Putting money down on the waterfront

[Chief]

http://columbian.com/news/localNews/2007/12/12292007_Putting-money-down-on-the-waterfront.cfm

Saturday, December 29, 2007
BY JEFFREY MIZE, Columbian staff writer

2008 likely will be pivotal for the Boise Cascade project, the year the city of Vancouver must come up with road dollars to support its waterfront vision.

The former industrial site along the Columbia River south of downtown could be a redevelopment bonanza.

Mid-range projections depict a bustling waterfront community packed with 2,300 residences, 814,000 square feet of office space, 299,000 square feet of hotel space and 193,000 square feet of retail space.

All of which comes at a price to the city: $9.5 million for the city's share of road improvements opening up the waterfront area and maybe a portion of an additional $13.8 million funding gap.

An initial round of road and rail improvements is expected to cost $38 million. A variety of sources will be used to pay the bill, including city, developer and BNSF Railway contributions.

Then there's an additional $24 million needed to improve Jefferson Street and Kauffman Avenue between Eighth Street and Mill Plain Boulevard and to extend the popular waterfront trail west past the Interstate 5 Bridge through the Boise site.

All those figures are little more than educated guesses and could fluctuate by millions. Firmer estimates should be available next spring, at which time the city wants to nail down a strategy for plugging the $13.8 million funding hole.

It's a challenge that city officials *believe they must meet. Mayor Royce Pollard said the Boise project, upon completion, could total a $1.5 billion private investment in Vancouver's future.

"I think we have to figure out how to make it work," he said. "There aren't many pieces of the river like this one left around, and we have the key."

Councilman Tim Leavitt agreed the promise of waterfront redevelopment is too great to let slip by.

"There is no other piece of waterfront property that I'm aware, and certainly not in the city of Vancouver, that has more value to the community, he said.

Lingering problem

The need to craft a waterf ront funding plan likely will reignite the debate over city finances and how to address a chronic shortage of transportation dollars, a problem that has flummoxed city officials for much of this decade.

A number of proposals have been floated, including doubling the city's water and sewer tax and reinstating a local business and occupation tax, but none of those ideas received city council approval.

The council added two-tenths of 1 percent to the local sales tax in August 2005 to raise money for roads. One year later, the council decided it had more pressing needs in police and fire and redirected that money to public safety.

In November 2006, the council approved a $50 per employee surcharge on local businesses, capped at $20,000 per company. That was projected to raise $2.4 million a year, but actual receipts for 2007 have been only $1.9 million, almost 20 percent below projections.

All of which leaves Vancouver facing an expensive bill to support waterfront redevelopment without a clear idea how to pay for it.

$3 million budgeted

So far, Vancouver has budgeted only $3 million to pay for design of the needed transportation improvements, not the $9.5 million the city tentatively agreed to contribute toward construction or an unspecified piece of the $13.8 million funding gap.

Gramor Development, the Tualatin, Ore.-based company that has pieced together a consortium of investors to purchase the Boise property and redevelop the site, is expected to contribute $8 million.

The city is looking at a variety of options, including seeking more money from BNSF Railway, lobbying for state or federal appropriations and forming a local improvement district, which could mean higher property taxes for nearby owners.

The ultimate solution likely will be cobbled together from a number of different sources. Pollard will be heading to Washington, D.C., in February to lobby for the city.

One possibility is to build the transportation improvements in phases, starting with punching Esther and Grant streets through to the waterfront as part of realigning the BNSF Railway tracks.

"Maybe our participation is spread out three to four years," Leavitt said. "I've got to believe a phased approach by the city will help to move the project forward and will be an easier pill to swallow."

Making the public case

Another part of the strategy w ill be persuading city residents that money spent near the waterfront is a prudent investment in the city's future.

The city doesn't have a large revenue stream for road projects needed to ease worsening traffic congestion in east Vancouver. At the same time, it wants to invest millions in downtown, a place with little traffic congestion, to support a posh waterfront development loaded with condos and upscale shopping for wealthy residents.

Pollard disputes any suggestion the waterfront will be an exclusive community for the rich, with little to offer the common person.

"That's not true," he said. "There will be waterfront access, shopping, restaurants for the whole community."

And Pollard said he is confident the city will be able to demonstrate a sizable return on investment through higher tax revenues generated by the project, justifying its financial participation.

"Right now, we've got nothing," the mayor said. "There's a fence. You can't go there."

Fair use on this since I've covered this from the start.

[Waterbuffalo]

So where is he going to get money for his pet projects for 2008-2011?

[Chief]

You see the problem clearly WB. We're talking untild millions of dollars worth of "investment" by the City, and minimal "investment" from the developer. I see little progress on this project since the last major update, and I wonder where the rumors came from that Gramor still hoped to close on this deal by year's end. That clearly isn't going to happen any time soon.

I think it's borderline irrational for the City to even consider this project if they still have no idea how to pay for any of the Columbia Crossing options that they want so badly too.

[tefen]

and minimal "investment" from the developer.


Somehow I think the developers probably don't find "a $1.5 billion private investment in Vancouver's future" to be minimal.

This article does raise a lot of questions about how the city uses money though.

[Chief]

I was referring to the $8 Million share that Gramor is shouldering, compared to what they wan t the City to cough up.

[Waterbuffalo]

If any one wants to know what the city financial situation is and how things are dealt out, there are quarterly and yearly reports on the subject. I'd like to discuss the topic not in conjecture and estimates but from some points that are actually established in fact.

