1. Portland Business Alliance Urban Land Institute Joint Development Committee: Greater Portland’s Chamber of Commerce Portland Central City Commercial Development Strategy Symposium II September 24, 2009

2. Committee Participants Gene Grant, Co Chair Eric Steinmeyer, Co Chair Mike Bernatz Wink Brooks Dominic Colletta Mark Desbrow Lindsay DesRochers Kimberly Fuller Kirstin Greene Robert Hoffman Mark Hush J Isaac Cori Jacobs Gordon King Christopher Kopca Scott Langely Will Macht Scott Madsen Don Mazziotti Gerald Mildner Brian Owendoff Vivian Perry Coni Rathbone John Russell Jim Sheppard Tom Shimota Dietra Stivahtis Damin Tarlow Jill Viglione Karen Whitman Karen Williams

3. Objective: Identify a strategy to maintain and improve the market position of the central city as a competitive location for commercial activity to: Encourage and enable commercial development in the central city; Support retention of market share in the central city, Stimulate the demand for central city office space.

4. Committee Participants Gene Grant, Co Chair Eric Steinmeyer, Co Chair Mike Bernatz Wink Brooks Dominic Colletta Mark Desbrow Lindsay DesRochers Kimberly Fuller Kirstin Greene Robert Hoffman Mark Hush J Isaac Cori Jacobs Gordon King Christopher Kopca Scott Langely Will Macht Scott Madsen Don Mazziotti Gerald Mildner Brian Owendoff Vivian Perry Coni Rathbone John Russell Jim Sheppard Tom Shimota Dietra Stivahtis Damin Tarlow Jill Viglione Karen Whitman Karen Williams

5. Central Portland Plan Update Study Area

6. Central City Plan Success: 1988 - 2009

7. Room for Improvement

8. Discussion Topics 1.Central City Vision 2.Regulatory Framework 3.Workforce Housing Availability 4.Financial Tools 5.Transportation & Access

9. Portland Business Alliance – Urban Land Institute Commercial Development Strategy: Summary of Findings VISION AND GUIDING PRINCIPLES FOR THE CENTRAL CITY ULI Symposium II September 24, 2009 Chris Kopca, Sr. Vice President of Real Estate Downtown Development Group

10. Guiding Principles of the Vision Recognize there is an inherent connection between land use planning and economic development

11. Guiding Principles of the Vision Acknowledge that high rise, high density, mixed use development is more costly and risky per square foot than suburban development

12. Guiding Principles of the Vision A balance of retaining existing industry base & fostering emerging sectors is key

13. Guiding Principles of the Vision Establishing and tracking performance metrics should be the cornerstone of any Plan

14. Guiding Principles of the Vision Balance aspirational planning efforts with what the market can support.

15. Guiding Principles of the Vision The Central City should be a viable regional employment center

16. Portland Business Alliance – Urban Land Institute Central City Commercial Development Strategy: Summary of Findings TRANSPORTATION, PARKING & ACCESS ULI Symposium II September 24, 2009 Will MachtGordon King Portland State UniversityColliers International

17. Presenters “Supply-side”“Demand-side” Will Macht PSU Professor of Urban Planning & Development Associate Director, PSU Center for Real Estate Gordon King Senior Vice President Colliers International Concentration in mixed-use, public-private partnerships and retail marketplaces. Senior broker specialized in tenant representation.

18. Stubborn Fact “There has not been…robust growth in non-residential construction in the Central City, particularly in the office core.” Central Portland Plan Urban Design Assessment Focus Issues: FAR

19. Portland’s Office Market: 25 Year Change in Inventory General History: The suburbs have experienced a 3-fold increase in size. Relative Influence of CBD Office: 25 years ago, 1/2 of the metropolitan office space was in the CBD. Today, 2/3 of the metropolitan office space exists outside the CBD. Source: CoStar (a national real estate information service company) as compiled by Colliers International – Portland. Note: The bracketed square footage number indicates the projected size of the CBD market had it grown at the same pace as the westside suburban market. MARKET AREA 19832008ANNUAL GROWTH RATE CBD18,293,805 22,730,459 [56,652,167] 0.87% Westside Suburban 7,958,52324,629,3574.53%

20. Difficulties and Contradictions  Despite good light rail, streetcar and bus facilities serving the Central City, for many office tenants and project funders, the limit of 1 parking space for 1,000 square feet of office space in the Central City is a key impediment to tenant placement and office development.  Many tenants would prefer the Central City but need higher parking ratios than 1:1,000 to accommodate their workforce and clientele.  Yet, developers struggle even to reach the limit of existing parking ratios due to the high cost of underground, structured parking.

