Block 67 Focused On Housing As Massive Project Moves Ahead

City of Hillsboro planning and economic development staffers held an open house on September 16th online to go over their recent thoughts and direction for Block 67, a massive development that is slated to move ahead soon.  Planning work on the former Hanks Thriftway land, between 6th and 7th along the MAX light rail, stopped a few years ago.   The timing might be right according to the City to move ahead with finding a new partner for the 3.5+ acre project, one that will define the future of downtown Hillsboro for decades to come.

The City of Hillsboro used urban renewal resources provided by the taxpayers to buy the site in 2016 for $4,800,000, which was well over 1 Million Dollars an acre.  The site, as a result, will have to go vertical in order to make financial sense.  But the MAX rail and the fully improved streets make it the only site of its kind!  OHSU (formerly Tuality Hospital) flanks the land on the South and East, and Pacific University matches that on the East and North.  A previous development agreement with Project PDX fell apart in 2018 as a result of runaway construction costs and shifting market demands.  That version of the project relied heavily on parking intensive office space and an underground parking garage which was needed to meet code requirements.

The staff, led by Karla Antonini, made a case in this presentation that housing, not commercial, needed to be the focus of the next development foray.  The market research commissioned by the City shows that there are 4 jobs for every 1 residence in the Downtown Hillsboro Market and that 97% of all workers are commuting into the area.  That isn’t good for greenhouse gases and the climate.

“The goal here is to make downtown a place where people live, work, and play,” Antonini said, adding that doing so can reduce traffic and greenhouse gas emissions.  The slide below was revealing.  There are too many jobs, not enough housing, and too many people driving to work.

Most of the people who live downtown are leaving their homes in the AM to work outside the area.

Even more jobs are coming to downtown Hillsboro with expansions at Pacific University and OHSU happening now and into the future.  The City is growing 60% faster than the rest of the Portland Metro area and this is showing up in skyrocketing rents and increased housing prices.

The next slide (below) shows that the vacancy rate in the Hillsboro Downtown core is at an all-time low.  Add to that the fact that virtually no units are being built.  Each slide, if the facts are accurate, made it more and more clear that housing, not office or commercial, is what is needed.  The staff during the presentation, where no citizens were interacting directly, laid out the case for housing.

A grocery store that has long been the community’s #1 Mantra appears to be a fading possibility.  Staffers showed a study by Eco-NW that indicated there are now 7 grocery options in the immediate area and that household counts and incomes are too low to attract a grocery chain.  It is highly unlikely we will see that in future offerings for Block 67.

The next steps will be for the City to post a Request For Proposals to the developer community and see if anyone bites.  The property itself will likely be transferred rather than co-developed with the City.  There will no doubt be special considerations, tax advantages, and financial hooks & tax breaks to get a deal done.  Time will tell.

Dan Dias, Director of Economic Development, pointed out the changing market conditions and the new world we are in with COVID-19.

“….uncertain market/use types, such as office, need to be carefully evaluated because if they are not filled, they can have adverse effects on the economics of the project,” he said. “This has become even more important during the pandemic and moving forward.”  Dan Dias

Office space is a bad bet, one that could bury any project.  We are a Zoom-Town in many ways.  Hillsboro enjoys some of the fastest internet speeds in the world and many workers have been sent home not only for the Pandemic, but permanently to telecommute their work.

No grocery, limited office, and worldwide pandemics.  When weighing that against the housing crisis and the abundance of jobs, one gets a clear picture of a project designed to be housing heavy.  Block 67 is destined to be a housing project with mixed retail/office.  Will it be?  Only time will tell.

The City indicated a list of development partners will be considered and a selection could be made by early 2022.  That would have the project in a true planning phase in 2022 and 2023 and possibly building by late 2023 or 2024.

Editors Notes- Comments:

1.  This online event was labeled a “Community Discussion”.  That is not what it was.  It was a presentation of the findings and the recommendations the City staff wanted to make.  I think their findings are consistent with everything we have researched and believe to be true.  But the event was a very sterile one-way outcome.  Yes, some questions were responded to.  We submitted several and 1 or 2 were answered.  The City would be well served to have a meeting at City Hall in person and allow people to be heard.  We are lacking that in Hillsboro, and despite Covid concerns, that can be done safely.  Our kids are in schools face to face- adults can work it out just fine.
2. It is not a given that this project has to move ahead now.  Paying a record land price was one thing.  Being in a rush to move the property now at any sort of financial loss to the taxpayers is not a good policy.  We need the rooftops- but waiting may be the way to go.
3. This focus on housing feels a little like the path is being cleared for someone like Holland Development to come in and build a 10-story luxury project.  Those of us in Orenco saw what Holland’s projects did to the rents and the cost of living in our district.  Their Vector, HUB 9, and Rowlock projects on the Orenco MAX Station singlehandedly raised rents in Orenco and Citywide within a year or so, as much as 70%.  Existing 2 BR units in Orenco were renting at $1500 dollars a month.  Holland’s units are rented for $2200-$2500.  Within 24 months of renting his projects, nearly all of the surrounding projects had increased rents by 35 to 60%.  That forced local residents out and has made the Orenco district the most expensive in the City.  Is that what we want in Downtown Hillsboro?
4. Parking –  All of the jobs that are mentioned in the City’s stats have increased on-street parking and decreased available spaces.  Housing will be limited by parking, and the community must have assurances that our historic districts and existing residents will have access to minimal parking and not suffer a net loss in same.
5. Block 67 is a great site– it can be something fantastic and the key to long-term stability downtown. Shops and eateries need foot traffic and housing, and people will support them.  It is a win-win for all.  Our City planners are very capable of bringing the best players in the market to the table.  When they come, we all need to eat, and we need to make sure that Block 67 does not destroy the unique character of Downtown Hillsboro.  The project must provide housing and retail in a way that reflects who and what the area is and supports and enhances it- not alter and eliminate it.  A project like this one can get an ultimate gentrification machine or the harmonic source of new meeting old.  Finding the balance is one that will take all of us, as a community, to see realized.