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In
1988, the City of Portland released a planning document that described
the North Macadam district
in South Portland as the best opportunity for urban
re-development in Portland. The 142-acre site, long
a center of shipbuilding, was characterized by a hodgepodge of gravel
roads, industrial facilities, and fenced-off vacant land. With more than
a mile of prime riverfront property on the Willamette, it offered tremendous
potential for a vibrant urban neighborhood.
Fourteen years later, it looks much the same as it did then, and is still
described by planners as the best opportunity for re-development in Portland.
To the casual observer, this might seem like a case of “market failure,”
requiring government intervention to get the region built-out to its full
potential. But in fact, the lack of economic activity in North Macadam
is primarily the result of “government failure.” The two largest
property owners put forward a development concept in 1993 that would have
produced millions of dollars of investment with no public subsidy required.
But Portland planners, convinced that the district needed to be developed
at Manhattan-style density, rejected the plan as too suburban.
Desperate to move some dirt, the Portland City Council designated the
area an Urban Renewal District in 1999. This authorized a development
process by which the Council would identify desired types of development,
sell urban renewal bonds to subsidize politically favored projects, and
re-pay the bonds with the rise in property tax revenues (called the “tax
increment”).
But in December 2001 their plans were derailed by an Oregon Supreme Court
decision that will severely limit the amount of tax money available through
urban renewal. In a case filed by Shilo Inn hotel chain owner Mark Hemstreet,
the court held that the city had improperly calculated the tax rate under
Oregon’s complex property tax limits. This will reduce the revenue
generated by tax-increment financing (TIF).
In May 2002, financial consultant Steven Siegel reported to the Portland
Development Commission (PDC) that the agency’s plan for subsidizing
condos, office buildings, streetcars and an aerial tram to Marquam Hill
would be at least 107 percent over budget for the amount of revenue that
would actually be received through urban renewal. In addition, there will
be timing problems associated with certain projects that will cause severe
“cash flow shortages.”
For example, PDC has a wish list of projects for 2003 that will cost more
than $14.9 million, but they expect to actually have only $600,000 to
$700,000 in TIF funds.
Given this bleak state of affairs, one might think that city officials
would be interested in dusting off that 1993 proposal to have the district
developed with no public subsidy, on the theory that low-density development
is better than no development. But that assumption would be wrong. Portland
politicians, steeped in a culture of government activism, have no intention
of allowing landowners to control their own destiny.
In fact, looking at the fancy, full-colored map of the city’s proposed
development plan released in April, one could easily conclude that there
are no private property owners in North Macadam. The map shows an amazingly
detailed series of high-rises, streetcar alignments, and a greenway along
the riverfront, with no apparent relation to the land as it actually exists
today.
For example, on the city’s map, the shipbuilding yard of Zidell
Corporation—the district’s largest landowner—is replaced
by a park. There is no discussion of what Zidell might actually want for
the property. The map is drawn as if North Macadam is simply a blank canvas
upon which omniscient planners get to paint.
The Portland City Council has even designated North Macadam part of a
new Science and Technology Quarter. How they know that biotechnology research
will emerge in this precise area of Portland—or anywhere in Portland—is
a mystery, but they are prepared to spend more than $162 million of public
funds on their dream.
THE NORTH MACADAM PLAN
The North Macadam district is an area bounded by I-5 to the north and
west, the Willamette River to the east, and John’s Landing to the
south. The area totals approximately 142 acres, and very little is in
public ownership. Under the plan released by Portland in April, there
will only be about 70-75 buildable acres, with a proposed Willamette River
greenway of 17-23 acres and new parks totaling eight acres. The rest of
the area will be needed for infrastructure such as roads, sewers and a
new streetcar line.
Although the district is highly inaccessible by car, with only two main
entrances off Macadam Avenue, there are few plans to improve the roadway
system. Instead, the city wants to build a streetcar, light-rail line,
and an aerial tram up to the top of Marquam Hill to service the expected
expansion of Oregon Health and Science University (OHSU). With OHSU as
the hoped-for anchor tenant, planners expect the district to accommodate
10,000 new jobs and 5,000 new residences by 2019.
