Oregon Housing & Community Services today received $5 million in federal funds for the department’s Neighborhood Stabilization Program.

The Neighborhood Stabilization Program, which is run on the federal level by the U.S. Housing and Urban Development Department, was born out of the federal Housing and Economic Recovery Act of 2008. The program is designed to provide assistance to middle-income citizens looking to purchase foreclosed single-family homes.

Money from the program is designated at the state level to local land trusts or city governments. Those entities then use the money to purchase foreclosed homes, fix them up and sell them to qualified buyers. In urban settings around the state, the money can also be used for low-interest, soft-second mortgages.

Oregon Housing & Community Services has received a total of $26.4 million in federal funds through the program before the most recent $5 million. The money so far has been used to purchase more than 350 properties in 45 Oregon communities.

Lane Community College is planning to construct a $35 million campus building and a $15 million student housing facility in downtown Eugene. the city helped the college finance the development. (Rendering courtesy of Lane Community College)

With few traditional financing options available these days, the development industry has slowed from a snail’s pace to a virtual standstill.

But in Eugene, city officials are using various sources of public funding and financing to help push ahead four large and different projects that otherwise could have stalled.

“When the economy is good, the government can step back and let things happen,” said Scott Luell, planning and development director for the city of Eugene. “But when economic times are tough, the public sector can play a vital role in improving the private sector.”

The economy in Eugene, like in the rest of the state, dropped off in early 2008 and has remained in a rut ever since, Luell said. But development is starting to pick up again as public and private parties work together to pencil out projects.

“Given the state of the economy, it’s a really good thing,” Luell said, “not only because these resources are available, but also because these private developers are willing to invest in downtown Eugene at such an uneasy time.”

Lane Community College

Lane Community College is planning a $50 million development that includes a campus and student housing in downtown Eugene. The college had kicked the idea around for years, but didn’t know how to build from the $9 million in bond money it had set aside.

“We had the idea, just not the financing,” said Mary Spilde, president of Lane Community College. “When the recession first hit, a few large, private development projects fell through, so the city asked us if we would like to partner up on the project.”

The city first purchased the property with urban renewal money, but no private projects could pencil out. So the city sold a half-block, valued at $1.6 million, to the college for $1.

However, financing the $35 million, 90,000-square-foot campus building still was a challenge. So the city also appropriated an additional $8 million of urban renewal money for the project.

The college will also use $8 million from the state community college capital fund, $5 million in new market tax credits, $550,000 in energy-efficiency tax credits and a few million dollars from college revenue sources.

“Lots of people would prefer private development here, but it just wasn’t realistic,” Spilde said. “But our vision is that this project will bring people to downtown and give some impetus for more private development.”

Ground will be broken on the campus building, planned to be certified Leadership in Energy and Environmental Design platinum, in early 2011. Completion is tentatively set for fall 2012. Then the college will start the $15 million student housing project, which will be financed more traditionally. But the school could receive nearly $7 million in interest-free financing through the city’s recovery bond authority. The bonds, which came from the American Recovery and Reinvestment Act, provide interest abatement on financing for public construction projects.

Inn at the 5th

Not one hotel has been built in downtown Eugene for 28 years. But scaffolding went up Wednesday for a project to construct a new 68-room boutique hotel at the Fifth Street Public Market.

Brian Obie, the market’s owner and a Eugene developer, received a $500,000, five-year business development loan with below-market interest rates. The $11.7 million project also is benefiting from a $2 million low-interest loan from the U.S. Small Business Administration. Private investors and two traditional lenders, Selco Credit Union and Oregon Community Credit Union, also are helping finance the project.

The hotel is expected to be completed within the next year. An official ground-breaking event is planned for Sept. 24.

Centre Court

Portland-based Beam Development has been working for more than three years to transform Eugene’s Centre Court building, designed by A.E. Doyle and constructed in 1928, into creative office space. Much like the company’s Portland projects, the building’s shell will be restored in a historically accurate manner while the inside will be built out more traditionally.

“Beam has been working on this project for years,” said Denny Braud, development analyst for the city of Eugene. “But right when they were about to start the project, the economy crashed.”

Beam received an $8 million, low-interest U.S. Department of Housing and Urban Development Section 108 loan, which is allocated to brownfield redevelopment sites through municipalities. The development team also received a $2 million federal grant that can be used for cleanup and construction on a former brownfield site.

All preliminary demolition work has taken place for the $11 million project, which is in the permitting process. Construction is expected to be completed by the end of 2011.

The Pit

Near Beam Development’s Centre Court project, Eugene-based Bennett Management Co. is constructing a $10 million mixed-use building that will have 30,000 square feet of office and retail space.

Rob Bennett, president of Bennett Management, said the adjacent office buildings will serve different types of companies. Beam’s project will be focused on accommodating creative tenants, while Bennett’s project will serve traditional office users.

The project is receiving $8 million of the city’s recovery zone facility bonds. The company will have to pay off the loan, but the bond is enticing because purchasers receive tax-free interest payments for a private project - a benefit usually reserved for public projects.

“These are hard bonds to find the right project for, and we got lucky to stumble across this one,” Braud said. “Both office buildings will be a great addition to downtown.”

Construction is expected to start on the project late this month, when the bond is officially approved.

Charles McGee II, executive director of the Josiah Hill III Clinic in Northeast Portland, says a Community Benefits Agreement for the Rose Quarter redevelopment would be a lifesaver for organizations like his. Under the agreement, a $1.99 fee would be added to all tickets sold in the Rose Quarter. That money would be used to aid businesses, neighborhood groups and nonprofits in North and Northeast Portland. (Photo by Dan Carter/DJC)

Spectator Fund facts

• The city of Portland gets 6 percent of ticket revenue from the Rose Garden and Memorial Coliseum events and 100 percent of income from two Rose Quarter parking garages.
• Rose Quarter operations produced a net income for the city of $1 million per year over the past five years.
• Nearly all of Rose Quarter income is used to support city operating and capital expenses at PGE Park, which has lost between $500,000 and $1.2 million in revenue per year over the last five years.
• The Spectator Fund has $45 million in bonds outstanding with an annual debt payment of $6 million.
• The city of Portland will issue an additional $12 million in bonds in 2011 to bring Major League Soccer to PGE Park. All future Spectator Fund money is committed to MLS at PGE Park.
• The Admissions Tax Offset allows PAM to reduce payments to the city Spectator Fund on a dollar for dollar basis if the city or Metro enacts a tax on tickets.

Source: David Logsdon, Spectator Fund manager

Homes and businesses owned by African Americans were leveled in the 1950s to make space for what is now the Rose Quarter. With the city planning to once again revamp the Northeast Portland neighborhood, the community wants to be certain it doesn’t get the short end of the stick this time.

Roy Jay, president of the African American Chamber of Commerce of Oregon and Southwest Washington, has proposed a Community Benefits Agreement that would take revenues from development and place them in a fund to support North and Northeast Portland. However, such an agreement could conflict with one the city struck a decade ago with Portland Arena Management, a private company that manages buildings within the Rose Quarter.

