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The Zidell family’s dreams of transforming their 33 acres of South Waterfront property are on hold after the developers could not come to terms with the city of Portland on how much each side would contribute to public infrastructure at the site.

The impasse threatens to throw away years of work on the South Waterfront. The Zidells’ ZRZ Realty Co. proposed to build approximately 5 million square feet of residential, office and retail space on the west bank of the Willamette River.

All development and design work on Zidell Yards is halted, ZRZ Realty President Jay Zidell said Monday.

Talks with city bureaus fell apart over costs concerns, according to interviews with ZRZ and city officials. The construction of Zidell Yards would have required millions in local government spending to extend Bond Avenue through the site and help pay for parks and the Greenway Trail.

鈥淲e had one view of how that needed to be funded, and the city had a different view,鈥� Zidell said. 鈥淎t the end of the day, the city’s position required ZRZ to make a substantially greater investment that impairs the returns on the buildings to the point where we do not believe we could go to the capital markets and get the capital we need to do the buildings. It kind of collapsed on itself.鈥�

The two sides mutually terminated a development agreement last week. It’s not clear where the South Waterfront goes from here.

鈥淲e don’t currently have Plan B,鈥� Zidell said. 鈥淲e’re picking up the pieces and figuring out what to do.鈥�

The phased project would have remade a long-neglected former industrial area just south of downtown Portland that city leaders believe could be home to dense housing and commercial development.

ZRZ and Prosper Portland forged a development agreement in 2015 calling for the city to spend $23.7 million on public infrastructure in conjunction with Zidell Yards. After further study on development needs and private financing, ZRZ’s estimate of the city’s needed contribution grew to $53 million. That’s as high as the city could go, said Lisa Abuaf, development manager for Prosper Portland. And then the price tag went higher.

鈥淲e weren’t prepared for investment beyond the $53 million,鈥� Abuaf said. 鈥淭hey did a tremendous amount of work really putting detail on the vertical development needs and private financing analysis together with the public funding contribution, and we couldn’t get to an agreement on what that share would be.鈥�

The city’s inclusionary housing rules were not a major obstacle, Zidell said. 鈥淭hat was a minor consideration in what really happened,鈥� he said.

The Zidells have owned the South Waterfront parcels for decades. The site was used for building and scrapping barges by Zidell Marine Co. The last barge was launched in 2017 as the family firm shifted its focus to property development.

Substantial work has been done on design and planning for Zidell Yards. Sasaki Associates, a firm based in Watertown, Massachusetts, and Shanghai, China, completed a detailed master plan for the property in 2017 on which Place Studio and West 8 Urban Design & Landscape Architecture also worked. SCB of Chicago and GBD Architects were engaged on building design. The Zidells also staffed up at ZRZ Realty, hiring experienced developers Thomas Henneberry and Sarah Zahn to guide the project.

The city remains open to the Zidells’ plans, Abuaf said. 鈥淲e remain absolutely supportive of their vision,鈥� she said. 鈥淥ur lines of communication are certainly open.鈥�

The decision to halt Zidell Yards could affect other major institutions in the area, including Oregon Health and Science University, a fast-growing employer and institutional developer, and the Oregon Museum of Science and Industry, which is pushing its own master plan across the river for a large-scale mixed-use development requiring new public infrastructure.

Regardless of the status of Zidell Yards, the city is committed to working on infrastructure priorities in the South Waterfront, including extending Bond Avenue and the Greenway Trail and providing affordable housing, Prosper Portland spokesman Shawn Uhlman said.

Zidell offered to meet with Mayor Ted Wheeler to discuss a way out of the impasse.

鈥淣otwithstanding where we find ourselves today, I’d love to sit down with the mayor for both of us to roll up our shirtsleeves and figure out a way to put this back together,鈥� Zidell said. 鈥淚t’s just too big of a lost opportunity to the city to not figure out a way to get it done.鈥