City's need for 635 acres could get boost from local lawmaker

by: COURTESY OF PORT OF PORTLAND - Seen from above, West Hayden Island includes acres of land the Port of Portland wants to turn into industrial land. The plan faces opposition from area residents and environmental groups who want more land protected for wildlife habitat and open space.
Portland planners are under pressure to identify hundreds of acres in the city for future industrial development.

State land-use planning policies require the city to have a 20-year supply of available land to meet its employment needs. A recent analysis found that the city needs 635 more acres of industrial land to meet this requirement — including 356 acres in the Portland Harbor.

Annexing West Hayden Island could help meet this requirement. A proposed plan would then allow the Port of Portland to develop 300 acres on the island for terminals. It is opposed by environmental groups and many residents on the island.

But even if the City Council overcomes the opposition and annexes the island, the city and the port would still have to spend millions preparing the site for development. Costs include more than $26 million for road improvements and $11 million in land restoration and planting.

Ironically, there is no guarantee the state would contribute to the development of the island, despite its requirement that the city have a 20-year supply of industrial land available. This is true, even though the state stands to benefit from the development of West Hayden Island.

An analysis by the port estimates it will create and support between 2,300 and 4,000 jobs, generating between $18 million and $30 million a year in state income taxes.

“The state of Oregon benefits from the investments that local governments make in economic development projects,” says state Rep. Tobias Read, a Beaverton Democrat who is co-vice chairman of the Oregon House Transportation and Economic Development Committee.

As Read sees it, the issue is not so much one of fairness. He believes local governments also benefit from the economic development projects they support.

But with a stumbling economy cutting into the revenue available at all levels of government, Read believes the time has come for the state to start sharing in the cost of preparing industrial land for development. He will introduce a bill at the 2013 Legislature to create a state loan fund to help support infrastructure employment to make targeted land ready for development. All or part of the loans will be forgiven if a projected number of jobs are created on the properties.

“I don’t think the state should pay more than 50 percent of the upfront costs,” says Read. “I think it’s important that local governments still have some skin in the game.”

Creating new jobs

The loan fund idea grew out of a series of studies on the availability of industrial land conducted recently by a number of business-oriented organizations, including the port, the Portland Business Alliance, the Oregon chapter of the Commercial Real Estate Development Association and Business Oregon, the state’s economic development department.

The most recent study looked at the benefits and costs of developing 12 specific Portland-area sites. It found they could result in the direct creation of 12,500 new jobs with average annual wages of $97,000, generating $764 million in additional personal income tax revenue for the state and $217 million in additional property tax for local governments during 20 years.

But the report also found it would require more than $91 million to provide basic services to the properties, including transportation, water, sewer and stormwater services. In almost all cases, the study found the costs were more than private developments could be expected to pay, meaning public support would be required to develop the properties and create jobs.

Costs varied by site. They ranged from $57,000 for a 93-acre general manufacturing site in Gresham to more than $30 million for the full development of 320 acres recently brought into the urban growth boundary in Hillsboro.

The study did not include West Hayden Island or speculate about where else Portland might identify the state-required 635 additional acres of industrial land. It did include two parcels already known to city planners, however. One is a 51-acre warehouse site on Northeast Marine Drive that needs $59,000 for transportation, water, sewer and stormwater services. Another is a 52-acre industrial site in the Portland Harbor that needs $15.6 million for such services.

Group seeks solutions

The 653-acre shortage of industrial land in Portland was identified as part of the city’s effort to update its comprehensive land-use plan. State land-use planning policies require all cities to adopt so-called comp plans that govern how they will develop in the future. They must be updated periodically with new population and employment projects. Portland’s update is due to the State Department of Land Conservation and Development by the end of next year.

The shortage was revealed in the state-required Employment Opportunity Analysis as part of the city’s comp plan update. It also found that the city has a shortage of 74 acres for new institutions, such as hospitals.

Finding a solution has been assigned to the Economic Development Policy Expert Group that is helping the Bureau of Planning and Sustainability update the comp plan. It has 25 members representing business, community and environmental interests.

The final decision must ultimately be made by the council, however. It must be approved by the staff of the DLCD.

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