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Colossal conundrum

Not everyone is convinced that renovating Veterans Memorial Coliseum is a good investment


by: TRIBUNE PHOTO: JONATHAN HOUSE - Chris Oxley, who manages the Rose Quarter and Veterans Memorial Coliseum for the Portland Trail Blazers, says its rare for a city of Portlands size to retain two arenas, but that each serves a valuable function.The glory days are long gone for Portland’s Veterans Memorial Coliseum, where the Trail Blazers clinched their NBA championship and Elvis Presley and The Beatles performed.

Though the city-owned arena is listed in the National Register of Historic Places, its fate has been in limbo since a $31.5 million renovation deal put together by former Mayor Sam Adams died on the vine in his last weeks in office.

New Mayor Charlie Hales says he’ll take a fresh look at the coliseum, and he starts with some hesitation about committing $21.5 million in Portland Development Commission funds that were part of the deal engineered by his predecessor.

One “conundrum,” Hales says, “is that’s nowhere near enough to put that building in the proper condition. That $20 million just gets you down the ‘honey-do list.’ ”

Nobody’s talking seriously about razing the 52-year-old building, as discussed a few years ago. But now that the city’s 2013-14 budget is done, Hales says he’ll devote much of his time to the future of PDC and its big-ticket projects, in light of the city urban renewal agency’s sharply dwindling funds.

“We’re trying to keep our powder dry on these big expenditures,” Hales says. As for the coliseum renovation, Hales says he’s “not ready to walk away, not ready to write the check.”

City Commissioner Steve Novick, the other City Council newcomer, is openly opposed to putting $20 million of PDC money into the coliseum.

Hales’ fears about upkeep costs for a worn-out spectator facility are just part of the city’s conundrum. Architects rushed to secure the historic listing for the coliseum when city officials pondered tearing it down in favor of a minor-league baseball stadium in 2009. That makes it harder to tear it down or convert it for alternative uses. Veterans groups have lobbied to retain the modest veteran’s memorial garden on the coliseum grounds.

While skeptics insist Portland isn’t big enough to host a smaller, outmoded coliseum next door to the modern Rose Garden where the Trail Blazers play, the city-owned facility has become an indoor version of Pioneer Courthouse Square, which is known as “Portland’s living room.” The coliseum provides a low-cost venue for 130 events a year: the Rose Festival’s Grand Floral Parade, high school graduations, state wrestling and drill team competitions, and big draws such as the Dew Tour, Davis Cup tennis and a 2008 Barack Obama campaign appearance. In the past few weeks, the coliseum hosted the Dalai Lama and a Jehovah’s Witnesses convention. City councilors and promoters are excited about the coliseum co-hosting a 16-college basketball tournament in 2017, to honor Phil Knight’s 80th birthday.

No business plan

Former Mayor Adams, in a dizzying effort, spent a good part of his four-year term considering new uses for the coliseum and then putting together a renovation deal involving two billionaires and eight interlocked agreements. The Portland Winterhawks, owned by Calgary oil magnate Bill Gallacher, agreed to put up $10 million, which would pay for a new ice floor and secure the major junior hockey team as a longtime coliseum tenant. Paul Allen’s Portland Arena Management would continue to manage the coliseum, as he’s mostly done since his Trail Blazers team moved into his new Rose Garden in 1995.

Despite Adams’ perseverance, he tried to rush the deal to the City Council in November before all the details were worked out. The private parties weren’t ready to sign the various agreements, and there wasn’t — and still isn’t — a viable “business plan” for how it would pencil out, says Susan Harnett, spectator facilities and development manager for the city Office of Management and Finance. There was no clear analysis of the city’s bang for its buck, or even whether the improvements might cause some users to be priced out of renting the facility.

by: TRIBUNE PHOTO: JONATHAN HOUSE - Veterans groups prize the coliseum in part because of the veteran Memorial Wall on the grounds outside the arena. And the estimated cost to renovate the coliseum was actually more like $55 million, Harnett says.

Adams’ deal was based on the available funding from the PDC and the Winterhawks.

Financial analysis of last year’s deal was “pretty appalling,” says Portland architect Peter Meijer, who spearheaded the effort to get the coliseum on the National Register of Historic Places. “Neither the city nor the manager could identify how much revenue is being generated by the property,” Meijer says, “or how much is being returned to the city.”

During a tour of the coliseum this week, Chris Oxley, who manages Rose Quarter operations for the Trail Blazers, was unable or unwilling to cite any new events the $31.5 million renovation might make possible. Nor would he cite projected utility savings if the coliseum’s heating and other systems are modernized.

Cramped seating

Nobody questions that the coliseum needs improvement. It opened in 1961, a time when fans and sponsors didn’t demand the type of amenities they demand today, Oxley says.

The seats are tiny by today’s standards, fine for someone who’s 5-foot-6 and 150 pounds, but a 6-footer’s knees butt up against the seat in front.

