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The Portland Development Commission‘s board of commissioners on Wednesday unanimously approved one of the largest, most complicated loans the agency has ever issued in its 55-year history.

The $20.32 million loan to the Pacific Northwest College of Art, for its upcoming renovation of the 511 Federal Building on the North Park Blocks, consists of $12.71 million in short-term bridge financing and $7.61 million in long-term, market-rate debt that would increase in interest over the life of the loan.

Patrick Quinton, the PDC’s executive director, said he was not aware of a previous PDC loan comparable in size or complexity.

“There isn’t a lender out there that can do this deal, or structure it like we’ve done it,” Quinton said during Wednesday’s meeting. “There isn’t a lender that can take the kind of risk, that can be the patient lender, as well as do the ownership piece … So I do think this remains a role for a public agency like the PDC. We’re not in any way trying to push out private lenders. To my knowledge no one else is going to step up and do this kind of deal.”

The PDC’s commitment also comes with a pledge to acquire (for free) the 511 Federal Building from the General Services Administration, and lease it back to the PNCA for 99 years at $1 per year. The 134,000-square-foot building has been on the GSA’s disposition list for more than 20 years, and has been vacant for much of that time save for a small, recent lease by the Department of Homeland Security.

The PNCA is planning to supplement the PDC’s loan with $3.8 million from the sale of new markets tax credits (during construction) and $5.26 million from the sale of historic tax credits (upon completion).

Officials have garnered pledges totaling more than $10 million toward a $15 million fundraising campaign for the project. Also, $6 million in proceeds from the recent $11.75 million sale of the PNCA’s Pearl District campus will go toward the $31.5 million renovation project.

“We look at this as an incredibly important development for our college, but we also look at it as a step toward bringing together two separate neighborhoods that have been divided,” PNCA President Tom Manley said in reference to the Pearl District and Old Town, “and as an actual outgrowth of our college’s vision of being supportive to not only our students, but the community in which they live.”

Craig Boretz, vice president of development for Con-way Inc. and a PNCA board member, also spoke at the hearing.

“It’s going to change the whole nature of the North Park Blocks,” Boretz said of the redevelopment. “It’s beginning to evolve, but this will really take it to a whole ‘nother level.”

Boretz pointed out that the loan, though complex, exposes the PDC to very little risk. Commissioners agreed, and PDC board Chairman Scott Andrews, president of Melvin Mark Properties, made the point that if the PNCA were to vacate the 511 Federal Building, the PDC could afford to lease it to other creative businesses for “way below” market rate given the no-cost acquisition and the relatively low amount of debt involved in the deal.

Commissioner Aneshka Dickson stressed her desire to see construction work extended to minority-owned, women-owned and emerging small businesses.

Andrews’ only request was that the PNCA make greater strides to create a master plan for the site – an unfulfilled requirement linked to the PDC’s initial $740,000 predevelopment grant. That process, he said, would be critical in bridging the economic gap between the neighboring communities of the Pearl District and Old Town.

“(The PDC’s loan is) not just an investment in the school,” he said. “It’s an investment in a really strong link to bring one of the most prosperous neighborhoods into one that has not been quite so successful.”