Beaverton's zoning changes draw appeal
by Virginia Bruce

Web-only Q & A with Peterkort's development consultant, Scott Eaton...

At a packed meeting at Leedy Grange Hall on Tuesday, January 3, Beaverton Planning Division Manager Steven Sparks attempted to answer questions from a group of local residents who are alarmed at the proposed changes to zoning to be applied to the Peterkort family properties along Barnes Rd. near Cedar Hills Bl.

The group is led by Jake Mintz, who lives nearby in the West Haven neighborhood. Many of the people attending the meeting rarely visit the CPO and were prompted by emails and other communications to attend. They fear that Beaverton's proposed amendments to their zoning code—most of which would only apply to these parcels and were crafted only to deal with it—would allow an immense development that would rival or exceed Washington Square in total footage of commercial space.

This group has raised funds to appeal the Beaverton Planning Commission's recommendation to approve the changes. A Beaverton City Council meeting is tentatively scheduled for February 7 to hear the appeal. The group has a website under development to provide information and recruit support: savecedarmill.com.

Zoning areas adopted by Beaverton's Planning Commission click to enlarge

While the changes to the zoning involve a lot of esoteric details pertaining to square footage, percentages of use types (residential, commercial, retail), residential density, and how commercial and residential development is staged, there's a bigger issue at stake.

Landowners want to know that their investments will be profitable. They are generally risk-averse. Traditionally they have seen areas like Orenco Station, a nationally-recognized planned station community, as experimental and risky.

Metro is tasked with planning for the population growth that we all acknowledge will occur. Metro, Washington County, and Beaverton see areas around MAX stations as the best place to put additional population density because access to mass transit reduces the need to build expensive and climate-changing auto-centric infrastructure. Locating employment and shopping within walking distance has further appeal.

How or whether these government agencies can either force or entice private landowners into creating "new-urban” communities is the central question. Some degree of government subsidies was necessary for the creation of Orenco Station. Whether there is a will or ability to provide similar help in this instance is a huge question, especially in light of current economic conditions.

In addition to an updated “Frequently Asked Questions” document that has been posted on the Beaverton website, Sparks provided answers to additional questions to clarify the history of the annexation and Beaverton's current position. Since publication, Beaverton has created a web page with links to all Peterkort-related documents, including the appeal filed by the citizens' group.

This map from February 2011 shows the progression of Beaverton's annexation of the subject properties.

Although the Peterkort family at one time was opposed to annexation by Beaverton, Sparks says that the city began discussing annexation about four years ago. He notes that, “The city has agreed, in the annexation agreement, to phase-in full level taxation for the property over time, but all taxes will, ultimately, be collected and new development will generate substantial additional revenue.”

One of the main concerns of the group opposing the zoning changes is that the resulting station development will not be a “complete community.” This means a mix of housing, office and retail that will create a safe, pleasant and walkable environment.

Sparks says, “A very understandable concern especially considering the rhetoric that has been used to describe the City's actions. I believe that the zoning that has been recommended by the Planning Commission will result in a community of mixed uses. However, I also believe that the market will help define how that community takes shape. The community will also help define how the community takes shape through the public hearing process. What is proposed for development will depend on what type of project can obtain financing, what are the demands of the market, and what can be accommodated by area infrastructure (including but not limited to the road system). Bottom line, I do think that residential and commercial development will take place. It is likely to be developed at different times, dependent on market conditions, interest rates, community discussion and design review requirements, and availability of infrastructure, to mention a few of the relevant factors.”

Because of the difficulty in finding financing for mixed-use development, public investment is often a key factor in its realization. Sparks says, “First, the City of Beaverton, Washington County and most municipal jurisdictions have participated in subsidized housing programs since 1948 and the passage of the Federal Housing Act. Beaverton, for example, utilizes its annual allocation of Community Development Block Grant funds to help fund various aspects of housing, land and facilities for low and moderate income persons. There are no such subsidies in-place for the Peterkort project.”

“Second, the City is currently considering the creation of a Vertical Housing Development Zone on the parcels adjacent to the station. This program, provided for under Oregon law and in-place in cities around the region and state, is a limited duration (up to ten years) property tax exemption for vertically mixed development (i.e. commercial on the ground floor and residential above). The program is administered by the State but the first step is the City creating such a zone. Since the City wants to incentivize residential mixed-use development in this area, this program will be a good thing to take advantage of. This is something we have been working on for a few months and I am hoping we can bring to the City Council in the next two to three months.”

