The Portland Historic Landmarks Commission on Monday got its first look at the proposal for a seven-to-eight-story affordable housing development. Flatworks, at 240 S.E. Grand Ave., would have approximately 143 rent-restricted units. The site is in the East Portland/Grand Avenue Historic District.

The project is valued at $25 million, according to Portland Permitting & Development.

TVA Architects‘ design calls for eight-story dark massing clad in masonry on the north third of the block and seven-story light massing clad in high-quality fiber-cement panels on the remaining two-thirds of the block, according to the project’s narrative.

Sturgeon Development Partners is developing the project. The team also includes civil engineer Langan of Clackamas, structural engineer KPFF, landscape architect Shapiro Didway, MEP engineer Interface Engineering, and general contractor LMC Construction.

During a type III historic resource review hearing in 2020, the Historic Landmarks Commission had approved for the site a similar proposal with office space. But that proposal did not advance, and the developer shifted to affordable housing. The plug was pulled because of a lack of demand for office space, said John Jamiel, a TVA Architects senior associate.

The project team expects to seek a permit for the new proposal by April 2026.

At the ground level facing Southeast Grand Avenue, programming would include a lobby, offices, community rooms, a gym and bike parking. Eight parking stalls would be provided inside a ground-level garage with access at mid-block on Pine Street. Ground-floor glazing and active programming would generally be oriented toward Grand Avenue and on the corners, with building services at mid-block facing Ash and Pine streets.

The design team wants to offer some kind of roof deck for residents – on level 8 – and is looking into the cost of such an amenity.

Exterior cladding materials would include brick, composite metal panels, fiber-cement paneling and ribbed metal paneling. There would be five levels of wood framing over three levels of concrete.

The proposed fiber-cement material appeared to be of decent quality, commission Chair Andrew Smith said. Previously, for the office building proposal, only a couple of materials would’ve been used, he added.

“I would encourage the design team, as you move this forward, to take a hard look at that and try to simplify (the material palette),” Smith said.

Commissioner Hugo Hamblin-Agosto suggested the design team look for softer colors for the exterior instead of the dark brick so the building would blend more with the district. Pam Saftler, a TVA Architects principal, said alternatives would be a red or brown brick.

“I don’t find the dark nature of the material that has been chosen to be objectionable at all,” Smith said. “I’ve seen a couple of other buildings of this scale using that type and tone of brick and I’ve seen them be very successful.”

One of the potential modifications is related to required building lines. The space between the building and the street lot line must be designed as an extension of the sidewalks and committed to active uses such as sidewalk cafes, vendor’s stands or developed as “stopping places,” the city’s staff report states. The proposal includes raised planter beds along most of the street frontages between the building setback and the lot lines instead of treating this area as an active space. The commissioners suggested removing the planters to allow for a communal space for residents.

Another potential modification is to the requirement of an eco-roof. Currently, one is planned on level 2.

“We’re looking at providing solar panels in lieu of providing an eco-roof,” Jamiel said, adding that stormwater would have to be managed in a different way.

Commissioners expressed support for eliminating the eco-roof as long as there would be stormwater mitigation. Smith suggested the team seek an equivalent that would provide benefits like those of an eco-roof.

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Sturgeon Development Partners is reshaping Oregon’s real estate landscape with a focus on innovative, sustainable spaces that foster vibrant communities. With a diverse portfolio spanning mixed-use, residential, and commercial developments, the company has built a reputation for transforming underutilized properties into community-centered spaces.

A prime example of this is the redevelopment of the Premier Gear and Machine Works Building in Portland’s Slabtown district. Acquired in 2017, the 68,646-square-foot industrial site was converted into Class A office space, enhancing the area’s commercial appeal. Sturgeon also demonstrates its commitment to sustainability through the Flatworks Building, one of the tallest cross-laminated timber structures in the western United States.

This eight-story, 130,000-square-foot office building on Southeast Grand Avenue incorporates energy-efficient features and green building practices, reflecting the company’s focus on long-term value.