The city’s proposal is incredibly detailed. The most obvious feature
is the wide greenway along the Willamette River. For riverfront property
owners, there is a minimum setback of 100 feet from the top of the riverbank,
which may translate into an actual setback of 120 feet or more, depending
on the slope of the bank.
Within that greenway, ecological, trail and transition areas must be provided
in specific sub-areas, at landowner expense. The area closest to the river
(the riparian zone) must be left in its natural state. The next zone is
for landscaped vegetation, and the property owner is required to choose
plants off of a specific list and meet a minimum amount of landscaped
area. The final zone, the one furthest from the water, requires separate
bicycle and pedestrian paths that are 12 ft. wide, with landscaping in
between the two.
Other features of the proposed code are equally prescriptive. For example:
· Certain property owners along the waterfront must provide “major
public viewpoints.” These facilities must include benches, lighting
and landscaping in conformance with specific Bureau of Parks regulations.
· Locker rooms are required in any building with over 100,000 sq.
ft. of non-residential floor area, in order to encourage bicycling.
· The code identifies a specific required residential area. Projects
will be required to include one dwelling unit for every 500 square feet
of net site area, a density of more than 80 units per acre.
· Surface parking will be prohibited within 200 feet of the streetcar.
Retail outlets larger than 40,000 square feet are generally prohibited,
with exceptions allowed up to a cap of 60,000 square feet. This will prevent
any larger retailers such as Costco or Fred Meyer from building in the
district, as their stores typically require 120,000 square feet or more.
PROPERTY OWNERS SKEPTICAL
The two largest property owners in the district, Schnitzer Investment
Corporation and Zidell Company, have participated in the public planning
process for over a decade. Ann Gardner, property manager at Schnitzer,
jokes that she’s been to so many meetings that “sometimes
I feel like I’m in the movie Groundhog Day,” the 1980s comedy
where Bill Murray wakes up each morning destined to repeat the previous
day over and over again.
Unfortunately, despite the numerous meetings, Schnitzer has no current
plans to develop their property. “We spent a million dollars participating
in the city’s planning process and tried to meet the public goals,”
says Gardner, “but ultimately the plan the city settled on is uneconomic.”
As a result, Schnitzer is in a wait-and-see mode. Gardner notes, “We’ve
had the property for a very long time and we can afford to wait longer
for a good opportunity.”
This is a marked change from the early 1990s, when the company actively
looked at redeveloping its property. In 1993, Ken Novack, President of
the company, along with Jay Zidell and Steve Shain of Zidell Company,
met with city representatives to lay out a plan that would have developed
their properties—more than half the district—without the need
for any public subsidies. The plan featured long cul-de-sacs and suburban-type
densities. It was rejected by the city.
In a follow-up letter, Bob Stacey, then-director of the Portland Planning
Bureau, wrote, “the development intensity shown in the concept is
considerably less than the Central City Plan envisioned for the North
Macadam area. However, Mr. Martin’s [David Martin, an advisor to
Schniter and Zidell] objective was to picture a market-driven residential
development, built without public investment or subsidy. His advice to
you has been that greater densities will require greater cost than the
housing market presently will support.”
A significant concern for the city was that the lower density would eliminate
any rationale for extending the Portland Streetcar (which didn’t
even exist at the time) into the district, and that was an important element
of the high-density dream of city planners. As Stacey noted, “it
would probably be unwise to extend rail service into North Macadam in
the foreseeable future to serve these densities.”
Though clearly disappointed, city officials did not reject the plan outright.
They simply suggested that the design might have to be tweaked a bit during
the regulatory review process. Specifically, Stacey wrote, “City
staff will be happy to assist you with the land use reviews you need to
begin development of the Martin concept. With the exception of the street
pattern, we see no significant problems in obtaining approval.”(emphasis
added)
To the uninitiated, this sounds reassuring. One can imagine a few short
meetings with helpful city planners, the issuance of necessary permits,
and a celebratory groundbreaking ceremony.
