If plans to place an emergency homeless shelter at the city's surplus Terminal 1 property would have moved forward, the property would have been leased at well under what city officials have said is the going rate.
According to a copy of a tentative lease agreement between the Bureau of Environmental Services (which owns the land) and the Portland Housing Bureau (which wanted to lease it for shelter space), the 96,000-foot warehouse would have been available for 20 cents per square foot. That's a 42 percent discount from the 35 cents per square foot Commissioner Nick Fish's office had suggested is the market rate for the property. It's also less than the 30 cents a square foot BES is currently charging for the space.
UPDATE, 3:17 pm: Jim Blackwood, senior policy director for Fish, reminds me that BES was blocked by City Council from seeking the full rate. Instead, council passed language saying BES could only charge "monthly rent sufficient to cover BES's expenses" and setting an absolute floor at $10,000 per month.
The 20 cents per square foot rate for warehouse space was the number the agency came up with that reflected that. I've changed the headline of this post to reflect that reality.
ORIGINAL:
As part of the city's charter, bureaus funded by ratepayers, like BES, are constrained in how they can use that money. Fish's office has argued those same constraints extend to property leases—arguing BES would be shortchanging its customers if it leased Terminal 1 at a cut rate.
"We can't tell ratepayers we discounted this," Blackwood told the Mercury in August. "We have to recover what the market will bear."
As we've noted, that view is shared by Portland attorney John DiLorenzo, who is already suing BES and the Portland Water Bureau for what he says are misapplied ratepayer funds. DiLorenzo immediately tried to tack on the Terminal 1 deal to his list of gripes when the arrangement emerged several months back.
But his threats didn't sway Portland City Council, which directed BES only to recoup expenses for the land in the lease.
But at some point during bargaining, it appears Fish's office softened its stance on what constituted an acceptable market rate. The deal it had worked out with the housing bureau, obtained via a public records request, says the property would be leased at 20 cents per square foot—a rate that would have included parking lot space thrown in at no charge.
Harbor of Hope, the nascent nonprofit that had hoped to run the shelter, wanted to start small, gradually expanding into the entirety of the 96,000-square-foot warehouse in three phases. Under those phases, it would have paid:
•$10,940 per month for 32,600 square feet of warehouse space and 71,000 square feet of parking lot space
•$13,800 per month for 67,000 square feet of warehouse space and 71,000 square feet of parking space
•$19,200 for the full 96,000-square-foot warehouse and the parking space.
In August, Fish's office said an analysis suggested that the market rate for the warehouse alone could be as high as $33,600 per month. But the now-scuttled lease says BES would have come out even on the deal if it charged an average as 6 cents per square foot for the entire property.
Fish's office didn't immediately return a call asking how it arrived at the 20-cent figure.
It'll no longer have to. Harbor of Hope, founded by prominent developer Homer Williams, failed to find an entity to operate its shelter that officials would agree to work with.
The property is now back on the market, and Fish is once again hoping for a windfall from companies looking to tap into centrally located industrial land that's hard to come by in Portland.
