Last month, the Portland Development Commission (PDC) announced a pilot program for its eight Neighborhood Prosperity Initiative (NPI) areas, four of which are in east Portland, including Parkrose. “PDC found some money under the seat cushions,” Senior Business Development Officer Bernie Kerosky jokingly told Historic Parkrose (HP) NPI board members at their November meeting. “It’s a small amount of money where real estate development is concerned,” Kerosky acknowledged, especially for eight NPIs. So new it doesn’t have a formal name, Kerosky said to call it the Community Land Acquisition Loan Fund (CLALF) for now. “This is still in the infancy of trying to develop this and see how this would work.”
Because NPIs have generated little Tax Increment Financing (TIF) since their inception in 2012, there is little money to loan out Kerosky said. Therefore, using $900,000 of its money, PDC created the program (see below for a definition of TIF).
CLALF is inspired by last summer’s purchase of a two-acre lot in the Cully neighborhood by a coalition of Portland nonprofits and neighborhood groups (“Sugar Shack property in Northeast Portland sold to Cully group for $2.3 million” The Oregonian, July 8, 2015). Deleterious to the neighborhood, the triangular lot where Northeast Killingsworth Street meets Portland Highway at 67th Avenue was a nexus of nefarious activity that housed a variety of adult businesses.
Despite being outside Cully’s NPI boundaries—meaning that by law it couldn’t receive TIF—PDC still chipped in $250,000 in an interest-deferred loan towards the lot’s purchase.
CLALF’s intent is for the geographic-specific NPI groups sprinkled throughout Portland to not only identify parcels of property or buildings for purchase in or just outside their boundaries, but to also find a builder and/or nonprofit coalition to develop it, like in Cully. “We’re asking the NPIs to come up with some properties they think are strategic and community goals and benefits that could be achieved by partnering with somebody and finding a developer to pull this off,” Kerosky said a few days after the meeting in a telephone interview. “This is supposed to be community driven, [focused on] what these people in this community want,” he said. “It’s a little more challenging when you’re trying to do property development and not just business development or business assistance in these areas.”
Nevertheless, the money is a strategic investment meant to tie up a property to find a community use for the neighborhood, not a long-term real estate loan. Additionally—and without turning the volunteer groups into developers—the new program is intended to give NPI groups a chance to control the land while assembling a coalition to develop the property. “The key role is finding the property and what the community’s goals are and what they want to get out of it,” Kerosky said. “It’s [the money] meant to be replenished and brought back so it can be used and reused in multiple areas.”
HP revitalization manager Mingus Mapps, a PDC employee, handed the volunteer board a list of 10 properties. It included parcels as small as a squatter-occupied private home on Northeast 105th Avenue for $118,000 to the 40-room, $962,000 Portland Value Inn on Sandy Boulevard at Northeast 119th Avenue.
“You’ve got Mark New [of New & Neville Real Estate Services] that’s doing the Grocery Outlet,” Kerosky said. “I’d talk to him. You know him, he might be a good source.”
Historic Parkrose’s boundaries are centered along Northeast Sandy Boulevard in the commercial corridor from Northeast 99th to 121st avenues, and extend one block north and south from Killingsworth to Wygant streets. Mingus Mapps and Kate Coenen staff HP. The volunteer board is Chair Ken Poirier, Vice-Chair Rick Randall, Secretary Marcy Emerson-Peters, District Improvements Grants chair Mark Gardner, Amy Salvador, Joe Rossi, Chris Hamilton, Bob Jolin, Loretta Stites, Ed Charles, Dominic Moran, and Gail Volk. Visit historicparkrose.com, or the group’s Facebook page for more information about HP’s mission.
Tax Increment Financing explanation culled from PDC’s website
TIF is one of PDC’s primary sources of urban renewal funding. When the city defines an urban renewal area’s boundaries, the Multnomah County assessor freezes the assessed value of all real property within the URA. By borrowing against future growth in property taxes, URAs raise money. The city uses the borrowed money to pay for capital improvements in the district, which are intended to spur more development. As the city and others invest in the URA, property values rise. Property taxes above those collected when the values were frozen—the tax increment—are used to repay the loans used for the improvements in the URA. When the URA expires in 20–25 years, the intent is to return a higher property tax base to tax rolls.