A CBA is a private contract between a developer and a community that designates benefits a community will receive from development. Generally, these benefits include local hiring, living wages for workers and environmental projects. But Jay says Portland can do better. Under his proposal, 1 percent of gross revenues from the revamped Rose Quarter, as well as a $1.99 fee for every ticket sold in the Rose Quarter, would go to a fund to support North and Northeast businesses, neighborhood groups and nonprofit organizations.

“We have not been doing our job as a community to be sure everyone is empowered,” Jay said. “This is one of the last prime pieces of real estate to be redeveloped in Northeast Portland. This is an opportunity for an entire community to financially benefit beyond a few jobs.”

A ticket fee could impact the city’s Spectator Fund, according to its manager, David Logsdon. Presently, 6 percent of all Rose Quarter ticket revenue goes into the fund. All future Spectator Fund money is dedicated to paying off debt incurred from recent improvements made to PGE Park.

This agreement between PAM and the city, however, includes an admissions tax offset that allows PAM to reduce payments to the Spectator Fund on a dollar-for-dollar basis if the city or regional government Metro enacts a new tax on tickets. If Jay’s proposed ticket fee were introduced, the city could see reduced Spectator Fund payments.

However, it is unclear without a legal analysis of the final Community Benefits Agreement if Jay’s fee would be considered a tax or not, Logsdon said. Jay acknowledges that the admissions tax offset is a potential barrier, but he says he’s confident that once the developer and the Trail Blazers see who benefits from the agreement that his plan will succeed.

Some parts of North and Northeast Portland have experienced growth and redevelopment over the past decade; however, Troy Tate, the director of nonprofit organization Child Inc., says he has been frustrated by gentrification in areas like Mississippi Avenue and Alberta Street. His group is one of many on an initial list of North and Northeast Portland businesses and nonprofits that would benefit from the CBA.

“When I grew up near Alberta there were boarded-up buildings and residential crime,” Tate said. “Then money from the city came to improve buildings and lighting. By the time that happened, the people that lived there couldn’t afford to stay and their businesses had gone under. This agreement will let people who are currently in the neighborhood know that money is coming, and they might be more willing to hold on.”

According to the Center on Wealth and Philanthropy at Boston College, donations to nonprofits have dropped 10.9 percent in the past two years. Many organizations that reach out to the North and Northeast Portland communities rely solely on charitable contributions, said Charles McGee II, executive director of the Josiah Hill III Clinic. The nonprofit provides blood tests, air monitors and other services to help reduce lead poisoning in children in North and Northeast Portland.

“The Trail Blazers are like Portland’s family,” McGee said. “The community nonprofits and entities serving North and Northeast Portland urgently need this financial assistance to keep our doors open.”

The Rose Quarter Community Benefits Subcommittee will vote on a final Community Benefits Agreement on Sept. 23. The agreement would not be completely finalized, however, until the Portland Development Commission and City Council also vote on it.

An increase in orders for boots over the past few years has caused LaCrosse Footwear Inc. to move its Danner Inc. brand, which has operated in Oregon since 1933, into larger spaces.

After 20 years of operating out of a 36,000-square-foot building on Northeast Airport Way Road, Danner has outgrown the space and is splitting its operation between two spaces in the area.

One of the new locations, on the corner of Northeast 120th Avenue and Northeast Airport Way Road, opened to the public on Father’s Day weekend and acts as a commercial space for Danner. The 4,000-square-foot building also houses Danner’s repair center, where customers can send or bring in boots with worn out soles and have them replaced.

The space was gutted and redone to fit the new commercial space, said Dave Carlson, executive vice president of LaCrosse Footwear Inc.

“We spent $9 (million) to $10 million dollars on construction and renovations between the two projects,” Carlson said.

The other building, which will act as Danner’s new manufacturing facility, opened Aug. 30. Danner is leasing 59,000 square feet of factory space in the new 140,000-square-foot building located at 18201 N.E. Portal Way Rd.

Carlson said Danner caters to hunters, police officers and the military.

“We’ve seen an increase in demand from the military side over the last three years,” Carlson said. “We just received a $8.6 million order from the Army to build boots for the rugged mountain environment of Afghanistan.”

Cindy Brown, principal broker and founder of Commercial Quest NW, stands in front of one of the Southeast Portland properties she has listed. Brown posts her commercial property listings on Craigslist as well as other traditional real estate websites. While Craigslist has helped her find several clients, the Inner-Southeast neighborhoods tend to get the most inquiries from the website, she said. (Photo by Dan Carter/DJC)

Amid an abundance of vacant spaces, low lease rates and concessions, local brokers nowadays are being challenged to get commercial properties noticed.

But some of the area’s commercial real estate firms are finding success posting properties on Craigslist, a website usually reserved for personal ads, bicycle sales and job postings. The tool isn’t an ultimate solution for the woes of commercial real estate, but these brokers believe Craigslist is a perfect fit for do-it-yourself Portland entrepreneurs.

North Rim Partners, for example, previously relied only on what Vice President Matt Schweitzer calls the usual suspects, CoStar and LoopNet, for listings. But the full-service real estate firm recently also has found success with Craigslist.

“We started posting our properties on Craigslist because we wanted to open ourselves up to as much of the potential clientele as possible,” Schweitzer said. “Plus, a lot of the bigger firms don’t think to post their listings on Craigslist, so it allows us to serve an audience that other firms don’t.”

More large real estate firms may soon follow suit, however. Bluestone and Hockley, for example, has been posting listings on Craigslist only for the past year or so, but the firm has already experienced success, said Cliff Hockley, principal broker with the firm.

“You’re not going to have a downtown law firm needing 30,000 square feet looking for its space on Craigslist, but that’s not the only clientele looking for space in Portland,” Hockley said. “But we’ve had plenty of success filling spaces in the 200- to 1,500-square-foot range.”

Geographically, central eastside spaces seem to get the most attention on the website, said Cindy Brown, principal broker and founder of Commercial Quest NW.

“There’s this do-it-yourself attitude from entrepreneurs on the east side who want to do everything for their business by themselves,” Brown said. “And Craigslist is a great, and easy, way for them to start their search.”

But both Brown and Schweitzer admit that Craigslist listings tend to yield more inquiries from people they call tire kickers - those who attempt to haggle down prices because the leasing is taking place in a nontraditional fashion.

“I get more unqualified clients and tire kickers than when I list on CoStar or LoopNet,” Brown said. “But with that said I’ve also found a lot of tenants that I otherwise wouldn’t from Craigslist.”

While brokers may have to explain more when dealing with potential tenants they find on Craigslist, Schweitzer pointed out that the education factor can actually help his firm secure a lifelong client.

“You get a lot of folks new to the program, which allows us the opportunity to teach them how leasing property works,” he said. “Most of these people are looking on the Internet themselves because they don’t want to deal with an agent.