Sturgeon’s approach goes beyond development, emphasizing community engagement. The company proposed transforming the Premier Gear Building into a mental health crisis center with housing, underscoring its dedication to addressing local challenges. Sturgeon’s inclusive approach ensures that each project reflects the needs of residents, making it a leading force in creating positive change.

Through thoughtful development and sustainable practices, Sturgeon Development Partners is making a lasting impact on neighborhoods and communities across Oregon.

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Urban Development + Partners is moving forward with plans for a three-building mixed-use development that would anchor the north end of downtown Lake Oswego.

The Lake Oswego Redevelopment Agency‘s board last month voted to authorize negotiations with UD+P for a memorandum of understanding and a disposition and development agreement for the project, which is expected to cost more than $60 million.

The Portland developer plans to construct three buildings on a 1.07-acre site that was cobbled together by the city of Lake Oswego to bring new development. The city spent $6.8 million to assemble the parcels, which are for now mostly covered by surface parking lots.

A 51-room boutique hotel would occupy the westernmost parcel at B Avenue and First Street, and come from the same people behind the Atticus Hotel – a luxurious wine-country retreat in McMinnville. The Lake Oswego hotel is likely to be part of the Atticus brand, said Sarah Zahn, UD+P’s development director.

Architect Nathan Cooprider designed the McMinnville hotel and is on board to design its Lake Oswego counterpart. Plans call for a four-story, 45,000-square-foot building, Zahn said.

The middle parcel would have a four-story, 45-unit apartment building.

The third parcel would have 30,000 square feet of office space. It would rise as three main floors, with a small fourth floor opening onto a rooftop deck.

“At UD+P, our major focus is really urban infill – walkable, community-based development – and we feel like this location in downtown Lake Oswego is a good opportunity to continue that focus,” Zahn said.

Hacker is designing the office and residential structures. DCI Engineers is also working on the project.

UD+P has not selected a general contractor. The developer will invite handpicked contractors to participate in a selection process, Zahn said.

For the city of Lake Oswego, the plan would fulfill a long-held goal to anchor the north side of downtown and to complement The Windward and other new developments to the south. Lake Oswego officials refer to the UD+P project as North Anchor.

“We’re really looking at something to energize a compact shopping district,” said Sidaro Sin, redevelopment manager for the city.

Four-story buildings are appropriate for the existing scale of downtown, Sin said.

“The key thing here is kind of a balance between a development that works and also fits within the character of Lake Oswego,” he said.

Zahn expressed hope that the boutique hotel would work in concert with – a new four-story, mixed-use building from the Haladay family’s 10 Branch development company that includes a 10,000-square-foot event center and wedding venue.

“We feel like there’s demand in Lake Oswego for all of these uses,” she said.

UD+P is Lake Oswego’s latest business partner for North Anchor. A previous request for proposals led to the city selecting Sturgeon Development Partners; however, the firm withdrew from the project last year. Sturgeon Development Partners had planned a somewhat different project, with a larger, 132-room hotel, but no multifamily or office space.

“They weren’t able to secure all the financing that they needed at the time,” Sin said. “It was amicable.”

Vanessa Sturgeon, a principal and founder of Sturgeon Development Partners, said local politics in Lake Oswego, including demands by one city councilor for affordable housing, sank the project.

“It ended up spooking our investors,” she said. “The Lake Oswego political environment is what killed the deal.”

Lake Oswego then launched a second request for proposals in late 2019 that led to the connection with UD+P.

UD+P is confident it will be able to complete the project despite the economic upheaval wrought by the coronavirus pandemic, Zahn said.

“We have our own investment fund that we bring to bear on projects, so our horizon is a long-term horizon,” she said. “This gives us some more flexibility.”

UD+P is not obligated to buy the land right away, Zahn said.

“We can work with the city,” she said.

The city and developer are on track to execute a memorandum of understanding in June, and a disposition and development agreement in September, Zahn said.

“We would start construction next summer,” she said. “So hopefully, from a timing perspective, we’ll be at a good time for starting a project and financing a project.”

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A 97-year-old single-story warehouse slightly north of Portland’s Pearl District has received several renovations over the years. The latest one might be the most extensive.

