Killian Pacific‘s Goat Blocks is nearly complete, and tenants are filling the superblock complex in Southeast Portland.

The massive development includes 347 apartments, a grocery store and a hardware store surrounded by industrial businesses in the Central Eastside. Tenants can walk to many of Portland’s hottest restaurants and bars.

Three of the four apartment buildings are finished; the building at 888 S.E. Ninth Ave. is set to open in July.

It’s been a long road for Killian Pacific, which acquired the 2-acre superblock and adjacent property in 1999. CEO George Killian negotiated with a consortium of Italian-American produce distributors who connected Willamette Valley farms to Portland restaurants.

Several economic cycles came and went as Killian Pacific pursued a grocery-store tenant and institutional financing while considering the best use for the sprawling urban property.

“George is known for long, long land plays,” said Jeremy McPherson, Killian Pacific’s development manager.

The project team endured a hard fight through design review, with representatives of the Central Eastside Industrial Council questioning the number of residential units planned for the industrial neighborhood. But the City Council backed the Design Commission’s approval in August 2014.

Workers broke ground on the project on Feb. 26, 2015, more than 15 years after Killian purchased the property. Construction was slowed by harsh winter weather.

Goat Blocks occupies the parcel bounded by Southeast Belmont and Taylor streets, and 10th and 11th avenues. The superblock is broken up into four towers with different design features, and is bisected by Yamhill Alley, a long-vacated path. The project also includes a building across 11th Avenue that will hold Kachka, a well-regarded Russian restaurant.

Goat Blocks was able to open after luring Market of Choice to build a grocery store of approximately 26,000 square feet. The project team had discussions with every major grocery chain in the Portland urban market before coming to an agreement with the Eugene-based company, McPherson said. The Goat Blocks location is Market of Choice’s fourth Portland-area store, and it’s the only grocery store within a one-mile radius.

Some grocers were reluctant to come to the urban location in part because of parking concerns, McPherson said.

“By and large, I think groceries were afraid to make the leap to understand how much parking they’d need in a large, urban format,” he said.

The Goat Blocks team settled on what McPherson called a “very aggressive” parking offering of 2.5 stalls per 1,000 square feet.

“That was what was necessary to get the deal done,” he said.

Orchard Supply Hardware took another large storefront. The retailer offers lots of home décor at the Goat Blocks location, in addition to the usual paint selection and tools.

The developer is looking to fill 98,000 square feet of ground-floor retail space. Micro-retail spaces line Yamhill Alley. RoseLine Coffee, a homegrown Portland roaster, is taking one space, as is Schilling Hard Cider, a Seattle-based beverage manufacturer that’s opening a 50-tap bar with a gluten-free food menu on June 16, manager Jennie Dorsey said.

A highly efficient central HVAC system serves the entire development.

The retail offerings will add amenities to the neighborhood, but apartments are the heart of the Goat Blocks. The 347 units come to market amid signs high-end rents softened in the first months of 2017, with some properties offering concessions.

The market has since improved, McPherson said.

“Everybody saw a little bit of softening,” he said. “I’m seeing it pick up dramatically now.”

Goat Blocks’ units were 24 percent leased as of June 5, said Virginia Barden, regional property manager for Pinnacle Property Management Services.

McPherson said he’s confident renters will be attracted to the close-in location.

“We’re very bullish on housing in the Central Eastside,” he said.

All apartments, ranging from studios to three-bedroom units, are priced at market rates. Rents range from $1,200 to $1,600 for a studio, from $1,400 to $1,900 for a one-bedroom unit, and from $2,400 to $3,000 for a two-bedroom unit, Barden said. No listed price was available for the five three-bedroom units – one on each floor of the 808 building.

McPherson said neighbors wanted market-rate housing for the area.

“They felt they had their fair share of affordable housing projects in the last few years,” he said. “They wanted a different demographic. The fact is, what’s being delivered is what was asked for.”

The apartments feature many nods to the Central Eastside’s industrial background. Bicycle parking is separated from an apartment hallway by chain mail, and a lobby sculpture is made from reused old-growth timber dating from 1594 that was sourced from Oregon Electric’s former headquarters.

Goat Blocks

Developer: Killian Pacific

Architect: Ankrom Moisan Architects

General contractor: Andersen Construction

Financiers: General Electric Pension Trust, HomeStreet Bank, U.S. Bank

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If someone were to write a book about the history of Killian Pacific, it would likely read like the classic American story.

