Randy Leonard is Portland's Bluto. So strong, so unyielding.

Why won't Mark Rosenbaum eat his spinach?

This town is so ready to love Mark Rosenbaum. Love him deep. More than skin.

They just need their vitamins. And to see his remarkable Heroism/Gyroism on display.

Mark is right. Right like car insurance.

Looks like an insider just took a load of drugs and got on Blogtown...

I did hear that Mark Rosenbaum makes a mean Gyro, but he's usually too hungry to put them on display.

Scott,
Did Leonard give you these comments directly, or are they from elsewhere? If from elsewhwere, I'd like to read the whole thing.
Thanks,
Lister

He said that to me directly, and those were his comments in their entirety before he skipped off to whatever wilderness he's visiting on his vacation. Well, there was one line about an Oregonian story, which I clipped because, hey, I don't need Randy Leonard pimping our competition.

Scott, can you explain Randy's suspicion that a negative appraisal would somehow allow PDC to circumvent affordable housing. I don’t understand that connection.

He says he doesn’t know why they wanted a negative appraisal--he should read it because it shows why. They adjusted the value because the owner would have to build 100 parking spaces for the guys next door who are on a 99-year lease at a $1 per year.

SCG, Randy Leonard wrote a fairly comprehensive post on this article over at Blue Oregon on December 26th. It should answer a lot of your questions.

As for how the negative appraisal circumvents affordable housing policy - only projects that have a public subsidy are required to have a component of affordable housing in the project. With a negative appraisal, the developer will not ask for a city subsidy and thus there is no affordable housing requirement. In addition it is also important to note that the negative appraisal also allows the developer to circumvent the city's prevailing wage law for construction.

This is why Randy and others are so up in arms over the deal. They feel PDC was trying to avoid playing by the rules by using a very questionable and potentially illegal/unethical manner for the appraisal.

Spy, thanks for the explanation. Does anybody think Trammel Crow did anything illegal?

I think Trammel was probably just following what PDC lawyers and their lawyers said was ok, but hey in real estate development all bets are off!

The easiest way to find out is to get a copy of the DDA (Development Agreement) or any MOUs (Memorandums of Understanding) between PDC and Trammel Crow. That is, if PDC decides to follow public records laws and release them, and PDC's record on that isn't always very good.

This is my (educated but I can't say anymore about it) guess as to what happened. PDC has a very difficult piece of land which is a mjor eyesore in a prime downtown area that they have not been able to attract a private developer to. This has been going on for several years. PDC funding in the Urban Renewal Area that it is located begins to become less and less of an option as time goes on and the URA reaches towards maximum indebtedness. A public RFP goes out to solicite developers for the property. Lack of response from the public sector. PDC gets desperate. Either PDC approaches Trammel Crow or Trammel Crow approaches PDC - Trammel Crow says (probably rightly so) that given the cost of land that PDC wants for the property, construction costs, and the affordable housing and prevailing construction wages requirements that the only way to make the project pencil out is to either get rid of the requirements or lower the overall cost. PDC also probably has 18 different staff working on this project with lots of staff turnover and bad record keeping so nobody knows who said what to whom. A decision is made somewhere within the agency to get a negative appraisal to make the deal pencil, and the agency is in such chaos/staff and board turnover that it slips through the cracks and is approved as an afterthought. Randy and Sten call foul and PDC is like, "what? we got approval from our Commission! It's not our fault, blah, blah, blah...Actually, pretty typical at the PDC.

Besides, who ever said PDC was set up to fund affordable housing and why is the City using TIF to fund it? That makes ZERO sense and is really risky from a public financing set-up. Affordable housing is extremly important, I'm all for it, but there are major trade-offs in how the City funds it. Portland has become addicted to TIF financing through PDC in lieu of a balanced tax system and shrinking federal funds for affordable housing. This is extremly problematic as affordable housing does not generate taxes that pay back the bonds issued by PDC to develop it in the first place.

Make Sense?

Spy-how many elected officials do you think truly understand tax increment financing?

For what its worth, Spy, I think the deal probably went down generally as you have so articulately written.

I do think the economic factor missing in your comment regarding affordable housing and it not generating the tax increment to pay off the bonds misses some key economic facts.

Working class men and women who can get into decent, stable and affordable housing generally become contributors to the economy and the tax structure. They pay income taxes, buy goods and services from the community they live in and so on.

Having said that, I do understand that reasonable minds can disagree on this point.

Had the PDC publicly announced they were going to turn over a one to two million dollar piece of property to Tramell Crow to develop market rate housing, I may not have agreed that was the best economic strategy but I certainly would have never questioned the integrity of their process.

The bigger point is that public resources are held in trust by public employees. All transactions related to those resources should be transparent and above reproach.

No one can seriously argue that PDC's handling of the 3rd and Oak deal met that standard.

Commissioner Leonard,

Thank you so much for asking the hard questions about PDC overall and for responding to comments on this and other blogs. I respect you tremendously for your willingness to contribute and participate in open dialogue. I just wish PDC would do the same and stop being a bunch of arrogant and silent one-way communicators. It’s embarrassing and no wonder the public hates PDC....

