Bad sneakers

Mason Ehrman building.

Sophie of the Weed had a howler the other day, which is already being lost in the shuffle. The City of Portland redevelopment agency, "Prosper Portland," is making a dubious $7 million loan to some folks in the Jessie Burke circle of influence. These borrowers are going to use the public money to buy two foreclosed buildings in Old Town, and somehow miraculously turn them into a "creative hub" for people who design athletic shoes and clothes. The loan is a sweetheart deal at a low interest rate (3 percent) and a ridiculously light repayment schedule that leaves a $5.4 million balloon payment at the end of 15 years.

And that's not the worst of it. The biggest problem is that a recent appraisal says that the buildings are worth only $3.8 million, and Propser is going to lend nearly twice that. It violates nearly every loan criterion that the agency has.

The local prosperity bureaucrats are not alone in throwing money at this "project." The state apparently handed the promoters the money to buy another abandoned building across the street from the office complex. In this other building, supposedly someone is actually going to manufacture the shoes and clothing someday. The new owners paid $1.5 million, according to county property tax records. For years now, the would-be factory is boarded up and surrounded by people sitting on the ground smoking fentanyl.

The story is that these dynamic enterpreneurs will pay $7.4 million to buy the office and storage space, known as the Mason Ehrman building and annex, on the east side of Fifth between Davis and Everett, spend $1 million of the loan proceeds on improvements, and when they're through, the place will be worth $13.87 million.

It is the most ridiculous thing you have ever heard.

They're not putting up much of their own money, as far as I can tell. They're out hitting up other government agencies for the rest of what they need. Metro's already told them no.

Previous owners have tried and failed to attract tenants to these buildings. The annex was remodeled by Beam and SERA Architects at considerable expense something like seven years ago. It was designed to bring all the "creatives" running to work there. The come-ons are still on the web for all to see, here and here. It flopped spectacularly. The last owners, a joint venture that included ScanlanKemperBard, defaulted on $17 million unpaid on a loan, which I believe was from Prime Financial. 

The taller building, full of office space, reportedy got a seismic upgrade when the annex was redone, and it apparently it had some other renovations performed around 2000. But Old Town has fallen so flat on its face that the Mason Ehrman block became the poster child for the failure of Portland downtown office space. Calling it a "creative campus" and saying "Yay, sneaker heads!" isn't going to bring it back. If it were that easy, it would have been done already.

Among the bells and whistles being used to sell the current "project" is that one of the private entities involved is a "perpetual purpose trust," which gives it kind of a nonprofit sheen. But it's not actually a registered charity, as far as I can tell, and the trust document that the public can see leaves plenty of room for employees and other "distributees" to get paid. The trust "enforcer" is someone named Ezra Hammer, who I suspect is the lawyer who's making a nice fee putting the various shells together.

So now we will hand the Burkies $7 million to let them tilt at the windmills. These are your property tax dollars at work, Portland. Look on your property tax bill. They're there as "urban renewal." Kiss that money goodbye.