For seasoned developers, however, it was like hearing the Trail Blazers
tell a prospect, “Except for the fact that you’re only 6’2”
and we need someone to guard Shaq, you’re well qualified to play
center for us and we look forward to seeing you in camp.”
Anticipating the gauntlet of reviews that hostile city bureaucrats would
impose, and facing redesign of the street pattern that would totally change
the market viability, Schnitzer and Zidell withdrew the proposal.
Today, Steve Shane of Zidell judges the city’s current plan as “overly
prescriptive and not especially creative. It adds little value to what
we’re trying to accomplish.” He also views it as a major barrier
to economic development. “The city says that they want to attract
jobs and lower regulation,” says Shane, “but what they’re
doing here is just the opposite. Incentives that exist elsewhere in the
Central City in terms of bonuses are required in North Macadam.”
Discussing the planning process, Shane says, “The outrageous hubris
of planners is that they sit in offices and plan for property that they’ve
never walked.” He claims that some Portland planners have never
even been to his site (at 35 acres, it represents one-fourth of the entire
district), so they are poorly qualified to tell his company how to develop
it.
TAKING A GAMBLE
Not all property owners within the district share this view. The most
notable exception is Homer Williams, who has assembled land in the middle
of the district and is working with Oregon Health and Science University
(OHSU) to bring a planned expansion of OSHU to North Macadam. However,
Williams is different from Schnitzer and Zidell in several important ways.
First, he shares the city council’s preference for dense, mixed-use
development. Second, he firmly believes that the city must spend public
resources to make things happen and is happy to cut deals with PDC to
get subsidies. And third, he hates cars. He says, “The automobile
is the bane of our existence. I haven’t owned a car in three years.
I live and work downtown. If we limit parking and bring the streetcar,
this will be a wonderful neighborhood.”
While other developers in the city also say nice things about the streetcar
or light rail, most believe that accommodating the needs of motorists
is essential to any successful project. Williams believes that city planners
are correct in manipulating the development code to try and force people
out of cars.
THE
GRIDLOCKING OF NORTH MACADAM
While there is something admittedly appealing about the notion of people
traveling around by streetcar and tram, there is no evidence that large
numbers of Portlanders are prepared to actually live that way. The transportation
studies that have been done for the city predict major overloads of the
road system under the high-density plan. As PDC noted in 1999, “The
Bancroft, Macadam and Hood intersection will be significantly congested
during the a.m. and p.m. peak travel hours. Conflicts will increase from
increased traffic weaving on Macadam as a result of additional right turns
into the district.”
This is intensely frustrating for nearby residents of existing neighborhoods.
Marty Slepekis is one resident who has invested enormous amounts of personal
time into the planning process, representing the Corbett-Terwilliger-Lair
Hill neighborhoods in city planning exercises. He says, “Everyone
in the CTLH neighborhood is concerned about the major traffic impacts
of this proposal.”
Slepekis says that the traffic problems in North Macadam will be far worse
than in other urban renewal areas, due to the inadequate road system.
“I’ve counted the access points in other urban renewal districts
and they range from 18-117 for an expanding grid street system. We only
have two here.”
Nonetheless, the city is planning to spend most of the infrastructure
budget on fixed guideway transit, including some $44 million on a streetcar
extension and $16 million on the aerial guideway (though no one actually
knows what the tram will cost). The city is also planning to spend at
least $3 million on a transit hub linking these two projects together.
In comparison, planners are only budgeting $7.6 million for a new, two-lane
road in the district called the River Parkway, $4.6 million for an upgrade
to Moody Street, and $4.25 for improvements to Bond Street, despite the
fact that road systems carry far more people (as well as freight) then
a streetcar or tram ever will.
When asked about this imbalance, PDC senior development manager Cheryl
Twete said, “We know we have an area that is transportation constrained.
It’s physically impossible to build more roads. The goal is to build
a local street system, bus, streetcar and tram so that people have multiple
options for entering and leaving the district. Our consultant concluded
that more housing would help alleviate the traffic problems as higher
densities result in higher transit ridership.”
