Port of Portland officials withdrew Wednesday morning their plans to annex and develop potential industrial property on West Hayden Island.

Members of the Port Commission agreed after a Jan. 8 briefing on the issue that the project would not be viable under the city’s terms of annexation. Port officials plan to reassess the agency’s short- and long-term plans for West Hayden Island. The port also did not rule out future annexation and development of the site.

The agency told Mayor Charlie Hales about its decision on Wednesday.

“The terms under which annexation has been proposed by the city would simply render a future development on the property impossible,” said Bill Wyatt, executive director for the Port of Portland. “We understand from the mayor that Portland City Council is unwilling to take action to modify these proposals at this time, so we cannot justify the investment of more time and money into the process.”

The port owns more than 800 acres of property on the island that is part of unincorporated Multnomah County and lacks the appropriate zoning and city services needed for marine terminal development. Starting in 2009, the port began a process at the request of then City Commissioner Sam Adams to pursue annexation. A proposal emerged through a series of studies, meetings and hearings that would have preserved 500 acres as open space and 300 acres for future marine industrial development.

The city’s Planning and Sustainability Commission recommended annexing the property in July 2013, but the recommendation included new forms of mitigation not required of other developers. With an estimated $30 million to $40 million in added costs, port officials said the terms would have priced the developable land at double the cost of industrial land in the region, while still lacking appropriate zoning to ensure that future development could actually occur.

With the city unwilling to amend the terms, annexation proved impractical for the port to proceed, officials said.

“This is a disappointing and unfortunate outcome on several levels including lost economic opportunity for our region, implications for current and future land-use planning, and lost social and environmental benefits,” said Wyatt. “Despite this action, I believe that West Hayden Island remains viable for the future as an ideal place to grow the city’s tax base and family jobs while providing space for public recreation and wildlife habitat.”

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