This page contains a single entry from the blog posted on March 23, 2010 10:39 AM. The previous post in this blog was Tax-financed election porn -- it's "for the children". The next post in this blog is The American Dream, Portland style. Many more can be found on the main index page or by looking through the archives.

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Tuesday, March 23, 2010

Portland taxpayers about to *way* overpay for Main Post Office

Here's some fascinatin' rhythm from Portland City Hall: The city and the Post Office are working on a deal in which the city would buy the Main Post Office site from the feds for something like $64 million, so that the post office can be knocked down and some lovely modern development can go in there.

The money would all be borrowed by the city under the umbrella of "urban renewal," of course, and paid for out of future property taxes.

Hasn't the city already bought up enough property and leveled it, just to find that nobody wants to develop it? Take a ride up and down MLK and vicinity, where the fields of weeds mark block after block of city-owned real property on which absolutely nothing is happening. Why would we do even more of this?

But wait. It gets worse. According to the linked story, the $64 million price tag is $18.5 million over the last reliably appraised value of the property -- and that appraisal was done in 2007, before the real estate market swooned! (It also doesn't count the cost of environmental cleanup from all those postal trucks and who-knows-what-all else that's been going on out back on the 13-acre site all these years.)

And then send in the clowns -- here's some guy at the Portland Development Commission wheeling out the "10,000 jobs" malarkey: "Steven Shain, development manager for the Portland Development Commission, said the site could support as many as 10,000 jobs." Yeah, Steve, and marsupials could fly out of my derriere later this week in time for the sweet 16. Probably the only job that's going to come of this deal is the continuation of Steve Shain's.

Bottom line: We Portland taxpayers are going to pay $64 million for property worth maybe half that, and watch it go downhill from there. On top of which, we'll probably sell it for $1 to some Homer-Weston-Edlen developer type, then give him a massive tax abatement and build him a bunch of free infrastructure for some awful apartment buildings and bad retail, further sucking the life out of the city's crippled downtown.

Enough with these "urban renewal" boondoggles, already! This one needs to be stopped. Normally these deals are at least good for a chuckle, but this one's not even funny.

The City of Portland is going broke, people. It does. Not. Need. To buy. The Main. Post Office.

Comments (42)

Do we know when this comes before Council? They will probably make this an "emergency" ordinance so it goes through quickly and no time to act as a community. This is why Leonard has been quiet lately.

10,000 jobs? head=>desk, head=>desk, head=>desk

The worst thing we could do in this economic climate and real estate market is to displace a big active use like the post office. That property would sit there for years. Better just to have the activity of the post office there.

This site is oft-mentioned (not by me) as a good spot for a new baseball stadium. I can't imagine the Pearlies putting up with that, though.

And, Saks has made it official - they're closing their stores in Pioneer Place - which already resembles a ghost town in parts of the complex. Despite daMayers "best efforts," including meetings in ?Chicago and New York, I believe the story said.

That large property, across Hoyt St from and added to the old Custom House, would seem to form an irresistible package:

Here's an idea! Why doesn't someone with a few dollars sue the City over all this PDC madness? Cite lack of fiduciary responsibility of public funds or lack of public input for starters. Probably would not be hard to do given the PDC's numerous financial screwups and cost over-runs. If nothing else, this could be bottled up in the courts for months or even years. And you know it would be pissing off Firehose Randy, Creepy Sam, most of the PDC weasels and a few developers as well.

Wow. That cost equates to about $113 per square foot of land, before demolition and environmental remediation.

I can tell you with certainty the even the most skilled developer weasel in town can't make a project work in this economy with that as a land basis, which means....wait for it....PDC will be forced to sell at a loss if anything will ever be built there.

I'm disgusted.

"Bottom line: We Portland taxpayers are going to pay $64 million for property worth maybe half that, and watch it go downhill from there."

$32 million??

NO WAY, you put that property on the market today for $10 million and I'd bet anything that it would not sell. The cost of demolition is probably higher than the value of the land.

"the site could support as many as 10,000 jobs"

That's a throwaway line. He might as well say 100,000 jobs. It's like politicians saying they've saved 10M jobs - Who knows?

Say hello to the new baseball stadium. Again, anyone who believes in new taxes because the govt doesn't have enough money is a fool.

