Zoning puts out Portland industrial businesses by, Nick Bjork, Daily Journal of Commerce

Hanset Stainless, a steel fabricating business along the Columbia Slough in east Portland, has become an expert at adapting to survive. In the past few decades the company has shifted from manufacturing parts for restaurant equipment to manufacturing parts for electronic equipment. Now the company produces parts for medical supplies and architectural interiors.

But Hanset Stainless’ owners worry the company’s adaptability could be in jeopardy because of a city plan to update environmental zones near Portland International Airport. Owners of businesses and properties in the area say they are concerned that the zoning changes being proposed would prohibit future expansions or development along the slough, which could push businesses not just out of the area but out of the city.

“As we’ve changed and adapted, we’ve had to improve our technology, as well as expand and retrofit our shop,” said Luke Hanset, a project manager and an estimator with the company. “All of these changes required expansions to our building, and if we needed to shift again we wouldn’t be able to with this new zoning.”

While companies like Hanset Stainless consider the slough to be one of the last sanctuaries for industrial business in Portland, the city sees the slough as an environmental gem that needs to be protected, said Jay Sugnet, a project manager with the Bureau of Planning and Sustainability.

Everything in the area that is at least 50 feet from the bank, including businesses like Hanset Stainless, is considered is to be in a conservation zone. If proposed zoning were to be approved by City Council, the area would become a protection zone.

In a conservation zone, future development, improvements or expansions are allowed if the property owner also performs mitigative or restorative work worth 5 percent of the cost of the work. But in a protection zone, all three are strictly prohibited.

That change could place Hanset Stainless in a precarious business position. The company’s compressor, which is essential for vital manufacturing equipment, sits within the proposed protection zone. Eventually, the compressor will need to be replaced, but a switch to a new compressor won’t be allowed in an area designated as a protection zone.

“We would have to reroute and retrofit our entire building if the compressor went out because we wouldn’t be allowed to put a new one where it currently sits,” Hanset said.

Hanset Stainless, however, isn’t the only business in the area that would be affected by the new zoning. The district would include 5,686 acres that sit between the Columbia River, the Columbia Slough, Northeast 13th Street and Interstate 205. The area has 354 industrial-zoned properties in use and approximately 260 acres of industrial-zoned, undeveloped properties – 37 percent of the city’s industrial land.

“This is incredibly important to us,” said Corky Collier, executive director of the Columbia Corridor Association, a group of industrial professionals representing 28 square miles of industrial property, much of which is along the slough. “Not only do the changes in zoning devalue the undeveloped industrial land in the area, (but) it makes it nearly impossible to expand or improve the facilities currently in operation, most of which are out of date already.

“This is a great area to redevelop, something the city likes to see happen with other commercial buildings around town. If the zoning is changed, it’s going to push industrial businesses away from the city, toward greenfield sites at the edge of the urban growth boundary.”

Mark Childs, a senior vice president with Capacity Commercial, is working with a potential buyer on a manufacturing property he is brokering in the area. Fifty feet may not seem like much, Child said, but almost every manufacturing business in the area has a paved parking lot in the zone. Improvements would not be allowed if it became a protection zone.

“This deal, a $1 million to $2 million deal, will be dead in the water if this passes,” Childs said. “The building is a little outdated and no matter who moves in, they will need to make improvements, if not expand the building.

“If property A is in the city but has a 4-inch-thick binder about what can and can’t happen on it, and property B is out of the city but doesn’t have any binder, no one is even going to look at property A. This is going to push businesses out of the city.”

The Bureau of Planning and Sustainability and the Port of Portland will be bringing the proposed zoning changes to the Planning Commission for a hearing on Aug. 24. If the Planning Commission makes a recommendation, it will go in front of City Council to be passed as an ordinance. Staff is targeting a council meeting sometime in October.

“We understand that this could be a heavy hammer, and we hope to work with these industry groups, but this corridor is already constrained,” Sugnet said. “There aren’t many places in the city with as much wildlife, and we need to do something to protect that.”

While Hanset agrees that both businesses and the city should be good stewards of the environment, he doesn’t agree with the path the city is taking.

“We don’t mind mitigating our impact, but we need to be able to grow to afford it,” he said. “If the city is going to come on our private property and regulate, then (it) needs to compensate us for it because this is going to really hurt our resale value.”

Daily Journal of Commerce