Pig in a poke
A while back an alert reader pointed me to the Portland City Council's then-impending "emergency" action to spend $1 million of scarce parks acquisition money to chip in with the Portland Development Commission as they rushed to buy the Public Storage property in the SoWhat district for future use as a public park. (I believe this is the property in question on a map -- and here's the Google satellite image.) With all the capital needs our parks have these days, this seemed like foolishness to me, but then again, the whole SoWhat development seems the ultimate in foolishness, so it's not a huge surprise.
I blogged about it, and Commissioner Saltzman's office (in charge of parks) got all huffy and defensive, but the resolution apparently sailed through the council, 4-0, despite a cautionary speech by Saltzman's upcoming challenger, Amanda Fritz, who knows a thing or two about parks.
The same reader who threw the light of day on the rush-rush money resolution keeps whispering sweet nothings in my ear. Now he or she's asking me how the city and the PDC can justify the price that they're paying for the property, in light of the fact that by the PDC's own admission, the property is environmentally contaminated.
According to news accounts, the purchase price of the property is $7 million -- $1 million up front out of parks money, another $800,000 out of future parks funds, and the other $5.2 million paid by the PDC (which has a $200,000 EPA grant to abate some of the hazardous materials on the site). Our reader asks whether the price was lowered appropriately to reflect the environmental problems.
Indeed, how was the price arrived at? The buildings are going to be knocked down; all that the taxpayers get for $7 million is the land (burdened by demolition and cleanup costs). It's 2.1 acres. And so that works out to $3.33 million per acre for contaminated land, in Portland, Oregon, with buildings on it that are going to be razed, at additional public expense, ASAP. "It's a good deal, and we should be celebrating this acquisition," said Saltzman. This despite the fact that the property is on the county rolls at the following values:
Market Value Year: 2004
Market Land Value: $ 1,446,920
Market Improvement Value: $ 3,134,330
Total Market Value: $ 4,581,250
Land Use: MOORAGE ACCOUNTS; Zoning: CXD
Assessment Year: 2004
Total Assessed Value: $ 2,229,790
The total market value on the county tax records in the years 2001-2003 appears to have been $4,674,750.
According to the county, the seller is a Glendale, California-based company called PS Partners VII Ltd. PS Partners appears to be affiliated with the large, publicly traded personal storage empire known as Public Storage. On that company's latest quarterly report filed with the SEC, it reports that it will book a $5 million profit on the Portland property (see page 13). Apparently, part of the "emergency" was that Public Storage had told its investors back in August that it expected to get its money by September 30.
The $7 million contaminated park block -- $3.3 million an acre. I can hear the boys down in Glendale laughing, all the way up here.
| Posted at 10:04 PM | Permalink |
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Comments (14)
This deal points up the hypocrisy of the city's massive expenditure of money on the SoWhat private development. Out of one side of their mouths, the city commissioners tell the taxpayers: "It's a contaminated, stinking brownfield, and you should be kissing Homer Williams's feet in gratitude that he's turning it green." On the other side: "Hey, that's valuable land down there. Guess we'll have to drop $7 million plus of your tax dollars if we want land for a park. And hey, the empty-nester California transplants deserve a park, at your expense."
Posted by Jack Bog | October 4, 2005 10:10 PM
That blows away the questions on the Schnitzer donation to OHSU.
They donated 20 acres (environmentally clean) and called it a $35 million tax deductible donation.
http://www.wweek.com/story.php?story=5676
At the $3.3 millon/acre their deduction would have been $66 million.
I wonder if Homer et al. are having regrets for lobbying the park site change?
Perhaps old Homer would have eagerly taken the $7 million instead of getting the park site moved from the property he controlled.
I do know that the public storage people were well armed and ready to wage war upon the city's condemnation if the price was not right.
It's also my undersatdning that the greenway (glorified sidewalk)is not funded. I guess all of the Public's intitial $277 million is going to provide fee infrastucture for the developers.
That and the Tram [rim shot]
Posted by steve schopp | October 4, 2005 10:50 PM
Meanwhile, parents are being asked to cough up more money (or launch fundraising efforts) so we can pay increased 'usage fees' for our kids to practice soccer in public parks. Why? Because the city's broke, that's why...
I haven't yet seen the dollar amount I'll need to kick in - but I'm sure it'll be exorbitant in light of the fact that the kids will have practiced for one hour per week for two months, tops (practices will end when daylight savings time ends.)
