospital, which moved to the Sunset Corridor several decades ago.

"The consumers are smart, and they're discerning, and I think there are consumers in Portland, Oregon, who would pay $1,000 a square foot for the right penthouse," said Kathy MacNaughton, a broker with Realty Trust Group Inc. "But it has to be the best in Portland, and there's a lot of competition."

MacNaughton is listing other condos but is not involved in The Cambridge project.

The 73 units in The Cambridge project will rise only about five stories, with about three stories peeking over Northwest Westover Street, between Glisan and Irving streets.

"You're going to appeal to a traditional buyer that wants that neighborhood," said Kirk Taylor, a multifamily investment broker with CB Richard Ellis, which represented the buyer and seller in the land deal. "They're not disturbed by pricing."

Return of the condos

For the past 15 years, Robert and Pat Amidon have called a three-bedroom ranch in Cumberland their home. Close to schools and a short commute to Portland, it was a great place to raise a family.

But now Pat Amidon wants to live where she doesn't have to mow grass or shovel snow. She'd like to walk to work, restaurants and shopping.

That's why the couple recently put down thousands of dollars to reserve four units in Waterview, a proposed, $20 million condominium in downtown Portland.

Waterview will have 94 units with prices ranging from $250,000 to $475,000. The 12-story project won't be ready for a couple of years, but Pat Amidon is getting in on the ground floor. A real estate appraiser, Amidon figures she'll have a great place to live, and a smart investment.

"When I look at the demographics," she said, "we are at the beginning of a period of very heavy demand from baby boomers."

Waterview is one of four major condominium projects announced recently in Maine's largest city. Together they have more than 290 units. A fifth proposal, just in the discussion phase, could add 300 more units downtown later in the decade.

These projects represent a new generation of high-end condominium development in Portland. The activity is being driven by several factors: Low interest rates, the desire of homeowners in their 50s and 60s to downsize without giving up amenities, and Portland's rising national profile as an attractive place to live.

Developers and early investors also hope to make money on the trend. Their instincts may be good. The City of Portland saw 250 condo sales in 2003, with a median price of $176,000. Last year, 299 condo units sold with a median price of $210,000. That's a 19 percent jump in value.

The rate tops single-family homes in the city, which also saw strong appreciation. Their value rose 16 percent last year, from $195,000 to $226,000, according to figures from the Maine Real Estate Information System.

Portland's experience reflects national trends. In late 2003, median sales prices of condominiums nationally exceeded single-family home prices for the first time. Strong demand in urban markets such as Boston and Los Angeles helped drive the appreciation. In resort markets such as Miami, condomania has buyers waiting in line for hours to reserve units that haven't been built yet.

Condominiums haven't always been a good investment in Portland. Long-time residents remember the late 1980s condo glut, when waterfront units were unloaded at auction during the subsequent recession. But condo values have shot up over the past few years, in tandem with overall home prices. As demand increases, inadequate supply is pushing prices even higher.

"The condo market is very strong," said Tim Seekamp, president of Harborview Properties in Falmouth. "Our problem is the lack of inventory."

Portland could use more affordable housing. But that's not where this latest condo market is moving. It's aimed at people who want views of the ocean, upscale kitchens and prime locations - and can pay from $200,000 to more than $1 million.

"I think the market is yearning for inventory like that," Seekamp said.

CONDOS WITH CHARACTER

Waterview is the vision of Jeffrey Cohen, a former Washington, D.C., developer who now owns the Time and Temperature building on Congress Street. It would rise up at 409 Cumberland Ave., between the downtown and the city's fast-changing Bayside neighborhood. Eventually, Cohen wants to build a larger, 300-unit project across the street. That development would include restaurants, a park, maybe an art gallery. It would reflect the festival marketplace concept that developer James Rouse brought to Boston in the 1970s.

"Portland has the architectural character to create that Fanueil Hall atmosphere," Cohen said.

Waterview isn't being advertised yet. But people are finding out about it and contacting Greg Nisbet at Downeast Realty in South Portland.