Beaverton is often perceived as being more “business friendly” than the county in working with developers. We asked, “How much government control over how a landowner develops do you think is legitimate? Should the market alone determine it or does government have a role in assuring livability?”

Sparks replies, “This is a deeply philosophical question and is not something I can address in this forum. Ultimately it is the decision of the City Council how to best plan and regulate development in the community, as provided under Oregon law. The city, both staff and decision-makers, are highly-sensitive to impairing the property rights of owners, while fully respecting the need to manage the need for the general welfare of the community—which includes the provision and management of the infrastructure necessary to support urban service levels to city residents.”

The Peterkort family sold off a portion of its holdings north of Barnes for housing a few years ago. A partial land swap resulted in their acquisition of commercial property in Clackamas County and Clark County (see peterkort.com for more information). Afterwards, they said they wouldn't sell any more of their land.

Whether the proposed zoning changes are adopted quickly by the Beaverton City Council or not, it may be a while before development plans are forthcoming. We asked Sparks, “Does Beaverton feel that the economic climate is improving to the point that any new development is likely in the near future?”

He responded, “I do not want to speculate on the economic climate. I can offer that the City has been seeing an uptick in development interest throughout the City but we also understand that the financial markets remain very conservative with respect to funding new development in most markets of the country.”

Peterkort development consultant Scott Eaton responds to our questions

Just before we printed the January issue, we received answers to some questions from Scott Eaton, a development consultant working with the Peterkort company. We did not have time to incorporate his information in the printed version Here are our questions (italic) and his answers.

At the CPO 1 meeting, I quoted Lois Ditmars in the October 2004 issue of the News about the family's reluctance regarding mixed use developments. You said this was inaccurate. It was confirmed with them at the time, so something must have changed.
 
A lot has changed.  I think we are all very aware of several local and national mixed-use developments that failed and were in the process of failing just prior to that time. We are all smarter, as consumers, planners and developers, about what works and does not work in a mixed-use environment. Currently, J. Peterkort and Company has no reluctance whatsoever to having mixed-use development on the subject sites. I think that we should all consider ourselves fortunate that the wisdom that led to reluctance in the early 2000's may have saved this important site from being yet another failed mixed-use development. 

You said that it probably wouldn't be them doing the station area development - is that accurate? I assume that they'll keep the land (the last I heard they said they'd never sell land again).
 
What I said was the Station Site is complicated and that it would be very possible that J. Peterkort and Company would probably not develop it themselves.  We have discussed several different options that keep J. Peterkort involved, but include bringing in others to assemble a team with the overall capabilities to ensure a successful development.

The 2004 article mentioned government subsidies for developing “risky” mixed use. Do you think that Beaverton, Metro, or the county is likely to be interested in subsidizing housing, for example? Tax forgiveness or any other measures that will encourage residential alongside commercial?
 
I am not currently aware of any tax incentives for residential on the J. Peterkort and Company sites, but I do think that this project will end up being used as a case study to demonstrate how successful mixed-use can be accomplished in a predominantly suburban location, so I would welcome any assistance.

There was a time (before you were involved, I believe) when the family was adamantly opposed to annexation. I believe that they regarded Beaverton's annexation of the "Walmart” parcel as very hostile. What changed? Were they able to come to agreements with Beaverton re: taxes, development opportunities, or other?
 
Many things have changed, including the City of Beaverton. I was not involved until post Walmart, but The City Council, The Planning Commission, Mayor Doyle, Don Mazziotti and Steve Sparks have made tremendous strides in bringing the City of Beaverton into the light. I think if you surveyed others who deal with them you would hear the same.  Also, keep in mind that we approached the City of Beaverton, not the other way around.  Our Regional Planners and Washington County have always intended for these parcels to be annexed into the City and it was time. Most of the undeveloped parcels were already annexed into the City of Beaverton anyway and it was imperative that we deal with one jurisdiction in order to make any progress. 

How much input have you had on the package of zoning designations? Has there been an ongoing process with the city, or did they do everything on their own?

