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Thursday, July 19, 2007

A Vietnam victory at the airport

Maybe an Ikea store and a light-rail line out by the Portland airport aren't a complete disaster. But let's face it, the 10 years of "urban village" planning malarkey regarding development in that area was nothing but unadulterated methane being blown by Vera, Charlie Hales, Opie, Big Pipe, and all the Goldschmidt boys and girls at the Port, at Tri-Met, and at the PDC.

"It was all going fine 'til 9/11.... Nobody noticed that it's too noisy out there for people to live.... Nobody noticed that retailers wanted more space than we were going to let them have.... The retail market changed unexpectedly...." Sure.

This is "planning"?

But what the hey, looks like Bechtel made out. And Neil got his fees, of course. That much was never in doubt.

Comments (24)

Rob Kremer has a pretty good analysis over on his blog.

The O didn't explain that Bechtel Corp's "kicked in $28.2 million" for the Cascade Station 120 acres was in large share "in'kind" service costs. They performed all the design/planning/engineering with inflated costs PLUS they got the exlusive rights to build the lightrail line with means of inflated pricing without competitive bidding. These "services" are what made up the $28.2 million.

Also, getting 120 acres next to a major international airport, with lightrail, major roads, streets, infrastructure in place, and next to a freeway for just $28M is quite a bargain. It calculates out to be $22 dollars a sq. ft. or $1.48M for a typical 200ft x 200ft Portland block including the street ROW. This price is below market value for similar property with all of these attributes.

Just another deal sponsored by PDC, Metro, TriMet, and CoP-oh, that's us.

"The idea was, let's build an urban village next to the airport in an industrial core," said Craig Sweitzer, who tried to market Cascade Station to retailers.

Talk about being out of touch with reality; this "idea", while it probably makes sense to "planners", could be new definition for insanity. I wonder how they manage to breathe in the rarified atmosphere they occupy.

Keeping a straight face is another monumental achievement.

...could be a new definition for insanity.

Just thinking about the lack of oxygen made me drop the article.

That, and the Stella for lunch.

...and to think, those "urban pioneers" that moved into the Pearl and promptly complained about train and truck noise were actually typical after all.

So what's Bechtel's take? They fronted for the airport light rail in exchange for development rights. The development failed.

I'm not seeing how they're cashing in. Any insights on this?

I guess the only good thing about this is I think Potter is more deliberate than Vera was.

Vera got a bug up her butt and anything was fairgame for taxpayer funding, even that clinker PGE Park / Cascade Station. However, I am sure Vera Jr. (Sam) will pick up where she left off.

God, these politicians are such simpletons when it comes to finance and being sold.

I'm not seeing how they're cashing in. Any insights on this?

Do you think that maybe they made a few dollars on the construction contract? Plus free land, as Lee pointed out.

Sure, they did it in-kind, without competitive bidding, but my point is that the land they got has turned out to be kind of a bust, no? Isn't that the gist of the story? And do they own the land or just the rights to develop it?

I'm not arguing that Bechtel got burned. I'm just wondering if maybe this deal didn't turn out so well for them after all.

They are still blaming the failure on September 11th. Ridiculous.

I'm amazed that a supposedly-brilliant "planner" came up with a design concept that involved tree-lined parks and streets underneath the airport's flight paths. Are you kidding?

These are the same geniuses who are going to throw up another runway where the Colwood Golf Course is now. " No one in Cully or Rose City or Alameda will mind the noise"!

I'm just wondering if maybe this deal didn't turn out so well for them after all.

From what I'm reading, they contributed $28 million (retail value) in services -- I'm guessing at an out-of-pocket cost of, say, $15 million or $20 million. From that, they got the construction contract on the rail line, which must have run close to $100 million(?), at a profit of, what, $20 million(?) Which puts them ahead already. Now they make money off the Ikea lease and whatever else they can get built out there(?)

It ain't the gold mine that Neil promised them, but they could have done worse.

It's much worse folks. Bechtel/Trammel Crow paid approx $28 million for the no bid contract ($125 million)to build airport max and development rights on 120 acres.
Bechtel/Trammel Crow recently leased to IKEA 19 acres for $14 milion.
For the same 93 years left on the Bechtell renewable lease.
The windlfalls for the private half of this "public-private partnership" have been enormnous.
Because not a single jounrnalist will do an in depth story we will never know the names of those who lined their pockets and treated their families to living large at the expense of our public land and tax dollars.

Come on, the Ikea store is a linchpin...

