An unremarkable quarter-block surface parking lot in Portland’s Pearl District seems an unlikely place for a project proposal to cause a neighborhood controversy.

Yet it has. A group, the Pearl Neighbors for Integrity in Design, has formed to fight plans by Seattle developer Vibrant Cities to build a 23-story Hyatt Place hotel and residential tower at Northwest 12th Avenue and Flanders Street.

At a recent Portland Design Commission meeting, neighbors paraded around the hearings room with hand-painted pictures of a maple tree at the site they want to preserve. One resident, Patricia Cliff, who started the opposition group, called the project “vertical sprawl.”

The Hyatt Place project is the first Pearl District proposal to enter the city’s design hearings process under the Central City 2035 zoning rules that raised height limits. The zoning changes enacted by the City Council in June 2018 raised the height limit at the property, including bonuses, from 175 feet to 250 feet.

The 250-foot-tall proposal offers a glimpse of the Pearl District’s future under the new zoning rules. It’s part of a broad policy choice, backed by Mayor Ted Wheeler and other city leaders, planners and urbanists, to encourage dense development in Portland’s urban core.

“Compared to a lot of American cities, we’re not that tall and that dense,” said Troy Doss, Central City planner for the Portland Bureau of Planning and Sustainability. “For us to achieve our employment goals and our density goals for the Central City, we need to get the most out of the land.”

It’s not going over well in the Pearl.

“It’s a monstrous building,” said Cliff, a real-estate consultant and neighborhood preservationist.

Cliff painted the project as an attempt to maximize private profits at the expense of the neighborhood’s character.

“If all of these carpetbagger out-of-town developer people buy something and air rights, then you’ve got 23-story buildings all over the south Pearl,” she said.

Cliff objects to the proposed dual uses – hotel and residential – and lack of parking. She would not object to a smaller tower of about 12 stories, she said.

The higher height limits allows the Hyatt Place building to include approximately 110 residential units, including a to-be-determined number of rent-restricted inclusionary housing units, said Brian Fleener, vice president and director of architecture at Otak Inc., the Portland firm designing the building. When first proposed, the building had only 12 stories, all dedicated to the hotel.

Opposition to the Hyatt Place project follows the 2018 fight over the Fremont Apartments, a 17-story tower that survived an appeal by the Pearl District Neighborhood Association. It’s unlikely to appeal the Hyatt Place project if approved by the Design Commission, said Stan Penkin, the group’s president.

“The building, as far as the height goes, meets code,” he said.

Unlike the Pearl District Neighborhood Association, the Pearl Neighbors for Integrity in Design is not a city-recognized neighborhood group and cannot appeal Design Commission approval to the City Council.

The neighborhood association opposed the Fremont Apartments design because of the building’s proximity to the Willamette River and a pedestrian greenway, and its position blocking bridge views, Penkin said.

Penkin, who like Cliff came to Portland from New York, said he does not object to tall buildings in the right locations. Resistance to the changing skyline in the Pearl District is not a case of not-in-my-backyard, or NIMBY, politics, he said.

“Being a neighborhood person and a city person, I’m concerned about the larger context,” he said. “It’s easy to call somebody a NIMBY. But I also think there’s nothing wrong with not wanting the character of your neighborhood changed. If that makes you a NIMBY, fine.”

The Hyatt Place proposal could proceed next to a formal design review hearing, or Vibrant Cities could opt for another advice meeting. The developer did not return messages seeking comment.

The building would stand near several residential high-rises, including The Casey, The Louisa and The Henry. Those buildings are all nearly 175 feet tall. There are even taller buildings at the Pearl District’s northern edge, including NV and the Cosmopolitan.

Demand to live in Portland’s urban core is strong, amid a long economic expansion, healthy job creation and in-migration. At the same time, Oregon’s system of urban growth boundaries contributes to a need to accommodate building within them.

Downtown Portland seems to be seeping into both the Pearl District and Goose Hollow – both neighborhoods adjacent to downtown that have seen an explosion of growth.