Nisbet is taking reservations from local people, such as Pat Amidon, from residents in the New York-to-Boston corridor looking for a retreat in Maine and from snowbirds who will live here in the summer and go someplace warm when the snow falls. Prospective buyers put down $5,000 refundable deposits, which will be transferred to purchase-and-sales agreements once the project secures its building permits. Nisbet said he's reserving two units himself, for a model unit and to rent.

"I personally don't see prices going down," Nisbet said.

VISION FOR CONGRESS STREET

Charles Hewitt grew up in Lewiston during the 1950s and remembers downtown Portland as a vibrant shopping destination. Now a painter who lives in New York City and owns a summer home on Vinalhaven, Hewitt was driving through the city last year when he passed a vacant storefront at 490 Congress St., formerly Bernie's Fashions.

Hewitt also invests in real estate and has rehabbed old industrial buildings in New Jersey. He immediately saw the potential to transform 490 Congress St. into modern, loft-style condominiums, within walking distance of an art school, museum, library, public market, health club, movies and restaurants.

"Portland has the sense of a suburb," Hewitt said. "The middle of town is a place you go to work. But it should have a life and a culture in the evening. People don't see Congress Street as an address they want to be associated with. I want to change that feeling."

Hewitt and four other artist-investors bought the building for $800,000. Workers are now turning it into Monument Plaza, three ground-floor storefronts and 23 condominium units, some with views of the harbor and Back Cove. Initial prices range from $199,000 to $610,000.

The project is expected to be ready by this fall. With minimal advertising, agents at Coldwell Banker Residential Brokerage have already taken $1,000 refundable deposits to hold seven units.

HILLSIDE LUXURY

Intown living may appeal to some buyers, but others want the amenities of Portland in a secluded setting. That's the market Diane Doyle of Doyle Enterprises hopes to capture with Graves Hill, a luxury high-rise project she has proposed for a wooded hillside on the Portland-Falmouth line.

Doyle's project would be located across from an emerging enclave of upscale homes and condominiums. Her next-door neighbor is Ocean Ridge, a recently built, 46-unit condominium where water-facing units sold for between $300,000 and $400,000.

Graves Hill is perhaps the most ambitious of the current condo proposals. Doyle is planning 98 units in two buildings that would each stand 100 feet tall, affording views of Casco Bay and the White Mountains. The project would feature a lap pool, underground parking, concierge service and a rooftop fitness center. Gourmet kitchens and large, custom interiors of between 2,000 to 4,500 square feet will appeal to buyers accustomed to comfortable living.

"A lot of people have a nice house in Falmouth or out of state, but they don't want to give up the amenities," Doyle said.

Luxury comes with a price, however. Basic units will start at $610,000. A penthouse on the 11th floor will cost over $1 million.

Doyle's project still needs final approval from Portland's planning board, so construction costs and financing are still being nailed down. If all goes well, Graves Hill would open in late 2006.

PRIME SITE ON WATERFRONT

Construction of a new cruise ship terminal is drawing developers to Portland's eastern waterfront, including Drew Swenson and his business partner Fred Forsley, owner of Shipyard Brewing Co. Doing business as Riverwalk LLC, they have proposed a $45 million project that includes a large parking garage, retail space and 78 condominiums in three different buildings.

This proposal still needs city approvals. Officials want to see the parking garage up by 2007, when the cruise ship terminal is expected to be done. With that time frame, Riverwalk LLC is waiting to do market studies on price and other considerations, Swenson said.

As they consider Portland's surging condominium market, developers say they are mindful of the overbuilding that took place in the 1980s. But Swenson said he sees "a substantial deficit" of housing for people who want to live in the city.

Pat Amidon agrees that any real estate investment is a risk. But banks aren't likely to finance projects today that don't have a chunk of units pre-sold, she said, and the rising tide of retiring baby boomers seems to assure a deep market.

At Waterview, Amidon and her husband have reserved four, two-bedroom units on the 10th floor. The condos range in price from $325,000 to $375,000. The units face different directions, so the couple hasn't decided which one to live in and which ones to sell.

"I want to see the views before I decide," she said. "We're covering our bases."

By TUX TURKEL, Portland Press Herald Writer
Copyright © 2005 Blethen Maine Newspapers Inc.