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The Portland Development Commission on Wednesday granted a generous loan modification to Portland Center Stage for refinancing of the Armory Building in the Pearl District, but not before a somewhat heated exchange between one commissioner and the performing arts organization’s artistic director.

The PDC in 2003 issued loans totaling $4.6 million for redevelopment of the 126-year-old Armory Building. The effort spearheaded by Gerding Edlen was intended to create a major cultural attraction in the neighborhood, and the facility now accommodates more than 800 events and 165,000 theatergoers annually.

Portland Center Stage, via the Armory Theater Fund, requested that the PDC extinguish $2 million of the loan amount and let $3.2 million more be refinanced. That did not sit well with Commissioner Charles Wilhoite, a managing director at Willamette Management Associates.

“I’m being asked to forgive $2 million in debt, and restructure $3.2 million in debt over 10 years at zero (percent) interest with no plans for repayment,” he said. “Does that make sense?”

The PDC originally provided $2.6 million as a 10-year loan at 3 percent interest (loan A), and $2 million as a forgivable loan if certain public benefits were achieved (loan B). That condition on loan B was later removed because structural requirements of New Markets Tax Credits – used to finance construction – didn’t allow the loan to be converted into a public investment (aka forgiven).

Those tax credits are nearing their expiration, and the two loans are coming to term. The problem, Portland Center Stage officials reported Wednesday, is that it is currently unable to repay the sum. So, the organization requested a 10-year extension on the balance of Loan A ($3.2 million) at zero percent interest; and, with the New Markets Tax Credits out of the way, a return to the original plan for forgiveness of Loan B.

Wilhoite asked Portland Center Stage’s artistic director, Chris Coleman, repeatedly if the request was an indication that the organization is in financial distress. Coleman waffled and replied that the answer depended on how Wilhoite defined financial distress, and then Wilhoite pushed for a “yes” or “no” answer.

“Am I on trial here?” Coleman retorted. “I didn’t realize I was going to be on trial here.”

Wilhoite apologized for being abrupt, and said he supported Portland Center Stage’s work, but added that he has a responsibility to adequately vet the request. In the end, his main concern came down to language in the resolution stating that “there is currently no plan for how the extended loan A will be repaid at or before maturity.”

Wilhoite said he had never seen such noncommittal language before, and so Commissioner Tom Kelly, president of Neil Kelly Co., proposed amending the resolution to require Portland Center Stage to return before the commission in two years with a plan for repayment.

The resolution passed three to one, with Wilhoite offering a resounding, sing-song, “Naaay.”

The entire meeting can be viewed at: www.youtube.com/watch?v=Z8HRfDl8f5Q.