“We’re an extension of downtown,” Penkin said.

Goose Hollow’s neighborhood group did not object to a 21-story residential tower that received Design Commission approval in November.

The Pearl District is undergoing a natural progression from the initial residential wave of rehabilitated two-story warehouses, to a generation of mid-rise condo towers, to today’s high-rises, said Joe Cortright, an economist and writer on urban growth.

“There’s clearly demand for it,” he said. “From an economic perspective, there’s a really strong desire that people have for great urban environments. The Pearl District in particular is a very desirable place to live, and more people want to live there than we have housing for. As a practical matter, the only way to provide more housing there is to build up.”

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Portland’s inclusionary housing rules have been in effect for nearly a year and the impacts are beginning to appear fully around the city – including historic districts.

The rules state that any project including 20 or more residential units must designate a portion of them as affordable, or pay a fee in lieu. Such projects must have at least 20 percent of units affordable to people making 80 percent of the median family income or 10 percent of units affordable to people making 60 percent of the median family income.

Many developers rushed to submit projects before Feb. 1, 2017, when the rules took effect. The submission rate of proposals has since dwindled.

One of the biggest issues is that designating a certain number of units to rent below market rate dramatically changes the financial dynamics. That impact can be especially profound within historic districts, where height and design guidelines are especially stringent.

“My understanding is that there has not been a land use review for a project that would trigger the inclusionary zoning rules,” said Brandon Spencer-Hartle, historic resources program manager for the city of Portland.

One team did come before the Historic Landmarks Commission in December seeking advice on a project that would trigger the inclusionary housing requirement: the Omni tower. As proposed, it would sit on the corner of Northwest Fifth Avenue and Glisan Street. The design presented to landmarks commissioners called for 13 stories. At approximately 135 feet tall, it would be significantly shorter than the 350-foot height maximum allowed within the district. However, during the hearing, landmarks commissioners said the height would be too tall given the context of the district.

“The building’s owner does not believe that a smaller building is financially feasible given the city’s current inclusionary housing rules,” Ankrom Moisan Architects designer Paul Jeffreys told the commission during the hearing.

The problem for the project is that the Historic Landmarks Commission is charged with ensuring districts’ character and context are maintained. That can often mean that while zoning rules may allow for a taller maximum height, it may not be found appropriate within a particular district.

“I don’t like that process, personally,” Jeffreys said. “The inclusionary zoning is a problem for every area. Historic districts carry a bit more risk. We are hearing a lot of area developers having problems all over the city.”

Another hurdle for the Omni tower is that it is proposed for an area that already has a significant amount of affordable housing. The number of existing affordable units in a particular area isn’t factored into inclusionary housing requirements.

“This district has stagnated,” Jeffreys said. “People are risk averse. We need market-rate apartments in this neighborhood.”

While landmarks commissioners were sympathetic to the developer’s dilemma, financial viability is outside of the commission’s purview.

During the Dec. 4 advice hearing, some landmarks commissioners wondered if the developer would be better off going through the review process with the intention of appealing a denial to the City Council.

“The City Council’s ear is tuned a little different,” Commissioner Matthew Roman said during the hearing. “They approach it a little different.”

However, that option has drawbacks.

“It’s more costly and we don’t want to do that,” Jeffreys said.

The overall problem for project teams is incorporating enough floors into buildings on small sites to accommodate the minimum number of affordable units and still achieve financial viability.

“My view (of) the quota is that it is too high,” Jeffreys said. “It puts too much of a burden on the project and the other options (taking off floors) are not financially helpful.”

Even developers whose overall goal is to provide affordable housing can find historic districts challenging to build in. A development at 1727 N.W. Hoyt St. aiming to provide 165 units for seniors and others making 60 percent of the area median income. But the proposal for a six-story building in the Alphabet Historic District drew a cool reception from landmarks commissioners.

“We are not like market-rate apartments where we can increase our rents to be able to cover the costs of the construction we need to do,” said Stephen McMurtrey, director of housing development for project developer Northwest Housing Alternatives. “We need the amount of units proposed to deliver much-needed affordable housing to an area of the city.”

