Port snapping up industrial land

Recent purchases in East County signal a push to find shovel-ready sites
by: CHRISTOPHER ONSTOTT This existing PGE substation is considered a major asset on the Gresham industrial land bought by the Port of Portland.

The Port of Portland is once again becoming one of the largest industrial property developers in the region - a move that is drawing both praise and criticism.

For the past 75 years, the port has created, improved and provided industrial land to businesses in the Portland harbor. With that supply almost exhausted, the port is buying and developing other property, including the former Alcoa-Reynolds Aluminum plant in Troutdale, land owned by the LSI Logic Corp. in Gresham and part of West Hayden Island, which it already owns.

Mayors in Troutdale and Gresham praise the port as a valuable development partner. After port commissioners agreed to buy the LSI Logic Corp. property last Wednesday, Gresham Mayor Shane Bemis noted that the site had been for sale for many years.

'This property has been actively marketed for years, but without a local owner possessing expertise in industrial development, its potential for employment and economic development has remained unrealized,' Bemis said.

But Bob Sallinger, conservation director of the Audubon Society of Portland, blasts the port's push to develop its largely natural West Hayden Island site. Sallinger says the land is more valuable as natural habitat and accuses the port of supporting business interests at all costs.

The port 'often demonstrates a profound disregard for public process, public oversight and public accountability. It supports the interests of industry often with little regard for the overall interests of the community,' says Sallinger, who serves on a Hayden Island advisory committee appointed by Mayor Sam Adams.

Bill Wyatt, the port's executive director, says the West Hayden Island development can balance business and environmental needs. He notes that the port has already agreed to leave roughly 500 acres of the land it owns in a natural state. He points out that the thriving Smith and Bybee Natural Wetlands Area is adjacent to the Rivergate Industrial District, which the port has developed.

'We are capable of doing both things,' says Wyatt.

Dwindling supply

The Port of Portland was created by the Oregon Legislature in 1891 to dredge a shipping channel from Portland to the Pacific Ocean. Today, the port is charged by law with promoting aviation, maritime, commercial and industrial interests in Multnomah, Clackamas and Washington counties, including the city of Portland. The port is overseen by a nine-member commission appointed by the Oregon Governor and confirmed by the State Senate.

Most area residents know the port operates the Portland International Airport and owns shipping-related facilities in the harbor, including four marine terminals and industrial properties along the Columbia and Willamette Rivers. It also operates smaller airports in Hillsboro and Troutdale.

Most of the harbor-related properties owned by the port are occupied. The port still owns a limited amount of vacant land, including about 100 acres near the Portland airport being held for the U.S. Post Office if it ever moves from downtown.

Despite the dwindling land supply, port commissioners have approved a 2010-15 strategic plan that calls for the port to 'be a regional leader in industrial land acquisition and development.' Funding comes from the port's maritime operations and, more recently, the sale of its downtown headquarters for about $29 million.

'As long as we get a good return on our investments, we can reinvest it,' says Wyatt.

The port is also partnering on a comprehensive survey of the region's large industrial land sites and their readiness to support new private-sector jobs. Called the Regional Industrial Lands Inventory and Site Readiness Project, it is scheduled to be completed in coming weeks.

Other sponsors of the study are: Business Oregon, the state's economic development department; the Portland Business Alliance, which represents business owners in downtown Portland and surrounding areas; and the Oregon chapter of NAIOP, a commercial real estate development association.

Shovel ready

The port began acquiring new industrial land long before the survey was launched, however. For example, it bought the 700-acre Alcoa-Reynolds aluminum plant just outside Troutdale in 2004. The site with annexed by Troutdale, and both governments worked to make sure it was cleaned up and redeveloped.

Among other things, the port invested $14 million in infrastructure improvements and Troutdale approved tax breaks for FedEx to build its 447,000-square-foot distribution center there.

A three-phase development is planned on the site that will eventually produce an estimated 3,500 new jobs, $141 million in personal income and $46 million in local and state taxes. Troutdale Mayor Jim Kight praised the port's work on the project when he testified in support of the Gresham purchase at last Wednesday's commission meeting.

The 222-acre LSI Logic Corp. site is between Northeast 223rd and 242nd avenues, and Northeast Glisan and Stark streets. LSI Logic originally planned to build its own industrial park there. It started by building a semiconductor manufacturing plant that was sold to ON Semiconductor. But progress on the rest of the property stalled after the national and state economies tanked.

The port bought the property for $26.5 million, largely because it is the only site in the region consisting of more than 100 acres that is zoned and ready for industrial development. The port intends to adopt a master plan for the property, prepare it for industrial customers, and lease much of it to Gresham for 10 years.

'Acquisition was a priority for the port due to its unique size, shovel-ready status and potential to attract strategic investment and significant job creation,' says Wyatt.

When complete, the business park will generate an estimated 2,768 direct jobs - plus thousands of indirect jobs in the surrounding community. Altogether, full development of the property would mean nearly 5,000 new jobs in Gresham, according to the port's economic impact model.

Workable, not perfect

The first big purchase of potential industrial land happened 17 years ago. That's when the port bought approximately 800 acres on West Hayden Island from Portland General Electric in 1994 for about $7 million. Metro brought it into the Urban Growth Boundary for industrial development in 1986. But for that to occur, the land needs to be annexed and zoned for industrial use by Portland, which must provide it with water and sewer services.

Unlike both the Troutdale and Gresham sites, West Hayden Island is almost entirely undeveloped. Environmentalists like Sallinger argue it is has unique wildlife habitat that must be preserved.

The Portland City Council agrees, but has nevertheless indicated it would support a 300-acre industrial develop. That is 100 acres less than Metro thought was appropriate. The reduction does not sit well with all port commissioners, including Oregon AFL-CIO President Tom Chamberlain, who argues that the city should reimburse the port for the unused portion.

Sallinger argues that such an attitude reflects what he calls the unbalanced nature of the commission. He says business and labor interests are represented on it, but not environmentalists or community members.

'They will tell you that supporting industrial development is in their charter which is true, but that should not serve as an excuse for a public agency to ignore or suppress other community interests,' Sallinger says.

Wyatt says the port can still make the 300 acres work, however.

'It's not perfect, but it's workable,' says Wyatt, who argues the remaining acreage can be made into an even more valuable environmental resource through proper management.