Yep. Steve is right. This is the new home for the baseball stadium. I'd be willing to bet on that....

I don't know what you're all worried about. I'm sure the sewer bureau has more surpluses we can use to pay for this.

First, what exactly is "blighted" about the main post office?

Second this plan is a big slap in the face of PSU, which was supposed to be the main beneficiary of the next URA.

Third, our green city will have to pay dearly for the main post office, not because the land is particularly valuable, but because the machinery inside the post office was recently replaced at a cost of tens of millions. Consequently, you can throw out the appraisals when considering what price it will take for the USPS to move. FMV doesn't apply because the USPS does not want or need to sell, and the city of Portland has zero leverage because it cannot condemn federal property. The USPS would never incur a loss to move out to the airport, especially with the well-organized union here, but if the city of Portland is stupid enough to fully compensate the USPS for the move, including paying to replace the huge, new, expensive mail sorting machines (that would be scrapped in a move), and if the city will also give the USPS a replacement site near PDX, then the USPS will take advantage of the opportunity.

Only in Portland!

More folly!!

What are we to think? Adams knows they are getting the signatures and he needs to pull everything into place before he leaves or the masters are cornering him to do this and that or else? Why this escalation now, projects rolling out by the week in this uncertain economy?

Or do the masters know the hammer is coming down in the commercial market too and in our country and they want to get as much as they can now for themselves?

A compromised Mayor is a asset to some but a detriment to our community. We need to reconsider the recall and roll out the signatures or this will never end!

A compromised Mayor is an asset to some . . .

Yes, I think that their “jobs created estimate methodology” goes something like this:
Buy former post office lot for $18.5 million over assessment. Security guard for vacant lot that will never be developed (1 job) goes to 7-11 to buy a beef and bean burrito (cashier 1 job, Reser’s burrito factory 150 jobs, microwave oven factory 150 jobs, slurpee machine manufacturer 75 jobs…)

In the Mayors defense - he has never been good with numbers... 17 was close enough to 18. Sorry could not resist.

Think about it this way, snap up the property and all that moola can be re-directed to fund solid middle class postal union jobs with excellent benefits -- the type of jobs that progressives like.

Is it a requirement that everyone who works for the city submit to an old fashioned lobotomy when they are hired?
...and yes 'hiz-honor" is really bad with numbers...

I think Portlanders keep voting for these unqualified politicians just to give substance to Jack's blog. At the same time, nobody wants to be anti-progressive or even worse, a Rethuglican or Tighty Righty (eww). Please, for the love of God, stop limiting your choices to "Randy or the next-closest liberal" or "Nick Fish or the next-closest progressive."


The presentation given to the PDC commissioners earlier this month put the average appraised value at $52.5 million. At a 150% premium that means the PDC is looking at a purchase price of $78.75 million.

ws -

Commercial land prices in the pearl peaked at about $175 per square foot, but that would have been for a small parcel with no internal circulation (streets, walkways, etc)...making the entire parcel coverable with structure...but that was at the peak of the market. Large parcels often sell for a lot less because of the scale and internal circulation issue, and IF this parcel had sold during the peak of the market, I'd guess it could have been (maybe) as high as $70 per square foot which would have made this particular parcel worth about $40mill -- at its peak.

This property is a bit different because it has a lot of buildings and a parking structure on it, etc....so it would be worth more than just the land value...so you have to factor that in...but...this is what if often referred to as a "single-use" property, meaning that the buildings and structures are configured in such a way that they are pretty much valueless to anyone other than the current occupant (USPS)...so anybody looking to buy would almost always establish value based on the land only.

Today that parcel would likely appraise for $50 to $60 per square foot -- which is about $30mill, less than half that the City is talking. The folks at PDC know this, and they'd never take a leap like this unless they had big plans, like a baseball stadium or something.

Don't worry, when it's all done they'll baffle us all with Paulson-crafted revenue projections and "job creation" then they'll spin it as if they cleaned up a SuperFund site saving us all from contaminated groundwater. Just watch.

"Under terms of the agreement between the PDC and the Postal Service, the city agreed to pay 150 percent of the appraised value of the property in exchange for having the exclusive right to bid on it..."