The “high density reduces traffic” argument has been the mantra
for Portland planners for over a decade, but has no basis in fact. The
places in the country that have the highest densities, such as New York
and San Francisco, also have nightmarish traffic problems, despite operating
world-class transit systems.
The problem is that when density is increased, transit ridership does
tend to rise, but not nearly enough to offset the huge increase in automobile
traffic caused by that same density.
The city tries to minimize this effect by artificially constraining the
amount of parking allowed for new development. In the proposed zoning
code for North Macadam, for example, the parking ratios for new retail
and office development will initially be 3.4 parking spaces per 1000 square
feet of net building area. Starting in 2008, the ratios drop to 2.9, then
2.4 in 2014, and finally 2.0 in 2020.
Portland planners assume that as the streetcar system gets built out,
the district will need fewer parking spaces. But that assumption is a
fantasy, and building a business plan around it is going to set off a
chain reaction of unintended consequences.
First, lenders will not finance projects with excessively low parking
ratios, even when fixed-rail transit is right next-door. On the Westside
MAX
line, for example, one six-acre parcel at the Beaverton Creek station
has remained undeveloped for over five years due to
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improper
parking ratios. According to
Todd Schaeffer of Specht
Properties, the owner, “The zoning ratio for that site is 2.7 parking
spaces per thousand; the market rate is four. We think light rail is an
amenity but it doesn’t take the place of parking. Lenders aren’t
going to go for a project like that.”
A second problem is that unrealistic parking controls simply externalize
the parking shortage to nearby neighborhoods. Commuters in particular
are very savvy about finding on-street parking in residential neighborhoods,
taking up space designed for use by those who live there. The Corbett-Terwilliger-Lair
Hill neighborhood already suffers from this problem, and has for decades.
A major analytical problem with the City’s strategy is that there
is no way to link parking ratios with driver behavior. John Liljegren,
a Portland lawyer who worked for years in the office development business,
served on a Department of Environmental Quality task force on parking
ratios in the early 1990s and still becomes incensed when the subject
is broached. He says, “The advocates of parking limits haven’t
thought through a single question. They have no way to measure the actual
impacts of their proposed rules and they have no intent of doing so.”
He asks rhetorically, “What is the purpose of parking limits? Are
they trying to reduce auto trips? If so, by how much? Just because you
reduce parking spaces by 10 percent or 20 percent doesn’t mean you
reduce trips by that number. There are at least 11 possible actions a
person could take when encountering a retail location that doesn’t
have enough parking. How can the powers that be measure the frequency
of each of these alternatives to decide how well the parking maximum is
doing at reducing trips? Of course, they cannot.”
Even if planners relented on parking ratios, however, the North Macadam
district is simply in a bad location for high density. It is hemmed in
by the Willamette River to the east and I-5 to the west. There is no way
to build out a better street grid. Jerry Foy, with Westwood Development
Company, worked in the district for many years. He says, “Between
4:00 p.m. and 6:00 p.m., Macadam routinely backed up all the way to John’s
Landing. I could not think of a worse location to put all that density.”
OHSU DOES NOT NEED NORTH
MACADAM
Although the popular press accounts of this debate describe the North
Macadam district as essential to OHSU’s need for 2.2 million square
feet of new space, what is not generally known is that OHSU actually has
room for that expansion right on land they already own up on the hill.
Such expansion would give Portland the jobs it wants, while eliminating
the rationale for a controversial and expensive tram. It would also allow
North Macadam to develop at lower densities, minimizing local traffic.
At first blush this scenario seems implausible, because Marquam Hill has
bad enough traffic problems of its own. But this could be alleviated by
building a new, two-lane road to OHSU from Barbur Boulevard. That concept
was analyzed by David Evans and Associates in 1992, as part of an OHSU
master planning exercise, and found to be feasible. The road, which became
known as the South Access Road, could be built on public land, with minor
effects on five property owners. It would go down the south side of the
hill, tunnel under Terwilliger Boulevard, and connect with Barbur Boulevard
near Hamilton Street. This option would take care of OHSU’s transportation
needs for any future expansion on the hill for the next 30 years.
