REGISTER GUARD EDITORIAL
August 3, 2014
EWEB’s field of dreams: Choosing a developer won’t be easy, but riverfront property has huge potential
If the Eugene Water & Electric Board were selling a truck or a transformer, it could invite bids and take the highest. Selling the utility’s surplus riverfront property won’t be that simple. Choosing from among three developers that have expressed interest in the site will be a decision that won’t hinge on price, at least initially. Instead, the utility board and a separate evaluation team will select the developer that promises to put the property to its long-term highest and best use, and expect economic benefits to follow.
The property itself is loaded with promise. There’s nothing like it in Eugene, and probably never will be again: 17 acres on a gentle bend of the Willamette River opposite Alton Baker Park, with downtown to the west and the University of Oregon to the east. For developers and urban planners, it offers a once-in-a-lifetime chance to create an entire neighborhood in the heart of Eugene.
But there are challenges. The property has been an industrial site for a century, with all the potential environmental problems that entails. Access is poor to non-existent; the site is hemmed in by busy railroad tracks and lacks connections to city streets except at the west end. Addressing these problems will be expensive, and no one can calculate the cost with any confidence.The developer will also be constrained — or guided, as some would prefer — by a master plan prepared by EWEB with extensive public participation and approved by the utility board in 2010. EWEB needed a master plan to retain influence over what would happen to the property after it is sold, ensuring that it wouldn’t fill up with muffler shops and martial-arts studios. EWEB also needed the property to be rezoned by the city of Eugene, which couldn’t happen without a plan for the site’s use.
The qualifications of the developers that have stepped forward offer strong reassurance that the promise makes the challenges worth facing. Two are private, for-profit companies — Trammell Crow Co.’s Portland office and Williams & Dame Development of Portland. Trammell Crow is a subsidiary of CBRE, the biggest real estate services company in the world, and has completed a big public-private project near the Portland airport. Williams & Dame has changed the face of Portland with developments on the city’s waterfront and the former industrial zone now called the Pearl District.
The third candidate is the University of Oregon Foundation. The foundation is a non-profit organization, but like the private developers it exists to make money — its primary responsibility is to build the UO’s endowment through investments that are both prudent and profitable. The foundation evaluated the EWEB property on that basis, and saw an opportunity to make its first foray into the field of real estate development, assisted by a team of advisers with expertise in development, architecture and finance.
The private companies have the benefit of experience, which gives them a considerable edge. But the foundation brings two great advantages to the competition. First, it’s local — and not just local, but encoded in its DNA is a commitment to the interests of the UO and, by extension, Eugene. Second, a long horizon is part of the foundation’s investment practices. While a private developer might resell the EWEB property in a few years, the foundation would expect to own the site more or less permanently.
All three envision a riverfront development with housing, retail outlets, restaurants, office buildings and open space — that’s what the master plan calls for, and the property itself, both in its location and its size, invites those uses. In a decade or so the result will be an eastward expansion of the downtown area, and a long-dreamed-of connection between the city center and the river.
And what’s in it for EWEB? That won’t be known until later in the process. Any of the three potential developers would agree to pay a fair market price for the property, but exactly what that price will be depends on a thousand variables and contingencies, ranging from the amount of environmental remediation required to the apportionment of infrastructure costs. The utility hopes that proceeds from the sale of its property will offset part of the $64 million cost of its new operations center in west Eugene. Ratepayers would welcome a big check, but the riverfront land may be subject to so many costs of development that the net proceeds to EWEB will be modest.
The quality of the developers interested in the EWEB property, however, speaks well of the utility’s effort to maximize the site’s value through the master planning process. Timing helps, too: Interest in the project would not have been so keen five years ago.
But regardless of what the property sales means to EWEB, for Eugene it means that the downtown area, already in the midst of an accelerating process of revitalization, is on the threshold of its biggest transformation in half a century.