“George Killian, the patriarch of the company … didn’t have the money or the power or the fancy education,” Noel Johnson, Killian Pacific’s general manager, said. “He just built trusting relationships, and he kept his promise. Some 40 years later, that’s still the hallmark. That’s still the basis of the company.”

That philosophy of approaching each development project with a sense of fairness, honesty and even empathy has helped the firm build a solid reputation with the project teams it works with, the tenants who fill Killian Pacific projects and the neighbors who live in the areas where those projects are located.

Approximately two-thirds of the Vancouver-based firm’s focus is in Washington, with the remainder in Oregon, mainly in the Portland-metro area. But no matter which side of the Columbia River the firm works on, some common elements are found in the buildings it develops.

“We build really cool stuff, but they make money,” Johnson said.

“Tenant mixes are carefully considered,” he added. “We don’t just lease to the highest bidder. We lease to groups that help each other out. There are ways to help or hurt your tenants. If we can find a way to focus on what our tenants need, we end up having less turnover.”

While Killian Pacific is behind one of the biggest, most highly visible projects in Portland – the mega Goat Blocks mixed-use project – the firm is equally proud of its smaller projects.

The Hudson Building, three stories of offices in downtown Vancouver, for example, is the type of heavy-timber and structural brick building that hasn’t been built in the area in about a century.

“It’s not the shiniest building, or the tallest, but it’s got such truth,” Johnson said.

The firm also has a trio of projects in Bend, Tigard and Vancouver that focus on taking what Johnson describes as “old retail (buildings) that needed love” and turning them into active retail centers filled with small local restaurants and services.

Johnson attributes the success of the firm’s projects – big and small — to a dedicated team of talented people.

“Each one is an outstanding developer in their own right,” Johnson said. “It’s totally the team.”

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An 86-year-old office building on Southeast 11^th Avenue is being demolished to make way for a mixed-use building that will be part of Killian Pacific‘s LOCA superblock development. Crews with LOI Environmental & Demolition Services are dismantling the 24,600-square-foot building and recovering much of the building material.

Approximately 5000 square feet of 3×5 fir roof deck was removed, denailed, and bundled for reuse, as were a total of 167 4×14 fir joists and 13 old growth fir beams ranging in length from 25 to 50 feet. The building’s concrete and steel are being recycled, and general demolition debris will be sorted for recycling, as well. According to LOI president John Mayer, the project is estimated to achieve a 98% recovery and recycle rate.

Portions of three concrete walls will remain in place and will be utilized in the parking structure of the new building, which will be built by general contractor Andersen Construction. The future 4-story, 39-unit apartment building with 20,000 square feet of ground-floor retail space and two levels of underground parking was designed by Ankrom Moisan Architects.

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Before a once-vacant Southeast Portland lot served as pasture for a herd of goats and became the future site of a mixed-use superblock development, it was a pond.

In the late 1800s and early 1900s, water from the dammed-up Asylum Creek covered a large portion of the site, bounded by Southeast Belmont and Taylor streets and 10th and 11th avenues. The pond and creek were then buried in a series of fill projects intended to promote more development on the east side of the Willamette River.

Now the site is under water again. Andersen Construction crews excavating the 385-spot below-grade parking garage for Killian Pacific‘s LOCA project over the past month have exposed and are working in and around millions of gallons of groundwater formerly hidden beneath the former pasture.

“It’s a filled-in lake, so that’s a problem,” said Stuart Albright, geotechnical engineer for the project and principal with environmental engineering firm Apex. “Really we’re just undoing what they did after the turn of the previous century when the city filled it in.”

Planning around the large amount of groundwater has been one of the biggest project challenges, he said. Anticipating how the water would impact construction involved identifying which portions of the site were once covered in water by examining old land plat maps. Wells drilled on the site also helped paint a picture of the location and depth of groundwater.

“We basically knew there was a pond here before we even started working on the site,” Albright said. “We relied heavily on the existing information. All of that data factored into us making an informed decision for where we thought the water would be.”

He learned that the pond once covered the Goat Blocks‘ eastern side. It provided drinking water to a nearby mental hospital and the city of East Portland. That use was eventually abandoned after East Portland became part of Portland in the late 1800s and the cities combined drinking water systems.

“At the time it was filled, nobody was using it and people were dumping garbage into it,” Albright said. “It was probably not very pleasant, which is probably why it was filled in.”