Damn, those PDC guys really know how to negotiate.

As if the Burnside Bridgehead isn't enough of a white elephant...now this? The PDC gave the same "job creation" rationale as they were writing checks to nowhere for the Bridgehead...and the economy was better back then.

This crap needs to stop.

USPS is in a financial hole. Gotta dig 'em out.

Maybe the PDC is planning on giving the land to Wal-Mart for a new store just like they were going to give the land at the BBH to 'Home Despot' 6 years ago. But Sam says no to big box stores...so....will they give the land to Little Lord Paulson for his baseball stadium?

I have a question: is anybody writing all of this down? I really think you could make one hell of a sitcom, comparable to The Office or the late, lamented Action!, out of this idiocy. Change the names slightly, but focus on the downtown solar-powered Turdis and the real estate grabs, and Showtime or TNT will be all over this.

A lot of families who over spent, taking out full loans against their houses, recently had a bad day of reckoning and now face foreclosure. However, the spend thrifts in charge of local, state and federal governments are still spending freely despite mounting debt levels. Governments will also have their day of reckoning, as illustrated by recent fiscal events in California. Unfortunately, the government spend thrifts most often do not pay for their ill fated decisions, its we that pay.

At last week's Portland Utility Review Board Meeting, city staff said the city has lost easy access to municipal credit, and now must borrow more to get the same amount of borrowing. The extra dollars borrowed are set aside in a sinking, or reserve, fund of sorts.

"This property is a bit different because it has a lot of buildings and a parking structure on it"

Don't forget they are going to raze it, so raw land less the demo/cleanup costs.

I'm confused why the PO needs to sell (unless you get an offer like this from the village idiot and have daddy pay for it), their business is shrinking like crazy (we had to throw $4B at them last year.)

Given the PO's current fiscal difficulties, now is not a good time to pick up and move a major facility regardless of how much they manage to get for it. It's wasteful, foolish and completely unnecessary.

I've already seen several stories about how disruptive this is going to be for the post office and the public it serves and now we see that it will be a bad deal for the city which represents the taxpayers of Portland. That means that while there's some downside to the USPS and some to the city, there's NO discernable upside for the public at all.

If we had a better economy . . . if the property were fairly priced . . . if there were some reason the city had to buy it, such as there was an actual plan or it had to be saved from some other undesirable fate that would negatively impact the neighborhood . . . I might understand these negotiations.

As it stands, all I can assume is that there is an under-the-table deal going on and potential mega perks for developers that we will only find out about after they have their hands in our pockets and firmly wrapped around our wallets.

And, yes, I think that the customs house will eventually be a part of the deal.

Anybody heard anything recently about the Conway "Little Venice" project?

So why bargain for "the exclusive right to bid on it"? Doesn't that actually prevent a company from moving its headquarters there?

Money quote from the article:

"The post office offers an “unbelievable” opportunity, said Scott Andrews, PDC chairman and president of Melvin Mark Properties"

So when Melvin Mark brokers this deal at 5% = $3.2M commission.

I work for the PO. I've said before on this blog, the original plan was rumored to be the installation of a huge automated sorting monster (the FSS, look for it on youtube) that was going to be installed in the area of Cascade Station. At the time there was the PACC, the AMF, and Mount Hood DDC (all in the area of PDX, BTW). There could have been a cost savings and a huge consolidation, thus the obsolete 715 NW Hoyt could be closed, and its functions better handled by the new site/technology.

However, as many astute readers have noted, the PO is broke. Upside down, banko, BK. We aren't getting first class mail any more. So the FSS really may never make it here. They have slowed the deployment of these machines, significantly.

But as another of my fellow Bogophiles (I think I just made it up, if not, I think it a cool descriptor) noted, we are trying to dig out any place we can. So in postal logic, it all pencils out, even without their precious monster.

And it bodes well for my facility, which is IMHO, underutilized. But as a Portland resident, it burns me to see how thick or deliberately stupid, these guys are with money.

Dear Mike (the other one) - if the concept of liberal (socially) Republicans (fiscally conservative) hadn't been killed, trashed, and mashed by the morons in charge of the repugnicants, I might be tempted to vote for them. The issue is I am not voting for a right wing caveman who is as likely to be fiscally conservative as our last president. Not a damned thing in it for me.