“So if we can provide them with a positive experience, there’s a good chance they will use us in the future when looking for more space.”

Each local firm that has turned to Craigslist has found its own way to differentiate its properties.

Some have used the traditional Craigslist approach. For instance, Bob Zimmerman and Focus Commercial use multiple symbols - such as exclamation points, asterisks and ampersands - in their headlines to attract attention. But others have used a more businesslike approach, creating HTML templates that make posts look like their firms’ websites.

“The more properties are posted and linked to on the Internet, the better it is for business,” Hockley said. “But with that said, we try to keep our brand as uniform as possible, no matter where we post.”

Of course, Craigslist is certainly not the only answer for commercial leasing.

“Marketing is an essential part of running a successful commercial real estate company,” Brown said. “But you can’t run a successful company by only posting on Craigslist.

“It’s a great tool. But it’s only one of the tools in the toolbox.”

Before beginning the Vancouver waterfront redevelopment project, Gramor Development, BNSF Railway and a team of government agencies will raise train tracks, that currently block downtown from the site. They will also extend Esther Road and Grant Road down to the site. The access project is expected to cost $44 million. (Photo by Dan Carter/DJC)

Vancouver, Wash., waterfront development groundbreaking

What: Vancouver waterfront redevelopment access project groundbreaking
When: Wednesday, Sept. 8 from 4-6 p.m. Formal program begins at 5:15 p.m.
Where: The waterfront redevelopment site, located just west of Vancouver Landing and the Red Lion Inn at the Quay
Who: Speakers will include Gramor President Barry Cain, Vancouver Mayor Tim Leavitt, Washington Senator Patty Murray and Washington Representative Brian Baird.

The city of Vancouver, Wash., and Gramor Development will break ground tomorrow on the first phase of a long-anticipated $1.3 billion Vancouver waterfront redevelopment project.

But before the public-private team transforms the 31-acre former Boise Cascade site into waterfront parks, downtown restaurants and corporate headquarters, the team has to build a way to get there.

Right now, most of the site is separated from downtown Vancouver by railroad tracks. Gramor, BNSF Railway and various government agencies will spend a total of $44 million to raise the tracks and build roads under them.

“We got into the visioning process for what we wanted to see on the land, and then we realized there wasn’t a convenient way to get to the waterfront from downtown,” said Barry Cain, president of the Tualatin-based Gramor Development. “It’s funny because downtown is so close to the water, but you can’t get there from it.

“We’re going to change that.”

Gramor will put $8 million down on the access project, the railroad will pay $2.5 million and the rest will come from a mix of city, state and federal sources.

Once the access project is done, Gramor will begin redeveloping the 22 city blocks it bought in early 2008. The first phase of work will include building a public park and esplanade stretching a half mile along the waterfront. It will also include a hotel, two restaurants and office space that Cain thinks would be a perfect fit for high-level corporate tenants.

“This is very much on the scale of the Pearl District,” said Cain. “This project is a game changer for both Vancouver and the region.”

When Gramor is done with redevelopment work on the site, 21 buildings there will boast 800,000 square feet of office space, 200,000 square feet of retail space and 3,000 housing units, said Mark Brown, government relations coordinator for the city of Vancouver.

“The scope and scale of this project is unprecedented,” Brown said. “It’s literally going to be a city within a city.”

Despite the sluggish economy, Gramor has been hitting pay dirt when it comes to finding financing for its projects.

Last month, the development firm broke ground on three development projects around the region: a Costco-anchored development in East Vancouver known as Lacamas Crossing, a $60 million retail and office development at Progress Ridge in Beaverton and a Fred Meyer-anchored development in Wilsonville.

The waterfront project is the latest job opportunity with Gramor. The project to raise the tracks along the Boise Cascade site alone will create between 600 and 700 construction jobs, Brown said.  The city estimates another 10,000 long-term construction jobs could be created once work on the park, esplanade and buildings begins, he said.

The project is expected to leverage $30 in private investments for every $1 spent by the public. The project is estimated to cost $1.3 billion. The entire scope of the project will take 10 to 15 years to complete.

Hillsboro will consider cutting land use and planning fees by half for improvements made to downtown storefronts.

The Hillsboro Planning Department will present the fee cut to Hillsboro City Council in order to help businesses receiving money from the city’s storefront improvements grant program. The fee cut would only apply to projects that qualify for the grants

“Considering funding for the grants comes mostly from the general fund, grant recipients are really just getting money from the general fund and paying right back into it with the fees,” said Colin Cooper, planning supervisor for the planning department. “This move will let the grant money do what it’s supposed to do - improve storefronts.”

Any business looking to make a storefront improvement within the city’s downtown local improvements district can apply for the $25,000 grant program.

The fees that would be cut include development reviews and sign permit fees. A development review currently costs between $315 and $5,775 in the city of Hillsboro. A sign permit costs $60 per sign face.

The Hillsboro City Council meeting will be held Sept. 7 at 7 p.m. in the Hillsboro Civic Auditorium.

Gresham City Councilor Josh Fuhrer, left, and Community Development Director Eric Schmidt, right, meet with Matt Thomas, owner of Townshend’s Tea on Northeast Alberta Street. Fuhrer and Schmidt visited Thomas on Wednesday to discuss an incentive program for businesses that might be interested in expanding into Gresham. (Photo by Dan Carter/DJC)

Matt Thomas is a businessman with a passion for loose-leaf tea.

With teahouses in Northeast Portland and Bend, and plans for a second Portland location, Thomas wants to expand his business, Townshend’s Tea Company, across the entire Northwest.

But while his 2011 expansion plans are focused on some of the usual suspects - Seattle, Eugene and Corvallis - a push by the city of Gresham to fill its vacant storefronts has Thomas strongly considering a town he didn’t before.

In April, Gresham started offering new businesses, and existing businesses looking to expand into Gresham, a number of financial incentives. For one year the city will waive initial business license fees, development-related fees and all system development charges for businesses moving into spaces less than 5,000 square feet in Gresham’s downtown, Civic and Rockwood neighborhoods.

But in order to promote the program, Gresham city staff and city councilors are taking the next few weeks to visit various Portland businesses and explain the program to the owners.

“I had never considered Gresham before this,” said Thomas. “But the population there would be a good market for my business, and when the city offers this kind of opportunity, it’s absolutely worth looking into.”

Community Development Director Eric Schmidt and City Councilor Josh Fuhrer made their first stop on Wednesday, a 30-minute visit with Thomas at his shop on Northeast Alberta Street and 22nd Avenue.

“It’s quite a piece of bait you’re throwing out,” remarked Thomas after the city representatives made their pitch. Thomas paid about $3,000 in city fees to open his Portland location and paid slightly less in Bend.

While the program had some success within Gresham, city staff wants to make sure anyone in the region looking to possibly expand knows about Gresham and the various incentives.