Draining site not an option

Normally, a construction site where groundwater is exposed is drained first so that crews can work on a dry surface, but the city sewer system surrounding the Goat Blocks site wouldn’t be able to handle the large amount of water seeped up during excavation, said Chris Copeland, a senior project manager with Andersen Construction.

“The project was kind of conceived by Killian with the knowledge that there was no place close to dump the water to do this the standard way,” he said. “We didn’t have any choice except to get creative for how we were going to do this … We had to come up with a scenario to contain that water.”

Draining the whole site would also be expensive because the city of Portland charges a fee for dumping groundwater into its sewer system, Albright said.

“There was a time when we would drain all this water, but the city charges for it so everybody wants to figure out where the water is and get around it,” he said. “It changes how we deal with (ground)water in the city of Portland. Very few clients want to pay for draining.”

Underwater construction

The Goat Blocks project team has devised a way to work around and in all that water. As excavation of the parking garage continues, construction crews are containing the groundwater in pools, ranging from 15 to 18 feet deep, using a steel sheet piling system. The metal walls are typically used to retain either water or soil.

“We’re essentially building underwater,” Killian Pacific Vice President Noel Johnson said. “Once you build it, you pump the water out.”

Project subcontractor West Coast Contractors, a Coos Bay-based firm that specializes in bridges and marine facilities, has assisted with this underwater work. West Coast crews used a boat to traverse the groundwater and check the level of the terrain underneath using grade rods. This helped a long-range excavator operator digging the flooded parking garage space, Copeland said.

A lengthy concrete pour that started Monday is taking place with the water still in place using a type of concrete that cures in wet conditions. Crews will pump concrete using hoses under the water to form a 6-foot-deep plug that after curing in about a week should prevent more groundwater from seeping into the project site, Copeland said.

“It’s the same technology that you would use to pour a bridge pier in a river,” he said.

Once the concrete has set, crews will pump out the remaining water and the construction site should be essentially dry within the next couple of weeks, Copeland said. Crews have pumped out about 5 million gallons of water already, he said.

Although the project team was expecting a lot of groundwater to come up during the excavation process, Copeland said that in some cases it was deeper than anticipated.

“When you expose this water, the most interesting thing to me is it’s not all at the same level,” he said. “It’s very dynamic. It’s very fluid. (You have to) change your methodology as you go.”

A watertight parking garage

The LOCA below-grade parking garage is designed to sit just slightly above the typical groundwater level, Albright said. If the water were to rise above that level, it would flow into and be drained out of the garage, he said.

Johnson said Killian Pacific has owned the Goat Blocks site for a long time, and the Vancouver, Wash.-based developer learned of the underground pond about 10 years ago.

“We did a lot of testing and drilling test pits even when the goats were still there,” he said.

The amount of groundwater on the site didn’t come as a surprise because that’s typical for projects involving excavation in the surrounding Buckman neighborhood, Johnson said.

“That’s the reason there aren’t a ton of basements in that whole area of town,” he said.

But building below ground level was necessary for the superblock development, which will include 247 apartments and grocer Market of Choice and Orchard Supply Hardware as anchor retail tenants, he said. The development is expected to be finished by early 2017.

“The entire foundation is built like a ship, where it keeps the water out,” Johnson said. “We spent a lot of good engineering money figuring out how to build it given the amount of water.”

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A Central Eastside mixed-use project 10 years in the making is getting closer to development.

Foresight Development has applied to the Portland Bureau of Development Services for a land use review of the property at 915 S.E. Belmont St. The firm has plans to develop a $23 million, six-story, 120-unit building with more than 6,000 square feet of ground-floor retail space.

Foresight in 2005 purchased the 45,000-square-foot Grand Central Building, located between Southeast Belmont and Morrison streets. At the same time the firm acquired a surface parking lot located just across Ninth Avenue.

Foresight principal John Plew at that time announced plans to build condominiums on the vacant lot after renovating the Grand Central Building, but the recession curbed those plans.

In 2013, when Killian Pacific began moving forward on its Goat Blocks superblock development nearby, Foresight principal John Plew announced that his company would forgo condos in favor of apartments.

The firm hired Ankrom Moisan Architects to design the space, which will feature a mix of studios, one-bedroom units and two-bedroom units. Plans for the ground floor show four retail spaces, 35 vehicle parking spaces and four Zipcar parking spots.

