Financing set for 155-unit apartment building in North Portland
Daily Journal of Commerce
January 9th 2012
Like many developers these days, those working on the Prescott Apartments have encountered twists and turns in their search for financing. But construction of the $26 million, 155-unit mixed-use building may finally begin in March, and contribute to a boom in North Portland.
In 2008, Prescott Partners, a development entity affiliated with Sierra Construction Co., purchased the lot on the corner of North Interstate Avenue and Skidmore Street. After holding the property through the worst of the economic downturn, the Woodinville, Wash.-based group has come up with a new financing plan, so that ground can be broken by early spring.
However, the construction timeline hinges on approval of a Department of Housing and Urban Development loan guarantee, expected to be issued this week. And while 31 units are planned to be affordable housing, changes to Portland's tax abatement programs could impact that number.
"We are in the final throes of a complicated and time-consuming process," said Brendan Lawrence, development manager at Prescott Partners. "We battled through the downturn (and) could've been ready to go in '09, but there were no financing sources then or in 2010. We've been working on this for quite some time."
Financing struggles didn't impact the original design, however. The C-shaped building will offer 9,500 square feet of ground-floor retail space and underground parking for 111 vehicles. The Prescott will be six stories on its tallest side, facing Interstate Avenue.
"Going north, our building has a nice leading edge as you're approaching it; it's designed to fit in with your light-rail experience in that corridor," said Allen Tsai, project manager at Myhre Group Architects.
The apartments will be built near the Prescott Street station that serves TriMet's MAX yellow line.
"The other side of the building has a more residential character," Tsai said. "Not only does it get shorter, but the massing is more conducive for the residential portion of the neighborhood."
The street-level apartments will feature porches and planters, and the building will include an exercise room as well as a courtyard with bocce ball and pickle ball courts. Lawrence hopes that the amenities offered at the Prescott will complement other new apartment buildings in the neighborhood, such as Killingsworth Station and The Albert.
"There seems to be enough job growth and population growth in the Portland market to justify all of these projects," Lawrence said. "We are pretty excited about the North Portland neighborhood - there's quite a bit of opportunity there. We can attract downtown professionals who don't want to pay the rates for downtown apartments, and will have only a 10-minute commute downtown."
Whether the Prescott will offer some units at income-adjusted, affordable housing rates will depend on a review of tax abatement programs being conducted by the city and Multnomah County.
Prescott Partners applied for transit-oriented development tax abatements, which require that part of the project be affordable housing. If approved, the Prescott would be exempt from taxes on the property improvements for 10 years. But Multnomah County has not yet extended its authorization of the program, which Lawrence said is "unfortunate."
"If you remove a component of the tax credit, affordable rents would in effect create a negative valuation on the project," he said.
County officials are expected to vote on extensions of the transit-oriented development program and other tax exemption programs in March or April, according to Marissa Madrigal, chief of staff for Multnomah County Chairman Jeff Cogen.
"In these tough budgetary times, all governments are looking at everything they're doing, and by having these abatements we're foregoing revenues that could otherwise be used for services," Madrigal said. "But I think with the long-term nature of the (transit-oriented development) program, there's a good case to be made that we should continue."
A few blocks east of the Prescott, Sierra Construction and another of its development entities own a nearly three-acre site known as the Bakery Blocks. Last week, New Seasons Market announced plans to open its 13th store on the north portion of the vacant site. The 30,000-square-foot store will be built by Sierra Construction. R&H Construction, which has a long-standing partnership with New Seasons, will complete the interior.
Lisa Sedlar, president and CEO of New Seasons, estimates that the project will cost between $5 million and $7 million.
Plans for the south side of the lot are still preliminary, although Lawrence said that New Seasons' investment could make another mixed-use, residential project a likely candidate.
"The Prescott is less than two miles away so we'll have to look at our overall portfolio to see what the market can support for the south block," he said. "But an anchor like New Seasons is an important component in helping us revitalize that site and rejuvenate the area."