While the city is looking at the issues caused by the inclusionary housing rules, one issue that was not considered was exempting historic districts.

“The intent after passage was to apply it broadly,” said Tyler Bump, senior economic planner for the city. “One unintended consequence was if we don’t have requirements (in historic districts), it could have motivated investment into those districts. The requirements also had to meet the state law.”

Spencer-Hartle pointed out that floor area ratio bonuses and tax incentives can help offset the costs associated with the requirements. Also, the city will examine options for keeping projects financially viable while the goal of increasing affordable housing is achieved, he added.

“The height limit is in front of council,” he said. “There are some real decisions to be made.”

A mixed-use project at the corner of Southwest Third Avenue and Ash Street was able to successfully use bonus floor area ratio and tax incentives to offset costs incurred by adding affordable units, prior to the new inclusionary rules taking effect, Spencer-Hartle added.

The city is aware of the struggles that area developers are experiencing, Bump said.

“We are sensitive to the private sector,” he said. “(The inclusionary housing policy) has been in effect for 10 months now. We are trying to find out how this works. We have ongoing conversations with area builders.”

One of the goals of the inclusionary housing policy is to promote a diversity of housing types throughout the city – including historic districts.

“We want to help these districts,” Spencer-Hartle said. “The question is: How do we get there?”

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The city of Portland is trying to attract developers to the U.S. Postal Service site by allowing them to build to the sky.

The City Council is expected to later this month approve raising maximum buildable heights in the area to 400 feet north of Northwest Johnson Street and 250 feet south of it.

The council is also poised to raise the floor area ratio (FAR) to a maximum of 10-to-1 with bonuses, with a base of 7-to-1. That’s up from 4-to-1 under the old rules. The higher FARs allow developers to plan much taller buildings.

The 24-acre Broadway Corridor, including the 14-acre Postal Service property, is essentially a blank slate for city officials and developers. Affordable-housing advocates, equity activists and transportation watchdogs all want a say in how this keystone parcel bordering the Pearl District and Old Town Chinatown is built out.

Prosper Portland plans to seek a master developer for the project with a request for qualifications in mid-November that would remain open until mid-January. The developer would serve as a consultant for a year or so of planning.

“Should that partnership work well, they would have exclusive rights to develop the post office site, but not adjacent sites,” said Sarah Harpole, project manager at Prosper Portland.

A member of the Broadway Corridor steering committee told the City Council it’s crucial that the broad rules for building on the property are clarified before a request for qualifications is issued.

“We’re working to get the RFQ finalized so we can get it out to developers,” said Sarah Stevenson, a committee member and executive director of Innovative Housing Inc., a developer of affordable housing. “But it’s critical we have clarity on the heights and the FAR before we can fairly ask a developer to respond to a solicitation. That’s why early implementation of the height and FAR recommendations that have been developed throughout this prior public process are important.”

The City Council did not vote on the agenda item last week. It is tentatively scheduled to reconsider that matter at a Sept. 28 meeting.

At 400 feet, certain blocks of the Broadway Corridor would have height limits comparable to some of the tallest in Portland. It would represent a spike in height next to lower heights permitted in much of Old Town Chinatown and taller heights south of Burnside Street and the West End.

Prosper Portland and a stakeholder advisory committee, along with a long roster of consultants, are evaluating the possibilities for the Postal Service site and the larger Broadway Corridor. Among the issues are whether the property can or should be used as a massive corporate campus, whether the existing postal facility should be preserved and possibly used as office space, and how to incorporate open space.

The Broadway Corridor is projected to absorb 10 percent of Portland’s population growth by 2035, Harpole said.

With greater building heights comes the possibility of increased property tax revenues, jobs and residences.

“The only way to meet our future demand in a sustainable way is to use the density,” said Sam Rodriguez, a member of the stakeholder advisory committee and senior managing director of Mill Creek Residential Trust, a prolific apartment developer. “The more flexibility the better.”

