Declare intent to initiate formation proceedings to construct street, sidewalk, stormwater, sanitary sewer and water main improvements in the NW Park Ave Local Improvement District in conjunction with the segregation of pending local improvement district liens (C-10076)

NW Park Avenue, NW Johnson Street and NW Kearney Street are currently combined into a single LID. This Resolution will bifurcate the LID so that NW Johnson Street and NW Kearney Streets are built in the first phase under its own LID, with a new LID building NW Park Avenue in a second construction phase. Taxlots have been platted since LID formation, so this ordinance segregates assessments to new taxlots and between the two LIDs. The segregation of assessments will provide significantly more clarity on future LID obligations to prospective purchasers and developers of property within the currently-formed LID.

The overall amount of the combined LID assessments between the currently-formed LID to be amended and the new LID to be formed does not change. The bifurcation of the LID provides considerably greater flexibility to manage interim financing costs prior to final assessment. An additional $6.0 million in project costs will be funded by a State HB 1530 grant. The overall $3.6 million in PBOT SDC funds budgeted for the project does not change, but direct funding of the LID is reduced to $1.9 million. $1.7 million in PBOT SDC funds will be set aside to budget for interim interest costs on the NW Johnson-Kearney LID incurred by Prosper Portland, and will be replaced with HUD Section 108 Program Income funding for direct project costs. No funding is being provided by PBOT General Transportation Revenue (GTR). Per Administrative ENB-6.02, 100% of the future LID assessment amount is on currently publicly-owned properties and is therefore exempt from all feasibility tests in ENB-6.02; however these properties meet the requirements of Code Section 17.08.050.E. The remaining 15% of the future LID assessment amount will be secured on properties currently in private ownership which meet all other applicable requirements of ENB-6.02 in addition to Code Section 17.08.050.E. Formation of the LID also advances City goals and objectives as identified within Ordinance No. 190146 approved by Council on September 23, 2020. The Portland Bureau of Transportation, Budget and Finance Service Area’s Debt Management and Revenue Divisions, and Prosper Portland have collaborated on using the NW Johnson-Kearney Streets LID credit facility that is being authorized separately but alongside this ordinance. Pursuant to intergovernmental agreements between the City and Prosper Portland, NW Johnson – Kearney Streets LID credit facility financing costs will be paid for separately by Prosper Portland and, in a limited amount, the City, as described in Exhibit G. The Special Projects Debt Service Fund is frequently used for financings involving intergovernmental agreements and in this case is being used to record the receipt of funds from Prosper Portland and payment of credit facility interest to better manage the financing arrangement of the intergovernmental agreements. T he risk of Prosper defaulting on payments due as a result to an inability to transact on land sales may also be mitigated by provisions that allow for renegotiation of the terms of the Community Benefit Agreement and/or the Disposition and Development Agreement due to financial infeasibility that could reduce Prosper Portland’s financial obligations within the Funding and Finance Plan. If the aforementioned mechanisms are insufficient, the requirement of full and timely debt service payments on the NW Johnson-Kearney Streets LID credit facility and related long-term bonds creates potential risk to City funds, including the General Fund, if Prosper Portland defaults on the LID assessment payments. Formation of this LID conserves discretionary public resources and enables funding of additional planned public infrastructure within the Broadway Corridor.

Engagement specific to the creation of the LID financing mechanism for the Broadway Corridor was limited to notifications to the impacted property owners as set forth in Chapter 17.08 of City Code. The adjustments to the existing NW Park Avenue & Johnson / Kearney Street LID are necessary to implement the city code-required Broadway Corridor Master Plan, which in turn serves as a guide for the redevelopment of the former Post Office property. The Broadway Corridor Master Plan was informed by robust community engagement throughout the plan development process, which engaged more than 1,000 people through a steering committee, public forums, in-person open houses, online open houses, focus groups, and round table discussions. The former Post Office property is currently a largely vacant 14-acre asphalt site. Creation of the LIDs, and subsequent construction of the associated streets, has significant economic and real estate development impact, including: Directly creates construction contracting opportunities with an anticipated LID construction contract of $14 million for the first phase of LID construction. Provides street infrastructure critical to catalyzing four million square feet of mixed-income development and public amenities on an underutilized site – stitching together the Pearl District, Old Town and Union Station and helping revitalize an area hit hard by the Covid-19 pandemic and regional housing crisis. Creates a Phase 1 affordable housing development parcel owned by PHB, and leverages Metro affordable housing bonds to create ~230 affordable (up to 60% median family income) housing units. Leverages an estimated $1 billion in private investment and enables smart growth by unlocking a development site that can house up to 1,800 to 2,400 new households and 4,000 to 8,800 jobs in a mixed-income new neighborhood, thereby reducing displacement pressures on adjacent neighborhoods. Property owners were provided mail, notification and posting notice beginning three (3) weeks in advance of the Council date as required by City Code. The segregation of assessments with the creation of new pending liens affects only properties currently owned by Prosper Portland. Coordination and collaboration between PBOT, Prosper Portland and Debt Management has occurred since April 2024 and shaped the LID amendments No feedback was received during the LID notification period. It should also be noted that the creation of the LIDs is being proposed in partnership with Prosper Portland, the majority property owner impacted by the LID. Prosper Portland has also discussed the financial impacts of the proposed LID with the Portland Housing Bureau and prospective private developers. No feedback has been received in these discussions counter to the proposed funding strategy. The LIDs are necessary to unlock commercial and residential development of the former Post Office property. The cost of the LID will be borne by property owners, including future developers. As noted above, the formation of the LIDS is proposed in partnership with Prosper Portland, and details have been shared with prospective developers. Without the LID, economic and real estate development within the former Post Office property is not possible. The LID also improves east-west access to the Greyhound site and connects it to new development in the Broadway Corridor. Construction of the streets is on the critical path for any economic and real estate development to occur within the property, and the LID enables construction of improvements which have already been established as conditions of development. Amendment of the LID per Code Section 17.24.055 will remove obstacles and barriers to development. There are no direct impacts from the creation of the LID. However, extensive benefits are achieved via unlocking the development potential of the former Post Office property, as noted above. Without the LID in place to provide assurance of performance per 17.24.055 of City Code and as a mechanism to fairly allocate infrastructure costs across the development parcels, including Greyhound, this centrally located development opportunity would not be competitive for real estate developer and investor interest. Developing 230 units of affordable housing would also not be feasible, as a first phase in delivering on the City’s commitment to provide at least 720 units of affordable housing in the Broadway Corridor. As noted above, real estate development, including housing production across income levels, would not be feasible without the creation of the LIDs. Conversely, the LID is a means to mitigate the need for undue cost burdens of district-wide infrastructure to be carried by the first phase of development – anticipated to be a half block affordable housing project. By providing a financing mechanism, the costs of infrastructure necessary for a first phase of development can be carried by all development parcels that will ultimately benefit from this upfront investment.

This project is part of the planned redevelopment of the Post Office site in Northwest Portland. This LID was initiated by majority petition support, with outreach to Prosper Portland and Greyhound, which are the only two (2) current property owners in the LID. Prosper Portland has in turn reached out the development partners who will be the future owners of their property.