However, the plan was dropped from consideration in the early 1990’s
for “political and environmental” reasons, according to OHSU
consultant Carl Buttke.
More recently, the City’s Peer Review Panel for analyzing the transportation
problems associated with Marquam Hill—a group of five consultants
appointed by the City—noted that “the Peer Review Panel recognizes
the significant transportation system advantages associated with the South
Access Road. However, the cost and environmental constraints have been
determined to be fatal, and therefore the Panel did not give further consideration
to this alternative.”
However, if one goes back and actually reads the original David Evans
report, it’s clear that the “fatal flaw” argument is
bogus. The environmental issues associated with the South Access Road
are minor. The public lands right-of-way consists of cutover forestland.
There are no wetlands on the site, no threatened or endangered species,
no major waterways, no effects on the 40-mile Loop Trail, and no trees
older than 100 years. Evans found that “Portions of the site are
overrun with such invasive species as English ivy, traveler’s joy,
and blackberry…the main effect of establishment of exotics is to
reduce species diversity and homogenize wildlife habitat across the landscape.”
The total cost of construction in 1992 dollars would have been $5.5 million,
including construction, right-of-way, engineering, environmental mitigation
and contingencies.
The analysis showed that the road would take traffic off of local neighborhood
streets and Terwilliger Boulevard, thereby reducing congestion for motorists
and improving livability for residents. The road would also include six-foot
shoulders and five-foot sidewalks on both sides, making it potentially
another scenic route for joggers and cyclists to use.
There is really only one problem with this option: it’s a road.
And the City Council hates roads. For the past decade, they’ve been
busy cannibalizing our existing roadway system with under-used light-rail
lines, streetcars and bikeways, while dreaming of bigger things such as
removing I-5 on the east side.
Cheryl Twete at PDC recalls that the South Access Road was discussed in
the context of North Macadam planning but “it was never given serious
consideration. It would run through an environmental overlay zone and
be very expensive. PDOT was never very interested in that concept.”
Ken Dueker, a retired Portland State University professor who lives near
Marquam Hill, recalls running into Earl Blumenauer when Blumenauer was
a member of the Portland City Council and asking him about the road option.
He said that Blumenauer told him it was no longer on the table as the
city didn’t want to encourage auto access to the hill.
Dueker, who formerly ran the Transportation Research Center at Portland
State, believes that building a road would still make sense and would
solve one of the major problems associated with the proposed aerial tram:
parking. “The tram is designed mostly to serve internal trips to
the hill,” says Dueker. “If you want to get a lot of commuters
to use it, you need a big parking structure in North Macadam, but that
isn’t planned, and even if it was, it would still aggravate traffic
problems down on Macadam.”
SAVING THE RIVERFRONT
FROM PEOPLE
Although the OHSU expansion is the supposed economic rationale for the
City’s North Macadam plan, the environmental showpiece is a greenway
along the bank of the Willamette. The existing code calls for a 25’
setback, but Portland planners have a much more grandiose concept in mind.
The proposed code calls for a minimum 100’ setback, and a strong
preference for150’.
While this is seen as cutting edge thinking in some quarters, Barbara
Walker has a more critical view. “I hope the real greenway turns
out to be different than the plan. I don’t want a strip of riparian
area, then a strip of trees, followed by a strip of sidewalks. We need
more variety.”
Walker, who lives in Southwest Portland, is more than a novice on the
subject. She is a highly respected parks and open space advocate who has
been active on these issues for decades. She believes that the plan should
be less prescriptive and allow more flexibility. She also believes that
expanding the greenway to a minimum of 100’ is a mistake.
“There is a fairness issue here,” she says. “I have
no problem with the current 25’ setback. We could require property
owners to build a trail as they would a sidewalk in a more traditional
neighborhood, and I don’t think they’d object. But when you
get out to 75 or 100’, who is going to pay for that? In order to
avoid this requirement, the riverfront owners will be the last to develop
in the district, and that’s wrong.”