21. Four Avenues to Address Parking Availability  Increase the non-single occupant auto mode split [i.e., decrease the demand-side].  Increase Para-Transit Alternatives— Taxi/Shuttle/Towncar/Shared-car/Circulator Integration [i.e., decrease the demand-side].  Increase efficient use of the existing parking inventory [i.e., effectively manage the supply-side].  Construct additional shared parking spaces [i.e., increase the supply-side].

22. Recommendations 1)Establish a Parking Management System 2)Facilitate a Shared Parking Pool 3)Consider a Central City Transit Circulator System 4)Network Dispatch for Taxi/Shuttle/Town Car/Car Sharing Service 5)Encourage Multi Block Underground Parking Structures 6)Enforce Parking with Real-Time Congestion Pricing, Not Fines 7)Encourage Public Sector “Pioneering” of Mechanized Parking 8)Allow Higher Effective Parking Ratios in High-Rise Office Buildings 9)Coordinate Funding Regionally for Higher Capacity Downtown Transportation Projects

23. 1. Establish a Central City Parking Management System Entity  Establish a Parking Management System (PMS) entity to manage the inventory of parking spaces in the Central City that would provide real time parking maximization and long-term utilization.  Authorize the PMS to function like a parking broker with property owners and parking operators to lease any unoccupied parking stalls to proximate users.  A PMS could increase parking efficiency, lower City costs, increase revenues and support higher density.

24. 2. Facilitate a Shared Parking Pool  Include unoccupied stalls in a managed shared parking pool from which property owners can use or lease spaces to increase mixed-use density.  Parking spaces dedicated to a specific purpose can be managed in a collective parking pool during times that are not dedicated to that purpose.  Provide development incentives (e.g. FAR bonus) for developers who contribute a certain percentage or number of parking stalls to a shared parking pool.

25. 3. Consider a Central City Transit Circulator System  Utilize the investment in MAX and Streetcar as circulators allowing employees and clients to park in underutilized garages, such as the Rose Quarter.

26. 4. Centralize Network Dispatch for Taxi / Shuttle / Town Car / Car Sharing Service  Create a centralized and connected GPS/cellphone dispatch network of taxis, shuttles and towncars operating on a zone-based fare to, from, and within the Central City.  The certainty of increased taxis for short trips serving the Central City reduces the need for an automobile during the day, eliminates parking, encourages transit ridership and allows flexibility for commuting options.

27. 5. Encourage Multi-Block Underground Shared Parking Structures  Facilitate the assembly of multi-block or large parcels and incentivize building shared underground parking connected under multiple blocks.  Example sites that may be appropriate for this strategy include the Post Office blocks, Lincoln High School site, the Jasmine Tree blocks, and the University Place area.

28. 6. Enforce Parking with Real-Time Congestion Pricing, Not Fines  The current criminalized system is inefficient, expensive, cumbersome and counter-productive.  Install meters and wireless mesh networks that charge the user increased graduated rates the longer the car is parked, rather than high fixed fines.  Congestion pricing parking rates can be adjusted by location, occupancy levels and by time of day to manage parking during peak periods.

29. 7. Encourage Public Sector “Pioneering” of Mechanized Parking  Mechanized parking increases space efficiency, but is most cost-effective at a larger scale than individual private projects can provide.  The City should install a large-scale, high-capacity centrally located SmartPark mechanized parking structure.  The City should offer FAR incentives to private developers for the inclusion of parklifts in private projects.

30. 8. Allow Higher Effective Parking Ratios in High-Rise Office Buildings  Allow and support concealed above-grade parking in new high-rise development in appropriate locations in the Central City in order to make Central City office construction more economically feasible.  Allow higher parking ratios at locations that are not on mass transit lines to encourage “in-migration” of office tenants.  Encourage shared parking pools for mixed-uses that create higher effective parking ratios.

31. 9. Coordinate Funding Regionally for High Capacity Transportation Projects  Ensure that the Central City remains the region’s primary economic hub by accommodating trips to it through all transportation modes.  Forge regional agreements among Metro, Tri-Met, ODOT and the City to support downtown infrastructure.  Formulate a superior downtown transportation/transit strategy to reinforce the Central City core and educate funders of its importance as the region’s largest commercial and employment hub.

32. Summary Comments 1)Establish a Parking Management System 2)Facilitate a Shared Parking Pool 3)Consider a Central City Transit Circulator System 4)Network Dispatch for Taxi/Shuttle/Town Car/Car Sharing Service 5)Encourage Multi Block Underground Parking Structures 6)Enforce Parking with Real-Time Congestion Pricing, Not Fines 7)Encourage Public Sector “Pioneering” of Mechanized Parking 8)Allow Higher Effective Parking Ratios in High-Rise Office Buildings 9)Coordinate Funding Regionally for Higher Capacity Transportation Projects

33. Closing Comment  Increased availability of employee and visitor parking.  The continuous growth of new office product within our Central City.  Higher density of mixed-uses for 24/7 downtown vitality. We trust that these recommendations regarding transportation, parking and access will strengthen the existing office business base by impacting issues that influence office placement decision making, especially the quality of business life through:

34. Portland Business Alliance – Urban Land Institute Commercial Development Strategy: Summary of Findings WORKFORCE HOUSING AVAILABILITY ULI Symposium II September 24, 2009 Michael E. Bernatz Ashforth Pacific, Inc.