The other problem is that once folks like Fritz and Fish are on the council more than 6 months they seem to go over to the dark side (as one of my friends calls Katz's transformation from the 70s to her later days).

Clinamen, If by signatures you mean the recall, the O reported last week that the recall was short by 25,000-30,000 signatures with only 30 days left to go. They are just now putting paid signature gathers on the payroll. It just boggles my mind that they are that short. A year ago Adumbs seemed to have some support left. Now I don't know anyone personally who supports him in any way.

The post office property deal is clearly just another major example of CoP and PDC playing big time Developer on the public's dime.

There is no pressing, logical reason for the post office to move; the economic times are not favorable for either party to press the sale; there is no need for the land to become public owned then driveled to opportunist developers.

There's more PDC owned land in this city than any privately owned developer, or even a conglomerate of them. What's wrong with a little enterprise and not all kinds of government controls and oversite? Oh, that keeps government employees employed (or adds more), I forgot.

Let's look at the recent success stories of PDC: SoWhat; Williams/Lombard,North Portland; Rose Garden; The Burnside Bridgehead; Cascade Station.....failures. More interference by government than success.

Jack, when are you going to start talking about the issues with the City's Commissioner form of government that contribute to these issues?

Taking advantage of our city leaders' stupidity by selling this property at an inflated price has been a key part of planning and procurement at the USPS for at least a decade. We will get hosed in this deal because, in addition to the usual reasons, our leaders have no grasp of the regional mail sorting goals of the USPS, or management and union dynamics, or the impact of various scenarios on mail delivery in Oregon.

They're going to remove the building and dig a giant hole to throw the rest of Portland taxpayers' money into over the next 100 years. For the children. Go by dumbwaiter.

"City's Commissioner form of government"

Hey, if you put this bunch of simps in ANY form of government, we'd still have the same bad outcome. Why give them another excuse for failure?

NW Portlander:

Con-way is about 2-3 years from collapse/splintering. I wouldn't hold my breath for the "little venice" project.

The entire second floor of their new data center/office building is vacant and has been since UPS bought Emery Worldwide out of the old CNF/Con-way/Menlo company 5 years ago. The Adtech III building (the one attached to the Adtech I building via walkway) is still vacant as well after the data center was moved out of that building to the new one and VectorSCM all but shriveled on the vine with GM's fortunes.

The old truck shop across from the parking lot is a great building, if you're a mechanic, but not so great if you want to develop it as it is a superfund cleanup site.

Con-way are currently outsourcing their IT to HP (and lying to that third party about any number of crucial things in the process) and are expecting to save millions of dollars in the next 5 years.

Eventually the Data Center in the basement of the new building will be emptied and the equipment replaced by HP equipment in one of HP's data center's. Legacy has expressed an interest in renting that data center space, but I suspect they might just end up buying the entire set of buildings, before Providence does, as Legacy already leases much of the parking space that Con-way used to use and with the Healthcare bill, they'll need the room for administrative staff.

Those of us in IT know the truth, as we know where the skeletons are buried. We know just how much extra work we do that is outside of our normal jobs that Con-way will have to pay extra with the new outsourcer, at higher costs than originally planned for, therefore eating into the "savings"

Once Menlo Logistics and Phoenix Brands see the kind of mess that an outsourced IT solution represents, they'll look to jump ship and bring in their own IT. That's essentially what caused Con-way to assimilate CNF, but if Menlo Logistics leaves, Con-way freight will be without a cash cow to sustain it and it will be just another freight company to bought and sold.

The sole purpose of PDC's action is to control this land. Rather create an option to purchase at 150% above appraised value, wouldn't this be easier to control by modifying the zoning. PDC has to betting on the idea some foreign investor would be willing to over spend for this location, thereby letting PDC off the hook. If we step back and look what PDC did to MLK Blvd. They over purchased small parcels inflating seller expectations. When a qualified buyer reviewed the opportunity, their conclusion was the area was too expensive for development and the left. Today, MLK isn't any better due to PDC's action. Let's face it, the successful developers are still around because spend their money foolishly. The Portland Board of Commissioners should pay attention.

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