“We want to let business owners know about the value proposition in Gresham,” said Fuhrer. “Downtown has all the walkability and charm of any neighborhood in Portland.

“Combine that with the incentives and lease rates half of those in Portland, and the value here is great.”

Fuhrer and Schmidt are going to spend a few days during the next week walking up and down Northeast Alberta Street, North Mississippi Avenue and Southeast Hawthorne Boulevard. They will target restaurants and coffee shops specifically but are interested in talking to any business that would like to make the move to Gresham.

“A restaurant would be great because they can be catalysts to bring all types of other businesses,” said Schmidt. “And ultimately we are looking for diversity.”

After pitching the program to listening business owners, the duo is inviting them to a Sept. 15 information meeting where the incentives program will be explained. Also at the event will be a panel discussion with a representative from the Mt. Hood Community College Small Business Development Center, government officials, local business owners, commercial real-estate agents and developers.

Matt Thomas's first Townshend’s Tea retail shop opened in 2006. He has since opened one shop in Bend and is planning another inside a new Whole Foods store in Portland’s Hollywood District. After hearing about the financial incentives Gresham is offering, Thomas said has put the city at the top of his list for future expansions. (Photo by Dan Carter/DJC)

“A big part about this program has been working with not only people at the city, but local business organizations, businesses and real-estate agents,” Schmidt said.

The fee program is working. More than 20 businesses have used the incentives, and 39 businesses have used the business license fee waiver. The incentives saved these businesses nearly $47,000 collectively.

While the city is losing this money, Fuhrer and Schmidt believe the return to the city will be on the back end of the incentives program, when property taxes increase due to a revitalized downtown core.

In late April, three new businesses moved into the 3rd Central Building in downtown Gresham, a 5,436-square-foot premium retail building that sat vacant for almost a year after it was constructed. Since the incentives program started, Bella Cupcakes, KZME Radio and Lillian’s Natural Marketplace have filled the building. These businesses alone have saved a total of $35,000.

“We’ve been working closely with the city to promote these incentives,” said Sue O’Halloran, a principal broker with Kohler Meyers O’Halloran, a commercial real-estate firm with 15 properties for lease that fit into the incentives program, “and it’s really helped us out.

“In the next week or two, we will be closing on a lease deal for one of the large, long-vacant downtown spaces. It wouldn’t have happened without the program.”

But Gresham still has plenty of vacant spaces left. And until they’re full, Schmidt and Fuhrer will let people know the city is open for business.

“We’re going to promote our businesses and give them the tools to be successful,” Fuhrer said. “Because if we can get good businesses and help them be successful, we’re going to minimize our risk.”

And while Thomas hasn’t committed to anything yet, he’s adding Gresham to the top of his list.

“It’s great that a city is making the effort to come so far to attract locally-owned business development,” Thomas said. “It’s especially welcome in a time when getting expansion loans via traditional methods can be difficult.

“It’s a very smart position for a city to take, in my opinion.”

Aurora State Airport, Oregon’s third busiest airport, was recently awarded $4.3 million from the ConnectOregon III program to build a control tower at the airport. (Photo by Dan Carter/DJC)

In response to criticism that it has moved ahead too quickly with plans to build a control tower at the Aurora State Airport, the Oregon Department of Aviation is standing firm that its only intention is to improve safety while money is available to do so.

The project, which last week officially received $4.3 million in lottery-backed funds, has taken hits from Clackamas County and Wilsonville city officials, who say the project places state interests above local ones. But the Department of Aviation, the state agency that runs the airport, says the quick timeline is necessary to qualify for a share of money available through the ConnectOregon III program.

With 450 aircraft based at the airport and sharing its one runway, state aviation officials say a staffed-control tower is necessary to avoid any potential accidents.

“This tower isn’t about future growth at the airport or potential revenues to the state,” said Mark Gardiner, chair of the Oregon Aviation Board. “It’s all about making the airport safer for its many users and the people around it.”

The Federal Aviation Administration agreed the airport needed a manned tower and said it would pay for the position. But that still left a gap in how the state aviation department would pay for the tower’s construction. Then the ConnectOregon money became available.

The Oregon Legislature created ConnectOregon in 2005 as a way to provide money for non-highway transportation projects such as fixing rails and improving airports. The third and most recent phase of the program contained $97.1 million for 41 projects. The airport tower ranked No. 4 on a list of priority projects.

But the city of Wilsonville and Clackamas County, both of which border the north side of the airport, have said the project shouldn’t have been submitted because the airport’s master plan hasn’t been updated yet.

The update is required by law to be completed every 10 years. The airport’s update was supposed to have been finished at the beginning of this year but was delayed due to a lack of money and won’t be done until next year, according to Mitch Swecker, state airports manager for the Department of Aviation.

The aviation department, however, has said the need for a control tower has been known for some time; it just was never formally added to the master plan.

“It’s not like we haven’t discussed a control tower, it’s been in the future layout plan for the airport since ‘76,” Swecker said. “Considering we had started the master planning process, we just didn’t want to pass on the opportunity to get this funding.”

The airport’s government neighbors say an updated master plan is necessary so that the increased use of the airport associated with the new control tower can be studied. At a recent Oregon Aviation Board meeting, Mark Ottenad, public and government affairs director for Wilsonville, brought up concerns that the tower would allow the airport to handle more air traffic, which would mean more air passengers traveling to and from the airport on already-congested Interstate 5.

But the Department of Aviation believes that the tower will actually decrease traffic in and out of the airport.

Currently, 480 aircraft are housed at the Aurora State Airport and share its one runway. (Photo by Dan Carter/DJC)

“A lot of the smaller aircrafts and recreational pilots probably won’t use the airport once the tower is built,” said Swecker. “You will probably just see a few more corporate jets.

“We don’t envision the airport ever becoming a commercial airport or a cargo hub. And the implication that this could cost taxpayers in the future because of increased traffic is far-fetched.”

Another concern of both Wilsonville and Clackamas County has been the potential money the state could make from more pilots and businesses using the airport. These include possible landing and takeoff fees and lease deals for the surrounding lands.

The aviation department says those aren’t realistic sources of revenue for the state.

“During the master planning process we discuss every possible way we could derive revenues,” said Chris Cummings, planning and project manager for the department. “But landing and takeoff fees aren’t even in the realm of realism.”

And from a real estate perspective, only a handful of lots could potentially be built out, Swecker said.

“The city of Wilsonville has decided there shouldn’t be any new facilities at the airport, but they aren’t the ones in charge of land use for the area,” Swecker said. “They are running an agenda.”

While Ottenad stands by his claims, he hasn’t heard of any organization making an appeal on the funding.

“Something might come out after the holiday weekend, but I haven’t heard of anything yet,” Ottenad said.

One of downtown Portland’s eyesores is about to be demolished.

During a Sept. 7 groundbreaking ceremony, the boarded-up former Burger King at the corner of Northwest Couch Street and Broadway will be demolished to make way for a new health clinic.

