Portland and one of the city's most prominent developers, Hoyt Street Properties, have yet to finalize a deal for more affordable housing in the posh Pearl District after nearly seven months of negotiations.
It's not clear why talks are dragging, although Portland is now slated to buy land from Hoyt Street by April 24, a city attorney said Friday. Developers and city officials declined to discuss progress.
The protracted deal-making may provide valuable lessons for city leaders separately negotiating with the Zidell family to ensure more affordable housing for Portland's other upstart neighborhood bookending downtown, the South Waterfront District.
Those lessons? Secure land early, agree on a purchase price and write a contract that protects taxpayers.
Affordable housing advocates hope city officials learn from missteps with Hoyt Street and lock in specifics as part of a deal with the Zidell family, which owns about 30 acres in the South Waterfront.
"It's very hard to go back," said Will White, who led Portland's housing division from 2003 to 2009. "Waiting always costs you more money."
City officials thought they negotiated robust affordable-housing protections two decades ago as part of a pioneering deal to transform the Pearl District from an old rail yard into an urban paradise for Portlanders of all incomes.
In 1997, the Portland City Council agreed to invest tens of millions of public dollars to tear down the Lovejoy viaduct, build a streetcar line and construct three parks. In return, Hoyt Street Properties agreed that 35 percent of all housing units built on the company's 34 acres would be affordable to individuals or families of modest means.
As a protection, Portland could buy up to half a city block from Hoyt Street at a discount if the company failed to deliver, according to the city's revised 1999 contract. Portland would have two years to begin construction on a new affordable housing project, according to the deal, otherwise Hoyt Street could buy back its land.
In March 2014, Portland officials realized that Hoyt Street wasn't on track: of 2,556 units built or under construction, just 727 - or 28 percent - would meet affordability standards. The Oregonian reported the deficiency in August but city officials said they were undecided about buying land from Hoyt Street.
On Sept. 3, five days before the city's deadline to notify Hoyt Street, Portland Commissioner Dan Saltzman told the company it was out of compliance and the city wanted land.
Nearly seven months later, Saltzman and the Portland Housing Bureau refused to answer questions about progress or release documents requested by The Oregonian/OregonLive.
Determining the price:
1) Portland notifies Hoyt Street Properties that affordable housing goals are unmet.
2) Hoyt Street identifies land it will sell Portland.
3) Within 10 days, Portland and Hoyt Street select their own appraisers to value the property. Their appraisers also select a third, independent appraiser to determine the value - in case both sides can't reach an agreement.
4) Portland and Hoyt Street's appraisers set the price within 60 days of appointments. If they disagree, the independent appraiser determines the value within 30 days of the dispute.
5) After that, Portland's appraiser has 30 days to determine the appropriate discount taxpayers should receive for building a streetcar line, parks and removing the Lovejoy ramp.
6) Hoyt Street then has 30 days to rebut the discount. The independent appraiser then has 30 more days to make a final decision on the price.
7) Closing occurs no more than 30 days later.
The Oregonian since Feb. 3 has been seeking information about the purchase price and the level of discount taxpayers will receive.
"Negotiations with Hoyt Street Properties are currently underway," Saltzman and the Housing Bureau said in a prepared statement. "We expect to conclude negotiations this spring."
Tiffany Sweitzer, president of Hoyt Street Properties, did not respond to requests for comment. Sweitzer is the stepdaughter of influential developer Homer Williams, who previously served as the face of Hoyt Street before losing his stake in the company to Portland real estate mogul Joe Weston.
According to the 1999 contract, Hoyt Street was supposed to pick a piece of land it would sell the city. Both sides would hire their own appraisers to determine the value. If they couldn't agree, an independent appraiser would weigh in - and also determine how much of a discount Portland should receive for the taxpayer-funded parks, streetcar and transportation improvements.
But for whatever reason, that approach wasn't acceptable to Portland housing officials. According to a Sept. 2014 memo, officials planned to "immediately begin negotiations to include a simplified pricing methodology and possible extension or elimination of the construction start time limit."
Martha Calhoon, a spokeswoman for the Housing Bureau, declined to answer any questions about the Hoyt Street transaction, including whether terms of the 1999 agreement changed or what parcel of land has been offered. The city also refused to provide appraisals or documents about the city's discount, citing an exemption in the state's public records law.
Lisa Gramp, a deputy city attorney, said the city and Hoyt Street tentatively reached a deal this week and Portland should close on the property by April 24. Disclosing any details now, Gramp wrote in a letter Friday, would harm the public by compromising the city's leverage or "opening the negotiations to competing buyers."
White, the city's former housing leader, said the city should be transparent with the public about the appraisals - particularly since the 1999 contract called for Portland and Hoyt Street to freely share details during negotiations about a piece of land Hoyt Street is contractually obligated to sell the city.
"If those have been put on the table with Hoyt Street Properties, then it's not a secret anymore," he said. "I would think that that should be publicly available."
White and others see parallels between Hoyt Street and struggles to develop affordable housing in the South Waterfront, where just 209 rent-restricted units have been built amid glitzy condo towers.
For months, city officials have been working with the Zidell family to ink a development deal that would include about $27.4 million in public investments. Affordable housing has been a key holdup. But progress has reportedly been made.
"We're still in negotiations," said Patrick Quinton, executive director of Portland's urban renewal agency, which is negotiating with Zidell. "We're not going to comment on specifics."
Dennis Allen, director of development for Zidell, said he's hopeful a deal will be reached. "We anticipate affordable housing being a part of it," he said.
Margaret Bax, a former housing policy adviser for Portland, said she hopes the deal is heavy on specifics - including the site Portland will buy and the price it'll pay.
Given the lengthy process with Hoyt Street, she said, both sides should specify terms now to ensure they don't "waste six months of everybody's time."
"I'd rather see that money and energy going into developing that housing," she said.
-- Brad Schmidt
503-294-7628
@cityhallwatch