The Premier Gear & Machine Works building, on nearly a full block bounded by Northwest 17th and 18th avenues and Savier and Thurman streets, is being gutted and transformed into creative office space. Sturgeon Development Partners is the developer. The project team includes LRS Architects, Lorentz Bruun Construction and Catena Consulting Engineers.

“Overall it’s an addition, square foot wise because we’re adding a second level,” Lorentz Bruun Construction project engineer Mark Drahota said. “Right now it’s about 40,000 square feet, and with the second level we’re going to add roughly 15-20,000 more square feet, so it will be roughly 60,000 square feet when it’s all said and done.”

The adaptive reuse project includes a substantial seismic upgrade. Steel, buckling-restrained brace frames and shear walls were installed to connect the roof to the rest of the building.

The outside of the building is not going to experience wholesale change. That’s reserved for the interior, where crews are adding a mezzanine level, new entrances, new windows for the south side of the building and a large covered outdoor terrace.

The new design incorporates the building’s original features and pays tribute to the legacy throughout the additional space, which is being constructed with heavy timber – mainly glulam beams and columns and Douglas fir car decking flooring on the mezzanine level.

An elevated sky-bridge will connect the north and south halves of the mezzanine level, while an outdoor patio for tenant use will be notched into the building on the south side.

Construction crews are continuing to encounter remnants of previous building expansions, Drahota said.

“As we’ve dug into the building we’ve found different issues, old-school stuff,” he said. “That’s definitely been the biggest challenge.”

Different construction types were used for each project, leading to some unique discoveries last summer during the demolition and abatement phase.

“There was asbestos abatement and little bit of lead abatement, but not very much,” Drahota said. “It was mostly just warehouse space, but there was some existing office space that had some stuff we had to do. But it definitely had to be taken care of. It was a lot of work to remove all the existing beams and clear the space.”

The building’s south side featured newer concrete tilt panels, but the older north side was mostly board-formed with a heavy timber interior. The latter featured some hefty 14-inch-by-30-inch solid Douglas fir beams carved from old growth that is long since gone.

“It’s a menagerie of styles,” Lorentz Bruun project superintendent Bruce Fabian said.

Approximately 150 window openings had to be cut into the existing concrete exterior walls as part of demolition, according to Fabian.

“At one we had four saws running at one time just to make schedule,” he said.

Then there are vintage overhead gantry cranes, including at least three that formerly graced the warehouse. One will remain on its rails as a reminder of earlier times.

“A lot of the crane rails were supported by timbers, as well, and we actually left some of those existing crane rails up,” Drahota said.

But now, carpenters with Framing Force of Molalla are installing the last of the car decking flooring and glulam beams, while mechanical, electrical and plumbing subcontractors prep for rough-in work. Crews with Nuwave Concrete of Forest Grove are also on site finishing the massive new floor slab.

Other members of the project team include: Humber Design Group, which performed civil engineering; MFIA Inc., which carried out MEP design and engineering; and Shapiro Didway Landscape Architecture.

Project completion is scheduled for June 2020, although the COVID-19 pandemic could lead to that date changing.

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A proposal for an eight-story, 134,000-square-foot office building in the East Portland Grand Avenue Historic District drew criticism from the Historic Landmarks Commission on Monday for overall excessive size and scale.

The structure would be built on a half-block parcel fronting Southeast Grand Avenue between Ash and Pine streets. But with many of the surrounding buildings in the historic district rising only three or four stories, commissioners expressed concern at a design advice hearing that the new building would simply overwhelm everything around it.

“My understanding of this district is certainly some degree of differentiation is OK,” Historic Landmarks Commission Chairwoman Kristen Minor said. “But right now this scheme is too much; it feels like too much mass. And when you look at all the examples, the buildings that are contributing to the district are generally one to four stories.”

TVA Architects is designing the project for Sturgeon Development Partners. As submitted, the building would feature glulam columns and beams and cross-laminated timber panels on the interior. Precast concrete panels would clad the exterior in a similar manner as the Weatherly Building and other contributing historic buildings in the district.