Central City Concern - a local nonprofit providing affordable housing, health, recovery and employment services - is planning to build a $19 million, 44,000-square-foot health clinic on the lot. The facility will be partially funded by $8.9 million in federal stimulus money.

The building will be attached to the organization’s Old Town Clinic, which is located right next to the proposed project. It will house Central City Concern’s 12th Avenue Clinic, a mental health facility now located at 412 S.W. 12th Ave.

Partners on the project include Wells Fargo bank, Oregon Facilities Authority, SERA Architects, Walsh Construction and Gerding Edlen Development Co.

The groundbreaking will take place on Tuesday, Sept. 7 at 11:45 a.m. Speakers will include Rep. David Wu, D-Portland, Multnomah County Commissioner Deborah Kafoury, Portland City Councilor Nick Fish and Wells Fargo Regional President Don Pearson.

Portland Community College has been booming throughout the recession as enrollment has increased by 18.4 percent over the past year.

But in order to accommodate the growing number of students, Portland Community College has to expand. Fortunately for the college - and the local construction industry - voters approved a $374 million bond in 2008 for several projects at seven of the college’s locations. PCC is just now getting into the meat of the work.

“We knew the bond project was obviously important, but we didn’t know how quickly we would need all the additional space and updated facilities,” said Linda Degman, associate director of the bond program at PCC. “We know people are anxious to get the work, but we’ve been spending the past two years getting all the input we could and lining up the most important projects so we can do this right.”

The purchase and renovation of the four-story Willamette Block building in downtown Portland was one of Portland Community College's first bond projects. The $14 million project was completed in less than nine months with Fortis Construction as the general contractor. PCC has a $374 million bond from 2008 that it's using to add more capacity at eight of its locations. (File photo by Dan Carter/DJC)

Even though the college isn’t far down its project list, it has already put 80 firms to work, not including subcontracting work. Work has begun on four renovation projects and one newly constructed building, and the college has only spent $70 million, including construction costs and land purchases.

“We’ve been working hard to spread the work out,” Degman said. “Our intentions have always been to get a variety of different contractors on these projects.”

So far the college has spent $35 million on the new 95,000-square-foot, Leadership in Energy and Environmental Design Platinum Willow Creek Center in Hillsboro and nearly $14 million on the purchase and renovation of the four-story Willamette Block Building in downtown Portland.

The college has also spent $95,000 converting offices to more classroom space at the Rock Creek Campus in West Portland, $310,000 renovating and adding classroom space at North Portland’s Cascade Campus  and $93,000 renovating classroom space at the Sylvania Campus.

“We’ve been trying to get the needed renovations done before the fall term started,” said Gina Whiteholl-Baziuk, the public involvement manager for the bond projects, “but now that most of these are complete, we can turn our attention to the bigger projects on our list.”

Newberg

Breaking ground on Oct. 13, PCC will build a 13,000-square-foot classroom building on a 16-acre lot that it purchased for $3.75 million earlier this year.

Ten bidders are prequalified for the general contracting work on the project with bids due on Sept. 10. Plenty of subcontracting is available.

“This building is on a fast timeline, so we are looking to line up work on it as soon as possible,” said Kate Chester, spokeswoman for the Newberg and Sylvania campuses. The building is expected to be open by the 2011 fall term, she said.

Sylvania

After completing a classroom renovation, Chester will begin work on bigger projects at the Sylvania Campus in Southwest Portland. Bids are out right now for the creation of a campus-wide water efficiency system for its 900,000 square feet of building stock. Work is slated to cost nearly $2 million.

Once complete, the college will start on two other projects: a $19 million renovation of the 200,000-square-foot College Center and construction of a 10,000-square-foot Child Development Center.

Howard S. Wright Construction has been selected as the general contractor on the College Center renovation, but subcontracting work and the other project won’t be out to bid until early 2011.

Southeast Center

Attendance has increased by 70 percent in full-time equivalent student enrollment since the center was created in 2004.

In order to accommodate the increase in students, PCC is transforming its Southeast Center - located on Southeast 82nd Avenue and Division Street - into a campus. It will become PCC’s forth campus. In order to do so, the college is constructing two buildings that will total 100,000 square feet. The buildings will be used for classroom space and faculty office space.

The buildings will be constructed on 5.2 acres of land the college purchased for $7.4 million earlier this year from the German-American Society.

Work on the two new buildings is expected to go to bid in the spring of 2011.

Rock Creek

The college will be constructing a new 110,000-square-foot general purpose building at the Rock Creek Campus. The building will house classrooms, the health professions program and a new food services area.

Bids will be out for the project in the early spring of 2011, and construction is slated to begin by the end of spring.

More work will come to Rock Creek as the college is still in the process of creating a campus master plan. Once completed this fall, the college will have a full list of future projects for this site.

Cascade

The Cascade Campus in North Portland will have two major projects through the bond. These include a new 50,000-square-foot academic building, as well as a new 40,000-square-foot student center that will replace the current one.

Both projects are expected to go out for bid in March 2012 with construction slated for mid-summer of the same year.

New environmental overlay zoning along the Columbia Slough has the Columbia Corridor Association concerned that the city of Portland is making industrial land in the city unusable. While Metro is looking at possibly adding more land into the urban growth boundaries, the CCA wants Metro to focus inward toward these underutilized lots already in the UGB. (Photo by Dan Carter/DJC)

Creating industrial jobs in the Portland-metro area starts with making land available where business can locate. On that, local commercial real-estate groups can agree.

But where two of Portland’s most notable commercial real-estate organizations can’t agree is how that land should become available.

The Metro Council for regional government Metro will make a decision by the end on the year whether to expand the urban growth boundaries in Multnomah, Washington and Clackamas counties. And while Metro staff has noted a glaring deficit of large-lot industrial land - lots more than 50 acres - in the current UGB, not everyone is convinced that adding more land to the UGB is the key to creating jobs.

On one side is the Oregon chapter of NAIOP, a local commercial real-estate development association. The group is fighting for more large-lot industrial land to be included within the UGB, a move members say will make the area more attractive to out-of-town, industrial businesses.

On the other side is the Columbia Corridor Association, a group of industrial business owners and real-estate professionals representing industrial land between the Willamette River and the Sandy River. While the group understands the importance of having available land, organization leaders say they are concerned that underutilized industrial land currently in the UGB is being left out of the expansion discussions.

“Suitable industrial land is hard to come by in the Metro region,” said Michael Jordan, the chief operating officer at Metro who is leading the potential UGB expansion discussions. “A site has to be large, flat and close to multiple transportation options.”

In a preliminary recommendation, Metro staff targeted 310 acres west of Hillsboro to be included in any potential expansion. But NAIOP says the acreage is not enough to help cure the region’s 10.4 percent unemployment rate.

