Upper Left Coast

Thoughts on politics, faith, sports and other random topics from a red state sympathizer in indigo-blue Portland, Oregon.

Wednesday, June 11, 2008

I'll sleep well with protection like this

The latest owner of the Round development in Beaverton owes the city more than $800,000 in unpaid utility bills, but the city insists in its finest ostrich imitation that there are no problems.

This is the same developer (Dorn-Platz), whose defaults on city agreements have led to millions of dollars in foreclosures, unpaid taxes and construction liens.

This is also the same developer that, because of its defaults, forfeited the Round's heating plant to the city, and then started receiving almost $36,000 a month in rent from the city for that same plant. Exactly how long the city paid this rent is unclear, but we know the city was informed of Dorn-Platz's financial troubles almost a year ago, and it wasn't until sometime in 2008 that it stopped the payments. Let's be conservative and say it was seven months -- July 2007 to January 2008. So that's a quarter of a million dollars in rent.

And don't forget -- the city purchased this property for $5 million, which was more than its appraised value.

So what has the city done in response to Dorn-Platz's unpaid bills? It's seized a $250,000 security deposit from the developer, and authorized $79,000 for legal services from its Portland law firm.

Here's the best line of the Oregonian story:
City officials wouldn't talk Tuesday about their next move. But they insist that taxpayers will be protected and suggested that the Round's struggles have more to do with Dorn-Platz than a bad project idea.
I know the economy is an issue, but it's difficult to accept the latter part of that statement when the Round has had nothing but problems since the city bought the property. As an earlier Oregonian story noted:
The Round has struggled since 1997, when the city sold the former sewage-treatment plant to a developer and called for multistory buildings with ground-floor retail and restaurants with housing and offices above.

The first developer declared bankruptcy, and the city took back control of the site in 2001. Later that year, Dorn-Platz took over the project. The city, however, declared Dorn-Platz in default of its development agreement, penalized the developer and signed a new agreement.
So let's do the math: $821,000 in back utility bills, minus the seized $250,000 deposit, plus $79,000 for legal bills, plus $250,000 in rental fees for a seized heating plant, plus $5 million for the initial property purchase. That comes out to almost $6 million out of city coffers. And that, frankly, only scratches the surface of the city's financial investment.

I feel so protected. Don't you?

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1 Comments:

  • At 6/11/2008 6:51 PM, Blogger MAX Redline said…

    You can be so silly!

    The Round is a classic example of Transit-Oriented Development (TOD). It's bound to be a success because light rail drives TOD investment! Just look at all of the development that's been going on over at the Cascade Station TOD site.

    Oh, wait...that sat empty for a decade until Portland City Council re-zoned the area to allow Ikea and Best Buy to build big stores with 2500 parking spaces for cars. Hmm. Development didn't start until the city zoned it out of a TOD designation.

    Well anyway, you know the Round is eventually going to be a huge success, and a fitting tripute to the concept of TOD.

     

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