July 28, 2004

(Updated) Council Authorizes Acquisition Of Naitos' Block 8

Fire Station #1 Relocation To Move Forward, Through Condemnation If Neccessary

Note: This post has been updated. Any and all updates appear at the end of the original post.

When last this matter came before City Council, a decision on granting the Portland Development Commission condemnation authority for the acquisition of the Block 8 site intended for the relocation of Fire Station #1 was pushed back 45 days, with PDC and the H. Naito Corporation being strongly urged to work on a negotiated deal for the purchase.

Today before Council, those 45 days ran out.

On today's agenda was the second reading of an ordinance (pdf) to adopt what's known as the 27th Amendment to the Downtown Waterfront Urban Renewal Plan "to acquire property for new fire station, mixed-use development and neighborhood revitalization." It authorizes the acqusition of that property by any legal means -- code, in essence, for the power to invoke eminent domain if necessary.

Speaking before Council today, Matt Hennessee, chair of PDC, called the moment "bittersweet." Presuming passage of the ordinance, the relocation of Fire Station #1 would be a virtual guarantee. On the other hand, Hennessee said that the people of PDC are not ones "who want to go through with condemnation." Saying that PDC had "worked very, very diligently to make sure we didn't get here," negotiating in "good faith" (with, he said, the Naitos doing the same), there was no agreement between the parties. As such, Hennessee asked the Council to adopt the ordinance formally authorizing the acquisition of Block 8, which he called "both a catalytic and strategic project" which would spur development from other property owners.

Fire Chief Ed Wilson spoke in support of the ordinance. Until recently, according to Wilson, Portland Fire & Rescue had not been directly involved with the negotiations, the most recent round of which resulted in three apparent options. In the first, the City would pursue the course laid out in the original proposition, acquiring Block 8 and proceeding with the relocation as originally envisioned. In the second, which evolved during negotiations, the Bureau's needs would be met, but the historic Globe Hotel would be demolished. In the third, Fire Station #1 would remain at its current location and undergo renovations, but scuttle the plans to revitalize the Ankeny Plaza area, likely in part through development of a public market.

Wilson's main concern, and seemingly the primary reasoning behind his backing the ordinance at this time, is the October 18 "drop-dead" date for acquisition of Block 8. After that date, it becomes economically infeasible to pursue that site at all.

Don Mazziotti, PDC's executive director, outlined PDC's take on the past 45 days since Council instructed all parties to try for a negotiated agreement.

"There's been no acrimony, no hostility, no doubledeadling," he said. "I thought you were Italian!" Commissioner Jim Francesconi interrupted. "I didn't use those skills," Mazziotti replied.

In the end, Mazziotti said, PDC and the Naitos "just happen to differ" as to the proper approach to the problem of relocating Fire Station #1 to Block 8. He listed off the steps taken by PDC during the past 45 days. Since he also provided this list in a written statement, we will use that version here:

Made two written offers and one verbal offer to H. Naito Corp.

Held five negotiation meetings with H. Naito Corp. These meetings were held in the evenings and on weekends to accommodate the property owners' schedule.

Contracted a new appraiser to do a fourth appraisal that arrived at a fair market value for Block 8.

Conducted further parking studies and contracted a traffic engineer to review existing parking studies, per H. Naito’s request.

Helped organize and pay for, with H. Naito Corp., a design process, or charrette, aimed at finding a mutually agreeable scheme. The goal was to find a design, use, economic, ownership and operations program that would facilitate a negotiated agreement for Block 8.

(This was our first encounter with the word "charrette" and in our notes it's spelled "sharet," which later prompted us to wonder if everyone had simply been referring to a "design share-it" -- which seemed at the time to make sense from a usage standpoint.)

Having proffered that list, Mazziotti said of the results of these negotiations: "We do not have what we needed to have by today." He reiterated the warning of Chief Wilson that there is an October 18 drop-dead date to get the project underway.

If the Council were to adopt the ordinance, Mazziotti said, it would mean two things: An agreement to fund the fire station construction; and the approval to acquire Block 8. However, he added that it was PDC's "intention to immediately seek a final shot of negotiations" prior to any move to assert the ordinance's condemnation authority.

Mayor Vera Katz asked if PDC was viewing the potential adoption of the ordinance as a "trigger opportunity for a final agreement."

