Mayor Charlie Hales felt fine enough about talks with Portland State over the demise of a promised "education urban renewal district"—one of the linchpins in a vast proposal to shrink the city's urban renewal footprint—that he cooked the resulting cash windfall into the budget draft he released last week.

But even he explained his budget to reporters last Thursday, Hales still wasn't feeling swell enough to declare a peace deal with the university—months after his office first floated aborting the district and opened up negotiations with PSU leaders on how to make everyone feel okay about a broken promise.

That moment waited, instead, for this afternoon.

Two days before the city council takes up Hales' proposed urban renewal changes—affecting not only PSU, but also the Central Eastside and the Pearl District—the mayor's office announced a tentative agreement with PSU that's $25 million over the next 10 years.

As expected, Hales and the Portland Development Commission will move to offset the vanished PSU urban renewal zone in part by expanding the neighboring North Macadam zone instead. A release announcing the agreement also spells out the following conditions:

● PDC’s transfer of its ownership of the Jasmine Block (between SW 4th and 5th, Harrison and Montgomery) to PSU.

● PDC’s support of the redevelopment of University Place, 310 SW Lincoln, both as a long-term development partner and investor.

● PDC’s partnership with TriMet to convey the rights to develop, own and transfer the Budget Rent a Car property, 2033 SW 4th, to PSU.

● TIF assistance for renovation of PSU’s School of Business Administration property (615 SW Harrison) and School of Engineering property.

● The city’s agreement to lease or purchase at least 30,000 square feet of space in a newly constructed or remodeled PSU building.

(Update 3:10 PM: The O's story about the announcement offers some additional context on the package negotiated between Hales and PSU President Wim Wiewel.)

Hales' urban renewal plan, largely put carving the Pearl District from the River District urban renewal area and putting it back on the regular tax rolls, is expected to return $158 million in taxes to the city, Multnomah County, school districts, and library district over the next 30 years.

Hales had mused for months about ending the PSU district, created under then-Mayor Sam Adams in late 2012, as part of comprehensive changes. The Mercury first reported that the effort to unwind the district was growing serious. The city and university hope to reach a final agreement by December 1.