In broad strokes, the city’s , published last year, sketched a future for the area. That plan envisioned 3.8 million square feet of development along with parks, open space and transportation infrastructure.

The plan calls for developing nearly 2.1 million square feet of residential space, including a substantial complement of affordable housing.

“That neighborhood is ripe for mixed-use overall development, and I think housing would be fantastic,” Rodriguez said.

Portland “has had some really good, successful test cases with a mix of affordable-housing buildings and mixed-income buildings,” he said.

Prosper Portland officials also see the property as a good place for jobs as they seek to preserve room for companies to operate amid the ever-present crush of housing needs.

“We’ve long recognized the site as a significant opportunity for employment,” Harpole said.

Plans call for Johnson Street to be extended to the east across the property. It would meet Park Avenue, which would be extended northward into the site along with three additional park blocks.

The Broadway Corridor is large enough to encompass anyone’s hopes and dreams. That’s a problem for officials planning the site – not everyone is going to get what they want out of the property.

“The city wants a lot of things to happen there, and there’s a lot of competing interests,” Rodriguez said. “What will make it really hard is you won’t be able to meet all of those goals, and what are the decisions that need to be made? There’s just a lot of forces pulling on the options, so it’s going to be tough, and there’s going to be some tough decisions that need to be made and not everyone is going to be happy.”

Planning for development is a long process. The Postal Service is not expected to vacate its building for another site near Portland International Airport until late 2018. Prosper Portland also agreed to allow the Postal Service to maintain retail uses at the Northwest Portland location indefinitely.

The city of Portland agreed in May 2016 to buy the Postal Service site for $88 million.

Building out the site will occur in phases. Consultants and committee members have discussed retaining the existing Postal Service building as an interim measure. That would allow for lower rents than would be possible in a newly constructed building.

The Portland Bureau of Transportation, TriMet and Portland Streetcar have also been involved in planning for the site to ensure transportation access.

Prosper Portland intends to guide the Broadway Corridor throughout the process, holding the development contract with the Bureau of Development Services.

“We ultimately are hosting the table and contracting the work,” Harpole said.

The Postal Service site itself will have a master plan that will be subject to a Type III land use review by the Portland Design Commission.

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David Leiken has some big ideas for the Roseland Theater half-block that he has owned for more than 20 years.

The property along Burnside Street is zoned for a maximum height of 460 feet, and he has considered joining with an adjacent property owner, David Gold, to build something big – a hotel, or apartments or condos – atop the historic music venue.

He’s also been approached about the property by major national firms, and at age 69, he’s ready to make a move. “In the next five to 10 years, something’s going to happen down here,” he said.

But planning is on hold for now as Leiken battles with the city of Portland, which is proposing to reduce the allowable height to 250 feet as part of the Central City 2035 plan.

Leiken is one of several property owners who are protesting height reductions in the Central City 2035 plan, a major zoning code rewrite that is wending its way toward approval this fall by the City Council.

They object that the proposed maximum height changes essentially pick winners and losers, block by block. The difference to a property owner could be millions of dollars.

Leiken said the area along Burnside has endured tough times and deserves greater consideration from city officials.

“There used to be at any one time of the day 10 to 15 crack dealers on the corner,” Leiken said. “And we’ve lived through that, and it’s over. And I feel like this area has been treated as a stepchild by the city for years and years and years.”

City officials are seeking to balance the desires of local residents, many of whom favor lower allowable heights to preserve their views, with developers, property owners and others who stand to financially benefit from taller buildings with more revenue-producing square footage.

Residents of the Goose Hollow and West End neighborhoods have been especially vocal about reduced views of Mount Hood and East Portland.

The Central City 2035 plan comes as booming demand for office and residential space has filled the development pipeline. At the same time, Portland is facing an influx of new residents and a growing push for greater density.

For Leiken, he’s galled by the looming change that would reduce the allowable height on his property by 46 percent. To make matters more absurd from his perspective, the Roseland Theater block is directly across Burnside from the U.S. Bancorp Tower, better known as Big Pink, the second-tallest skyscraper in Portland at 536 feet.