"That's out hope," Mazziotti replied, calling it an incentive for all parties. "But we've got to do it by October 18th."

While saying that "the idea of knocking down [the Globe Hotel] is not a good idea," and that more needed to be done on the matter of the parking issue, Francesconi argued that it "looks like some substantial progress has been made." Mazziotti, on the other hand, said that there had been no real progress "in substantive terms."

Francesconi weighed in on an issue raised both by Katz and PDC. "If you had the hammer [of condemnation], maybe you could finalize this." But, he urged PDC to do all it could to not have to actually make use of that hammer without a "sincere attempt" at a final negotiation process. "I give you my word," Hennessee replied. "That is exactly how we feel."

Saltzman asked about the viabiltiy of what kind out of the design charrette. According to Mazziotti, the "turning radius was too short to satisfy the operational requirements of the Fire Bureau." It's unclear from our notes whether this was true in and of itself, or if that's what prompted the idea of demolishing the Globe Hotel.

"It wasn't an alternative that people could live with," said Saltzman. "Correct," replied Mazziotti.

Katz then requested that one Karen Williams come before the Council. Somewhere we missed the introduction, but we're presuming that Williams is an attorney working with the Naitos on this matter. As was pointed out, she also once worked for PDC. In part, Katz appeared to call Williams forward to scold her for an email in which, according to Katz, Williams criticized the Mayor. "I do have the right to say I don't support tearing down the Globe Hotel," Katz said. Apparently, according to how Katz raised the remark, Williams had said otherwise. Katz also said (to some general amusement): "I can scold her, she used to work for us."

For her part, Williams seconded the comments of PDC about the approach to the negotiations during the past 45 days, calling them "sincere."

"It is very unfortunate that the parties didn't know they didn't have a real solution," Williams said. If you don't get the reference, don't worry. It hadn't been explained yet. We'll get there in a moment.

"We have essentially come 360 on the design issue," Williams argued, calling it "very frustrating to the Naitos." She said that the Naitos had "accepted the price offered" but (and here we're a little confused) had also "requested addition money from PDC to help mitigate problems." We're not entirely sure what that means, because that sounds to us like not accepting the offered purchase price.

Here, Williams dropped another data point into what would become a brief dispute at the Council hearing. She referred to a "letter by Don Mazziotti from the 23rd" which the Naitos had considered to in fact be a final offer. Again, we'll come back to this in a moment.

"Giving PDC condemnation," Williams said, "tells PDC they don't need to do anything else." As to approval of the ordinance, she added: "Verne and Sam Naito respectfully request that you decline."

There was an exchange here between Commissioner Erik Sten and Williams for which our notes are almost entirely useless. It had something to do with what elements the Naitos would propose go into the agreement itself and what elements would go into related "covenants," but that's all we can determine.

Commissioner Leonard, who originally pushed for the delay in consideration of condemnation authority in order to have the parties continue to negotiate, said that he had "tried to send a clear message" regarding the concerns that condemnation might create an "unleveled playing field." But he added, now that the 45 days had passed: "However, I'm mindful of that drop-dead date."

He argued, in fact, that the closer the process gets to that drop-dead date in October, the more that very balance shifts in favor of the Naitos.

"We thought we had a deal with we came out of the charrette," said Williams. "The correspondence doesn't say that," said Leonard. This, so you know, is where we learn about the conflict alluded to earlier. According to Leonard, "it appeared there was some backing away" after the design charrette. Once again, we'll get to more of this momentarily.

Williams returned to another issue that had been coming up, regarding the respective funding gaps in the various possible plans, saying that the gaps were the same.

Mazziotti returned before Council to dispute this and other assertions. Saying he was at the design charrette, he argued that afterwards he had said three things: That from a design standpoint, the result was good; that the "Globe is a contributing structure in a landmark district" and so PDC could not support demolishing it; and that the proposed new hotel for the site "would create a funding gap." For those latter two aspects, then, PDC couldn't support the result of the design charrette.

"We said it at the charrette," Mazziotti said," and Verne was there." Here, then, is the crux of the dispute that had been alluded to earlier. The Naitos are apparently arguing that they believed they had an agreement. PDC argues that they made it clear at the time that in fact they did not have an agreement.