“People were smaller back then,” Oxley notes.

Some heavy-set spectators don’t fit well into the seats, and accommodations for people in wheelchairs are minimal.

There are no suites that would allow the owner/manager to collect additional revenue, and the scoreboard doesn’t allow for true video images, Oxley says.

The entire concourse between the famed glass exterior and inside seating bowl is unheated and uncooled, making it function like a greenhouse, Oxley says. There’s no ability to vent exhaust air from cooking operations in the arena.

“If you can’t vent, you can’t cook,” Oxley says. As a result, “the coliseum has never seen a fresh-cooked hamburger.”

The $31.5 million renovation would have replaced outmoded electrical, plumbing and heating systems that date to the coliseum’s 1961 opening. The air conditioning was improved when a new ice floor and associated cooling system were built in the past year, items allowed to proceed when the main deal was tabled.

The renovation wouldn’t allow full cooking inside the coliseum, Oxley says, though it would permit newer devices like ventless fryers, complementing the allowed hot-dog rollers. New seats and related improvements would make the arena more intimate for hockey games, taking the seating capacity down from about 12,900 to around 9,000.

Much more could be done to modernize the arena that wouldn’t be covered by the $31.5 million price tag. The glass on the building exterior is single-pane, and the white exterior band atop the glass panels is merely painted plywood.

“If you were ever to replace the glass facade, that’s another $8 million proposition,” Oxley says.

by: TRIBUNE PHOTO: JONATHAN HOUSE - A large, old control panel in the boiler room of Veterans Memorial Coliseum is one of many original features of the 1961 arena.  Workers still manually open and close vents on the boiler system.

Better uses of money?

Sam Galbreath, who worked on development projects for the PDC for 17 years, questions whether the agency’s investment in the coliseum is the best use of its funds right now.

After all, the coliseum, even in its current state, hosts events attracting 400,000 to 450,000 people a year. That compares to 550,000 a year for the Oregon Convention Center and 1.7 million to 2 million for the Rose Garden, according to Oxley.

Half of the PDC’s 2013-14 budget for the convention center urban renewal area is dedicated to the coliseum, and the district can’t raise any new money. Galbreath says that area is still blighted and could benefit from other public improvements.

“You walk out the door of the convention center and it’s one of the bleakest areas in the city,” he says.

Scott Andrews, the current PDC board chairman, says he’s convinced the coliseum renovation is “critical to the future development of the Rose Quarter area.” Developers will be reluctant to invest as long as there are festering questions about the future of a huge property in the middle of the district, says Andrews, a leading Portland developer with Melvin Mark Properties. The Rose Quarter area represents one of the few places where a developer might find large parcels of land downtown or close to it, Andrews says.

But he notes that last year’s deal is off the table, and any price estimates for contemplated improvements are now

outdated.

If last year’s deal can be salvaged, the city “should definitely do the deal,” says J.E. Isaac, a former Trail Blazers executive who oversaw the coliseum and Rose Garden operations for many years. The city got $10 million pumped into its building by the Winterhawks, plus an anchor tenant, Isaac says, plus money for basic plumbing, electrical and heating and ventilating updates.

“Once they are (updated), the coliseum is going to serve the city for another 50 years,” says Isaac, now a local consultant for CFM Strategic Communications.

Still a money loser

For most of the past decade, the coliseum has experienced annual operating losses, Harnett says. “We don’t break even on that facility.”

Some, like architect Meijer, wonder if the city could make out better if it didn’t entrust operations to Paul Allen’s company. However, others say having a joint operator makes both facilities perform better. The coliseum would lose more money if the city had to hire its own management, Oxley says.

If the two facilities were in competition, event promoters would cause a “bidding war,” Isaac says, driving down rents for both facilities.

The city concurs. There’s no evidence that Allen’s Portland Arena Management steered business from the coliseum to his Rose Garden, Harnett says.

Experts say the two facilities offer very different experiences, features and prices.

To restart the process, the City Council recently extended Portland Arena Management’s joint operating agreement for another two years. That deal, which takes effect July 1, requires the city to pay a share of the operating losses, which had been borne by Allen’s company.

During the next year or so, the city will conduct a more exhaustive analysis of what the deal means financially, and what other improvements might be needed, Harnett says. “Are we buying 10 years of life or are we buying 20 years of life for the building? We really didn’t ask those questions,” she says.

Ed McNamara, the mayor’s adviser for PDC, says Hales will keep an open mind.

“We’re not wedded to the deal they were trying to rush to City Council last year,” McNamara says. “We want to go back and make this a more objective process.”

That means getting hard numbers on construction prices, a cost-benefit analysis, city payback scenarios, and an evaluation of alternate uses of the money, he says.

The Trail Blazers and Winterhawks have told the city they still want the coliseum to be renovated.

If the coliseum doesn’t remain a viable venue, Oxley says, the Rose Garden can’t accommodate all those 130 annual events. “Where do they go?” he says.