“Right now we do not believe the region has a competitive enough inventory to attract potential employers to the area,” said Mark Clemons, director of NAIOP Oregon and the director of project development at Group Mackenzie. “We’re supportive of the 310 acres being suggested, but it’s not nearly enough to help us create the jobs this region needs.”

Clemons’ organization thinks the amount needs to be closer to 1,200 acres to make any significant difference.

During the urban reserves process last year, Metro’s policy advisory committee found a need for between 200 and 1,500 acres of additional large-lot industrial land to meet the needs of the region during the next several decades.

“Because of our geology and geography there’s not a lot of opportunity out there. We understand that,” he said. “But when out-of-town companies come here, they want options, and right now, we don’t have many.”

The Columbia Corridor Association agrees with NAIOP that more usable land is important. But the group also believes there are alternatives to adding more land.

“We can keep adding acreage to accommodate industrial businesses moving to the outskirts of the region, but we all need to realize that there is land within the current urban growth boundary that is not being allowed to be utilized,” said Corky Collier, executive director of the CCA. “And until everyone acknowledges that, the problem isn’t going to be solved.”

The CCA is concerned about the city of Portland’s recent attempts to add environmental zoning to industrial lands along the Columbia Slough and up the Willamette River. New zoning in both areas would completely curb any future development within 50 feet of the banks of a body of water. This is the prime portion of most industrial zoned lots, and the reason a business would be next to the water in the first place.

“The city is slowly, bit-by-bit putting constraints on the industrial land,” Collier said. “And when we take away the usage of a parcel we lose industrial acreage, industrial businesses and industrial jobs.”

Also, the group believes that the city’s many brownfield sites - contaminated lots that would be usable if cleaned up - could be used for industrial land if a more consistent remediation method could be created.

“We have hundreds of brownfield lots in the Columbia corridor and several large brownfield lots in the Portland Harbor,” he said. “These sites are ideally suited for industrial usage, yet are being rendered useless by the city.”

Metro has met with both groups and says it is trying to come up with a solution.

“The discussions so far have gone smoothly, but both groups have made it clear that something needs to be done,” Jordan said.

Metro staff is looking at potential industrial sites north of Hillsboro that could be included, as well as some smaller parcels near Sherwood and Tualatin. But staff is also working on a way to make sure any additional land doesn’t fall into the trap that Collier and the CCA are concerned about.

“We want to instill some functional plan changes,” Jordan said. “If we do include some large-lot industrial land, we want to make sure it’s preserved to be used for industrial businesses for years to come.”

Metro staff is recommending putting stipulations on any industrial land that would be included. One stipulation would be that the land couldn’t be divided up, so it could be used by large industrial companies in the future.

The other stipulation would be that the land could only be used by private industrial businesses, not public entities. This would avoid what’s happened in Happy Valley, where the North Clackamas School District and North Clackamas Parks and Recreation District moved onto the town’s one large-lot industrial site, said Jordan.

Jordan also recommends that Metro should have a process where industrial land could be added to the urban growth boundary without having to go through the entire expansion process. Thus, if a business was looking for land and an accommodating site couldn’t be found, Metro could find urban reserve land to be included.

“Industrial business is a big part of the region’s economy and we understand that,” he said. “But we need to come up with an agreement that helps everybody’s interests.”

The Metro Council will make a decision on the urban growth boundary expansion by the end of the year. In the meantime, Jordan is visiting industry, environmental and community groups to determine their needs. He will make a final recommendation in October before the council officially starts discussing the matter.

The Portland office of Keller Williams Realty, a residential real-estate company, today announced the firm will add a new wing to the firm, KW Commercial.

Keller Williams first launched KW Commercial in its base city, Austin, Texas, in 2008. It offers commercial brokerage services using the same techniques and business practices as the residential counterpart.

Nick Krautter, a principal broker at the Portland office of Keller Williams, will become the managing director of the new commercial division.

“I’m excited about this opportunity because we’re going to take the approach of Keller Williams and apply it to commercial real estate, which I believe has a lot of opportunity right now,” Krautter said.

The new wing is still hiring commercial brokers. KW Commercial has a 70/30 percentage split, which is different from most commercial real estate offices. This means the agent keeps 70 percent of commissions and gives the company 30 percent. The company’s cut is capped at $30,000 a year, meaning once the company recoups $30,000 the broker gets 100 percent of the commissions.

The Portland Development Commission today voted to increase a loan that would move forward the Killingsworth Station mixed-use project.

The 4-1 vote increased a $3 million loan to project developer Winkler Development Corp. to $5.86 million, said PDC spokesman Shawn Uhlman. That increases the PDC’s total investment in the project to $11 million. Construction should begin within the next eight weeks, Uhlman said.

“It’s very welcome news for a project that has been a priority for the community and the PDC for a long time,” said Uhlman.

The project will contain 9,000 square feet of ground-floor retail space, 54 one-bedroom condominium units, of which 32 would be considered affordable housing, and three two-bedroom condominium units. The four-story building will be built in a 32,000-square-foot lot which currently sits vacant on the corner of North Killingsworth Street and North Interstate Avenue.

In order to qualify for the affordable housing units, families cannot make more than 80 percent of the area’s median family income.

The Federal Reserve will not reduce its interest rate on excess reserves, according to comments made today by Reserve Chairman Ben S. Bernanke.

At an economic symposium held in Jackson Hole, Wyo., this morning, Bernanke said the recovery of output and employment in the U.S. has slowed in recent months to a weaker pace than the Reserve’s Federal Open Market Committee predicted earlier this year. This is due to slow growth in consumer spending and continued poor economic conditions in the residential and nonresidential construction industries.

“The task of economic recovery and repair remains far from complete,” Bernanke said. “Growth has been too slow and joblessness remains high.”

A reduction in the interest rate on excess reserves, Bernanke said, could encourage banks to increase lending to nonfinancial borrowers. But under current economic conditions, it is unlikely that such a reduction would have much impact. The action could also cause further damage to the market by making federal funds less liquid.

“The Federal Reserve is already supporting the economic recovery by maintaining an extraordinarily accommodative monetary policy, using multiple tools,” Bernanke said. “Should further action prove necessary, policy options are available to provide additional stimulus.”

Since the homebuyer tax credit expired earlier this year, short sales have been one of the only tactics enticing people to buy a home in an otherwise grim market. And with any good thing in real estate, investors are looking to take advantage of it.

CoreLogic, a California-based real-estate data company, released data (PDF) yesterday that showed a trend in real estate professionals buying up short sale properties - properties sold for less than what’s owed on them to avoid foreclosure - and flipping them for market level prices.

The company found that 4 percent of the 250,000 short sales they investigated were sold by the purchasing party for profit within 18 months.

While nothing is wrong with this strategy, the report shows that agents and real estate investors have created a scam out of it.