A call to Foresight Development’s Susan Thompson was not returned by press time.

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The Portland City Council on Wednesday heard testimony from Central Eastside Industrial Council members and tentatively denied their appeal of the Portland Design Commission‘s conditional approval of the “goat blocks” mixed-use development planned in Southeast Portland.

Debbie Kitchin, president of the CEIC, in September filed an appeal of the design commission’s decision in August to conditionally approve plans for more than 111,000 square feet of retail space, 247 apartments and 339 parking spaces on the superblock at 1004-1036 S.E. Belmont St. CEIC members are concerned that adding apartments and businesses on the vacant lot would adversely affect industrial activities within the adjacent industrial sanctuary.

At a CEIC event Wednesday evening, Kitchin explained that current development plans call for narrowing Southeast Taylor Street and 10th Avenue. She said that narrowing those streets could affect businesses, such as Gatto & Sons Fruit, that rely on freight traffic to conduct business.

“It’s important to maintain the viability of the industries that are here, and we’re concerned how narrowing the streets would affect freight movement,” she said.

The appeal requests the city engineer to resolve right-of-way issues to the satisfaction of all abutting property owners on the affected street. It also asks the design commission to make specific findings about how the addition of apartments fits with the city’s Comprehensive Plan goal stating “residential uses are allowed but should be compatible with the surrounding industrial development.”

Noel Johnson, vice president of Killian Pacific, the Vancouver, Wash.-based developer of the project, said it wouldn’t narrow the right-of-way for cars and trucks and that he thinks the CEIC’s appeal was based on a “confusion of facts” regarding street width.

“I think they thought there was an atypical variance in street width,” he said. “The codes have a ‘standard’ width that all streets must meet, and a ‘preferred’ width. The end result will have the streets in excess of the preferred level.”

Portland code requires streets to be at least 11 feet wide, according to Peter Finley Fry, vice chairman of the CEIC’s Land Use and Development Committee. He said the preferred width is 12 feet. He said the CEIC chose to appeal the design commission’s approval to bring to the city’s attention that business owners don’t believe the 12-foot width is enough for freight traffic; they would prefer it be 14 feet.

“Even though our appeal was denied, the council instructed the city engineer to go out and talk to businesses one on one to find out what they need,” he said.

Fry said his group sought to raise the underlying issue that current standards are inadequate.

“Freight mobility is hugely important to us and to this project,” he said. “We explained, but that seemed to not be able to be heard by everyone.”

The Portland City Council is set to prepare its findings and on Oct. 22 issue a final ruling denying the CEIC’s appeal and upholding the design commission’s decision.

Johnson said construction will begin next month and require 21 months to complete.

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When the city of Portland’s Bureau of Development Services received approval – and funding – in March to hire 18 new employees, Land Use Division Manager Rebecca Esau knew it would not come in time to stave off the department’s summer rush.

Eleven of the approved positions are at various stages of the hiring process. The remaining seven have been filled, but Esau estimates training those new employees will take between six months and one year.

Meanwhile, Portland has experienced a boom of development and construction projects, the result of a recovering economy. The number of customers the bureau deals with, for example, has increased by 9 percent during the first six months of each of the past two years.

“We are overwhelmed,” Esau said. “Things have bounced back and bounced back quickly. We are hiring people and trying to get them up to speed.”

The bureau has been using aggressive training for the newly hired employees, moving them quickly into job shadowing and mentoring programs. They also are working directly with the public in the department’s plan center. But even for new hires with experience in planning and permitting, the learning curve can be steep.

Gina Tynan, who was the department’s first hire in April, is a 17-year planning veteran who left a senior position in Memphis, Tennessee to join the BDS staff.

The biggest challenge for Tynan has been getting to know the city’s zoning code, which weighs 13 pounds and is approximately 1,000 pages thick, or about three times the size of codes in communities where she’s worked in previous jobs.

“Luckily, if you don’t know something, you can look it up,” Tynan said about Portland’s zoning code. “It’s pretty large.”

At BDS, she’s training almost daily on TRACS, which is the city’s permitting database. She’s been learning GIS mapping software, how to use Portland Maps and how to process planning applications. She’s also benefited from having two assigned mentors, experienced BDS staffers she’s been able to turn to on a daily basis.

Complicated codes

��The length of time it takes to get new employees up to speed at BDS depends on their levels of experience and their familiarity with Oregon’s land use laws and Portland’s municipal codes, Esau said.

