January 11, 2005

(Updated) Dance Of The Bridgehead Developers Revisited

Big Box Proposers Continue Their Spin

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

At the end of December, we offered a look at the rhetorical backpeddling of two of the three potential developers for the Burnside Bridgehead project as it pertains to big box retail.

Our argument then was that it was a new open-mindedness in appearance only, and that their statements to the public and to the evaluation committee did not reflect that they had in reality moved very much in their thinking. Today, a Portland Tribune article tries to convince people that there indeed has been a shift in the thinking of Gerding/Edlen and Opus Northwest.

Unfortunately, the article very much overstates the case, at least if one compares it to what those two teams continue to say in responses to questions from the evaluation committee which have been posted to the development's page on the PDC website.

Gerding/Edlen

"It's critical to create a project that Portlanders will support, and we are hearing loud and clear that they do not want a large-format retailer," said Mark Edlen, manager of the Gerding/Edlen Development Co., which had proposed a Home Depot for its project. "We are prepared to eliminate it if that’s what the PDC decides."

Gerding/Edlen is the toughest developer to grasp on this count, for at least two reasons. First, they do not appear to have yet responded to the evaluation committee's second request for additional information (or at least, the PDC website says they are still awaiting that response). Second, while they have alternatingly described the inclusion of Home Depot in their proposal as either a financial neutral or a financial negative, they have yet to articulate what approach they would take without the retailer as part of their proposal.

As indicated in our previous report on the Bridgehead project, public remarks to date by Gerding/Edlen in the subject of big box retail has focused not on alternatives but on defending Home Depot's approach to building stores in urban centers, suggesting that "if they could do it in Manhattan, they could do it here in Portland".

Where the Gerding/Edlen team currently stands when it comes to what they are telling the committee (as opposed to the press) is difficult to determine without seeing their responses to the committee's second request. At the same time, however, the process has been underway long enough now that if the team is still not offering visions for what they would do without big box in their proposal, we think it would be fair at that point to question whether or not they are taking seriously the opposition to such a retailer.

Opus Northwest

Bruce Wood, a senior director for Opus-Northwest Development, said the same is true of his company, which had proposed anchoring its development with a Lowe's Home Improvement Warehouse.

"We have never been wedded to a big-box retailer," Wood said. "This project has to have the support of the community."

While current judgements of Gerding/Edlen to some extent must await their response to that second round of questions, no such delay is required when it comes to examining the position of Opus Northwest, beginning with their statement to the Tribune above.

However, in the most recent letter of response from Opus to questions from the evaluation committee, Opus is not quite so strident in their recognition of public opposition to big box retail at the site.

"Are you willing to remove the large format urban retailer from your program?" the committee asked. "If so, how would you adjust your program to compensate?" Opus' answer shows far more beating around the bush than the Tribune leads one to believe.

As we have indicated in our initial response and in both of the meetings to date, the answer is yes, however in order for this project to move forward the credit quality of the tenants (or a portion of the tenants) will need to be high enough to obtain reasonable financing. The alternative is to fund the gap with additional equity and/or public subsidy. It is unfortunate this discussion has revolved around big-box vs. local small businesses. May I suggest that a better discussion would center on energy (people working, shopping and living in the project) and credit (the stronger the financial condition the less equity/subsidy required). Succeeding with a project of this scope and complexity requires a balance -- functionally and financially. Having these requirements satisfied via a large-format retailer or some other concept (with credit) that brings people to the center provides the balance of the project to be more flexible in use and financial underwriting. That being said, our team has been contacted by many of the large format retailers, wishing to be included in this project. Most notable of these are Costco and Fred Meyer. It is assumed by the local community that Lowe's would be competitive with the local home improvement merchants. Neither Costco nor Fred Meyer would compete with the local home repair industry. The inclusion of a large format retailer, again, will bring more people into the area which will increase the available public purchase power and create the credit capability necessary to obtain financing. Consideration of these retailers could benefit the entire area. This is a good issue for public discussion, which has started during the selection process.

Where to begin? Firstly, it's very clear from the above that while Opus may be telling the Tribune that they are not wedded to big box and that community support is necessary, they are behaving very differently with the evaluation committee. To the committee, they direct most of their remarks regarding big box retail to a strategic defense of their inclusion of such a retailer in their proposal, and give little indication that they truly are open to an adjustment on that count.

Rather, the Opus team engages in something of an apologia, attempting to convince the committee that it's simply not worth the time and effort trying to find an alternative to big box retail at the site. While they are making statements to the press suggesting that if selected, they will of course change their proposals if need be, their arguments to the committee instead read like a preview of what they would do should they become the developer of choice.

And of course, like Gerding/Edlen, the Opus team still has yet to demonstrate just what sorts of alternatives to big box might feasibly be incorporated into their proposals.

Should we have any confidence in their willingness to dump big box retail if even after all of this public discussion -- and opposition -- they still have yet to present any notion of just how they'd go about the change they profess to the press that they are willing to make? We would suggest that the answer to that question is fairly clearly, "No."

Not to mention that Opus' suggestion that the discussion "started during the selection process" simply is untrue. The discussion has been ongoing since word of the Burnside Bridgehead development first began to attract community attention -- and in fact that community attention is the only reason the request for proposals were drafted in such a way as to make clear that big box retail was not a requirement.

Note how that last bit of reality, regarding the community and the RFP, contradicts the following statement in the Tribune today: "Both developers said they only included the big retailers in their proposals because that’s what the PDC wanted at the time."

What Next?

Even with all of this suggestive evidence that Gerding/Edlen and Opus are being less than up front when they talk to the press, it's important that people keep in mind another aspect of how the proposal process has played out, which we argued in our previous item on the subject.

What needs to get not become lost in all of this dancing around is that only one developer constructed a proposal that in the first instance avoided big box retail and focused on the small, the local, and the character of the district. It's important where these developers went, on their own, right off the bat. It tells us something about whether or not they are suited to the task at hand.

We think that's important to remember even if people come to believe that the two big box teams actually are reconsidering their positions. But, obviously, we don't even believe that they are reconsidering their positions, and we think the examination of their responses to the committee -- rather than their spin to the press -- bears that out.

What's really going on here is that the two big box developers are attempting to give just enough rhetorical ground in order to stay in the running. That would be welcome news if the rhetoric was being matched by the reality of what they are telling the committee, because it would suggest that no matter who is selected for the project, big box retail would be out of the picture.

But, for us anyway, the Gerding/Edlen and Opus statements to the committee demonstrate that they are only trying to remain in the game. If selected, we suggest, they would reassert what they've been telling the committee, and push the approaches they've been presenting all along.

All of that is important to keep firmly in mind as the public process continues to play itself out. That process resumes tomorrow with public presentations of the proposals to the Portland Developent Commission. The evaluation committee is also scheduled to present its findings at that time.

You'll note from the timeline that there also are two points at which aspects of the project come before City Council. While the Council does not have the opportunity to vote on the project itself, at the very least there apparently will have to be a vote on zoning changes which will be required for the project to go forward.

There's some discussion of this over at Jack Bog's Blog, but ultimately the point is this: If PDC itself falls for the spin coming out of Gerding/Edlen and Opus, that likely will be the final opportunity to derail any proposal which includes big box retail.

In the time between now and that August zoning consideration, then, it's vitally important that the community -- and members of City Council opposed to big box at the site -- maintain a recognition that the public statements of two of the three developers appear to be at odds with what they are saying to the evaluation committee. In other words: Don't believe the hype, believe the record.

Posted at 02:33 PM | PermalinkComments (5) | TrackBacks (0)
More In Burnside Bridgehead, Design & Development

« Previous Next »