Anyway,

I agree with you absolutely on everything you said, especially affordable housing. Access to affordable housing is such a critical issue in Portland for a variety of reasons and really is a long-term investment in the city. So let me help clarify – I do think part of the problem is the way PDC is currently set up to address the financing of affordable housing, and the way that urban renewal is currently structured and how projects are funded. Thus my "zero sense" comment which I didn't explain very well.

Rather than being able to fit affordable housing into the mix, it is often pitted against other projects such as parks, business investment, infrastructure improvements, etc. Couple that with the social stigma affordable housing often has in the development community and in the neighborhoods, as well as within certain sects of PDC itself and you have a major recipe for project messes like SW Oak.

Heck, you know all this better than I do.

Unfortunately I don’t think we’ve gotten there as a City on how to address this financing equation with TIFF so that things like affordable housing and living wage jobs on construction are seen as the norm rather than something that is a burden or as something that is a big sucking sound in the city.

Furthermore, and as you know, the culture and attitude of PDC really needs to change as well as the overall way they do business. I have wondered for years why PDC does not require risk assessments and scenario modeling for all their projects to illustrate trade-offs, what ifs, and come up with potential solutions based on rationality and data to support their decisions. This is standard in planning and development in many other cities. Instead PDC just bumbles through things over and over again without any real documentation or justification. It’s like PDC is still in the dark ages. Very disturbing, and unfortunately I think it will take a major overhaul of the agency (and I don’t mean merely replacing the executive director every 2-3 years) in order for things to get better.

Thanks again. Let me know if you need any help on this and overall PDC reform. I care about this a lot, and if it isn’t already obvious I know the agency from the inside and I am at the end of my rope dealing with them. I’d love to talk to you about it sometime.

SITH-
Yes, it is clear you know what you are talking about from on the ground experience.

It is also very obvious that your integrity means more to you than taking advantage of what you know about how PDC works.

Anytime you want to get together, send me an email at my office (just click on the link...I answer my own emails) and I will contact you.

If I have not made it clear, I really appreciate your thoughtful insights.

You just wait Randy Leonard (a.k.a. Bluto) until Mark Rosenbaum eats his spinach. He gets teeny muscles on top of his medium muscles on top of his big muscles. Mental muscles. Verbal muscles. After that workout, you'll be sore in political muscles you don't even know you have.

This town will eventually realize that this negative appraisal is the key to Portland's future awesome. Do I have to explain Einstein to you people? Space-time curves and the singularity? I'll do it if I have to. This is like that. Complex. Big time.

You can all be content to be suck ass if you want. This guy wants to be awesome. I can't be awesome in a suck ass non-awesome town.

Responding to an earlier comment: The new Day Appraisal appraisal also takes into account the terrible parking deal--the new owner of the property is required to build a basement parking garage, then lease it to the neighboring parking garage (Pine Street Parking)for 90 years, and then pay rent on Pine Street's parking spaces that will be unusable during the construction.

That's obviously a shitty deal. Add to that the fact that there is contaminated groundwater under the site, meaning that the new owners can't go further than one story below the surface for parking (so they can't recoup the lost revenue through more spaces), and it's a deal that I doubt many private developers would willingly jump in to without incentives.

But is it negative $2.7 million shitty? Not according to the Day appraisal, which knocks $1.3 million off the land's worth for the parking deal, but still shows a positive $1.12 million.

If anybody has any insight as to what's changed since 2005, I'd love to hear it.

Next time PDC comes up with a negative anything appraisal I will happily give them one hundred bucks for the property in question, sight unseen. Then Randy and I will convert it to a day care for wayward bureaucrats.

Scott: "If anybody has any insight as to what's changed since 2005, I'd love to hear it."

Um, I think PDC got busted by City Council (thanks Randy and Sten!) and had to backpeddle pretty hard. The new appraisal is a result of that.

My question is why is the Mayor so silent regarding PDC? I mean, it is his bureau afterall...

Say what you want about PDC's directives, but it would be nice to see completely accurate explanations of the appraisal. The new appraisal presents a market value. The original report was based off of a specific proposed project and some instructions provided by PDC. People can disagree with the opinion of that report, but 90% of the outroar over how land downtown could have a negative value could have been avoided if this story would have been accurately reported by the papers from the get-go. First, there isn't now, nor has there ever been, and apprisal at negative $2.7 million. That is a number mentioned in passing in some supplemental, secondary, analysis. The appraisal is at negative $1.9 million. Second, all a negative residual value says is a particular project is not financially feasible. Appraisers come to this conclusion on a regular (relatively speaking) basis. They don't normally report it as a negative land value rather the bank etc. is informed the project isn't financially feasible. That doesn't mean that the land itself is worthless, or that another project wouldn't be financially feasible. All it means is when you add up the costs there isn't adequate profit to justify that particular project. Many of the newspaper articles are comparing apples to oranges trying to figure out how the value of the property has gone down so much since PDC bought the site. However, in doing, they are comparing different animals. Rip on PDC all you want to for the methodology they selected, or the assumptions they directed to be used, but there was nothing sinister going on with the report itself.