Study says luring big employers depends on local land-use action

On paper, the Portland area has enough vacant industrial land to meet employers’ needs for the next 20 years.

In reality, maybe not. More than half the available sites need government help to develop, including assembling adjacent lots, annexations into cities, infrastructure improvements, and, in some cases, pollution cleanup.

Those are among the findings of the most recent study of the area’s industrial land needs conducted by Metro, the regional elected government, and a coalition of public and private partners, including the Port of Portland. The study says that 54 industrial sites larger that 25 acres have been identified within the urban growth boundary administered by Metro, the elected regional government, where new growth can occur. That’s more than the 34 sites the study predicts the region needs.

The Metro Council is scheduled to decide whether to expand the growth boundary next year to ensure a supply of buildable land until 2035, as required by state law. According to Metro staff, the study indicates the boundary does not need to be expanded at this time to provide more industrial land.

“There are enough sites already in the UGB,” says Tim Reid, a Metro analyst who worked on the study.

But others who worked on the study say it’s not so clear. At the least, governments in the region will have to spend time and money making certain enough of the sites are ready for development. The study found that only 14 are ready for development now, while the remaining 40 need additional work.

“You can say the region has 54 sites and only need 34, but the truth is many of those sites have constraints that will makes them difficult to develop,” says Lise Glancy, the regional government relations manager with the Port of Portland, who also worked on the study.

For example, one of the sites identified in the study is West Hayden Island, which is owned by the Port of Portland. The port has asked the city of Portland to annex the property to allow 300 acres to be developed as a marine terminal. But the Portland Planning and Sustainability Commission recommended conditions such as restoring wildlife habitat elsewhere, and the port withdrew its application. The site is designated as industrial property in the update of the city’s comprehensive land-use plan working its way toward the City Council next year. But neighbors and environmentalists are fighting to have the site removed from the update so it can never be developed.

Another is Site 1 of the Coffee Creek Industrial Area in Wilsonville. At 85 acres, it is one of the largest areas in the study. But it is owned by 16 parties who have not agreed what to do with it — and may never come together without public incentives.

Reid agrees that a sustained focus will be needed during the next 20 years to guarantee enough of the sites are ready when they are needed.

“The UGB doesn’t need to be expanded, but everyone needs to work together to provide the needed investments and actions,” says Reid.

Metro’s study does not say how much it will cost to prepare any of the sites for development or where local governments will find the money to do that work. Previous studies have estimated the pre-development costs of such sites in the millions of dollars.

Many of the sites in the study pose other challenges for policy makers in the region. The majority are on the edges of the urban growth boundary, which is determines where future growth is allowed to occur. That makes sense, because that is where the largest tracts of undeveloped land are located. But that also means that most are far from major roads and housing. Turning them into major employment centers conflicts with Metro’s goal of concentrating growth along existing transportation corridors in existing cities to reduce congestion and sprawl.

Reid says Metro and cities near the sites will address those issues as they arise, and that most new jobs will be created in urban centers during the next 20 years.

Recruitment-ready sites

The study is most recent one in a series that began several years ago. It is the “Regional Industrial Site Readiness 2014 Inventory Update.” In addition to Metro and the Port of Portland, partners include Business Oregon, the Oregon Department of Land Conservation and Development, the Portland Business Alliance and the Commercial Real Estate Development Association known as NAIOP. The study was conducted by the Mackenzie consulting firm.

The studies are based on the premise that large employers, like manufacturers, benefit the region by paying employees higher than average wages, which generate higher than average taxes for public services. This is know as the “traded sector” of the economy because the products they produce are sold outside of the region, bringing in dollars that would not otherwise come into it. The “2012 Value of Jobs Report” issued by PBA found that on average, a traded-sector worker in the Portland area earns 42 percent more than a local-sector worker in the same region. Each traded-sector job also creates 2.5 local-sector jobs, according to the report. That is why policy makers are willing to subsidize the creation of traded-sector jobs, if necessary.

“Because the Portland region must compete with other metropolitan areas for these traded-sector jobs, it must have an adequate inventory of development-ready large industrial sites for expanding and attracting companies,” according to the study.

Like previous studies, the new one focuses on vacant sites that are 25 acres or larger. It breaks them down into three levels, called tiers. Tier 1 sites are those that can be developed within 180 days of applications being submitted. Tier 2 sites require seven to 30 months of preparation. Tier 3 sites require more than 30 months before development can occur.

“Tier 1 sites are the only sites generally considered recruitment-ready for businesses expanding or locating in the Portland region,” according to the study. “In a globally competitive environment, businesses increasingly require compressed timelines for decision making and development.”

The study found that of the 54 identified sites, 14 are Tier 1 sites, 17 are Tier 2 sites, and 23 are Tier 3 sites. In other words, more than half the identified sites require the most work to be ready for development.

Glancy says the Tier 3 sites could have been dividing into a fourth tier: those that will take a lot longer than 30 months to get ready for development.

The study also found that most of the available sites are smaller ones. Of the 54 sites, 39 are 25 to 49 acres, 10 are 50 to 99 acres, and only five are larger than 100 acres. This is important because many employers who pay the highest wages frequently require sites that are larger than 100 acres, including high-tech, green tech and advanced manufacturing companies.

The sites are not evenly distributed within the region, however. Washington County has 30, and 14 of them are Tier 1 sites. Multnomah County has 20, with five being Tier 1 sites. And Clackamas County only has four sites, with just two being deemed ready for development.

According to the new study, having development ready sites can pay quick benefits. The first inventory was published in 2011. Since then, three Tier 1 sites were acquired for development with $38 million being invested to create 416 jobs. In fact, since the 2014 update was completed in June, three additional Tier 1 sites have been acquired for development, according to the study.

Challenges ahead

The study identifies each site by location, size, ownership and challenges that must be met to prepare it for development. Challenges vary considerably, requiring different approaches to overcome them. For example, six sites are polluted brown fields that need to be cleaned up before they can be developed. Three are Portland Harbor Superfund sites, subject to a complex federal process that is only making slow progress. More than half of the Tier 2 and Tier 3 sites require local and state legislative actions, such as annexation or completion of concept planning. Between 40 and 60 percent of the Tier 2 and Tier 3 sites also have transportation, other infrastructure or environmental mitigation constraints.

A number of local, regional and state programs have been launched in recent years to help speed development of the sites. For example, Portland has loaned millions of sewer ratepayer dollars to the Superfund cleanup effort for planning before the U.S. Environmental Protection Agency determines the exact steps to be followed and how much the existing companies that contributed to the pollutions will pay. Metro has created a regional Brownfield Coalition to help clean up other polluted sites. The state has created a Regional Solutions agency in the Portland area to reduce bureaucratic obstacles to developing the sites. The 2013 Legislature also created programs to help develop vacant sites that will be seeking funding next session.

Reid says Metro needs to update the inventory every few years to ensure that progress is being made preparing the sites for development.

Glancy agrees. “The region needs to focus on site readiness. We need to put our money where our mouth is,” she says.

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