Leiken doesn’t understand why the Roseland Theater property and surrounding blocks north of Burnside were singled out for lower heights.

“Basically they drew a line and said, here’s 460 (feet maximum) and here’s 250,” he said. “And we had always been 460 before.”

Leiken said there’s no doubt that if the height changes go through as proposed, he will see the city in court. “Nobody wants to get in litigation with the city of Portland, but at some point if they’re going to treat you differently than everybody else, that’s what ends up happening,” he said.

Leiken’s lawyer, Carrie Richter of Garvey Schubert Barer’s Portland office, has submitted a detailed letter to the Planning and Sustainability Commission.

Others are protesting as well. One property owner described in public testimony the height changes as a governmental “taking” of property value without compensation.

Leiken bought the Roseland in 1995 for about $1.4 million. He estimates he spent an additional $750,000 on a seismic retrofit and other renovations.

Gold owns the neighboring property at 19 N.W. Fifth Ave., as well as other buildings in the area. He said the proposed 250-foot height limit could limit the possibilities for the site amid a booming development economy.

“We’re closer to having a demand for that type of height than we’ve had for the last 30 years,” he said. “That proposal cuts it out before we know if it’s feasible or not.”

The proposed height limits came about after six years of discussion as part of the city’s quadrant plans, said Rachael Hoy, a senior planner and Central City team leader at the Bureau of Planning and Sustainability. The process included meetings with stakeholder advisory groups.

Yet some property owners are hearing about the changes only now after drafts of the Central City 2035 plan were posted publicly and reached public hearings.

In Leiken’s case, he said he was aware of the planning process, but was repeatedly told he had nothing to worry about, until he did. The city’s plan also limits lucrative transfers of floor-to-area bonuses in certain blocks.

The Central City 2035 plan is now before the Planning and Sustainability Commission, which is holding a series of hearings on the wide-ranging document.

Maximum allowable heights could change through the public process, Hoy said. The commission “very well will make changes, I’m sure, to some of the staff proposals,” she said.

“This is the time to hear from the stakeholders to state their case.”

Allowable heights under the Central City 2035 plan vary from neighborhood to neighborhood and even block to block, according to a height map from the Bureau of Planning and Sustainability. The city’s maximum allowable height of 460 feet is available in only a relatively small section of downtown.

In many cases, height reductions were driven by view corridors, Hoy said. But in Leiken’s case, his block was reduced to 250 feet because of development patterns and the neighboring historic district.

“That’s an area where there’s not a view corridor involved,” Hoy said. “There was discussion of that area’s proximity to the historic district. His property is not in a historic district, but it’s next to one.”

The area also hasn’t seen buildings built to maximum heights, Hoy said.

“The development pattern, we’ve not seen buildings built to 460 (feet),” she said. “What we have seen – and what we’re proposing – is 250.”

In that sense, the city seems to be taking a use-it-or-lose-it approach to height limits. Richter argued against that approach in her letter to the city opposing lower height limits on the property.

“Simply because no building has been built maximizing the 460-foot height limit does not mean that the existing height limits need to be reduced,” she wrote.

The area around the Roseland Theater has many low-profile buildings with historic character, Hoy said.

“There’s just kind of an older fabric of buildings,” Hoy said. “There are some older buildings that it would be great if they were preserved.”

In contrast, the block that contains the U.S. Bancorp Tower would have its height increased to 545 feet as proposed, from the current 460-foot limit. The tower’s owner, Unico Properties, has complained that the tower’s status as a nonconforming property could pose an obstacle to refinancing or sale in the future.

Leiken and Gold have discussed options to develop their properties. They’ve noted increased interest from national developers and proposals for taller buildings throughout downtown.

Leiken said he’s discussed with architects simply building on top of the existing Roseland Theater building, preserving its use as a music venue. The building could be topped by a hotel or residential units.

“We have some, I think, very cool ideas of what we could do,” he said.

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