Zidells and City shelve massive South Waterfront development
Zidell frustrated by city over going Dutch on infrastructure.
No barge-themed condos - for now.
ZRZ Realty and Prosper Portland have axed their development agreement for the Zidell family's 33 acres of South Waterfront.
In a joint press release both sides said they are "mutually terminating the development agreement for Zidell Yards, which will not move forward with development plans."
The Zidells got out of the barge building business earlier this year and went all in with real estate, planning to build 2,200 residences, 200 hotel rooms and 1.5 million square feet of office space, including a 19-story tower called one Gantry Plaza at Southwest Moody and Grover. They also talked up their plans for 10 acres of public parks in the area around Ross Island Bridge.
In the 2015 development agreement Prosper Portland was supposed to invest $23.7 million for infrastructure and economic development.
Gone but not forever
"While the termination of the agreement is significant, it does not signal the end of development work in South Waterfront," said Mayor Ted Wheeler.
Jay Zidell, ZRZ Realty's president and no fan of bureaucracy, said in the media release, "Unfortunately, given the costs of developing on the site and the city's priorities on how it intends to use urban renewal funds, we are not currently able to move forward on this development."
Mr. Zidell told the Business Tribune that he did not know what the next move will be.
"We're disappointed but as a family we're still optimistic about our plan and vision. It's too soon to say what's going to happen. We just need to let the dust settle and start."
"If the mayor were to call me up I'd answer his phone call. We're a team here, we just need some time to figure out what's next."
Zidell explained that as the scale of the plan had increased, so the city's willingness to split the cost of infrastructure had waned. In the 2015 development agreement the city agreed to fund half the cost of the infrastructure. That was when the plan was for 1 million square feet of new buildings.
"Two-and-a-half years ago the family undertook a master plan and the result was the development of four-and-a-half to five million square feet, which is vastly different in scale and density than the original."
He said ZRZ has been negotiating with the city for over a year to figure out how that larger amount of public infrastructure gets paid for, and to amend the development agreement.
A month ago, ZRZ told the city couldn't raise the money to build without it.
"In order for us to build the vertical buildings we need to go to the capital markets, we need to produce a market rate of return on the buildings," said Zidell.
Then two Thursdays ago they had another meeting with the city, at which neither side would budge. "They didn't have the appetite," according to Zidell. "We couldn't have meeting after meeting and get the same answer."
Back to Phase One
Even scaling plans back to a Phase One, which was just 10-plus acres with nine buildings, the city wasn't willing to go halves on so much infrastructure.
Asked if the window for development might be shrinking, he answered, "Economic cycles come and go. There's always a risk. We as a family are excited about our plans, we would love to be able to go forward. I would love to sit down with the mayor and break this jam."
And if the site is still empty in ten years time?
"We'd be very disappointed. The family views this as our legacy, we want to do something that significantly contributes to the city we've grown up in."
He explained it again.
"It's all about two things. Our need to be able to attract outside capital to fund the buildings which require market rate returns, and how do you pay for the public infrastructure, the regional attractors like the greenway trail and three more parks?"
Zidell sounded frustrated after his team has been in a series of meetings over the years with different bureaus. "There was no shortage of individuals in the meetings."