1 Transit Oriented/ Mixed Use Development in the Regional Centers of Portland Challenges, Solutions, Outcomes A Case Study
2 Tokola Properties – Development Background During the majority of Tokola Properties’ development history we focused on the production of 2 and 3 story, stick built, garden apartments on large suburban tracts. In 2008 Tokola Properties began implementing a strategic shift away from low density, horizontal form development on suburban acreage and toward higher density, vertical development on smaller urban lots and specifically on transit oriented/ mixed use development in the regional centers.
3 S uburban to Urban 3 rd Central Alpine Meadows Apartm ents Gresham , Oregon Gresham , Oregon
4 Why the S hift in S trategy? We believe the Regional Centers are in the early stage of a transition from a history dependent on suburban form development and the automobile to a future much more dependent on urban form development and mass transit. We also believe t hat developers who can meet the challenges associated with early adoption of transit oriented/ mixed use development in the Regional Centers will reap excellent long term returns
5 Why is this transition taking place? Impact of the urban growth boundary coupled with population growth Demographic trends including aging of the baby boomers and influence of the millenial’s – both groups are fueling demand for vertical housing Lifestyle changes – re-evaluation of value and benefits of homeownership Transportation – extension of mass transit to the Regional Centers Main street revitalization initiatives
6 What are the Challenges? Higher cost associated with urban versus suburban form development. Lack of comparable properties by which to establish value and secure financing. Lender resistance to “first in” nature of these investments. Low rent structure in the Regional Centers. Local jurisdiction inexperience with urban form development. Higher risk of environmental contamination on urban sites.
7 Overcoming the Challenges Use of public/ private partnerships during early adoption of urban form development in order to mitigate risk and attract private capital. Process of educating – educating local planning staffs, elected officials and the general public regarding the costs and benefits of transit oriented/ urban form development.
8 Historic Downtown Hillsboro Historic Main Street Main Street Today
9 Historic Downtown Hillsboro Corner of 4 th Avenue & Main Street Background • Purchased by City of Hillsboro & Metro in 1998 using Federal Transit grant funds • Intention to offer the Property to the marketplace for joint development • Development to feature a mix of high density uses with a physical or functional connection to the transit system • Dormant for 12 Years
10 Pre Development Photos View West on Main Street Form er Wells Fargo Bank
11 Hillsboro Central Transit Center
12 Development Offering Request for Qualifications Tim e Line • September 2010 the City of Hillsboro put forth a Request for Qualification to solicit qualified development teams. • November of 2010 Tokola was selected as the most qualified proposer. • February 2011 the Tokola, the City of Hillsboro and METRO entered into an Exclusive Negotiating Agreement. • February 2012 execution of a formal Disposition and Development Agreement or DDA
13 The Vision - October 2010
14 The Wells Building
15 Urban Plaza
16 4 th S The Vision – treet
17 4 th Main Challenges Financial Estimated project cost exceeded estimated market value by approximately $2,300,000. Environmental Environmental site assessment revealed presence of contaminants in the soil affecting excavation for below grade parking garage. Development Code Development code included 35’ height limit, maximum density of 36 units per acre, & prohibited residential use at the ground level. Other Federal transit authority requirements, neighborhood association concerns regarding density, State Historic Preservation Office concerns regarding the existing building on- site, lender concerns regarding “first in” nature of the investment, investor concerns regarding market rents
18 4 th Main S olutions Prim ary Solution Formation of a public/ private partnership between the City of Hillsboro, Metro and Tokola Properties with FTA as a key sub partner to address the challenges. Fostered close communication and relationship with other key entities including Tri- Met, SHIPPO, DEQ, Energy Trust of Oregon, State of Oregon, Neighborhood Association representatives and Principal Global Investors.
19 4 th Main S olutions Financial Land write down METRO TOD grant City payment of fees via urban renewal Establishment of a Vertical Housing Tax Zone and developer application for VHTC Credit Public participation was utilized to address approximately 15% of total project cost with private equity and debt meeting 85% of the challenge. Environmental City of Hillsboro and Metro developed a remediation plan with DEQ & in order to satisfy and investor concerns regarding potential future environmental liabilities, Tokola Properties entered into a Prospective Purchaser Agreement. The City of Hillsboro subsequently conducted the clean-up and to level meeting DEQ and PPA requirements. Development Code City of Hillsboro processed a revision in the downtown development code increasing the density, raising the height limit and permitting ground floor residential uses. Other Challenges Metro worked diligently with the Federal Transit Authority to assure the project met FTA requirements and the balance of other challenges were individually addressed and resolved thru education, negotiation and simply hard work.
20 S eptember 2010
21 April 2014
22 June 2014
23 4 th Main 350 E. Main S treet Historic Downtown Hillsboro • 71 Units, Luxury Market Rate Apartments • Diverse unit mix ranging from studios to 3 bedroom/ 2 bath penthouse homes • 3,859 Square Feet New Ground Floor Retail • 31,000 Square Foot Gated Below Grade Parking Garage • 5,300 Square Foot Renovation of existing mid-century building
24 4 th Main 350 E. Main S treet Historic Downtown Hillsboro • Elevator Service • Controlled Building Access • On Site Fitness Center • Gated Parking Garage • Bike Wash & Repair Station • Bike Coral • Transit Information Center & 2 Transit Trackers • Private Decks and Patios
25 4 th Main 350 E. Main S treet Historic Downtown Hillsboro • 9’ Ceilings • Stainless Steel Appliances • Quartz Counter Tops • Washer & Dryer • Luxury Vinyl Tile Flooring • Private Deck or Patio
26 4 th Main – Benefits of Public Investment Public investment leveraged nearly $15 million in private investment Activated long dormant site at key Main Street intersection Moved land and building back onto the tax rolls (is projected to generate nearly $1.6 million in net present value revenue for the Downtown Urban Renewal Area over the next 20 years) Created a dramatic new gateway at the eastern entrance to the CBD Substantiated new highs for residential and commercial rents Added 125 new residents downtown & projected to spend an average of $532,000 annually on downtown goods and services Expanded the retail base by adding new merchants and services Expanded housing option attracting new residents and helping retain existing residents Projected to generate an additional 64,000 transit riders per year
27 4 th Main
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