Land Conservation and Development Commission

April 29, 2013

Chair Marilyn Worrix and Commission Members

Land Conservation and Development Commission

635 Capitol St. NE, Suite 150
Salem, OR97301-2540

Re: Potential Loss of a Prime 90-acre Industrial Parcel

Dear Chair Worrix and Commission members:

The subject of providing and protecting from conversion Oregon’s prime industrial parcels, particularly large lot parcels, has been the subject of studies, urban growth boundary (UGB) expansions, legislation, and litigation for over two decades.

Just in this current legislative session, many bills have been introduced to super-site lands for large-lot industrial use, to better plan for industrial lands, to fund industrial site readiness, and to slow the conversion of industrial lands to other uses. These are motivated, in part, by a perception that Oregon does not have enough ready-to-go large lot industrial sites to enable the state to respond nimbly when out-of-state industrial suitors come knocking at our door.

Much of the focus of this Commission and local governments in recent years has been to expand the supply of industrial land. Last year, this Commission passed a rule allowing the three Central Oregon counties to jointly designate 6-9 new large lots sites for regional industrial use. The Bear Creek Valley Regional Problem Solving Process provides, among other things, for UGB expansions by Rogue Valley cities for industrial use. The Commission has approved several UGB expansions in recent years for large-lot industrial use. Lane County and the cities of Eugene and Springfield are in the process of providing at least three new large lot industrial sites, including the Goshen site, which, like all the others mentioned, will require considerable and expensive new infrastructure.

A few efforts have focused on how to make the state’s existing industrial land supply more ready-to-develop. The Portland Business Alliance, Port of Portland, Metro, and several other private and public entities concerned about the lack of ready-to-go industrial land conducted a comprehensive study of large lot industrial sites in the Metro UGB to determine the state of readiness of each. They are now pursuing various strategies to address the needs of individual sites, whether for infrastructure investment, wetlands delineation, brownfield clean-up, or some other need.

And, it is widely recognized that the least expensive large lot industrial lands are often the ones the state already has, and should not lose. Governor Kulongoski appointed an industrial lands task force chaired by former LCDC Commissioner Margaret Kirkpatrick to examine the state of Oregon’s industrial lands, which resulted in an October 2003 report titled Positioning Oregon for Prosperity. Conversion of industrial lands to other uses was one of the many issues studied and about which recommendations were made. The report provided examples of actual and proposed industrial land conversion problems, including in Medford, Springfield, Clackamas, and Woodburn, noting the particular negative consequences to both the state’s industrial lands and its highways when industrial parcels near highways are converted to retail uses.

The very visible conversion example is Keizer Station, located at I-5 and Chemawa interchange. This was a 225-acre parcel of land inside the Salem/Keizer UGB and planned for industrial use pursuant to a plan funded by a LCDC grant. Within several years of adoption of the industrial concept plan, Keizer re-zoned the site to allow the shopping center that is now located there and is struggling economically. Among other things, the shopping center has “defaulted on a portion of the loan, costing taxpayers more than $600,000. Another $5.83 million is delinquent, with taxpayers potentially on the hook.”[1]

A past legislative task force summed up the issue well:

“Local governments should adopt mechanisms that prevent the conversion of strategic industrial sites to non-industrial use. Large contiguous parcels within UGBs strategically located near transportation and other public facilities are not easily replaced once they are zoned for or developed with other land uses.”[2]

Yet, it appears Oregon has not yet learned this lesson. The city of McMinnville has a 90-acre parcel of flat, large lot industrial land, already within its UGB, served by a free-flowing state highway (Highway 18), near an airport, and in a single ownership. This is an uncommon asset for any city to have; it is, indeed, prime industrial land.

However, McMinnville is now considering a draft Economic Opportunity Analysis (EOA) that asserts a need for a very large commercially-zoned parcel that can accommodate a regional shopping center. The EOA then asks how that need can be met. The EOA has been funded by the owner of the 90-acre parcel, a developer of regional shopping centers. [3] The McMinnville News-Register reported the following when the city agreed to allow the owner of the 90-acre site to produce the EOA:

“The aim would be to determine whether, and how, the city might rezone Highway 18 property near the airport from industrial to commercial. Whitlow representsKimco McMinnville, which owns 90 acres of industrially zoned land along Three Mile Lane. The company has advised the city it wants to devote some of the land to “a regional shopping center…. ”[4]

1000 Friends of Oregon, Friends of Yamhill County, and many citizens have expressed concern about this proposal. As we stated in our testimony,[5] the EOA fails to serve the citizens of McMinnville. Rather than examine how McMinnville can use its existing land and transportation assets to readily achieve an employment future based on increasing family-wage industrial jobs, the EOA is simply a justification for re-zoning a 90-acre prime industrial parcel for retail use.

Despite the many efforts made by DLCD and Business Oregon to assist cities in adding to their industrial land supplies, neither agency has expressed concerns about this proposal. In fact, just as in the Keizer Station situation, Business Oregon has not appeared in the proceedings. Neither has the Oregon Department of Transportation – who made an enormous investment in Highway 18 to create a free-flowing bypass to 99W. DLCD staff has attended one local meeting but did not express concern over the potential conversion of industrial land.[6] In other contexts, DLCD staff has argued that large industrial lots should be added regardless of a demonstrated need for them, due to an “exogenous” industrial demand that will be more likely to locate in Oregon if such lots are available. The effort to protect existing sites should be at least as vigorous as the effort to add more sites.

It is unconscionable and inexplicable that Oregon’s key state agencies – DLCD, Business Oregon, and ODOT – would not be advocating protection of this prime industrial site if the state, in fact, needs large lot industrial sites.

Sincerely,

Mary Kyle McCurdy

Policy Director

cc:

Richard Whitman. Governor’s Natural Resources Advisor

Jim Rue, DLCD Director

Matt Garrett, ODOT Director

Tim McCabe, Business Oregon Director

Elana Guiney, AFL-CIO

Bernie Bottomly, Portland Business Alliance

Lise Glancy, Port of Portland

2

[1] Salem Statesman Journal, Dec. 16, 2012, “When Politicians Gamble on Developers with Taxpayer Money, Who Ends up Paying?” http://www.statesmanjournal.com/article/20121216/NEWS04/312160027/When-politicians-gamble-developers-taxpayer-money-who-ends-up-paying-

[2] Sufficiency of Commercial and Industrial Land in Oregon, Advisory Committee on Commercial and Industrial Development, December 2002, page 76.

[3] This is not the only example of proposals to re-designate land inside UGBs from industrial to other uses in recent years without input from relevant state agencies; but this is a particularly egregious one.

[4] McMinville News-Register, August 15, 1012.

[5] Attached please find the April 29, 2013 letter of 1000 Friends of Oregon to the McMinnville Economic Opportunities Analysis Advisory Committee on this subject, containing more details.

[6] In contrast, 1000 Friends of Oregon and Friends of Marion County objected to the conversion of the Keizer industrial lands to retail use and appealed the decision to the Land Use Board of Appeals and the Court of Appeals.