When an agent is signed on to sell a short-sale property for a bank, the agent will find a buyer but not tell the bank about the buyer. The agent will then find a real estate investor and have him make a slightly smaller offer than the potential buyer. The agent then reports that offer to the bank and makes the deal. The real estate investor then sells the property to the first potential buyer for the price he or she was willing to pay, making a profit for both the investor and the agent.

The study found that one in every 53 short sales used this scam. Lenders are losing an estimated $310 million a year due to this scam in short-sale transactions, according to the report.

The Killingsworth Station development was first proposed in 2003. After years of roadblocks, construction may begin on Nov. 1. The Portland Development Commission board will decide today whether to extend a $5.8 million construction loan to Winkler Development Corp. (Rendering courtesy of Vallaster Corl Architects)

After seven years of mishaps and funding difficulties, an urban renewal-aided development in North Portland finally is near the start of construction.

The proposed Killingsworth Station mixed-use project has endured a change in developers and multiple designs. But if the Portland Development Commission board this morning approves a third amendment to its agreement with the project developer, Winkler Development Corp., then construction on the project would start by Nov. 1. | Update Aug. 27: The PDC today voted to increase the loan to Winkler Development.

The project site is a 32,000-square-foot vacant lot at the corner of North Interstate Avenue and North Killingsworth Street. The proposed four-story, mixed-use building would include 54 one-bedroom condominium units, three two-bedroom condominium units and more than 9,000 square feet of ground-floor retail space to be sold to businesses and not leased.

Of the 57 condominium units, 32 of them would be considered affordable, so only families making no more than 80 percent of the area’s median family income would qualify to live in them.

“By making the condos and retail space for sale it helps eliminate the gentrification that can come along with these types of projects,” said Jim Winkler, owner of Winkler Development Corp., which in 2006 was selected by the PDC board and a public advisory group as the project developer. By providing affordable homeownership opportunities in an urban renewal neighborhood, existing residents can stay and new ones can move in, he said.

The concept is a far cry from the original plan proposed in 2004, when the PDC was working with Portland-based KemperCo.

“KemperCo wanted to do a mixed-use, mixed-income project like this, but (it) wanted to rent out the living spaces and retail,” said John Jackley, director of communication and business equity at the PDC. “Then as construction costs started to rise over the next few boom years, the company couldn’t make the apartments pencil out.”

KemperCo proposed more than 60 apartments and more than 12,000 square feet of retail space.

Not everyone is happy about the new plan.

“Maybe this project would’ve helped curb gentrification if they built it back in 2004. But it’s too late now,” said Julie Metcalf-Kinney, a member of the Interstate Corridor Urban Renewal Advisory Committee and executive director of Low-Income Housing for Native American People of Oregon. “When the urban renewal area was created, all the general funds for community organizations were redirected to the PDC brick-and-mortar projects.

“So not only did they lose their homes and businesses, they lost their community organizations.”

Jim Winkler

But Winkler disagrees.

“We want the people that live and work here to dig deep roots into the neighborhood,” he said. “We couldn’t think of a better way than to have the people that live here have a stake in the ownership of the property,” Winkler said. “By making these for sale we slow down the rapid increases in cost of living that can take place when an area is revitalized.”

Winkler wanted to move the project forward in 2008 and even made the property shovel-ready to accommodate his timeline.

“Do you remember what happened in September of 2008?” Winkler asked, rhetorically. “A near financial collapse of the entire nation and most of the western world.”

The project was placed on hiatus as he searched for a willing lender. He also turned his attention to the PDC to see if it could help out.

The PDC offered to increase its original subsidy from $3 million to $5.1 million. But Winkler still couldn’t find a lender.

Now there is one. However, Wells Fargo, which would loan $4.6 million, has a stipulation that the $14 million project include gap financing in addition to the subsidy. In order to accommodate this request and move the project forward, the PDC board will vote today whether to increase the PDC’s $3 million construction loan to $5.86 million. That would increase the PDC’s total investment to nearly $11 million.

“For us to stimulate the economy during the recession we’ve learned we have to increase our presence and position on the projects we want to see completed,” Jackley said. “And this is one of those projects.”

Not only is the project a top priority for the PDC, but the Interstate Corridor Urban Renewal Advisory Committee also has it at the top of its gem list, which includes the most important projects that should be paid for with urban renewal dollars.

“This is a big-time project for the community as it’s the first project along the Interstate MAX light-rail (line) since the recession hit,” Jackley said. “It shows that confidence is picking up on both the public and the private side.”

Vestas Americas, a producer of wind power systems will keep its headquarters in Portland in part because of a $30 million recovery bond. The company is planning a $60 million retrofit of this building, the former Meier & Frank warehouse in the Pearl District. (Photo by Dan Carter/DJC)

Cities and counties across Oregon are rushing to use federal bonds before a Dec. 31 deadline.

A significant amount of the bond money, which was intended to stimulate the building industry, has not been used. Local government officials admit that the federal process has been daunting, and that finding the right projects has been tiresome. But they’re working to allocate the money before it disappears.

The bonds, known as recovery bonds, were issued through the American Recovery and Reinvestment Act of 2009 to all 50 states. The states distributed money to each county and each city with a population greater than 100,000.

Oregon was authorized to issue $258.7 million in recovery bonds - $155.2 million for facilities and $103.5 million for economic development. Approximately $185 million of the bonds either has been issued already or will be, said Marc Zolton, a spokesman for the Oregon Business and Development Department, which is in charge of issuing the bonds.

The facility bonds are issued through the city or county for private projects. But unlike a typical private bond, the purchaser doesn’t have to pay taxes on the interest earned. Private projects thus receive tax benefits of a public bond.

“These bonds are a great stimulus because they give bond buyers a reason to lend to private projects in this economy,” said Patrick Quinton, urban development, business and industry division manager for the Portland Development Commission, which is in charge of allocating Portland’s bonds. “But even though they can be a big help, they’ve been slow to get off the ground.”

The first speed bump was the time-consuming process to secure the bonds and complete the accompanying paperwork and procedures, Zolton said. Then the department had to market the program to the various cities and counties, he said.

But since the facility bonds were handed over to the cities and counties, the problem has been finding the right projects under the right timelines, Quinton said. The project has to be ready to go and have any additional funding in place before the bond is put on the market, he said.

“In addition to the timeline, the project has to be creditworthy with a credit score of at least an AA- because the city and the state’s name will be attached to it,” Quinton added. “And in this economy, even some of the best positioned developers don’t have that.”

The city of Portland was given $20 million in facility bonds but hasn’t issued any of it. There are four or five projects the PDC has targeted, but nothing has come to fruition yet, Quinton said.

However, the city recently made a move.

Not wanting to use its allotted $20 million, the city of Portland earlier this month asked the state to issue it an additional $30 million in facility bonds to entice Vestas Americas to keep its headquarters in Portland. The request is expected to be approved at the PDC board meeting on Friday. Vestas, the world’s leading producer of solar power systems, would get the $30 million tax-exempt bond for a $60 million renovation of the former Meier & Frank warehouse in the Pearl District.

