Oregon Public Broadcasting

The slow real estate market took a bite out of Portland’s urban renewal agency this week.

The Portland Development Commission was supposed to pay off a major South Waterfront debt. But the PDC says it only has a million, of the nearly six million it owes.

The reason? Property it thought was going to sell -- didn't. Now, as Rob Manning reports, commissioners are betting the market will turn around in the next two years.

Less than a month after a high rise  in the South Waterfront district changed from condominiums to apartments, PDC commissioners are looking for more time to pay Bank of America.

Commissioners spent the money on extending the street care into the district and thought it would easily cover that debt by selling South waterfront property.  But plans for one of those parcels appear to be switching from condos to a  hotel.

PDC spokesman, Shawn Uhlman, says  condos are suffering from the current economic downturn.

Shawn Uhlman: “What we really thought would be happening as far as the market, specifically the condo market, just has not come to fruition. We’ve seen the market slow down, and that’s affected every sector, and obviously, real estate has been really, really affected by this.”

South Waterfront has been a lightning rod for criticism of Portland’s urban renewal strategy. That's mainly because of  its emphasis on high-priced condos, and the partnership with Oregon Health and Science University. In particular, OHSU’s controversial aerial tram originates at South Waterfront.

Critics include Jack Bogdanski, whose web site first called out the credit extension as another sign of a struggling development.

The credit extension essentially assumes that PDC will pull off enough deals in the next two years that will  pay off the credit line.

Again, PDC’s Shawn Uhlman.

Shawn Uhlman: “That really does allow us the most flexibility to get this line of credit paid off. I think, yes, there are other options we can look at, but considering the players involved, and the situation within Portland, I am pretty optimistic that we can get this paid off in the time frame provided.”

Uhlman insists that South Waterfront will be considered a ‘visionary’ project in the years to come, in spite of the problems it’s having now. PDC is expected to approve the credit at its Wednesday meeting.