“It’s a very complicated code we’re dealing with,” she said. “There are base zones, overlay zones and plan districts which have specific regulations to those parts of town. You have to figure out how those interrelate to each other and how to measure different things, like a house shown on a building plan.”

The new hires at BDS bring a range of experience, from entry level to senior planners. Tynan, for example, is a level 2, mid-level planner and can handle a range of more complex planning documents.

“She’s a gem,” Esau said. “Because she’s so sharp and knows how to read plans for the most part, she’s a star. She’s ahead of the curve.”

Learning to wait

��Until its new employees are all on board and trained, the department is trying to ease its backlog by paying experienced staffers overtime for longer days and weekends, Esau said. Many senior planners, meanwhile, also are being tasked with the implementation of the city’s new ITAP system, which will create a more integrated planning and permitting system by 2015. Once that system arrives and new employees are up to speed, the system should be faster and more efficient, Esau said.

Developers and builders who have projects moving through the development process, meanwhile, say they’re learning to expect a wait.

Noel Johnson, a developer with Vancouver, Wash.-based Killian Pacific, said the city planner on Killian’s Goat Blocks project worked three weekends in a row, “writing staff reports and making things happen.”

“I can’t blame him,” Johnson said. “It’s taken us forever to get through the process, but I have a ton of sympathy. It’s been very, very difficult.”

Johnson generally gives city staff credit for putting in the extra hours. But he thinks more front-end investment should have been made last year to hire additional staff as the economy improved.

“The city is fortunate to have people psyched to want to work here,” Johnson said. “The city has the best built environment in the country. It just takes time to do it.”

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When Dallas-based Trinsic Residential Group set its sights on Portland, it had hoped to replicate a 159-unit apartment project it was developing on the far side of Puget Sound. That $41 million development, now under construction, will have underground parking, high-end amenities and 20 percent affordable units. The Portland project will have those components too – except the affordable housing.

That’s because unlike a popular program in Seattle that rewards developers who include affordable housing in their market-rate projects with tax exemptions, a similar program in Portland effectively penalizes them, said Allison Finn, a development associate at Trinsic Residential. Portland city leaders are searching for new incentives to encourage inclusion of affordable housing in developments, but industry professionals say the first step should be to fix the disconnect between the existing tax exemption program and the free market.

“It’s too bad that the Portland program is what it is today just because there is a big multifamily housing boom going on and there are a lot of neat, cool, urban infill projects going on that could potentially have an affordable component,” Finn said. “But I just don’t see that same participation in Portland that I do here in Seattle … I hope they can craft or morph the program into something that’s more attractive to developers, and hopefully encourages more affordable housing in Portland in the close-in neighborhoods.”

Compare and contrast

Seattle implemented its Multifamily Tax Exemption (MFTE) program in 1998. It has since contributed to development of 148 projects featuring 4,477 affordable units in 33 targeted neighborhoods. Seventy-two of those projects are complete; 76 are in the pipeline.

In exchange for rent-restricting 20 percent of their units, developers in the MFTE program are excused from paying property taxes on the value of residential improvements for 12 years. Last year was the MFTE program’s busiest to date, as staffers enrolled approximately 40 multifamily projects.

By comparison, the Portland Housing Bureau approved just three: a 61-unit affordable apartment project in Gateway; a 142-unit project with 123 affordable units in the Pearl District; and a 196-unit project with 39 affordable units in downtown.

That’s largely because Seattle’s program has no financial limit on the amount of foregone revenue it can grant developers, while Portland’s Multiple-Unit Limited Tax Exemption (MULTE) program has an annual cap of $1 million. But that’s not the cap that bothers Finn.

“Basically, if you went over their performance cap then they could essentially come back and require a claw-back of taxes or require you to designate more affordable units,”

Finn said. “We didn’t understand that. From our perspective it seemed we were getting punished in a way for having the affordable component … that was a big red flag for us.”

Finn has other qualms. Not only does the MULTE program not allow developers to opt out of the program (MFTE does), she said it also requires the PHB’s approval prior to changes in ownership (MFTE doesn’t). That adds significant risk to a property from an investment standpoint.

Those performance constraints have pushed away other developers too. Killian Pacific considered seeking MULTE aid for its 240-unit, mixed-use Goat Blocks project, but Noel Johnson, the company’s vice president, said it didn’t make sense.

