ZRZ Realty Co.

Just weeks ago, both city officials and the Zidell family thought they were close to a deal to kick-start a long-anticipated development on the family's South Waterfront land.

The Zidell family had raised their ambitions for the site five-fold, from a million square feet of development to as much as 5 million -- the equivalent of four and a half U.S. Bancorp Towers.

But infrastructure costs had ballooned, too. It would cost as much as $90 million to build the streets, utilities and parks to support the built-from-scratch neighborhood. The city had initially pledged $23.7 million.

The gap couldn't be closed. Talks were called off three weeks ago, and ZRZ Realty Co., the family's real-estate arm, announced it was suspending development.

"It all gets back to one simply articulated issue which hasn't been so simple," said Jay Zidell, whose grandfather founded a ship-scrapping operation in what would become the South Waterfront. "That's getting the infrastructure paid for."

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The site, which the family calls Zidell Yards, is a rare blank slate near the central city. Its development would close the remaining gap between the developed north and south ends of the South Waterfront.

The Zidells' master plan for the site calls for up to 2,200 housing units and 1.5 million square feet of office space, as well as a hotel and a grocery store. It would also include three parks and connect the Willamette River Greenway, a riverfront trail that's interrupted through the site.

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ZRZ Realty Co.

In addition to a funding gap, there was also disagreement over where the money would be spent. When the ZRZ contemplated phasing in the development, starting on the south end of the site, to ease the up-front cost to the city, Zidell said Portland officials prioritized projects on the north side of the site.

The city and the Zidell family did manage to narrow the cost gap.

The city increased its offer to $47 million for infrastructure, plus $6 million to buy land for an affordable housing project. The Zidells, meanwhile, dropped their ask to $60 million.

"While the city has remained a committed partner in this work, taxpayer resources are not unlimited and ultimately we couldn't reach an agreement at this point in time," said Shawn Uhlman, a spokesman for Prosper Portland, the city's economic development agency.

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ZRZ Realty Co.

Zidell said the family would rather wait than scale back its plans for the site.

"Could we scale it back, dumb it down? Sure," Zidell said. "But it's not an interest to us."

He also said the city would have made back its investment over the 20-year buildout period through development fees and construction taxes, even without considering new property tax revenues.

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ZRZ Realty Co.

Portland's broader building boom faces headwinds. The construction of new apartments has slowed as rent growth has slowed. The cost of labor and materials has climbed. And a yearslong economic expansion has lasted far longer than previous ones, raising the risk a recession could be in the offing. But that had little to do with the decision to shelve the development, Zidell said, and the family was ready to proceed apace until a few weeks ago.

The family hasn't yet considered alternate plan, Zidell said.

He and other representatives met with the Portland Diamond Project, a group of investors hoping to bring a Major League Baseball team to Portland, but talks hadn't continued beyond that initial meeting.

"We have a terrific vision. We have a tremendous master plan," Zidell said. "Were committed to it."

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ZRZ Realty Co.

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-- Elliot Njus

enjus@oregonian.com

503-294-5034

@enjus