Posted by Betsy | October 5, 2005 9:12 AM
Meanwhile,
The Portland Development Commission agreed to sell the land at 3934 N.E. Martin Luther King Jr. Blvd. for $1 to developers.
http://www.oregonlive.com/search/index.ssf?/base/news/1128510168298040.xml?oregonian?lcg&coll=7
Posted by steve schopp | October 5, 2005 10:18 AM
According to the Oregonian reporter the PDC only paid $400,000 for the land.
So no big deal. Give it away for $1.
Of course they might have put a for sale sign up and gotten $2 or $3.
Land is sure cheap in Portland.
Unles the city is buying a park site.
Posted by steve schopp | October 5, 2005 11:31 AM
Just remember this when the City or Metro tries to claim some property under the recent SCOTUS ruling on Kelo. If you are turning property from tax generating into tax using, then you had best be cautious in claiming a need for economic development.
And at this price, it sure sounds like someone is getting paid off.
Posted by Ric | October 5, 2005 12:05 PM
This is one of Don Mazziotti's old deals, which of course brings out the odor of Neil.
Posted by Jack Bog | October 5, 2005 1:09 PM
There it is on page 11 of the SEC report - PS is making a $5,000,000 profit on the condemnation.
It would be interesting to see how much of a loss it claims on its taxes.
Posted by Echo | October 5, 2005 4:39 PM
I find it curious that the City can come up with one million in the snap of the fingers for a SoWhat park project, but a 15,000 square foot park property in Richmond (a park deficient neighborhood) remains undeveloped after 15 years and two promises from the Park Bureau that the improvements necessary would be included in not just one parks levy, but two.
I'd guess that that one million dollars would be more than enough to develop the park to the plan the neighborhood developed 15 years ago.
I guess it pays to be rich in Portland, especially if you want park space in your neighborhood.
Posted by Kelly Wellington | October 5, 2005 6:03 PM
I guess it pays to be rich in Portland, especially if you want park space in your neighborhood.
Actually, it pays to be rich in California, when you want park space in the neighborhood of the Portland skyscrapers that you're buying units in to flip.
Posted by Jack Bog | October 5, 2005 6:20 PM
There it is on page 11 of the SEC report - PS is making a $5,000,000 profit on the condemnation.
Page 11 of the SEC report -- page 13 of the pdf file.
Posted by Jack Bog | October 5, 2005 6:24 PM
Another piece of evidence the city's spending priorities are screwed up - a front page article in today's Oregonian Living section about a city program to get more women to ride bicycles.
When the infrastructure is falling apart and the police aren't policing, it's time to shut down the warm and fuzzy feel-good programs and put the money where it will do the most good.
Posted by RAH | October 6, 2005 7:10 AM
Understand folks that the city had originally identified a bare parcel for the park.
In a better location and adjacent to the greenway.
Homer Williams et al. that parcel and wanted to build a high rise.
So the switcheroo was made to accommodate Homer.
The cost for the park site soared when the city targeted a the fully developed, operating business tax, paying site Public Storage parcel.
The purchase of the PS site is naturally much higher then bare land would have cost.
This is just another haphazard, poorly thought out process with a costly outcome.
Business as usual.
Posted by steve schopp | October 6, 2005 10:02 AM
Compare this with the news release from Seattle Parks where $10 million was donated to fund construction of a waterfront park.
http://www.cityofseattle.net/news/detail.asp?ID=5035&Dept=40
Here City Father's stepped up to contribute to waterfront development not expect the taxpayers in park defecient neighborhoods to wait another 15-30 years to get a park, while they pay more and more of their property tax bill goes to pay urban renewal bonds. City of Portland Taxpayers already spend 43% more on Urban Renewal @ $1.76/$1000 than they do on Parks even with the Levy @$1.23/$1000. And as pointed out in the Oregonian article, on taxes Urban Renewal is not subject to the tax ceiling, some Salem legislative "clarification" of Measure 47. Which is why Portland Taxpayers are discovering they are paying more than $20/$1000 that Measure 5 was supposed to protect them.
When I grew up City Father's took pride in not profiting from government transactions, it was considered the "good of the order" To keep taxes low and a good business climate you didn't rape the taxpayers but took pride in a healthy community. Portland needs to wake up, and smell its roses. Stop following the Goldschmitt example of raping the innocent. Go rent the Capra Movie "You can't take it with you" Look a mutual benefit and not bleeding the system dry.
Posted by Swimmer | October 6, 2005 3:27 PM