the emery south waterfront

The Emery is the Zidell family's sole development to date.

(Elliot Njus/The Oregonian)

The Zidell family will blow past city deadlines to begin the first phase of its massive South Waterfront development, city and company officials acknowledged Thursday in response to questions from The Oregonian/OregonLive.

Under a "make or break" deal approved last year, Zidell agreed to start construction on an apartment project by Dec. 31, and another construction deadline looms July 1, 2017. The company's new chief operating officer now says those milestones won't be met but declined to offer a revised timeframe.

"I don't have a date for you for the beginning of construction," said Thomas Henneberry, who joined Zidell's ZRZ Realty Company this summer.

City officials are undeterred and say they won't walk away from their deal with Zidell. Portland's urban renewal agency has agreed to kick in an estimated $24 million toward redevelopment, and officials plan to extend Zidell's upcoming construction deadline by a year.

Despite the delay, city officials also appear ready to pay for key road connections that were supposed to coincide with construction milestones. Moving forward without Zidell -- and the tax revenue from a new development -- could jeopardize the city's ability to pay for other projects in the North Macadam urban renewal district.

But both sides expressed optimism over Zidell's new master plan for its roughly 30 acres in the district, the largest undeveloped property in the central city. That new vision includes more immediate plans for the Zidell's barge-building property - a key location just south of the Ross Island Bridge that originally hadn't been set for redevelopment until 2025.

"The development of a master plan is a large step forward, as far as providing detail as to what the projects will look like, the shape they'll take, the sequencing," said Shawn Uhlman, a spokesman for the Portland Development Commission.

Henneberry said Zidell's recent decision to close the barge business "creates an opportunity to really relook" at the entire site. He declined to share specifics about building sizes or provide artist's renderings, although details will become available when Zidell presents its vision to the city's design commission Dec. 15.

Zidell doesn't have any tenant commitments, but officials are talking to retailers, restaurants, grocers and companies in search of office space, Henneberry said.

"There's a lot of marketing going on," he said.

Zidell's waterfront property offers enormous potential and company leaders have said they want to be thoughtful with development. Three years ago, Nike officials eyed it for a remote campus before deciding to expand in Washington County. Zidell hasn't shown any particular urgency to move forward, despite Portland's robust real estate market.

City leaders worked behind the scenes to craft a deal in 2014 to accelerate development. Talks stalled over requirements for affordable housing. But both sides finally struck a deal in June 2015, although Zidell isn't contractually obligated to meet construction timelines.

A first wave of development was supposed to include three properties, all along an existing stretch of Southwest Moody Avenue.

Zidell agreed to start work on a building with 90,000 gross square feet, just south of The Emery apartment building, on land known as Block 1. Under terms of the deal, the beginning of construction for that project "must occur" by Dec. 31.

Company officials last year submitted plans for an apartment complex but it never went forward. Henneberry said the site is now being considered for a building with a mix of unspecified uses.

Separately, Zidell agreed to build a second building, with at least 250,000 gross square feet, on property just south of a new light-rail stop. The start of construction for Block 6 "must occur" by July 1, according to Portland's deal.

Zidell also had been expected to begin construction on Block 4, south of the Ross Island Bridge, by July 1. But the company wasn't obligated to do so until 2025.

"We have spent the last year or more working on development ideas for Block 1, 4 and 6 projects," Jay Zidell told the City Council last year. "We have an incredible opportunity in front of us and ... we look forward to rolling up our shirtsleeves and getting to work."

Together, those three projects were expected to add $60 million in assessed value to the tax rolls. A second phase of development was required to kick off by July 2019. Those plans included 1 million square feet of office, commercial and residential space worth $150 million in tax-assessed value.

And, as Zidell made progress, Portland had agreed to build neighboring streets, including an extension of Southwest Bond Avenue closer to the Willamette River.

"The important thing to note is we only initiate that design if they're also building Block 6 concurrently so that we can exercise efficiencies in our Bond Avenue construction," a development commission manager, Geraldene Moyle, told the City Council last year.

But Uhlman, the agency's spokesman, said Portland leaders are now comfortable with building those road connections ahead of time. He said Oregon Health and Science University's nearby developments "necessitate that work to move forward."

With a new master plan in place, Henneberry said, road projects could begin in 2018.

Uhlman said city officials "absolutely" believe Zidell will begin construction on its first project by the end of 2017. The city's only recourse for missed deadlines is terminating its agreement with Zidell.

"Their commitment to what's happening down there is clear," Uhlman said.

-- Brad Schmidt

503-294-7628

@cityhallwatch