Bob Thompson, a principal with TVA Architects, told commissioners that when it comes to context, the most important thing to consider is what will happen in the district in years ahead.

“You’re going to see development in this area over the next 15 years like you’ve never seen before,” he said. “We’re looking at it beyond what it is today. If we can work within the framework we’re talking about, I think you’ll be happy with how we incorporate this constructive feedback we’ve gotten today.”

On top of the building’s massing and scale, however, concerns also were raised about the so-called wedding cake architectural style that calls for a distinct base, midsection and top. While this is a common way buildings in this district are delineated, commissioners noted that the proposal for the new building could go further.

“I do think the idea of having a two-story base has been done in this building,” Minor said. “The Weatherly (Building) has a really explicit two-story base to it and the thing that building does is that there is a very clear distinction between the pattern of openings and the entire fenestration pattern at the base at the Weatherly.”

Commissioners expressed strong support for the use of CLT and exposed glulam beams and columns, as well as a generally open feel with large window openings to provide transparency and show off the natural wood finishes.

But that same aesthetic interest also contrasts with the historic aspects of the surrounding buildings and the district as a whole.

“I don’t mind concrete as a material, and look at the Weatherly Building – it is one that has painted concrete,” Minor said. “But there are so many fine details that really add to that building that need to be brought into this building. I’m with you, Commissioner (Maya) Foty, in that I do want to see the CLT construction here; I think it’s inherently beautiful. But also I think it’s going to be tough to have a building that has this degree of openness all the way up. It makes it hard to fit in.”

The project proposal is expected to change before it is submitted for design review.

“I think most commissioners might be amenable to seeing this building at this scale,” Minor said. “But I just think that the response to how this building must shift must change volumetrically.”

Foty agreed.

“It would be easier if it was a little shorter to blend in,” she said. “For me, personally, I really need conviction that it will fit in this neighborhood. But I’d be willing to review it at the same height.”

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Another project featuring cross-laminated timber will soon go before the Portland Bureau of Development Services for evaluation.

A pre-application conference for an eight-story, 144,000-square-foot mixed-use building in the East Portland Grand Avenue Historic District is scheduled for Jan. 9. Applicants from TVA Architects will outline plans for the project, which is being developed in an opportunity zone by Sturgeon Development Partners.

The property, at 236 S.E. Grand Ave., is half of a block bordered by Southeast Grand and Sixth avenues and Southeast Ash and Pine streets.

“It’s a really well-located site and a neighborhood that’s transitional,” said TMT Development CEO Vanessa Sturgeon, whose firm purchased the parcel in September for $3.55 million. “The property is currently underutilized, so we’re looking forward to being part of the neighborhood transformation.”

“It’s going to be an office building with retail on the ground floor,” Sturgeon said. “The retail is necessary to serve the office tenants. The tenants really like to have places to eat and services that are walkable, so this is contributing to all that.”

TVA Architects principal Robert Thompson is the project’s design architect.

“We’re going to be going after the creative workforce market,” he said. “So, the building is going to be a combination of exposed concrete structural framework vertically in terms of the core and perimeter columns, and all interior floors will be glulam beams and cross-laminated-timber floor panels; it will be beautiful.”

The project’s location will require review by the Historic Landmarks Commission.

“The building will honor and respect the character and the massing – the overall look and feel – of the historic buildings that make up the Grand Avenue Historic District,” Thompson said. “But at the same time we’re putting forward a more contemporary, modern interpretation of that look.”

Two exterior cladding options are being considered: brick masonry and an architectural precast concrete skin. Thompson said the design team like the idea of using fiber-cement panels as an accent.

“We’re evaluating the options,” he said. “But we’re leaning heavily toward the precast option, which is in concert with a lot of buildings not only in the Grand Avenue district but also the inner southeast industrial district.”

Generous amounts of glazing will further serve two purposes.

“We’re looking at a lot of large windows to express the retail to the public and the timber structure of the building, so it will be perceived as a very warm, progressive workplace,” Thompson said. “Our plan is to get under construction within this calendar year – in the fall of 2020 – and be under way with the project.”

