block 17 pearl district

A rendering of a a 281-unit market-rate apartment complex being built in the north Pearl District by Atlanta-based Wood Partners and members of Hoyt Street Properties. This project is one of three in the pipeline for Hoyt Street, which failed to meet affordable housing goals under a development deal with the city of Portland

(Wood Partners LLC)

Optimism ran high in 1997 as the Portland City Council approved a landmark deal to transform 34 acres of the forlorn Pearl District into an urban oasis that would be home to Portlanders of all incomes.

The city would spend tens of millions of dollars to bring traffic into the Pearl by tearing down the Lovejoy viaduct, building the nation's first new streetcar line and constructing three glistening parks.

Hoyt Street Properties, the largest landholder in the Pearl, would build thousands of dense condominiums and apartments while ensuring 35 percent were affordable to working-class residents.

And if the developers fell short? The city could buy land from Hoyt Street at a discount to get more affordable housing off the ground.

Today, Hoyt Street has missed its target. Only 30 percent of the nearly 2,000 units built under the deal are affordable, according to city documents obtained under the state's public records law. Three complexes now in the pipeline will bring Hoyt Street's affordable housing rate even lower, to 28 percent.

Hoyt Street would need to develop 258 affordable units to catch up to the city's target, an analysis by The Oregonian shows.

Yet the city has not brought down the hammer.

Despite knowing for months about the shortfall and a quickly approaching Sept. 8 deadline to exercise its purchase option, officials with the city have taken no documented steps to force Hoyt Street to sell land for modestly priced housing.

Traci Manning, director of the Portland Housing Bureau, said in an email this week that the city is working to get the "best information" before deciding what to do. She said regardless of how Hoyt Street's affordability record is measured ultimately, "it will be close to target."

"That's pretty sad," Debbie Aiona, action chairwoman for the League of Women Voters of Portland, said of progress on affordable housing. "You'd think they could have performed better."

The failure involving Hoyt Street Properties is just the latest example of high-minded Portland planning falling short. Despite city goals to sprinkle affordable housing amid heavily subsidized redevelopment efforts in the Pearl and South Waterfront districts, production targets have gone unfulfilled.

Portland's inability to deliver should give residents pause the next time a big redevelopment project is proposed, said former city Commissioner Gretchen Kafoury, who voted in support of the Hoyt Street deal.

"How can the public have confidence that those targets will be met?" Kafoury asked. "And the answer is, they can't – unless they elect people who really care about this stuff."

Minimum goals

Portland planners' vision for the Pearl District began taking shape in 1988, when the City Council designated the rail yards north of Lovejoy Street for new housing. Six years later, the City Council approved an ambitious housing strategy for more than 5,500 new units in the old warehouse district north of West Burnside Street.

Portland struck a deal in 1997 with Hoyt Street Properties to renovate a former rail yard into high-density housing. The developers have helped transform the old warehouse district but they didn't deliver enough affordable housing.

City officials knew that they'd need to subsidize housing construction for residents of modest means. In 1994, the City Council set a "target" that at least 35 percent -- but as many as 55 percent -- of the new units would be affordable for individuals or families earning up to 80 percent of the median income.

In 1997, city leaders found a development team ready to make it happen.

The City Council turned to Hoyt Street Properties, a collection of savvy and influential developers that at the time was led by Homer Williams, later succeeded by his stepdaughter, Tiffany Sweitzer.

Real estate magnate Joe Weston joined the deal. His involvement, he told city officials, was contingent on the principle that "we develop housing for blue-collar workers."

But when it came to affordable housing goals for Hoyt Street, city officials went with the bare minimum: 35 percent. The city's development agreement noted that Hoyt Street's ability to deliver "will be subject to the availability of public financial assistance" from the city or elsewhere.

Hoyt Street is responsible 17 years later for nearly 2,000 new Pearl District condos and apartments. But of those, only about 600 are affordable for residents of modest means, or almost 100 units short of Hoyt Street's contractual goal.

Portland defines the target for affordable housing in rentals as families with incomes up to 80 percent of the region's median, with the cutoff currently at about

With more projects in Hoyt Street's pipeline, the company's shortfall in affordable units is projected to grow to 167 in coming years.

Now city officials face a choice.

The development agreement said if Hoyt Street missed its target at any of three anniversaries of the 1997 deal – 2002, 2007 and 2012 – the city had the right to buy a parcel, chosen by the company, of up to 20,000 square feet.

The development partners met targets in 2002, city documents indicate, but city officials could not immediately provide an accounting for 2007. A separate deal negotiated in 2011 extended Portland's purchasing rights by two years.

The new deadline: Sept. 8, 2014.

What will happen?

Documents indicate that Portland Housing Bureau officials have known at least since March that Hoyt Street missed housing goals.

A Housing Bureau employee presented Manning, the director, and Javier Mena, the assistant director, a memo March 4 with data showing that Hoyt Street missed the mark on housing affordability.

The staffer recommended that the city needed to make "formal" contact with Hoyt Street executives about the shortfall, talk with them about the possibility of buying remaining parcels and review the complicated appraisal process to purchase land.

"Be mindful of termination date" of Sept. 8, the memo read.

That is now less than three weeks away.

The Housing Bureau has no documentation to show it's taken any of the actions specified in the memo. In an email, spokesman Jeff Selby said the bureau has been communicating with Hoyt Street primarily in person and occasionally by phone.

Hoyt Street has about 5.75 acres of vacant, available land left in its 34 acres, county property records show. The land, all of it north of Pettygrove Street, has a real market value of $26.7 million.

Fully 258 new affordable units will be needed to catch up with city goals.

The biggest affordable housing development on Hoyt Street land created 210 units on a full city block. A master plan posted on Hoyt Street Properties' website shows just one new affordable housing development in the future. It will cover half a city block.

Neither Tiffany Sweitzer, Hoyt Street's president, nor Weston, the company's other in-state partner, responded to messages seeking comment.

Manning said in an email response to written questions that city housing officials want to evaluate the right location for new affordable housing while ensuring land can be purchased at a reasonable price.

"The most important decision today is, given available resources, how do we get the best investment of public dollars to create affordable housing in the River District," Manning wrote.

Money should not be a problem. Hoyt Street's land is in the city's River District urban renewal area, which is flush with cash. But the City Council has set other priorities, devoting a smaller share of money for affordable housing in its latest five-year plan for urban renewal spending in the River District than in years past.

Aiona, of the League of Women Voters, said the city should be aggressive.

The league raised concerns in 1997 that affordable housing goals weren't stringent enough. Now, Aiona said, the city should buy as much land as it can to ensure additional units are built.

The city needs stronger contractual language in the future to ensure taxpayers get "more concessions from the people who are profiting," she said.

"We realize that there has been a sincere effort to get those housing units built," she said. "But it's a shame that we haven't gotten all the way there."

-- Brad Schmidt