$40M in public funds wanted for 500-unit Oregon City project
Developers who propose a 62-acre mixed-use project on a former landfill in Oregon City say they have learned from past missteps in attempts to revitalize the area.
Seth Henderson of Summit Development Group said his company has been in negotiations with DEQ for more than a year and has been doing its due diligence on the project for more than two years. In those years, Henderson acknowledged, COVID hit the economy and Oregon City began serious considerations of ending its urban-renewal (UR) program, two factors that jeopardize the viability of the project at the intersection of Interstate 205 and Highway 213. Summit Development's North End project is named for its location at the northern side of Oregon City's downtown UR district.
Henderson still believes there's a good chance of success, so he's been forging ahead with awareness of potential deal killers. Some of the previous development proposals were seen by city officials and citizens as "retail heavy," so Henderson proposes around 500 housing units. Developers also have heard from community members that central Oregon City lacks enough child care and grocery stores.
"We can't force a tenant to sign a lease," Henderson said. "But we are out actively pursuing a grocer."
Greg Mitchell of LRS Architects described how a newly proposed three-block Market Street would attempt to mimic some of the vibrant on-street uses of Oregon City's downtown. "Eyes on the street" and public safety is envisioned to increase with people living above sidewalks cafes that could operate after dark.
"We have a full range of spaces and building scales," Mitchell said.
Although several parts of the site are in the 100-year floodplain, parking areas can be located in areas that will flood. A combination of elevators and public stairs will be needed to get people from Washington Street to a public plaza 30 feet above.
Henderson said that it would be "very difficult" to complete the more than $300 million project without a significant infusion of about $40 million in funds from the city or other governmental sources to cover the extra costs of building in a difficult location. Economic planning firm ECONorthwest released a study finding that "public investment would be required" to make commercial and residential development financially viable on Rossman Landfill.
Henderson noted that in order to construct anything on a landfill, steel piles for perching buildings must be punched through the mass of garbage, but the cost of U.S. steel has tripled since the beginning of the pandemic. Summit Development has identified 10 to 12 federal and state programs that would fill parts of the funding gap if city urban-renewal funds fall through, but Henderson said these potential grants wouldn't cover all the costs.
"Rents are not increasing as fast as the escalation in construction costs," Henderson said.
A lot of potential development projects will fail in Oregon, if they haven't already over the past year, but Henderson doesn't think the picture is completely bleak for his project.
"The projects that do move forward will have less competition in the future," Henderson said. "I'm still fairly bullish on this one, if Oregon City believes in this project we're putting together a project of value."
Potential political barriers
Oregon City's currently adopted UR plan calls for eliminating blight by encouraging a commercial and employment center through stimulating private development. However, the makeup of Oregon City's commission has completely changed since the plan was adopted in 2007, and current elected officials may seek to go in a different direction with a potentially flexible funding stream.
City commissioners have yet to publicly discuss the North End project, but their comments during recent meetings on UR's future give some sense of their leanings. On June 2, the UR Commission voted 4-3 to pass the UR budget for the upcoming biennium. After comments about the 2016 vote of citizens wanting to close down the UR district, city Commissioners Frank O'Donnell, Rocky Smith and Adam Marl voted against the budget that sets aside funds for future potential projects.
On May 19, the URC voted unanimously that commissioners believe that UR is a good tool, but some commissioners seem to support using UR for smaller projects. On April 19, URC Chair Denyse McGriff said she did not support the current UR plan, saying it should include small and large projects. O'Donnell supported using the UR fund to build a parking structure downtown and use multiple small projects to demonstrate success. Smith supported smaller projects, updating the UR plan and reducing the tax rate.
If these three city commissioners denied funding the North End project using UR funds, there are still four other votes on the URC that could approve the project, with two city commissioners and two citizen URC members. Three city commissioners have another potential option for denying UR funds, since state law allows the governing body of a municipality to transfer UR authority to any other body authorized to exercise these powers, including the local governing body itself.
Oregon City's UR district has a maximal debt limit of $130.1 million for investments, so there's some potential wiggle room if commissioners are willing to go into debt. However, City Manager Tony Konkol noted the upcoming two-year UR budget has nothing set aside for new projects, and last year the URC decided to retire all outstanding bonded indebtedness, although the city could adopt a supplemental UR budget simply by scheduling an extra meeting.
Although only 20 years old and just appointed to the commission this spring, "Marl may end up being the swing vote" in determining UR's future, according to Henderson's political analysis.
Marl said he's becoming used to being called the "swing vote on urban renewal" in his first few weeks on the commission.
"I know this will be one of the biggest challenges facing the commission ahead," he said.
Marl said his biggest consideration in deciding whether to approve the development will be whether the competition of another big retail center will hurt Oregon City's existing small businesses already struggling to recover. While economic analyses suggest the project's potential to draw people to Oregon City who will then support other nearby businesses, Marl acknowledged that the post-COVID economy could baffle the predictions of even the best economists.
"The hometown feel is so important to people like me," he said. "As a growing city, we're going to need to have those tough conversations."
Summit Development Group has been attempting to rally public excitement for the North End project, including from Oregon City Business Alliance President Kent Ziegler, in anticipation of Planning Commission hearings on the proposal this spring.
"We support you 100%," Ziegler told Henderson during an April 27 OCBA forum on North End.
Former city commissioner Jim Nicita, who was a critic of the previous shopping-mall proposal, believes the issue of the Cayuse Five gravesite might become the most significant barrier related to the latest North End proposal. Oregon City's Storm Water Master Plan identifies a potential problem area along a stretch of Park Place Creek near the former peach orchard site where the five Natives may have been buried in 1850.
"Both the landfill mall and upstream development in Park Place hold the potential to generate significant and intense runoff that could exacerbate past scouring in the precise stretch of Park Place Creek that runs along the candidate site of the graves of the Cayuse Five," Nicita said. "Given this risk, it is probably time, in close and ongoing consultation with the Confederated Tribes of Umatilla, to resolve the matter of the Cayuse Five gravesite once and for all, perhaps as a condition of approval for the project if it gets that far."
Henderson said he's used to navigating conditions of approval and is even prepared to fight for the project's go-ahead before the Oregon Land Use Board of Appeals if someone questions a future decision by the Oregon City Planning Commission. Even if the North End development has to navigate an appeal to LUBA, he believes the project can break ground in the spring of 2022.
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