“We looked into it and we can’t figure out how it would be worth it,” he said. “The program is supposed to be a carrot to induce developers to actually want to do it, but we couldn’t figure out how it would ever actually make sense … It’s more risk than it is reward; more headache than help.”

Johnson thinks that’s unfortunate because thousands of units are under construction throughout Portland, and thousands more are on the way.

“If Portland’s program was substantially similar to Seattle’s,” he said, “I think you’d get a significant amount of affordable housing being delivered by the free market.”

Look again

In 2012, following a policy review by the “Big Look” committee of regional stakeholders, the PHB ratcheted up its requirements for tax exemptions.

In addition to setting the $1 million cap on annual foregone revenue, the committee made the application process competitive. Suddenly things like minority participation and green building techniques were being weighed on the same scale as affordability. The idea was to get more bang for the city’s limited bucks.

Jill Sherman, a vice president at Gerding Edlen, was on that committee and said those requirements were put into place as a compromise to keep the MULTE program from disappearing entirely. She said that following the recession, county governments and school districts – though supportive of affordable housing goals – were reluctant to give up any more of their dwindling resources.

“They’d been through so much pain in terms of cutting really critical programs, so the idea of losing any additional revenue (was hard),” Sherman said. “The cap was a compromise so they could feel comfortable supporting the program at all.”

Gerding Edlen has used Seattle’s MFTE program numerous times, and Sherman thinks a similar one in Portland would be beneficial. But she would rather have a hobbled program than none at all.

“In an ideal world it would be like the Seattle program, but on the other hand if there isn’t the sort of political will because of other funding challenges …” Sherman said, trailing off.

Finn finds Portland’s current process overly ambiguous and subjective, and up until recently she couldn’t apply for a building permit while she waited for the results. The reason harked back to language in the original state statute that essentially said: but for the tax exemptions a building would not get built.

Andrea Matthiessen, neighborhood housing program manager for the PHB, said the bureau has begun to rethink some of those positions.

“The way we look at it now is: the affordability in that property wouldn’t happen ‘but for’ the property tax exemption,” she said. “… There are some other general changes that we are looking at, and they’re all grounded in how to make the tax exemption program more appealing to developers while simultaneously ensuring that the city is getting an acceptable return on our investment in foregone revenue, because it’s not just our foregone revenue. It’s foregone revenue we share with the school districts and the county.”

Portland City Council recently removed the building permit requirement from its application process, and Matthiessen said the PHB is considering eliminating others as well – such as the market-rate performance cap. That stems back to another broken line of thought that theorizes: but for the tax exemption, the development would not be profitable.

Finn thinks those changes could have a huge impact on Portland’s housing landscape.

“In Seattle it’s very common – all big multifamily developers know the MFTE program very well and most of them are using it,” she said. “… I think developers are very excited and happy to be a part of the (Seattle) program because it does work with our business model, and also provides a public benefit … It’s easier and more cost-effective to have private developers provide multifamily, affordable, close-in housing when they’re already building these big, beautiful projects. So it just makes sense that there’s a public-private partnership that takes advantage of that growth.”

The post Developers not biting city’s lure appeared first on Daily Journal of Commerce.

With signed lease agreements with a grocer and a hardware retailer in hand, the team planning to develop the Goat Blocks in Southeast Portland is eager to gain approval from the Portland Design Commission.

But that won’t come until at least next month, after several issues were brought up Thursday during a roughly six-hour hearing before the commission. Approximately nine months have passed since developer Killian Pacific filed its request for a pre-application conference with the city.

“The bottom line is we need an approval,” said Tom Moisan, president of Ankrom Moisan Architects. “We need to keep this moving.”

Killian Pacific is planning to add 87,000 square feet of retail space and 247 apartment units on a three-block area. The seven-building development would include a grocery store and a hardware store, and several smaller retail spaces, Killian Pacific Managing Director Noel Johnson said.

“We’re pretty adamant this is not the next Pearl District,” he said. “It works hard to diversify and complement an already rich built environment.”

At the heart of the discussion Thursday was the use of public space and how the building would interface with the neighborhood at street level. The property, previously used as pastureland by a herd of goats, could mark the east-to-west transition from the leafy Buckman neighborhood to the grittier Central Eastside.

That transition presents a design challenge because the property slopes 24 feet from the northeastern corner at Belmont Street and 12th Avenue to the southwestern corner at Taylor Street and 10th Avenue.

