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TonkonĚýTorpĚýpartnerĚýĚýhas been elected to the Governing Board ofĚý, a nonprofit organization based in Portland since 1907 that providesĚýsupport services for people with intellectual and developmental disabilities, and mental health challenges.

CronnĚýhas served as chair or co-chair ofĚýTonkonĚýTorp’sĚýBusiness Department since 2008. He is also an active member of its Mergers andĚýAcquisitions and Shareholder Disputes and Governance practice groups. His legal practice emphasizes merger and acquisition transactions, shareholder transactions and disputes, and a range of corporate and business matters.

Please send your announcements for 91ĘÓƵ People to djcpeople@djcOregon.com.

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Paul Balmer has joined Tonkon Torp LLP as an associate in its litigation department. He works with regional and national businesses as well as individuals to resolve challenges in and out of court, including contract disputes and administrative charges.

He is a 2020 graduate of the University of California, Berkeley School of Law. While in law school, Balmer worked at Tonkon Torp as a summer associate and completed judicial externships for Associate Justice Kathleen Banke at the California Court of Appeal and Judge Trina Thompson of the Alameda County Superior Court.

Balmer previously worked for several years in the Washington, D.C., office of U.S. Rep. Earl Blumenauer.

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Opportunity zones may have been the most-discussed federal tax change for developers and property owners in the past two years, but changes to various deductions and treatments of pass-through entities also have caught interest.

The changes stem from the Tax Cuts and Jobs Act, which was signed into law by President Trump in December 2017. Lawyers and real estate investors are still working to untangle the provisions and apply them to their investments and income.

“This is the first year in which people are filing tax returns and finding out what it really means in terms of the bottom line,” said Kevin Pearson, a partner and tax lawyer at Stoel Rives in Portland.

Bonus depreciation has allowed property owners to expense 100 percent of a property’s cost and deduct it the first year the property is placed into service. The bonus depreciation applies to properties placed into service through 2022. Bonus depreciation “has been meaningful to people,” Pearson said.

“Bonus depreciation is one of those that Congress believes spurs investment,” he said. “I’m not sure it does, but people take advantage of that.”

The change in tax law is temporary, but Congress may choose to extend it. It is one of many maneuvers enabled by the 2017 tax law. The legislation has kept lawyers busy in applying some confusing and poorly written sections to their clients’ situations.

“This act was written so fast and so hastily that it’s an absolute mess,” said Mark LeRoux, a partner and tax lawyer at Tonkon Torp. “The drafting is horrible. There are cross-references to sections that don’t exist.”

The legislation made deductions of business-related meals more difficult, and eliminated deductions for business entertainment in most circumstances. That’s made it impossible to deduct golf rounds or suites at sports stadiums from federal taxes as business entertainment.

Companies organized as C corporations saw their income tax rate fall to 21 percent. That has primarily benefited large corporations such as Nike and Intel; public companies are often organized as C corporations.

“That mostly helps bigger, more established companies that are C corps,” Pearson said.

The legislation also lowered taxes for pass-through entities such as limited liability companies. Developers and investors often use LLCs as entities that own real estate.

Other changes affected Oregonians’ personal taxes. A $10,000 limit on state and local tax deductions from federal tax has hit taxpayers in relatively high-tax states such as Oregon. On the positive side of the ledger, fewer people are now subject to the alternative minimum tax. The tax was meant to limit the use of loopholes to avoid paying taxes.

“The alternative minimum tax got friendlier,” LeRoux said.

Another change in tax law allows taxpayers to deduct up to 20 percent of qualified business income from sole proprietorships, partnerships or S corporations, among other entities.

That provision has led many parties to change partnership structures in which beneficiaries received guaranteed payments, similar to a salary, to a share of profits instead.

“A lot of people are rewriting their LLC agreements,” LeRoux said.

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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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A mixed-use project anchored by a 33,000-square-foot grocery store is on the drawing board for 8000 N.E. Tillamook St. in Portland.

The project would also boast 51,000 square feet of office space and 50 residential units. Two new building pads totaling 23,000 square feet are envisioned.

The parcel is currently the home of Banfield Pet Hospital‘s corporate headquarters. The location is near Interstate 84, Madison High School and Rose City Golf Course.

It’s unclear which grocer is involved. A phone message left for the architecture firm listed as the project applicant, Baysinger Partners Architecture, was not returned promptly. Project owner Glenhaven LLC is registered to a Portland attorney, Bruce Berning of Tonkon Torp, who said he had no information on the project.

Baysinger applied for early assistance last week.

Rental cars and car wash

Meanwhile, at Portland International Airport, the Port of Portland and Hoffman Construction have applied for a building permit for a rental car storage and car wash area.

The facility would encompass more than 300,000 square feet for office, car wash, storage, fueling and related operations on two floors. The first story would be 158,600 square feet for a large-scale fueling and washing facility, and the second story would be 156,810 square feet for vehicle storage.

The “quick turnaround” facility is intended to help ease congestion on Airport Way, the Port of Portland said in a news release.

Enterprise Rent-A-Car is listed as an owner, according to city documents.

The facility will be screened from public view through aluminum screening panels, weathered steel walls and landscaping berms, the port said.

Potable water will not be used for the car wash. Instead, it will use a mix of water from a new well, recycled wastewater and harvested rainwater.

