As part of the agreement, TCR has agreed to sell a minimum of 15% of the total number of units at prices that do not exceed 95% of the Federal Housing Administration mortgage maximum for a single unit in the Portland-Vancouver MSA as of the initial sale date; and offer a minimum of 15% of the total number of units for initial sale at prices affordable to a family of two that earns no more than 120% of the median family income for the Portland-Vancouver MSA.

The city's urban renewal agency, the Portland Development Commission, has in turn agreed to give TCR the land, which is valued at $1.3 million; and to demolish the existing building and perform environmental remediation activities at a cost not to exceed $500,000. PDC says it is providing the land for free to offset the risk associated with an unproven location and the inefficiencies associated with developing a one-quarter block property.

The approval of the development agreement comes one month after the city council voted down TCR's request for a 10-year property tax waiver for a proposed 22-story, 319-unit apartment tower in the South Waterfront area. The denial was the first time the council had ever voted down an abatement request that met the minimum requirements, which call at least 15% of the units being made affordable to people making less than 80% of median income.

The deciding vote came from Councilman Dan Saltzman, who said he was voting against it because he thinks the affordable units should represent the mix of units in the building rather than just being the smallest units in the building. Given the situation, the council last week passed a six-month moratorium on apartment tax waiver applications while it determines if it still wants to have such a program.

The day before the moratorium vote, however, TCR submitted a new tax waiver application that it believes meets Saltzman's request. The new request calls for a seven-year property tax waiver in exchange for 10% of the units--including eight two-bedroom units--being made affordable to people making less than 80% of median income.

John Warner, a senior manager with the city's housing department, tells GlobeSt.com that the council now has 180 days to act on the application, though he expects the council will get to it long before the deadline. After a pre-application meeting, Warner says his department will comment on the financial necessity of the request, which will then be reviewed by the planning commission before heading to the council for a final vote.

Warner says TCR may well have simply switched the South Waterfront apartment tower to a condominium development if it hadn't already made that switch at the Third and Oak site. Back in February, when TCR and the city began working on the development agreement for Third and Oak, the goal was to balance what was mostly low-income housing in the area with the first new high-rise apartment project outside the city's burgeoning former warehouse district now known as the Pearl District.

Eventually, however, the PDC couldn't afford the subsidy that would have been necessary to make the project pencil, so everyone agreed to do the condominium tower instead. TCR isn't simply doing the same with its would-be South Waterfront project because TCR "doesn't think it's advisable to pursue development of two condo towers at the same time in the same market," says Warner, adding that TCR also would have had to have round up a new slate of investors. TCR senior managing director Robert Hinnen could not for comment.

Instant Insights /

TCR Wins Approval for Condo Tower, Resubmits for Apartment Tower

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