Sturgeon said the use of cross-laminated timber is more than just a passing fad.

“Part of it is the sustainability,” she said. “And frankly, we just really like the look of the product – it’s beautiful. In Oregon we’re on the cutting edge of sustainability, so we’re looking to push the envelope and go eight stories instead of six through some new developments in the technology.”

Building industry fears about shortages of cross-laminated timber panels are not influencing this project, Thompson said.

“It’s not an ongoing concern,” he said. “But it’s what’s current, it’s what people like right now, and it creates a unique, warm, inviting environment to work in. Timber is one of our great resources, and Portland is leading this industry at a national level.”

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Earlier this month, on a temporary stage set up on the Block 216 parking lot for a ground-breaking ceremony, an investment manager pitched to an audience of potential investors and VIPs an opportunity zone fund for the 35-story tower in downtown Portland.

Lenders and investment managers from San Francisco and Philadelphia discussed the $600 million project, the scale of which had attracted national capital. Mayor Ted Wheeler heaped praise upon the project. Meanwhile, a sleek, black Bentley sat parked where only days earlier an Iraqi food cart had been selling $8 shawarma.

An 844,117-square-foot tower with a Ritz-Carlton hotel and condos may not be the type of urban renewal foreseen by advocates of opportunity zone tax breaks, but it’s the type of project attracting investment.

It’s unclear how much of a role the Block 216 opportunity zone fund is playing in the project. Mosaic Real Estate Investors previously announced a $460 million, four-year construction loan. Terms of Ritz-Carlton’s deal have not been disclosed.

Tracey Nguyen, a partner at Baker Tilly Capital in Philadelphia, is managing the Block 216 opportunity zone fund. She referred requests for comment to Pat Walsh, a spokesman for developer Walt Bowen’s BPM Real Estate Group. Walsh declined to comment on the project’s financing.

Nationally, it’s difficult to assess how opportunity zone funds are functioning, who is using them, which zones are attracting registered funds or how much money they’re raising.

Opportunity zone funds are not subject to public disclosure, and there appears to be no comprehensive list or database of registered funds.

Opportunity zone funds stem from a federal tax law enacted in December 2017. The funds provide tax benefits for long-term asset holders. After 10 years, investors don’t have to pay any tax on capital gains realized for a property.

It was pitched as a boon for places passed over by the long economic expansion. Opportunity zones are “designed to spur economic development and job creation in distressed communities,” according to the Treasury Department.

Portland’s opportunity zones drew national interest because they cover much of the city’s most desirable real estate, including portions of downtown, the Pearl District and the inner Central Eastside. Yet, so far, opportunity zone activity appears to be modest.

“It hasn’t been a tsunami of opportunity zone funds, but I continue to see activity there,” said Dan Eller, a tax attorney with Schwabe, Williamson and Wyatt.

Eller said timing has been a deterrent for some clients who had considered opportunity zone funds.

“Some people had transactions that were ongoing that happened to be in opportunity zones, and looked into doing an opportunity zone fund, but just the timing of connecting investors with their project didn’t work, and so the fund didn’t take off,” he said.

Sturgeon Development Partners has raised $8 million for its opportunity zone fund; the firm’s goal is $330 million. The fund is backing construction of a 126-room hotel in downtown Salem. Demolition began at the site on July 15.

“Interest has been very steady,” co-founder Vanessa Sturgeon said.

More Sturgeon Development Partners fund projects lie in the future, she added.

“We expect to leave the fund open for the next four years or so, and continue to take investments on a rolling basis,” she said.

Sturgeon is eyeing Portland’s Central Eastside Industrial District for a second project: a seven-story office building to be constructed with cross-laminated timber. She declined to reveal the property’s precise location.

The Sturgeon Development Partners opportunity zone fund is one of a handful backing local projects. The Goodman family’s Downtown Development Group is working to form single-asset funds for both the Eleven West mixed-use tower at Southwest 11th Avenue and Washington Street, and the PAE Living Building at Southwest Second Avenue and Pine Street, co-President Greg Goodman said.

