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June 18th, 2014 AARON MESH | News Stories
 

Science and Industry

OMSI eyes becoming a real-estate developer. Its neighbors fear a Pearl District 2.0.

news1_4033OMSI MAX: The new Tilikum Crossing brings light rail to the doorstep of the Oregon Museum of Science and Industry, which has ambitious plans for the six acres it owns, as well as surrounding properties. - IMAGE: Kenton Waltz
For more than half a century, School Specialty Co. of Oregon has operated behind green loading docks at Southeast Taylor Street and 3rd Avenue, making cheerleader pompoms.

The company is one of the nation’s leading manufacturers of pompoms—hundreds of thousands a year emerge from a factory filled with spools of shimmering ribbon.

To David Lorati, whose father founded School Specialty, his business marks what makes this area of Portland, known as the Central Eastside, unique.

This rough-hewn pocket—with its maze of warehouses, loading docks and railroad tracks running down the middle of streets—is still old Portland. It’s home to businesses such as Pacific Coast Fruit, freight company Senvoy, and Sanderson Safety Supply—more than 1,000 businesses that the city says account for 17,000 jobs.

Lorati says this business core—one of the few places in Portland that has seen job growth—is at risk of vanishing.

Lorati says he’s eager for new development in the Central Eastside. But he and other business owners worry the area could soon be overrun by condos and apartment buildings, in the same way the gritty rail yards of Northwest Portland were transformed into the chichi Pearl District in Northwest Portland.

If that happens here, Lorati says, the last core of small manufacturing businesses near the city’s heart will be gone for good.

“New buildings get all the press,” Lorati says. “But it’s hard to argue with the success of the district compared with the rest of the city. We’ve actually seen job growth here, even during the downturn.

“The knowledge base here is old-growth stuff. You can’t replant it.”

The player that worries Lorati isn’t the well-heeled developer you might expect. It’s the Oregon Museum of Science and Industry.

OMSI has not publicly released details about its plans for the land around its riverfront site, but documents obtained by WW describe a development that includes 68 acres of office towers, apartment complexes, a riverfront park and a 13-story hotel—all where the east end of the new Milwaukie light-rail line’s Tilikum Crossing makes landfall.

The site isn’t near many of the businesses that oppose OMSI’s plans, but they worry that similar developments will spread. The suspension cables of the nearly completed Tilikum Crossing arc like a bow that’s ready to shoot millions of dollars in investment across the river.

The Central Eastside’s business association is opposed to the housing development OMSI wants. Yet the demand for land here could overwhelm that opposition.

The stakes are high for Mayor Charlie Hales, who has made refashioning the Central Eastside one of the few priorities of his administration.

For a mayor who is most energetic when shovels hit dirt, the district is a crossroads for his chief interests: trains, real estate and the reviving of decaying areas he calls “place making.”

But he isn’t saying what he wants for the Central Eastside.

 

Hidden by the overpasses of Interstate 5 and bridges spanning the Willamette River, the Central Eastside has quietly remained Portland’s industrial economic muscle.

The district’s 692 acres stretch south from I-84 to the Ross Island Bridge, and east from the river to Southeast 12th Avenue.

The area has always accommodated a wide mix. Businesses such as Gilbertson Machine Shop on Southeast Yamhill Street and Custom Stamping & Manufacturing on Southeast 9th Avenue, for example, have operated essentially side by side with the Produce Row Cafe, City Liquidators and the Lippmann Co., a party supply store.

Recent years have seen an influx of trendy restaurants—including Boke Bowl and Olympic Provisions—even as old warehouses started to hold nests of small businesses making bicycle frames, bamboo photo frames and mobile apps.

City officials estimate employment in the Central Eastside grew by 8 percent in the last decade, even as the rest of the city saw only 1.8 percent job growth.

The threat, as many eastside businesses see it, is the arrival of housing: New apartments would clash with the noise and traffic of factory work, and inflate property values so much that businesses would be pressured to sell their land and move.

Opposition to new housing comes from the Central Eastside Industrial Council—the local business association with 200 members—while real-estate developer Brad Malsin says new residential projects should be carefully limited.

“Central Eastside has a unique opportunity to recast itself into a new world order of industrial sanctuary,” says Malsin, one of the district’s biggest property owners. “I’m more in favor of evolution than revolution.”

So far, the businesses have an ally in city planners, who say new residents often conflict with industrial jobs.

“No matter how much you warn them, they’re going to complain,” says Troy Doss, who manages the Southeast quadrant for the Bureau of Planning and Sustainability. “‘Why do I have to hear trucks at 5 in the morning? Why do I have to smell that?’”

The current plan calls for a “business incubator” in the Central Eastside, and no zoning changes to add housing.

That would change if OMSI has its way.

POMPOM POWER: David Lorati owns pompom manufacturer School Specialty Co. of Oregon. “I’m not anti-development,” he says. “I’m for development that doesn’t displace the businesses working so well in this district.”
IMAGE: Kenton Waltz

 

It’s an unlikely role for a nonprofit children’s museum best known for an IMAX movie theater and a decommissioned U.S. Navy submarine. But OMSI has gathered political capital to push its ideas.

Not only does it count big companies among its backers—its 2013 annual report lists corporate donors that include Portland General Electric, Intel and JPMorgan Chase—but its development effort is advised by Pat LaCrosse, former executive director of the Portland Development Commission.

And OMSI is sitting on vacant land two blocks from the bridgehead of the Tilikum Crossing.

In 2005, the museum purchased six acres next to the museum, paying $4.7 million. (Two years later, Gov. Ted Kulongoski bailed OMSI out of insolvency by paying off a 15-year-old state loan with $4.6 million from PGE customers.)

OMSI’s designs for its land became clear in May 2013, when the museum contracted ZGF Architects to draft a concept plan—not only for its property, but for 68 acres along the Willamette River.

“We have spent a lot of time and a fair amount of money on developing this concept,” says Paul Carlson, OMSI’s senior vice president of strategic projects. “This could be an absolute gem in the heart of the city. It could be just dynamite.”

OMSI board member Susan Keil says the city isn’t getting the best value out of the Central Eastside by preserving it for manufacturing. 

“Don’t kid yourself with the business about this being an industrial sanctuary,” Keil says. “The nature of manufacturing and industry is changing. A lot of that industry is warehousing, with four or five jobs an acre. You need more jobs coming out of that land.”

Hales declined to comment for this story, but in an interview late last year, he said he recalled similar opposition to the Pearl District, even as it made landowners wealthy.

“If we do this right,” Hales said, “planning and redevelopment in Portland will make some people rich over their objections. I remember the pet-food owner in the Pearl District who came in and complained about the streetcar. He’s smoking a big cigar on his boat in the Bahamas now.”

Hales has already promised big plans for the Central Eastside, where private developers are eager to start spending. He’s proposed increasing the Central Eastside Urban Renewal Area by roughly 100 acres. That expansion would plunge another $20 million of taxpayer money into construction along the Orange Line light-rail tracks, and give the city another five years to spend it.

Hales prodded the Bureau of Planning and Sustainability to speed up its planning around the first four light-rail stations on the Orange Line, instructing planners to concentrate on light industrial and technology jobs. 

Lorati hopes Hales won’t repeat past building booms.

“Don’t turn it into the next downtown or the next Lloyd District,” Lorati says. “Don’t pretend it’s a South Waterfront. A healthy real-estate market depends on a diversified and growing economy. The Central Eastside really fills that bill for the city. And the results prove it.” 

 
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