I have met several times with the City of Beaverton to analyze the zoning.  I have a great deal of mixed-use development experience and part of my role was to make sure that we understood the City zoning and development process so that we could develop a successful mixed-use development.
 
Do you feel that there are any significant differences between the county's previous zoning and the current proposed Beaverton designations? If so, what are they? If not, what are the biggest misconceptions that people are acting on?

I think the biggest difference between the County zoning and the City zoning is the ability to mix the uses on each individual site in a way that optimizes the beauty of green spaces for the residences and buffers the traffic on Barnes Road with commercial.  This could have been accomplished using the County zone with some modern day tweaks, which I'm sure would have been acceptable to the County if it were being developed under their code.
 
Do you feel that the economic climate is improving to the point that any new development is likely in the near future? If so, any ideas on which parcels are likely to be developed in the near term?
 
We have talked about this a great deal. I don't think any of us would say the economy is moving much in either direction, but the location is so strong that there might be interest if we can develop a solid plan. I think everyone agrees that it would be ideal for a portion of the Station Site to develop first so that all of the amenities like restaurants, hotels, and retail shops or theaters are concentrated in a way that creates a safe, vibrant walkable environment that attracts office users and residents.
 
From what I've been able to make out, the main opposition is coming to the perceived likelihood that a lot of commercial (office & retail) will happen well before any residential. Do you think that's a false perception and/or a likely outcome? Do you think it is a problem?

I heard loud and clear that the community thinks the commercial is all that will be built and that their impression of J. Peterkort and Company is that of a wealthy land baron waiting and wringing their hands for this enormous pay day. That one really floored me. All of these people work. Their grandparents and parents were farmers and so are many of them. The fact that they have been able to develop anything is because they work hard and are very frugal.

That being said the residential component of the entire mixed-use development is the most attractive to them because of the nature of residential investment property, i.e. it is generally the safest of all the investment property types because it generally does not experience large sudden vacancies like commercial and office properties. That is why you see many more individual investors owning apartment buildings versus malls or significant office buildings. 

The problem with building residential first is both economic and structural by virtue of the zoning requirements. The zone requires a lot of residential. If mixed-use is to be achieved it will require the residential to be constructed with more of an urban construction type, i.e not garden style apartments. This raises the cost significantly and therefore raises the rents required to support it, somewhere around 2 - 2.5 times the rent of a garden style apartment. That might be achievable in a well planned, expertly built, transit oriented, mixed-use development. One where people can walk to the store, the coffee shop, the pub, the theater, the office, the hospital or the train. So, even though we all agree that the residential component is desirable and necessary, how can we start with the residential and charge double with no amenities; no there, there?

How much government control over the way a landowner develops their property is legitimate? Should the market alone determine how development occurs? Are any of the fears expressed Tuesday evening defensible?

Boy, that's loaded, but I'm not one to shy away. I think government control is necessary, but all the government control in the world can't ensure good development unless government officials listen to trusted, credible developers who have built projects that their communities are proud of. Generally, those developers have been in the community for a long time. The Peterkort Family has been in this particular community since before there was a highway.  They live here and desire to own this land for generations to come.  They will see that quality development is done because they want to own it for the long run. They want it to be a place where people want to live, otherwise it will not be a successful project.
 
To the extent that we all live near the site and may some day want to live on the site, we might all be the market. So in that sense the market should determine what we want to see there. Otherwise it probably won't be successful.  However, I would hope that we might all come to grips with the fact that this property has too much invested with regard to regional infrastructure to sit fallow, and that the mixed-use plan that was conceived many years ago needs to be delivered. There is no way Washington Square could be constructed on the Peterkort parcels, and statements such as this are neither productive nor well thought out.

(end of Eaton Q&A)

Claims were made during public testimony at the Beaverton Planning Commission hearing that there was not adequate public notice or involvement in the decision. Commissioners responded that there would be plenty of time for public involvement once a specific development proposal was submitted. While public involvement at every stage of land-use decision-making is mandated by the Oregon land use law, this contention is important. Once a developer comes forward with a concrete plan, citizens should be prepared to study it carefully, question all the assumptions about traffic impact, staging and other concerns, and participate fully in the public comment opportunities that will be available.

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