The Eleven West project will involve an opportunity zone fund in a 50-50 arrangement with a partner, said Goodman, who declined to identify the other investor. Construction of the project, which won Design Commission approval in December 2017, has not begun yet.

Eleven West vested before inclusionary housing rules required developers to provide below-market-rate multifamily units. The project wouldn’t be financially possible today, Goodman said.

“There hasn’t been a new high-rise in downtown Portland in 28 months with inclusionary housing,” he said. “While the opportunity zoning is good, it doesn’t offset the inclusionary zoning on the high-rise. The inclusionary zoning has shut that market down.”

Some investors have shied away from investing in multi-asset opportunity zone funds, fearing a lack of control or oversight compared to single-asset funds. A potential stumbling block is that investors must also be prepared to pay income tax on deferred gain in 2026.

In May, a bipartisan group in Congress introduced companion bills to require data collecting and reporting that was stripped from the original opportunity zone legislation. The bills were referred to the Senate Finance and House Ways and Means committees and have not advanced.

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An upcoming adaptive reuse project will convert a former machine shop slightly north of the Pearl District into a creative office space with nods to the building’s industrial past.

The building encompasses nearly a full block on a parcel bounded by Northwest 17th and 18th avenues and Savier and Thurman streets, and for decades was occupied by a machine shop that now operates in Canby. Sturgeon Development Partners purchased the building in 2017 and will name it the Premier Gear & Machine Works building after its former longtime occupant.

A core and shell improvement to the building – actually multiple structures that have been added over the course of the past 100 years – is slated to begin this month. Lorentz Bruun Construction is the general contractor for the LRS Architects-designed project.

The renovation will update the space to highlight the building’s industrial past, including old-growth timber beams, sawtooth skylights and crane equipment. Existing crane rails will remain in place throughout the building, two of which will be repurposed to support a bridge connecting two areas of an added second level.

“There’s all kinds of amazing machinery and equipment in there that we are cleaning and repurposing, and it will be part of the building structure,” said Vanessa Sturgeon of Sturgeon Development Partners.

The new second level will add approximately 28,000 square feet to the existing 39,000-square-foot structure. The mezzanine level will open to the ground floor and be built with heavy timber and tongue-and-groove decking. The building’s second floor will feature a 555-square-foot covered outdoor terrace.

The building will undergo a full structural upgrade that will include new CMU shear walls, steel buckling restrained brace frames, new roof diaphragms and out-of-plane anchorage between the walls and floor and roof diaphragm. The project will also include new openings in existing concrete wall panels, added skylights, entries, and new windows, installation of an elevator, restrooms, and bicycle storage.

The core and shell work is expected to last through late fall. The final 65,000-square-foot space will be dividable, but Sturgeon isn’t ruling out just one lease.

“It would be great if we were able to get one tenant for the entire building,” she said. “Right now we’re marketing it to any tenant that is interested in the space.”

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Downtown property owners and some of Portland’s wealthiest families are busily looking to form opportunity zone funds by taking advantage of a tax break in federal law.

Opportunity zones emanate from a federal tax bill that was enacted in December 2017. Seeking to encourage investment in blighted areas, the law allows for certain tax benefits for long-term real estate investors.

The opportunity zones are drawn from Census tracts. In Portland, that has yielded a curious situation that has made some very wealthy people very excited: Portland’s opportunity zone covers some of the city’s most expensive and desirable real estate, including downtown and portions of the Pearl District, South Waterfront District and Central Eastside Industrial District.

“Portland’s opportunity zone is a fabulous opportunity zone, and it’s getting a lot of attention nationally,” said Vanessa Sturgeon, a Portland developer who has formed a public opportunity fund.

Portland’s opportunity zone is home to recently constructed business hotels, multifamily developments and corporate office projects. Broadway Tower, soon to be home to Amazon, is in Portland’s opportunity zone. So is the new Woodlark Hotel on Alder Street. So is Portland’s largest building, the U.S. Bancorp Tower (better known as Big Pink), and its tallest building, the Wells Fargo Center.

