Coffee Creek development sees some roadblocks
The next frontier for industrial development in Wilsonville — Coffee Creek — is not materializing easily.
Over 13 years ago, Wilsonville City Council adopted the master plan for Coffee Creek, which called for mainly light manufacturing and other industrial uses. In 2018, it passed a form-based code to streamline the application process. Next, it approved a loan to finance a road construction project, hoping the public improvement would spur private investment.
The city's Development Review Board recently greenlighted the first development application in the area, which may pave the way for a site with warehousing and distribution. But barriers ranging from exorbitant infrastructure costs, existing landowners not wanting to sell, and possible design requirements may still hinder investment.
"It's going to take multiple different steps combined to get the raw property to where it's attractive enough to attract significant private-sector investment in some ways," Mayor Tim Knapp said during a work session Monday Nov. 16.
Is development feasible?
Coffee Creek consists of over 200 acres, is located primarily in Washington County, and is one of a few places in the Portland area designated for future industrial growth.
A recent analysis produced by the Port of Portland, Greater Portland Inc. and Metro, which the Wilsonville City Council reviewed during recent meetings, examined a 76-acre site in Coffee Creek and what it would take for it to be economically advantageous for developers to build it out.
According to the report, there is a $62 million financing gap for the project, when taking into account surrounding infrastructure costs such as utilities and public roads. City consultant Alex Joyce said building costs alone would be $250 million.
"It's a little daunting to see the magnitude of the gap in infrastructure costs even after we're putting that (Garden Acres Road) investment in there already," Knapp said during a work session Nov. 2.
Jordan Vance, the city's economic development manager, said the figure presented is outdated and isn't necessarily indicative. Still, he said financial feasibility in Coffee Creek and other regionally significant industrial lands is a continual challenge.
"Returns are pretty thin for industrial development. It's not as lucrative as residential. In order for the district to be viable and return to pencil for the developer, there's currently a gap unless we come up with additional financing sources to pay for the infrastructure projects," Vance said.
He added that a project to develop Garden Acres Road, which is slated for completion soon, could lead to imminent development east of the road and that development on the other side will happen more slowly.
Some in Coffee Creek, however, felt development unfeasibility is connected to the city's design standards.
Developer and Coffee Creek property owner Gordon Root and real estate broker Stu Peterson thought that zoning to foster smaller, high tech developments and bicycle and pedestrian connectivity precluded investment. And Peterson would like to see the city encourage more warehousing and food processing operations.
"This is a very strategic location. Amazon would find it very attractive (for warehousing). Columbia Distributing would have loved to come down here if some of the zoning was done correctly," Peterson said. "There's all kinds of companies that want to be down here and the city making it zoned for just Intel (style of) development, and that's what it is."
Root was particularly critical of a 600-foot block length requirement in the plan.
"They make you break up manufacturing operations into small, little, square buildings and into campus environments instead of an under-one-roof environment," he said.
Kimberly Rybold, the city's senior planning manager, said there isn't a maximum building size requirement but that the block length standard will foster connectivity.
"Part of that standard comes from wanting to create this internal circulation network and connection across properties," Rybold said.
Vance thought there wasn't enough data yet to determine whether the city's development standards were working or not, and he said this would be reassessed down the line. He also defended the city's goals of providing more accessible transportation options in Coffee Creek, which he said would provide employees the option of using alternative forms of transportation to get to work.
"We don't think this is a radical idea. To us it seems fairly simple," he said.
Wilsonville City Councilor Ben West brought up some of Root and Peterson's concerns at the Nov. 2 meeting. Root supported West's mayoral campaign.
What are funding options?
The city already established an urban renewal area in Coffee Creek, but the city will consider more incentives to foster development.
Based on the report, city staff recommended the council use urban renewal to either fund a 10-year tax abatement for vertical development or to simply refund taxes associated with development. Other ideas to slash costs for developers include a transportation improvement program, local improvement district, land banks and waivers.
The report also mentioned creating a Regional Employment Land Investment Fund, which would allow public and private entities to pool resources.
Vance surmised that urban renewal could account for two-thirds of the financial feasibility gap and that other tools could fill in the rest.
"These tools can work in harmony with urban renewal," Vance said.
Root said the city's tax incentive proposals are unnecessary.
"Because they're standing in the way of private developers coming in and building what the market wants, they need to then create a taxpayer funded incentive program to get people to build what they think should be there instead," he said.
Existing landowners seen as barrier
Vance and Rybold mentioned that the highly parcelized nature of Coffee Creek and some landowners not wanting to sell their property is an ongoing hindrance to development.
"What is often typical when you're going from residential lots into larger scale industrial development is you might look to aggregate parcels so you have more flexibility for a site," Rybold said.
The city could try to facilitate ways for property owners to coalesce to form a single negotiating block. One idea the report suggests is creating a Horizontal Development Agreement, which fosters a multiparty negotiation and packages incentives.
"The city has decided to leave some of this to the marketplace and have not played a hands-on role in facilitating this with property owners," Vance said. "If the policymakers decide they want us to take a more proactive role, we could look at how we could facilitate something like this."
Vance added that most Coffee Creek property owners are willing to sell, but that there are holdouts in strategic locations.
Peterson suggested that the city's development standards prevent local property owners from being able to sell their land at fair value because the land isn't as developable due to municipal standards.
"If you own property in Tualatin or Sherwood right now, industrial property is worth anywhere from $10 to $12 a foot. In Wilsonville, it's worth $2 to $4 a foot. No one is going to sell for that. No one is that desperate. It's a real problem," Peterson said.
In the meantime, the city has expressed concern in the past about contractor establishments (such as storage yards) sprouting up in areas of Coffee Creek and currently under Washington County jurisdiction. Such establishments are low-productivity developments in comparison to the high tech and manufacturing facilities the city envisions for the area.
Root said he has an application to turn his property into a contractor's establishment because of the city's current plans for Coffee Creek. He said he and neighbors have an agreement ready to finalize with an industrial developer if the city changes zoning to remove standards like the block length rule.
"We would rather stay in Washington County and operate as a contractor yard than annex into the city under a zoning which is not favorable to development," he said.
Bob Jonas, who owns land in Coffee Creek, has no intention to sell his property and would like to be annexed into Wilsonville, but he said the city won't allow that because he wants to build a storage unit there.
"I'm an old man, and so the last thing I want to do is sell something that I worked my whole life for and pay a great deal of income tax (for)," Jonas said.
Now that the city has reviewed the aforementioned report, it will begin considering whether to forward ideas mentioned within its pages.
"Because this (the production of the report) was a larger project and we happened to be included in through generous funds provided to us, we are going to benefit from this because we now have the toolkit and have the different models analyzed and can pick and choose what might be the best utilization for us," Wilsonville City Councilor Joann Linville said during a work session.
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