35. Introduction Future employment growth will require a balanced Central City housing supply that supports all income levels

36. Obvious Patterns  The suburban housing supply has naturally increased as businesses have located farther from the Central City  Suburban housing is typically less expensive to build, and thus cheaper to own  Consumers often choose the most cost effective alternative  All other things being equal, people tend to live near work

37. Lesser-Known Effects  A lack of workforce housing makes it more difficult for Central City businesses to recruit qualified employees  Higher housing costs place upward pressure on wages, which makes employee retention more difficult  Rising housing costs not only erode the standard of living for low and middle income residents, but also impact the Central City’s economic productivity, competitiveness and resiliency  These factors drive the workforce out of the Central City thereby impacting the tax base, land use, transportation and services

38. What is Workforce Housing?  Younger entry and mid-level employees comprise the “workforce” housing demographic targeted by office, service, and creative class employers  These employees tend to have incomes equal to or less than the median family income  We interpret the workforce housing demographic as those making 80% to 150% of median family income  For the federal 2009 fiscal year, the U.S. Dept. of Housing & Urban Development (HUD) estimated Oregon’s median family income (MFI) to be $48,900 for a two-person household

39. Economics  150% of median family income is $73,350 per year  80% of median family income equates to $39,120 per year  If 25% of gross income is prudent to pay for all housing costs, then the workforce housing demographic has $9,780 to $18,337 available per year  This equates to only $815 to $1,528 per month  A $250,000 home with 20% down requires a monthly mortgage payment of nearly $1,200 (30-yr. amortization @ 6%) plus taxes and insurance

40. Reality  There is a significant gap between what those earning between 80% and 150% of MFI can afford and the price per unit a central city developer can deliver to the marketplace  Current density goals encouraging high-rise construction throughout the core are incompatible with actual costs and risk-adjusted returns  Although there are several tools to assist low income housing development, there are no current tools that focus on the middle-income, “workforce,” demographic  Workforce housing is stranded without the achievable rent or development subsidies to consistently make them attractive investments

41. Recommendations  Extend the Transit Oriented Development (TOD) tax abatement program to facilitate middle-income housing development in the Central City  Provide practical and diverse development tools such as streamlined permitting, a pre-development menu to reduce time, and waived or reduced system development charges for projects that meet planning goals  Consider separate public parking to reduce overall development costs and increase financial feasibility  Target areas where lower density development can be encouraged

42. More Recommendations  Encourage the placement of additional Central City education facilities to support demand for middle- income housing.  Support the City’s 5-Year Economic Development Strategy to bring additional jobs to the Central City and stimulate workforce housing demand  Lastly, pioneer new housing construction methods such as prefabricated modular housing to efficiently deliver more workforce housing to the Central City

43. Closing Thought One moral of Aesop’s Fable The Goose That Laid the Golden Eggs, was “think before you act”

44. Portland Business Alliance – Urban Land Institute Commercial Development Strategy: Summary of Findings REGULATORY FRAMEWORK ULI Symposium II September 24, 2009 Wink Brooks Wink Brooks Strategies, LLC

45. Regulatory Context  Downtown planning over 40 years – 1972 Downtown Plan / 1998 Central City Plan  Regulation has been instrumental in shaping a rich mix of Downtown uses  Created a very exciting, attractive and user friendly environment  Helped shape a tremendous amount of residential growth over the last 10-15 years / Employment growth has been flat  Central City growth over time has illuminated regulatory adjustments that could sustain and shape the next 20+ years

46. Regulatory Goal s  Provide flexibility, up to date regulatory environment  Provide regulations that will guide Central City planning over the next 25 years  Use regulation strategically while allowing for market opportunities  Use regulation in conjunction with effective employment growth strategy

47. Recommendations 1)Allow height increases in market-driven opportunity areas 2)Allow higher parking ratios in certain locations 3)Allow opportunistic, market-driven use in certain areas 4)Identify opportunities to designate multiple parcels of land for Planned Unit Development 5)Establish hierarchy of ground floor uses to promote retail continuity and “retail main streets”

48. 1. Height Increases in Market –Driven Opportunity Areas  May be areas of Central City attractive to more intensive urban development, not recognized by existing plan/zone designations  Plan should reevaluate strategic locations for more intensive development, i.e. height increases  Locations designated for increased height should not conflict with overall urban design goals  Examine major arterials, major transit routes and historical districts