Opportunity zones could also figure in major planned redevelopments. Both the Broadway Corridor and Oregon Museum of Science and Industry’s campus are within opportunity zones.

Sturgeon said she and two others who have formed Sturgeon Development Partners are considering a handful of sites for one or more major opportunity zone projects. Nick Fritel is chief financial officer and Robert Pile is vice president of construction. They’re seeking to raise about $328 million for the projects.

Sturgeon said she and her partners are considering sites on both sides of the Willamette River.

“We’re really working on four different tower sites,” she said. “So we’re in due diligence on several sites. We don’t know whether we’ll do one or two, but they’re sprinkled all over Portland.”

Sturgeon Development Partners is also using an opportunity zone fund to back a hotel project in Salem. The 126-room hotel would be built on the site of a condemned parking structure at 195 Commercial St. S.E.

“The Salem market, it’s really becoming part of the greater economic region of Portland, and it’s highly underserved right now,” Sturgeon said.

Sturgeon was approached by Chris Duffin, president of LMC Construction, about redeveloping the property.

“It’s a block that is blighting downtown Salem, and the city is supportive of seeing something there,” she said.

The offering period for Sturgeon Development Partners’ opportunity zone funds began on Nov. 30 and ends March 31, 2019.

The Goodman family is also considering forming an opportunity zone fund with other investors to develop the Eleven West tower, said Greg Goodman, co-president of Downtown Development Group.

An opportunity zone fund will be used to develop Eleven West, and another one will be used at Downtown Development Group’s property at Southwest Second Avenue and Pine Street, Goodman said. Eleven West received design review approval in December 2017 but ground has not been broken yet.

Downtown Development Group will own half the opportunity fund at Eleven West, Goodman said. The Goodmans have hired Newmark Knight Frank to find and evaluate potential joint-venture partners.

“11-W will get capitalized,” Goodman said. “It will get done.”

The advent of opportunity zones has sparked bidding wars for highly desirable properties.

“You really have to pick your spots because you’re already seeing a bid-up for spots in opportunity zones,” said Todd Gooding, president of ScanlanKemperBard.

SKB plans to use opportunity zone funds for at least two multifamily projects – one in Tigard and another in Vancouver, Washington. The new developments will have 180 to 200 multifamily units each.

“Having the longer-term capital is extremely attractive for the stability of our portfolio and to create real, long-term wealth,” Gooding said.

For developers, opportunity zone benefits could push across the finish line some projects that have been on hold because of inclusionary housing regulations and escalating construction costs.

“Some of these projects that wouldn’t pencil might pencil,” Sturgeon said.

Interest in opportunity zones has been high locally, said Owen Blank, a real-estate attorney and partner at Tonkon Torp.

Opportunity zones have the advantages of deferring, reducing and eventually forgiving capital gains tax, he said.

“It’s a far more flexible program than some of the other tax credit programs, (such as) like-kind exchange,” he said. “Any kind of capital gain could be invested in an opportunity zone fund. It doesn’t have to be from the sale of real estate, or even the sale of a business.”

Opportunity zone funds are beneficial for long-term investors. Merchant developers, or investors looking to quickly flip a property, will not realize many advantages from these tax treatments, Blank said.

Discounted tax rates kick in after five years and seven years. But the biggest benefit happens after 10 years.

“The benefit that has really caught people’s attention is if you hold the investment for 10 years, and then sell your stock in the fund; the appreciation in value escapes tax,” Blank said. “You can imagine why that’s caught some people’s attention.”

Opportunity funds are still new, and some questions remain to be resolved by future Internal Revenue Service guidance, Blank said. For example, how investors can exit, or what happens when an investor dies, remain unanswered.

“There are still some significant unanswered questions pertaining to the operational issues over those 10 years,” Blank said.

Other opportunity zones include areas around Portland International Airport, Gresham, Beaverton, Hillsboro, Forest Grove, Tigard, Tualatin, Wilsonville and Oregon City. Oregon has 86 opportunity zones, and there are about 9,000 scattered throughout the nation.

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