Skip to main contentMayor Sam Adams announced last week that city taxpayers would give an $8.1 million interest-free loan to Gerding Edlen Development so the Portland company could build new North American headquarters in the Pearl for Vestas.
The Danish wind-turbine maker has been in Portland since 2002 and employs about 400 workers at one office on Southwest Naito Parkway and at four other buildings.
Once Vestas' new headquarters are completed in 2012, the $66 million project will turn the long-vacant Meier & Frank depot on Northwest Everett Street into an environmentally friendly office for up to 600 employees, project boosters say.
In making his announcement Aug. 18 with Gov. Ted Kulongoski, Adams boasted that Portland beat out other major cities in the U.S. for the new headquarters, which will create 400 to 500 construction jobs. And that's not because Portland offered the best financial incentives to lure the jobs here, Adams said. Instead, Adams suggested Portland's $8.1 million, interest-free loan was modest compared with other cities' bids.
"I will tell you that other communities in this country were willing to make much deeper subsidies/offers than Portlanders or Oregonians were able to afford," said Adams, flanked by construction workers in hard hats and fluorescent vests. "But we offered a total package and we offered a strategy and we offered a place to live for the employees that helped us compete."
In addition to the $8.1 million, 15-year loan from the city, Vestas will also get a $1 million grant from the governor's strategic reserve fund and another $1.25 million state tax credit.
Is Adams' boast about other cities' aid packages accurate? Is the deal any good? And how much will it cost Portlanders?
What did other cities offer Vestas to entice the company?
The answer in at least one case is bubkes. The Denver area, home to four Vestas manufacturing plants on three campuses, was rumored (in Portland anyway) to be in the running for Vestas' new headquarters. But Laura Brandt, manager for the Metro Denver Economic Development Corporation, which works closely with Vestas in Colorado, says Vestas never considered any location other than Portland as far as she knows. Therefore, the Denver area never made an offer, Brandt says. "It's never been on the table," she says.
Closer to home, Vancouver, Wash., entered talks with Vestas about two locations across the Columbia River for the new headquarters. The most Vancouver offered was up to $5 million in state grant money, sources say.
Officials from a third location in play, Houston, refused to answer questions, saying any negotiations with Vestas would be confidential. Vestas declined to acknowledge any offers, also saying those talks were secret. But a Vestas spokeswoman, Aili Jokela, insists the company did consider Denver.
How much will the zero-interest $8.1 million loan cost Portland taxpayers?
The promised loan will come from Portland's River District Urban Renewal Area, which stretches from the Willamette River to Interstate 405, mostly north of Burnside Street.
The city doesn't have $8.1 million lying around in cash to give recession-battered Gerding Edlen up front. Instead, it will have to borrow about one-third of the $8.1 million to give to the developer, says Patrick Quinton, a manager with the Portland Development Commission, which manages urban renewal funds in the city. Assuming that borrowing will come with 8 percent interest (which is the conservative number the PDC used in its analysis), lending the developers $8.1 million will cost the city $3.2 million. That's even if the entire loan is repaid in 15 years. The $3.2 million in interest the city will pay is $1.85 million in today's dollars. As the owner of the Meier & Frank building, Gerding Edlen would be responsible for guaranteeing repayment of the loan.
How much are Portland and Oregon taxpayers spending to create jobs? And what do those Vestas employees do anyway?
The governor's $1 million grant to Vestas comes with conditions. Vestas must keep its 400 existing jobs in Portland and create 100 more within five years to keep the money. If Vestas creates those jobs and keeps the $1 million, total public investment in Vestas will total $4.1 million in today's dollars, including the interest the city will pay on the $8.1 million loan. That's $41,000 per new job.
WWeek 2015