49. 2. Allow Higher Parking Ratios in Certain Locations  Need to attract office users to the Central City to increase employment  Increasing parking ratios in appropriate Central City locations could attract additional office development that might otherwise locate elsewhere  Propose allowing 1:2000 parking ratio in locations: –Four of more blocks from designated transit nodes –Not feasible for mixed use –With no access to shared parking

50. 3. Allow Opportunistic, Market-Driven uses in Certain Areas  Provide geographically broad regulatory flexibility in order to allow the market to play a larger role in determining development opportunity  Plan and implementing regulations should provide enough flexibility to implement exciting development proposals arising from the market, not anticipated by the plan  Central Eastside may be an example: –Important Employment District –Proximity to Eastside Streetcar and employment east and west of river –May be area where residential mixed-use development could be located –May not conflict in major way with existing commercial and industrial uses  As opportunities arise, proposals should be vetted with neighborhood and industry groups to assure optimal use and compatibility from a livability and economic perspective

51. 4. Identify Opportunities to Designate Multiple Parcels of Land for Planned Unit Development  Pearl District has shown success of critical mass of mixed-use development  May be other areas within the Central City Plan Area which could benefit from assembling underutilized parcels in a larger planning context  City should identify opportunity areas for larger scale multiple parcel mixed- use development and provide incentives  Incentives could include: –Streamlined development review process –Height and/or density bonuses –Fee waivers and reductions –Other offsets or incentives to encourage master planned multi-parcel development  City could provide general policy goals and guidelines to facilitate multi- owner, multi-parcel development of underutilized land

52. 5. Establish Hierarchy of Ground Floor Uses to Promote Retail Continuity and “Retail Main Streets”  Mayor’s Downtown Vision Task Force created strategy to reinforce downtown core  Strategy designed to concentrate retail activity along Yamhill and Morrison  Spine would receive regulatory incentives –Financial assistance –Regulatory incentive –Branding initiative  Goal is to create obvious downtown destination retail location  Suggest City apply the principals of this model by creating hierarchy of ground floor uses tied to specific street corridors  Current regulations requiring extensive ground floor commercial is problematic –Market can’t support all required uses –Required uses dilute opportunity to concentrate retail on specific corridors –Dilutes opportunity for retail success –Retail critical mass is not achieved  Regulation re: ground floor uses should: –Concentrate ground floor uses where market demand is sufficient for success –Allow walkup residential and office uses to better activate the streetscape

53. Summary Comments  Let the market work within a flexible regulatory environment  Be open to unanticipated opportunity and creative development ideas  Look for opportunity along corridors and in underutilized areas of the Central City  Create a regulatory environment that makes the Central City more competitive with other locations  Foster a friendly, economically attractive environment for business and development  Think strategically!!! Lots of tools and an exciting attractive environment on which to build.  Let the Vision, Employment Strategy and Plan work together

54. Portland Business Alliance – Urban Land Institute Commercial Development Strategy: Summary of Findings FINANCIAL INCENTIVES ULI Symposium II September 24, 2009 Gene Grant, Equity Partner Davis Wright Tremaine, LLP

55.  High density, mixed use development is inherently more expensive and financially risky than low density single use development  Lack of large parcels for large-site and campus style development  Inadequate public infrastucture financing constrains new central city development  Declining utility of tax increment financing in the Central City Financial Incentives: Barriers to Development

56.  Perception that suburbs deserve tax increment financing and central city is finished using that tool  Allocation of tax increment financing almost exclusively to residential development  Residential development success has obscured the lack of commercial development  Relatively higher development fees  Lack of demand due to unsuccessful economic development programs

57. Financial Incentives: Recommendations  Commit to a predictable public private partnership model that supports development by job creation and economic development  The City should subsidize structured long term parking in addition to short term retail parking  The City should use a broad spectrum of financing mechanisms to assist in providing sufficient transportation capacity  The City should continue the judicious and strategic use of tax increment financing (TIF) in the Central City to address blight and blighting factors and to support projects that promote economic development and job creation

58.  Consider short term tax abatement programs to encourage targeted development  Implement Plans using a holistic approach: –Public-private partnership supporting job creation –METRO AND JPACT must be partners in transportation planning and financing –OHSU and PSU must be partners in workforce training, employment, business spinoffs and land development –Multnomah County must be a partner on tax increment financing, taxation issues and transportation –Portland Public Schools must be a partner on tax increment financing and providing quality education for the children of the central city workforce –The State must be a partner in economic development efforts and incentives Financial Incentives: Recommendations

59. CONCLUSIONS  The decline of the Central City’s share of the region’s employment and commercial development must stop  The recommendations in this report will assist the city in stopping that decline  Investing in more commercial development will improve City finances in the long run  Investing in more commercial development will reduce sprawl and boost regional livability  Investing in more commercial development will provide jobs for residents returning of the central city