"The time for us to act is now," said Francesconi, adding that the Council needed to make "a tough decision and move forward." Referring to the fact that this entire project is about relocating Fire Station #1 to the only properly workable site other than its current location, he added: "The main job is to protect the public."

"I do have mixed feelings at this point," said Leonard, adding that no one has more respect for the Naitos than does he. However, he said that he was "persuaded that this spot is the best spot" for the new station, on the basis of public safety. "I would have been willing to wait longer," Leonard said, "but there is a drop-dead date." He also added that the relocation is "in the best interests of the City."

Commissioner Saltzman said there were "lots of different perceptions" when it came to Block 8. "I still am not convinced that there is a compelling need" for condemnation he said, arguing that the station could simply stay where it is now. He also argued that it was inconsistent for people to assert that the new station would have "activating" uses at street-level that would revitalize the neighborhood, since the current station does nothing of the kind where it is now.

We have to pause here, because we can't let this pass. While we fully admit that there are legitimate arguments on both sides of the issue of when to turn to condemnation, that last argument by Saltzman is simply and utterly nonsensical. It's not as if the City would simply be moving the existing station itself to the new location, letting its nearly barren and lifeless exterior sit on Block 8. Rather, there would be an entirely new building that in part would expressly be designed to offer "activating" potential for street life and the surrounding neighborhood. It's really not a difficult thing to grasp, and comparing the life of the streets surrounding the current station with the life on the streets surrounding the proposed new station truly is an apples and oranges comparison if there eveer was one. Sometimes, Commissioner Saltzman simply has no idea what he's talking about.

Continuing on: "Given no compelling public need [and] competing visions," Saltzman said, "none of these rise to the greater deference I give to the property owner."

Commissioner Sten said he was "pleased with how things have moved along," but added that demolishing the Globe Hotel would be "difficult to build consensus around." He echoed earlier comments about the Naitos, PDC, and the Fire Bureau being "as open as they can."

"This has been a very difficult deal to strike," said Mayor Katz. She argued that once the Council had adopted this ordinance granting condemnation authority to PDC in this matter, it "will send a signal that we're very serious."

With those closing remarks, then, the ordinance was adopted by a vote of 4-1, with the Mayor and Commissioners Francesconi, Leonard, and Sten voting in favor, and Commissioner Saltzman voting against.

After the adoption of the ordinance, PDC released a statement announcing that in effect the relocation of Fire Station #1 will now proceed, one way or the other:

Today City Council approved 4-1 to give the Portland Development Commission (PDC) the authorization to acquire Block 8 and develop a new fire station in the Old Town/Chinatown neighborhood, ultimately allowing the redevelopment of Ankeny Plaza and the Downtown Waterfront area. Block 8, owned by H. Naito Corp., is bounded by NW Couch and Davis Streets, NW 1st Avenue and NW Naito Parkway.

"We believe the new fire station and redeveloping Ankeny Plaza will spur other property owners in the area to redevelop their properties, generating $500 million in private investment and significantly increasing property values," Matt Hennessee, Chairman of the PDC Board of Commissioners, noted during today’s hearing.

PDC Executive Director Don Mazziotti added, "Without moving the fire station and redevelopment of the current site, it is unlikely that we would see significant investment along our waterfront for another generation."

Also this afternoon, a statement was released from Sam Naito (pdf) on the outcome of the City Council session:

I am disappointed that the Portland City Council today voted to approve condemnation proceedings on our property in Portland’s Old Town. In addition to the fact that this was the cornerstone of our family business, this property holds significance for its worth to us, the many people in this neighborhood, and our tenants in other buildings.

Click through for the rest. We have to say, however, that Naito's calling upon the "cornerstone" and "significance" terms is soemthing we find deeply odd -- given that the Naitos apparently agreed to a design which required the demolishing of the historic Globe Hotel. Last month, when Commissioner Leonard convinced everyone to delay a decision on condemnation, and the Naitos had presented a counter-proposal, it soudned to us as if there was real potential for an agreement over the course of the ensuing 45 days.

But after everything we heard today -- from the dispute over whether or not there was an agreement reached after the charrette, to the proposal to demolish the Globe, to the above statement calling upon the spirit of history despite the pitch to demolish the Globe -- it sounds to us as if the Naitos simply do not want to reach an agreement that makes sense. We're not overly or overtly fond of condemnation either. But at this point, given where thigns appear to stand now, we're ready to support it in this case.

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