Terminal 1, with the disputed warehouse.
Terminal 1, with the disputed warehouse. City of Portland

A week from today, city council is scheduled to take up one of the more politically intriguing questions to come before it in some time: Whether to open a temporary homeless shelter in a 96,000-square-foot warehouse at the city-owned Terminal 1 property.

And with various factions in City Hall prepping for what's sure to be a spirited debate, there's already a rhetorical battle brewing over how much that shelter might cost.

Remember: Housing Commissioner Dan Saltzman has elected to move forward with a resolution to establish a homeless shelter over the objections of Commissioner Nick Fish, whose Bureau of Environmental Services actually owns the property. And Saltzman's not alone. He appears to have support from Mayor Charlie Hales and Commissioner Steve Novick, meaning this might be a rare instance of council snatching a property from the commissioner in charge of that property.

A draft of the resolution [PDF], obtained by the Mercury, indicates council could force BES to lease its Terminal 1 warehouse to the Portland Housing Bureau "to provide a temporary mass shelter and services for approximately up to 400 people as well as analyzing a proposal known as the Oregon Trail of Hope project." The lease agreement would be for at least six months, and up to 18 months.

The Oregon Trail of Hope is being pushed by prominent developer Homer Williams, who wants to put more than 1,000 homeless people on the site, between a shelter space and a more-intensive residential facility. He borrowed the model from San Antonio's $100 million Haven for Hope facility.

"I think we could admit that it moved rather quickly," said Saltzman's chief of staff, Brendan Finn, when asked about whether the shelter resolution had been a surprise for Fish. "This step is an important one to take."

Sources say Saltzman personally walked a copy of the Terminal 1 resolution to Fish's office some days ago, as a sort of olive branch.

But that doesn't mean frustrations have cooled, as we might well see next week. At a time when Portland's got limited public funding for shelters, there's disagreement brewing about how much BES should charge the Housing Bureau to lease the warehouse, if it comes to that.

Finn tells the Mercury that Saltzman would look for a similar deal to one BES cut with TrackTown USA when it leased the Terminal 1 warehouse to the organization last year. Under that agreement, obtained via a public records request, TrackTown paid the city $10,000 a month (along with a $20,000 security deposit) in order to build an indoor track-and field-facility in the warehouse.

"Dan believes it is fair for the Housing Bureau to pay the same rate as TrackTown did to lease the property," Finn says. "Ultimately, that is a council decision."

But Fish's office says it's more than that. As has been laid bare in an ongoing lawsuit against BES and the Portland Water Bureau, the city's utility bureaus are severely constrained by the city's charter in how they can use ratepayer money.

Jim Blackwood, a senior policy director for Fish, says part of that arrangement means BES can't rent out Terminal 1 (or any similarly surplus property it owns) at a cut rate. And BES thinks Terminal 1 is worth a lot.

"TrackTown is a model for nothing," Blackwood says. "That's an indication of nothing."

BES is in the process of trying to sell Terminal 1. And it's doing so, Blackwood likes to note, under the direction of council. The bureau's been able to field offers for a little more than a week at this point.

"We can't tell ratepayers we discounted this," Blackwood says. "We have to recover what the market will bear."

There's one problem with that argument: BES has already leased the warehouse for less than its market rate.

We've reached out to brokers for an idea what standard warehouse space in the Northwest Industrial district could be expected to cost, and are waiting to hear back. But a cursory search shows nearby properties go for rates ranging roughly from 45 cents per square foot (roughly $43,200 per month for the Terminal 1 warehouse) to 59 cents per square foot ($56,640). Today, BES is leasing out part of the warehouse for for 30 cents for square foot, which would translate to $28,800 per month for the whole space. That's nearly three times what TrackTown paid.

Update, 11:13 am: Fish's office just released a new analysis that suggests fair market rate for the space is 35 cents per square foot, or $33,600 per month. That's more than $400,000 for an entire year. All told, the market rate for the entire Terminal 1 property could fetch up to $1,196,328 per year, the analysis says.

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Blackwood acknowledges that's at odds with the argument for market rate pricing.

"It was just sitting there empty not doing anything" at the time of the TrackTown deal, he says. "Why not make some money? There is a huge difference now."

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Blackwood says the market's heated up significantly in the months since the TrackTown contract was signed (though it was already fairly steaming at that point). He expects the market rate for the space will be above the 30 cents per square foot BES is currently charging (to the company Sulzer, for storage).

The particulars of how much the shelter costs might be a big deal. As we reported today, officials have already had to turn down potential homeless shelter sites because of cost concerns. But Finn says the private market, with Williams' urging, might be willing to help.

"We’re not doing anything other than asking the council to give the private sector a chance to invest in our homeless population," he said.