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Thursday, June 5, 2008

A city of two tales

From last Friday's Portland Business Journal:

The John Ross condominiums have sweeping views, an elegant shape that inspires architectural envy, and a whole lot of unsold units.

To date, just 177 of its 303 units have attracted buyers.

From the City of Portland offering document for bonds that it is selling next week:

Construction of the John Ross Condominium Tower began in mid-2005. The 31-story elliptical shaped building with 286 units is nearly finished and has an expected cost of $75 million. At the end of January 2008, approximately 57 units remain for sale.

Comments (17)

Let's do the math: if in January, 229 of 286 units were sold, and if four months later 177 of 303 units were sold, then in September 2009 the building will have 355 units, none of them sold.

And the unsold units may wind up being owned by the bank.

Can you say rentals?

"At the end of January 2008, approximately 57 units remain for sale."

Maybe they are off the market, due to their new status as rentals?

Maybe that is where Potter put those homeless dudes peeing on the courthouse lawn?

Maybe Sten's homeless solution has been solved, right before our very eyes?

Maybe I can lose my job, and lose my house, and then get moved into the John Ross?

Harry, that is freakin' BRILLIANT! A whole new way of creating Dignity Village 2.0. If Brainstorm NW figure of 7500 unsold condos holds true, we could house not only Portland's homeless, but also those less fortunate from SF...Seattle....street urchins from across the country and around the world. Create a Potter day labor center in each building lobby to help the residents as they get off the elevator, send them out to work, and before you know it, they'd be plowing their paychecks into down payments on the units they're living in. Get this idea over to Silly Hall immediately!

As we say at my house, "Harry, you've done it again!." Terrific job!

If the average loan balance on those 57 units is $500,000 then the interest payment is about $150,000 per month. Add $50,000 or so in property taxes and $30,000 in HOA fees and $20,000 in marketing expenses and you are looking at close to a quarter million dollars a month. How deep are the developer's pockets?

What happens to the TIF funded infrastructure in SOWA when the values of these places go down and the property taxes go down?

If the John Ross has 177 units for sale with the same numbers the negative cash flow is around $750K per month! Bet they are glad for non-recourse financing!

That's a good question -- what's going to happen to Dignity Village now that Sten is out?

My expectation is that Sam the Tram will pick up the baton, perhaps moving it downtown, and expand it.

John the developer's pockets aren't very deep. They are running a pyramid scheme to keep afloat. There will probably be some interesting news soon about condo failures in SoWhat.

The TIF dollars in SoWhat are not penciling out as PDC has estimated, and with the future news coming it will get worse.

With the eight amendment Agreements in SoWhat's City/Developer Partnerships, and their obligations to both parties, the taxpayers of Portland will be even more in depth. And legal consequences are likely for us taxpayers. Who's going to pay for the obligated greenway, neighborhood parks, 1200 car parking structure, three pedestrian bridges over I-5, the $13 Million obligated to be spent for bio-tech job creation, etc.?

The tram "linch pin" might become the "lynch pin".

depth=debt. Very similar.

John: What happens .... when the values of these places go down and the property taxes go down?

The former (based on real market value) has already happened. The latter (based on assessed valuation) will likely never happen, as the county is permitted to tweak the countywide ACV/RMV ratio to reflect the need to increase taxes by the M50 legislated 3%/year.

Don't measure 5 limits impact that ability? Also, have those units been assessed yet? M50 values are based on a percentage of market value the first year for new construction.

A couple I know just took a five year lease on one of the John Ross units. They're of retirement age and negotiated the ability to break the lease if one or the other of them should pass away. I guess they got a heck of a good deal.

I think the fact that the developers (or perhaps the speculators) are leasing the units out to maintain some semblence of cash flow is a sure indicator that they are bleeding heavily.

That offering document link seems to be dead. Remind me exactly what those bonds pay for and what income stream will pay them? We know they are backed up by general fund.

The link works for me, at present.

The new bonds are to refinance some 1998 bonds issued for the city's Development Services Building.

John, the non-occupied units are not placed on the tax roll. Only when they are sold. Also, that is one reason that developers do not completely finish a unit until it will be occupied, and customized in some degree and fashion by the buyer, thus the developer also isn't property taxed-an "unfinished building". That is one reason the TIF dollars projected in SoWhat are not being generated.

lw, that is simply not true, they tax the developer for whatever exists on January 1. If it is a half built building they tax them on that, if it is done they tax them on its value, sold or not. I build these things (smaller scale) and I've paid those taxes. Call the county and ask if you don't believe me.

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