From the comments section of the "new runway" thread :

This topic came up at the Kennedy School County Commissioner forum last year, and each of the candidates promised to bend over backwards to please NE residents, with the exception of Ginny Burdick, who completely blew me away with her "straight talk express," saying something to the effect of "if you choose to live near an airport, you should expect some noise." Imagine an entire room full of Concordia and other NE residents falling into deathly silence, mouths agape.

Well, hell, maybe my rent will stay relatively cheap.

Ginny Burdick is an unspeakably bad politician -- the worst of the worst of the Goldschmidt clan. Her performance in this last legislative session was classic corporate sleaze. Why "progressive" people on the west side can't find somebody better to represent them is beyond me.

Here's some more analysis for Himself to understand how Bechtel made out like a bandit.

To futher expound on Ben's numbers, since Bechtel has already realized $14M for use of 14 acres of a total of 120 acres, the math points to the astounding ability of Bechtel to achieve $163 MILLION for the remaining 111 acres(28M/19acres=$1.47M per acre x 111 acres=$163M).

Also, contrary to what Himself infers that Bechtel "fronted the airport lightrail", they only provided 22% of the rail cost($28.2M Bechtol cost/$125M LR cost=22%). The taxpayers paid the 78 percent. And they didn't even pay any part of the financing cost beyond the $125M for the lightrail project cost which is no small amount, and was paid by us taxpayers.

There is also the fact that with recent rezoning to allow IKEA and other big boxes, and the mere presense of IKEA and it's region wide draw, that the value of the remaining 111 acres has dramatically increased beyond even the $1.47M per acre that IKEA paid. This makes the above $163MILLION low for what is very possible to attain for the remainder.

In summary, I would say Bechtol did very well for having to sit on their investment for six years. And like I stated above about the "in-kind services" and Jack elaborated, probably Bechtel realized between $8 to $15M in profit for the "in-kind services" and an additional $20M in profits from building the non-competitive lightrail. This could in today's dollars equate to $198 MILLION minimal return for only a $28.2M investment. That is a 702% profit. NOT BAD. Now, did Bechtol get burned or did the taxpayers?

And why can't our media and crackerjack reporters delve into these kind of "gimmies"? Many of us on issues like Cascade Station have even given numbers before the decisions are made, shown the path to investigative reporters; and nothing comes out. If if does, it is after the fact. Someone is in bed with all these shenanigans.

Maybe the above 702 % gain for Bechtol can be investigated by Sam the Tram, and he can bring down the hammer to get most of his "Transportation Crisis" funded by the city not giving away the farm. Atleast he could try this theory on his (or the city's) future visioning projects that just seem to continually be "gimmies".

Sorry for my late nite calcs, but a CORRECTION is in order:

In my above post I dropped a point. The acreage remaining for Bechtel after IKEA's sale should be 101 acres and not 111 (120 acres-19 acres sold=101).

Thus, Bechtel could achieve an additional $148.5 MILLION for the remaining 101 acres ($1.47M x 101 acres=$148.5M).

This then makes the return on investment 576% and not the 702% ($28.2M IKEA sale+ $148.5M conservative remaining balance sale /$28.2M investment=576%). Still not bad. The summary of the analysis remains the same-who really got burned?

further insulting is the public agencies involved claim the "Partnership" and project is still as success story.

The big box outcome is precisely what the "plan" was intended to avoid.

The rest of the broader story is this unintended outcome can be found at other "stations" as Metro and TriMet dole out property and tax money without any regard for fiduciary responsibility or genine public benefit. It's all just pushing the theories and agenda to pack mixed use where and how the free market will not. Even at Gresham Station, where MAX has been for 20 years, Metro had to hand over long stagnant property to get more of this mixed use.
Along with 10 year tax abatements and other subsidies this stuff gets built, the develeopers make out and officials and planners face zero consequences while they simply cook up the public benefit.

More sleeze is that while "Goldschmidt, Imeson & Carter" were CONsulting their way to riches with the Airport MAX/Cascade Station deal making, the same "Carter" (John D Carter) was a Bechtel Exec.
Now isn't that special? If only Halliburton were involved the left around here would be slightly interested.
Now the same Carter is an exec with Schnitzer Properties.
More special.
Imeson and other Goldschmidt cronnies were on the OHSU board and TriMet board while the Tramscapade in SoWa was being perpetrated.
"Tramscapade"? Is that a new one?

Thanks for the further analysis guys. I get it.

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