The greenway as envisioned by the city has bike and pedestrian paths well
away from the water. Depending on how the mandated vegetation grows, over
time people may not even be able to see the river from the footpaths.
If that’s the case, they will start creating their own paths to
get closer to the water, as they do in Tom McCall Waterfront Park in the
“bowl” by the Portland Marriott. In that area, the sidewalk
circles away from the water, so people have voted with their feet to make
a new trail near the water.
Walker is troubled by the heavy-handedness of the North Macadam plan in
the way it treats property owners. “We need to find incentives to
make the greenway workable. I don’t think having to come up with
a plan to buy all the land is sensible. I’ve worked on the 40-mile
loop for over 20 years, and there are a phenomenal number of landowners
who are willing to donate land for a good cause as long as something totally
uneconomical isn’t jammed down their throats. There’s a lot
of good will out there; this is how we’ve created green spaces in
Portland for a very long time.”
ANOTHER
PLANNING TRAIN WRECK
Portland officials continue to cling to their dream of high-density, transit-oriented
development in North Macadam. But the city’s plan is so prescriptive
that the two largest property owners have essentially bailed out, and
even Homer Williams told the Planning Commission recently that much of
his project with OHSU will not be allowable under the proposed code. Williams
wants a variety of building heights and shapes; following the proposed
code would lead to the same result as in the Pearl District, where most
of the new buildings all look alike.
The tram, which will be a postcard attraction rather than a serious transportation
investment, is being fast-tracked like few projects ever have in the history
of the
city, and promises to create a major bloodbath with existing homeowners
living below the proposed alignment on Southwest Gibbs Street.
And finally, the entire idea of the City Council designating the area
a “Science
and Technology Quarter” is ludicrous. If politicians could make
profitable economic clusters happen simply by issuing a press release
and subsidizing a few buildings, the economy of Cuba would be flourishing
and the Soviet Union would still exist.
Venture capitalist Ralph Shaw, in a March speech to the Commercial Association
of Realtors, blasted the city’s economic planners for their wishful
thinking.
“Having watched the failure of economic development policies focusing
on dotcoms and telecommunication hotels, our economic development planners
are now succumbing to the irresistible, lemming-
like, urge of looking to biotechnology as our long-term economic savior.
This in spite
of the huge capital requirements incumbent in achieving success in that
highly risky business, and the absence of any commercial evidence that
our state has something unique to offer.”
The history of Oregon’s Silicon Forest should demonstrate the folly
of trying to “plan” any kind of economic cluster. While the
high-tech concentration in Washington County has become the economic engine
of the state, its development involved thousands
of seemingly random events, decisions
and investments over 50-some years. Though each connection is understandable
in retrospect, none could ever have been predicted.
A DESIRE NAMED STREETCAR
If anything symbolizes the daydreaming associated with North Macadam planning,
it’s the streetcar. Everyone seems to want it, yet almost no one
actually rides it. At the peak commute period in the morning, fewer than
100 people per hour ride it into the central city from northwest Portland.
The streetcar only collected about $69,000 in fares and passes during
its first year of operation, while operating expenses were $2.4 million.
Most passengers rode for free.
Zidell’s Steve Shane, a strong advocate of the streetcar, spoke
for rail fans everywhere when he said, “Actually, I’ve never
been on the streetcar myself. It doesn’t take me to where I want
to go, and it’s too slow.”
At the conclusion of our interview, he said he had to leave for an appointment.
We both went outside and got in our cars.
John Charles, a contributing editor to BrainstormNW, is Environmental
Policy Director at Cascade Policy Institute, a Portland-based free market
think tank.
SIDEBAR
A city council hearing date is currently set for October 9, at Council
Chambers, 1221 SW 4th Avenue, Portland. The schedule of hearings is maintained
at http://www.planning.ci.portland.
or.us/cp_nmac_event.html,. Check that website for more details in September.
Also, the “recommended” North Macadam plan is due to be released
on September 10; it will be available online at http://www.planning.
ci. portland.or.us/cp_nmac_over.html.
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