Killian Pacific and Portland-based Ankrom Moisan Architects, the project architect, have proposed building an alley through the property from Yamhill Street. The alley would essentially cut the property in half and take advantage of the slope with a set of stairs rather than a flat surface.

One commissioner, David Keltner, said he would not vote for design approval unless the developers were to build Yamhill into a continuous street that would encourage more pedestrian and bicyclist traffic through the development. Otherwise, the steps would create a “weird dead end,” he said.

“The kinds of spaces they are making are creative and inventive, but you’ve got to be sure that you’re doing everything else to make sure that they actually work,” he said.

The Yamhill steps would provide some dramatic views of the city’s skyline and also provide more room underneath for the hardware store, Johnson said.

“We simply disagree that it’s better to slope smoothly,” he said. “We think it’s better to basically hold it level and then go down stairs. It creates an iconic viewpoint of downtown.”

Commissioners who reviewed the project wanted to know how the Yamhill alley and another smaller pedestrian walkway would contribute to public space, which is a requirement for superblock projects.

“My point of view is that there is a lot of corridor circulation, but there is no place to get off the path and be in public space,” Commissioner Jane Hansen said.

Commissioners also repeated concerns issued in February about a lack of coherency in some of the planned materials and complexity of forms.

“The biggest issue is that so little changed in response to our original comments,” said Keltner, a principal architect at THA Architecture.

Buckman resident Kenneth Diener, owner of KJD Architecture in Portland, wondered whether a second-floor restaurant space could be set back farther from the street and an internal corridor could be moved to the perimeter.

“That would allow the grocery to expand upward, and it would activate the walkway on the west side,” said Diener, who submitted 25 pages of testimony stating concerns about the project. “There is no reason that can’t work.”

Making suggested changes, including leveling the Yamhill alley extension and setting back second-floor retail space, could lessen the appeal of prospective tenants, said Jeff Mitchem, an Ankrom Moisan urban designer.

“The moment you do one of those things, you lose the second-floor viability and views to the west of the city,” he said.

Killian Pacific will return with suggested changes at a July 17 hearing. Its goal is to start construction in August, Johnson said.

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Killian Pacific is adding another Central Eastside block to its portfolio, but without specific redevelopment plans yet.

The Vancouver, Wash.-based development company is under contract to purchase the lot owned and occupied by Speed’s Towing at 125 S.E. Clay St. The full block – in operation for now – is due west of the former Rexel/Taylor Electric Supply warehouse, which Killian acquired in 2012 with plans for a new five-story creative office development.

Killian Pacific Vice President Noel Johnson said the company’s strategy for the Speed’s Towing site may not be clear, but its advantages are evident.

“The green street improvements, the bike boulevard … you’ve got the bus, the light rail and the streetcar all right there with (Oregon Museum of Science and Industry) and (Portland Community College) being good, reliable, stable institutions that are really meaningful to the city,” he said. “It just seemed like a great place, and it just seemed like a logical extension of our commitment to the Central Eastside, and helping it grow.”

Killian Pacific also is redeveloping a former PGE industrial building nearby into the new offices of Viewpoint Construction Software. Johnson said the Speed’s Towing site could provide a logical avenue for future expansions by that firm or others in the area; however, he’s also talking with a food-based wholesaler interested in the site.

As the Central Eastside experiences a wave of change in the way of pedestrian-oriented development, Johnson said he wants to remain true to the neighborhood’s industrial roots.

“We’re trying to find ways to continue to be partners for those businesses and not just be a developer that’s doing breweries and mixed-use stuff,” he said. “There are plenty of people doing that out there. We want to make sure we’re staying true to the eastside’s core.”

About eight blocks east and five blocks north of the Speed’s Towing property, Killian Pacific has significant mixed-use development plans for the Goat Blocks, which the company is now referring to as the “Loca” (as in locavore) development. The project is going back before the Portland Design Commission on June 12, and Johnson said the project has garnered the support of the Buckman Neighborhood Association as well as the Central Eastside Industrial Council – groups that tend to have competing interests. Killian Pacific now controls more than seven blocks worth of the Central Eastside.

At the Rexel/Taylor Electric site, Johnson said Killian Pacific is close to securing anchor tenants and expects to have project news to report soon. Interest in that pending development, he said, has been strong.

“Once a week we’re responding to inquiries and every week we’re meeting with some group that’s interested in that site,” he said.

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