“We’d heard that some parts of the state weren’t planning on using the money, so we asked the state and (it was) willing to help us keep Vestas around,” Quinton said.

In Eugene, city officials are working to authorize an $8 million recovery bond for Bennett Management Co. to construct a new downtown office building. But the city’s remaining $3 million in bond authority likely won’t be used, said Denny Braud, development analyst for the city of Eugene.

“These are not easy bonds to issue because of all the people you need on board and the timeline that must be stuck to,” Braud said. “We just stumbled into this one project, and will be very fortunate if it works out.”

The economic development recovery bonds, on the other hand, can be used only by public entities, which get a 45 percent interest subsidy on the bond. Also, these bonds may be sold on the private bond market, where they could generate more interest.

Multnomah County has issued has plans to issue its $5 million economic development recovery bond to help pay for its $20 million East County Courthouse project. Because of the subsidy, the county will save $300,000 to $400,000 in interest over the life of the bond, said Mark Campbell, acting director of finance and risk management with Multnomah County.

“We were thinking about a lot of projects, but this one rose to the top because we knew we wanted to get it going by the end of the year,” Campbell said. “It fit the timeline.”

Portland used an $11 million economic recovery bond earlier this year to finance energy and water conservation projects at 100 Portland public schools.

Washington County has a list of projects for its bonds, as well. It has issued $19.3 million in facility bonds and $12.8 million in economic development bonds. Hillsboro and Banks have been the main beneficiaries so far. Beaverton felt the effects of the short timeline; it wasn’t able to get a list of potential projects together for the bonds by the time Washington County commissioners needed it.

And even Umatilla County recently authorized a $9 million grant for improvements to a Snack Alliance manufacturing facility in Hermiston. The company also is in an enterprise zone, so it gets property tax abatement on top of the bond financing for the improvements.

“They’ve been slow to get issued,” Zolst said. “But we’re going to do everything in our power to get the money out the door before it’s gone.”

Only five people have bid on the U.S. Custom House in Portland. The auction ends Sept. 21. (File photo by Dan Carter/DJC)

Three months have passed since the General Services Administration put the historic U.S. Custom House in Portland up for public auction. Only five people have bid on the building so far, according to GSA realty specialist Andrew Schwartz.

The GSA has posted a closing date for the auction - Sept. 21. The most recent bid for the building is $500,000. The suggested opening bid for the building, however, was $2.5 million. Located at 220 N.W. Eighth Ave. in Portland, the U.S. Custom House had trouble securing a tenant since the U.S. Army Corp of Engineers moved out of the building in 2004, prompting the GSA to put the building on the auction block in May.

“Selling the building at $500,000 would be left up to the GSA,” Schwartz said. “We’re hoping that by announcing the closing date there will be an impetus for increased bidding activity.”

The identities of the five people bidding on the building will be kept confidential until a sales contract has been signed, Schwartz said.

After seeing early signs of the recession, a couple of Portland’s multifamily real-estate firms made drastic changes to their business models.

While both firms - Gerding Edlen Development and Guardian Real Estate Services - have branched out over the past few years, they’ve looked toward strikingly different pockets of the industry to not only survive, but also thrive.

Gerding Edlen Development: a shift from traditional commercial development to high-end property management

Since starting a property management wing at Gerding Edlen, Damin Tarlow, director of asset management, has been trying to figure out what amenities renters want. He has been surprised at how much renters use community spaces like the patio at the Cyan apartments. The team has decided to focus on managing the properties they develop in an attempt to get a better understanding of what customers want. (Photo by Dan Carter/DJC)

When the Gerding Edlen Development team first saw signs of the recession it knew it was going to have to adjust. The decision was made to quit outsourcing property management services and perform them in-house.

“We didn’t do it to cut costs or lower our service level,” said Damin Tarlow, a former project manager who is now Gerding Edlen’s director of asset management. “We did it to keep our ear to the ground and figure out what customers want as we go through this period of a transitioning market.

“We wanted to differentiate ourselves, and we couldn’t think of a better way than getting feedback from our customers and putting it into action.”

Tarlow’s team used that approach for the company’s three newest Portland apartment buildings: Indigo@12West, 20th on Hawthorne and the Cyan. Tarlow said the team was able to identify potentially effective strategies by looking at the three very different buildings.

The team first created a specialized online concierge service for each building. At a website, tenants can forward mail, set up utilities and subscribe to cable television. They also can set up in-apartment massages, find deals on nearby events and reserve community spaces within their buildings.

The team then took it a step further and developed a mobile phone application for the service.

“Lots of times service is about how quick you can respond to it,” Tarlow said. “And these programs allow us to be as quick as ever.”

The team also started making deals with ground-floor retail tenants in the apartment buildings. Renters at Indigo can order room service from Jake’s or Masu, as well as order groceries from Whole Foods across the street.

“While doing these things has helped us offer a higher, and unique, level of service, it’s also given us credibility with potential lenders,” he said. “We can be a lot more certain of our projects’ viability because we are involved in the siting, the building and the service afterward.

“This is one of the reasons this firm is still out there working while others aren’t.”

Guardian Real Estate Services: a shift from market-rate property management to affordable housing development and acquisition

Tom Brenneke

Portland-based Guardian Real Estate Services has been one of the biggest property management firms on the West Coast for nearly 40 years, with more than 13,000 units in seven states. The firm started to shift from property management services to purchasing and developing properties when the recession first hit.

“We saw the margins in property management shrinking,” said Tom Brenneke, president of Guardian Real Estate Services. “At the same time we started to see a huge commitment from the government to financially assist affordable housing projects as the economy headed south.

“Combining the two, we decided to look into developing affordable housing projects.”

The company now owns nearly 6,000 apartment units and will be adding an additional 500 this year. The company plans to start nine affordable housing projects in Oregon by the end of the year.

“We knew we needed to change and we were willing to,” Brenneke said. “But it hasn’t always been an easy transition.”

The affordable housing business involves selling government-issued tax credits and is really complex, Brenneke said. There was a learning curve just to understand how the business works, he said.

The company at first did not find many buyers for its tax credits, aside from banks looking to use them to cover debt. But since federal stimulus money was allocated to help get affordable projects off the ground, business has really picked up, Brenneke said.

“A lot of these deals that are coming to fruition now have been in our minds for nearly three years,” he said. “But until the government really started to commit resources to affordable housing, it was a tricky market.”

And while the recession has caused heartache for many people, Brenneke saw it as an opportunity.

“These affordable housing complexes were cheap because of the economy, so we went in and bought them up,” he said. “Then we rehabbed them and added units so the properties fit what we were trying to do.”

Guardian has four of these rehabilitation-and-addition projects in the pipeline. The company also is building community spaces and adding green features to differentiate them from other affordable apartments.

“When things aren’t working out you need to have other options, and looking into developing affordable housing let us diversify while still using the skills and knowledge we’d gained over the past 40 years,” he said.