Construction is expected to begin soon and be completed by 2018.

Brewery waste disposal

Elsewhere, an iconic Portland brewery is looking to engineer a solution to one of the industry’s intractable problems – what to do with brewing waste.

Widmer Bros. is in discussions with city officials to install an above-ground tank that would use an anaerobic process to handle waste from the brewing process.

Widmer, owned by the Craft Brew Alliance, has submitted an early assistance request to install the equipment on two vacant city-owned parcels at 2711 N. Mississippi Ave.

Brewing on an industrial scale produces tons of byproducts, including spent grain and trub, a mucky layer of sediment. The system that Widmer is considering typically uses a sealed tank and an engine placed in a container.

Neighbors in the industrial neighborhood include McMenamins’ White Eagle Saloon, a CrossFit gym and a smattering of small shops.

Mike Warwick, who is active in the Eliot Neighborhood Association, stated in an email that the installation probably would have little impact.

“It is unlikely to have more odors or noise than brewing does, which is an aerobic process and – since that is what they make – much larger volume,” he stated.

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Portland attorney Brian Booth died more than two years ago, but his presence lives on through the writer’s fund that was created in his name.

The Brian Booth Writer’s Fund has garnered nearly $1.2 million of the $2 million targeted to provide an ongoing source of financial support for Oregon writers.

With expertise in a broad range of areas and a profound effect on the community, his profession and the state, Booth was considered by many to be the definition of a renaissance man.

In addition to being a founding partner of Tonkon Torp and a leader in Oregon’s legal community – he was named one of the “Best Lawyers in America” from 1983 until his death in March 2012 – Booth was an avid collector of Oregon literature. His tastes ran the full spectrum: novels, history, poetry, plays and essays, and nonfiction.

He envisioned Oregon’s place in the literary world and set about creating an environment and an organization to support that. The Oregon Institute of Literary Arts was formed in 1987 and has since merged with the Portland Arts & Lectures Series to become Literary Arts, an organization dedicated to promoting the artistic, social and economic importance of literary arts in all forms in Oregon. Literary Arts is now known nationally as one of the premier organizations of its kind.

Booth’s deep love of literature was one of the things that made him the guy at the party that everyone wanted to talk to, according to Bart Eberwein, vice president of Hoffman Construction and a longtime friend of Booth.

“He was the smartest guy I ever knew,” Eberwein said.Ěý “When you talked with him, he was like a mountain river with twists and turns and calm spots and rapids and an uncanny ability to find nuance in the simplest conversation. He never talked down to anyone, and I think that’s why people loved him so much. There was a kindness, a gentleness and a sense of humor in the way he dealt with people, and at the same time, he really knew how to bring an idea into reality.”

Booth’s dream for supporting Oregon’s literary community and the fund it inspired is already making a difference.

“I had a writer say the award helped he and his wife go from eating lettuce tacos to chicken tacos,” Andrew Proctor, executive director of Literary Arts, said. “So many writers are dependent on sponsorship. The creation of this endowment means we can help to bring those voices to the public.”

Proctor hopes that with additional support from the public, the fund will become a consistent source of support for writers – and an ongoing reminder of Booth and his love of literature.

“If we can raise the money to fully fund the endowment, we’re not as dependent on scrambling for funds every year,” Proctor said. “We can implement a set of awards … that will be consistent year to year.”

Contributions to the Brian Booth Writer’s Fund can be made through Literary Arts. For more information, visit .

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Shaun Jillions has joined Tonkon Torp in the firm’s Government Relations and Public Policy practice.

Jillions received a bachelor’s degree from San Diego State University and a law degree from Hastings College of Law at the University of California. His background includes work as a lawyer and government affairs specialist in Nevada.

He joined the Oregon Association of Realtors in 2008, and presently is the group’s vice president of public policy. He will continue to serve as the association’s chief government affairs specialist while working for Tonkon Torp.

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Christopher Pallanch, an attorney with Tonkon Torp, has joined the board of directors of the Oregon Chapter of the Federal Bar Association.

Pallanch received his law degree from the University of Oregon School of Law.

He joined Tonkon Torp in 2009 after completing a judicial clerkship with U.S. District Court Judge Edward C. Reed Jr., and is a member of the firm’s litigation and financial services practices.

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Attorney Edwin “Ned” Perry, a commercial litigator with Tonkon Torp, has been elected to serve on the board of directors of Portland YouthBuilders.

Perry focuses his practice on the litigation, mediation and arbitration of complex contract, construction and real estate disputes. He joined Tonkon Torp in 1984 after graduating from the University of Oregon School of Law, and is a former chairman of the firm’s litigation department.

He will serve a three-year term on the board of Portland Youthbuilders, a nonprofit organization that provides education and vocational training for young people ages 17 to 24.

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Duncan B. Delano, an attorney with Tonkon Torp, has joined the board of directors of the Oregon Association of Environmental Professionals.

Delano received his law degree in 2010 from Lewis & Clark Law School, where he was symposium editor of the Environmental Law Review. While in law school, he also served as a research assistant on the school’s International Environmental Law Project.

He is a former research assistant for the Natural Defense Council and currently serves as a member of Tonkon Torp’s environmental and natural resources practice group.

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