Honestly, I do think the City runs on "pipe dreams." What do you think all of these Vision statements have been coming out from the mayor?

So where is our data for the Gramor site? How much are they going to need from the government and what is it going to buy?

And points this at the City of Vancouver, please DO NOT use the "it needs to be secretive" crap like has happened in the past Guys. Get the numbers and let us, the citizens have a time to talk about it.

Whether we ALL feel its right for this city to start in the long process your professed to in the 12-17 CRCP and C-tran City Council workshop sessions. Its time I want to hear some honest numbers. CRCP may not have them all just yet, but this Gramor thing should be right up now ready to discussed now that it has had a year or so to fester in the background. Some numbers should be available.

[Chief]

The "City Center Visioning" plan is just that: a plan. What's more, it's a plan to deviate from. It sets out goals that the City would like to shoot for, but it eventually gets dragged back down to earth with fiscal realities like we are seeing right now.

What I found interesting is the $50 per head surcharge on Business is running 20% behind estimates. I would like to know why that is; were the initial estimates too high or are there a significant number of businesses that are non-compliant? That's an important distinction that this story does not address, and since Jeff Mize wrote it I am not surprised at how shallow this story is. In any case, I think Identity Clark County has some 'splainin to do, since they are the ones who came up with that plan and largely convinced City Council to enact it based on the rosy revenue projections.

That shortfall is what makes me even more nervous about the light rail payment schemes I hear. Once you commit to a large project (like light rail) you are betting the farm that your new revenue stream will keep up with the projected costs. If revenues fall short, you still have to come up with the money from someplace to pay those bills.

So, if we approve a Sales Tax increase to pay for $5 Million in annual operating and maintenace expenses for a Minimum Operating Segment (MOS), if that sales tax only yields $3.5 Million, then Council has to scramble to find the rest of that money; either cutting existing services, borrowing the difference, or trying to raise the money in some other way.

As for being "secretive" about it, I don't see how light rail O&M can be kept secret, quite the contrary, we will hear far more than we ever expected there was to know...

As for Gramor, the ball is clearly in their court. This story was a good rehash of where things stand, but in my view the developers are light years away from getting this funded via the City of Vancouver, especially in the amounts of cash they are talking about. Sure, if you spend enough money on the Boise site, you could build the Taj Mahal, but is that really the best use of our money?

Don't you find it curious that the picture the columbian ran with this story cuts out the Interstate Bridge, but includes a freight train on the trestle? I also find it interesting that there was not one word mentioned about the significant role the Port of Vancouver had in making all of this possible in the first place. POV took the lead in arranging all of the real estate transfers and complex negotiations with BNSF; without the leadership of the Port (and Arch Miller) this whole deal would still be mired in minutiae. The Port could have easily crafted their Rail Access Project by themselves, but chose to consider the entire site as well.

[Chief]

Updating...

Columbia Waterfront LLC (aka Gramor Development) was granted an extension in their lease agreement with the Port of Vancouver today at the regular meeting of the Commissione.

The original agreement with the Port expeired on 31 December 2007, as Gramor had planned on closing before then. Today they came back to the Commissioners and asked for an extension until the 31st of January, with an expectation that they would be closing with Boise on the 29th.

I have not seen any new information since the last time we discussed this subject, in that as far as I know there is stil an enormous financial hole that Gramor needs to fill, along with a considerable amount of cash that they expect the City of Vancouver to cough up as well.

All we can do at this point is speculate about what is going on, and wait until they actually close, and see what the terms of the deal they agree to are.

On a related note, I think it was prudent of the Port of Vancouver Commissioners to defer any judgement about mass transit into Downtown, until they see if Gramor has a prayer of pulling this deal together. Since most of the growth that RTC, C-Tran, the CRC Task Force and the City of Vancouver are projecting is from those 3000 condominiums in the former Bouse site, if that deal falls through, so does 90% of their justification for Loot Rail...

Still developing, slowly...

[Waterbuffalo]

Well one of the many reasons that the Columbia River Crossing is being touted and the light rail being pulled over the river is the Boise Cascade Site.

But there probably other personal and governmental reasons as well.

But my concern is that we have millions of our own transportation needs in other areas of Vancouver AND no one has shown me how we're going to provide all of it without shortchanging some one or raising more taxes to pay for more pet projects. (some of them in my opinion.)

Do I think the Boise Cascade site COULD be a windfall for this City or could it turn into another Boondoggle Express like the Hilton is?

Yes, I do love how other areas of Esther Short Park turned out and all of the lovely buildings that are in that area but does this area have the money or the capacity to draw in a 100 million dollars or so for the city that is needed for infrastructure in the area?

Relocating a Rail line, buidling a tunnels through it, adding lighting and street cars is going to cost in excess of 100 million. If you don't think so, take Portland as an example of how much their Downtown amenities cost and how many other areas of the City of Portland are neglected financially to pay for all of it?

Have as any one looked in NE Portland? Has any one road along 82nd Avenue, ride along Sandy Blvd, and many other areas. Wasn't it recently said in the Oregonian and Portland tribune that the City of Portland needs several hundred million dollars to fix potholes and yet, 2 billion more is needed for Light Rail projects that they think will be paid for mostly by the Federal Government?

Sorry guys but the smoking room cleared a long time ago and unless some one can tell me what the game plan is to pay for all of this and where its source is, I don't know how its going to come together?

[Chief]

bumping....good time to review this piece as well...

cewl

[Waterbuffalo]

Reviewing article for the financials that we almost forgot because we were focused for almost near a year on the Columbia River Crossing Light Rail system.