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An Arizona-based developer plans to build 340 apartment units in two buildings at the west end of the Broadway Bridge on land purchased from the Portland Development Commission.

The commission approved the $9 million sale to The Wolff Company, based in Scottsdale, Arizona, at a public meeting earlier this month. The developer has committed to designating 20 percent of the units 鈥� approximately 68 鈥� as affordable for people earning 60 percent of the median family income for a period of 10 years. The developer’s representatives said 55 of those units will be maintained as affordable units for 20 years.

The site has long been targeted for development, but the PDC is connecting with a new developer after years of working with Portland’s Winkler Development Corp. A development agreement between the parties was terminated in 2011 after eight years of no construction.

The Wolff Company plans to begin construction by late 2017, with completion to follow in August 2019. The total development cost is anticipated at $75 million to $80 million, said Chris Rossman, Pacific Northwest director of development for The Wolff Company.

Project plans also call for 164 below-grade parking spaces.

The site, at 1053-1201 Northwest Naito Parkway, comes with several challenges. The Broadway Bridge cuts across the property from above, essentially dividing the 2-acre lot in two. One building, containing approximately 230 units, will be built north of the bridge, while another structure containing 110 units will be constructed south of the bridge.

鈥淵ou definitely are limited in terms of how you can program the site due to the relationship with the bridgehead,鈥� said Rossman, who is based in Seattle. 鈥淲e’re looking at the areas north and south of the bridge; they’re unencumbered.鈥�

The Wolff Company has not decided what it will do with the center of the property. The developer is looking at ways to link the buildings and provide for outdoor uses, Rossman said.

The company has long sought a large property to develop in Portland, Rossman said. Previous potential development opportunities fell through.

鈥淚t hasn’t been a lack of interest in Portland 鈥� quite the opposite,鈥� he said.

The company recently began construction on a 279-unit apartment project in Hillsboro’s AmberGlen area. The as-yet-unnamed development will have only market-rate units.

鈥淚n urban Portland, finding these larger parcels is difficult,鈥� Rossman said.

The Wolff Company has a national profile, but is particularly active in the Northwest, with numerous developments and acquisitions in Eugene, the Seattle area, and Spokane, Washington. The developer also has a significant footprint in California.

The developer has not yet selected an architect or general contractor for the Broadway bridgehead project, Rossman said.

Portland’s strong population growth is one of the economic forces driving the project, Rossman said. The Portland-Vancouver, Washington metro area gained an estimated 40,621 residents from 2014 to 2015, according to the Census Bureau.

Another driving factor is demand for urban housing, Rossman said.

鈥淭hat’s more of a social trend that we’re seeing across the country, not just in the Pacific Northwest,鈥� he said.

In many cities, established business districts are gaining residential units at a strong pace, he said.

The section of Portland around the Broadway bridgehead is likely to be transformed in coming years. The development site is near the 14-acre parcel that the PDC purchased in May from the U.S. Postal Service for $88 million. A preliminary framework plan calls for developing buildings totaling 3.8 million square feet, including nearly 2.1 million square feet of residential space.

The Broadway bridgehead project will use the city’s multiple-unit limited tax exemption, or MULTE, a Portland Housing Bureau property-tax exemption program.

The Wolff Company has had success in other cities using incentive programs that offer property tax abatements in exchange for affordable units, Rossman said.

鈥淲e’ve found that a great mechanism in the markets we work in,鈥� he said.

The program is similar to others in Seattle and other cities, Rossman said.

鈥淯ltimately, we look at that as the ability to provide immediate affordable housing, and the incentive allows an economic offset to the development cost to the developer,鈥� he said.

The units could remain affordable for even longer than the 20-year period mandated by the MULTE program. The Wolff Company plans to employ tax-credit financing that would require the units remain affordable for 30 years, Rossman said.

The Housing Bureau last year revamped the MULTE program after it initially failed to attract developers’ interest. The agency raised an annual cap on the tax exemptions from $1 million to $3 million, and eliminated a rule that capped the return on market-rate units at 10 percent.

The PDC purchased the Broadway bridgehead property in 1987 as part of the larger Union Station acquisition, and it has since been redeveloped in pieces. The Wolff Company’s purchase follows a development process by Winkler Development Corp.’s that ultimately fizzled.

Winkler Development partnered with the PDC beginning in 2000 to build an office and garage project know as One Waterfront Place, but the development agreement was amended eight times to allow for additional time and other changes. The PDC terminated the agreement in 2011 when construction still had not begun.

The agency listed the property with CBRE in June 2015. The listing garnered two offers: a $2 million offer from a limited liability company backed by Winkler Development, and the $9 million offer from The Wolff Company.

鈥淲e’re certainly glad we’ve been able to come to a place with an acquisition,鈥� said Anne Mangan, a PDC spokeswoman.

The city saw 5.1 percent annualized rent growth during the second quarter 鈥� still robust, but below double-digit rates seen recently, according to Portland State University’s Center for Real Estate. The regional vacancy rate was unchanged at 3.5 percent, suggesting a landlord’s market.

A wave of multifamily construction is under way in the Portland area. To date this year, 95 building permits have been issued in the metro area for structures of five units or more, totaling 3,813 units, according to PSU.

The Wolff Company’s project will help address a need for multifamily housing in Portland’s urban core.

鈥淲e can use more,鈥� Mangan said.

The project was approved earlier this month by the PDC’s board without any questions. Mark Edlen, a board member and a developer himself, lauded The Wolff Company for its proposal.

鈥淲elcome to Portland,鈥� he said. 鈥淚’m glad you’re here.鈥