Portland Aerial Tram

Gibbs Street Voluntary Buy Out Program

Portland City Council Direction

In adopting the Portland Aerial Tram Final Recommendation and Report through Resolution 36224, City Council directed the City Engineer “to pursue and bring back to City Council for consideration, Recommendation 5.7.7 S-71, a fair market value, one-time, limited term property buy out program, based on an independent professional appraisal, for owner occupied, residentially zoned properties, along the Gibbs Street alignment.”

Proposed Program

The proposed program enables eligible property owners to obtain a fair price for their property based upon an independent appraisal that does not consider market affects, if any, associated with the planned Portland Aerial Tram Project. A key objective of the program is to match sellers to private buyers, if possible. The program is voluntary and not subject to the requirements of ORS 35 (Eminent Domain, Public Acquisition of Property).

The program described below is still in development and will likely change based on Council and community feedback. If the City Council accepts the proposed program concept, the Office of Transportation will have 60 days to return to City Council with a detailed program proposal for final Council approval and funding direction.

Key Actions

The program has five basic steps:

1.  Determine interest in program.

2.  Inspect and appraise participating properties.

3.  Make a reasonable offer to property owner and, if accepted, enter into a binding purchase and sale agreement.

4.  Facilitate the sale of properties at or above the City’s offer to private buyers through brokered sale or sealed bid auction.

5.  If properties are not sold to a private buyer, then the city will purchase the property and resell it at a later date.

Who is Eligible?

All owner occupied residential properties with a property line on the SW Gibbs Street Right of Way. There are 22 residential properties on SW Gibbs Street between I-5 and Terwilliger Boulevard that appear eligible to participate in the program. See figure 1 for a map and address list of potentially eligible properties.

When Would the Program be offered?

It is anticipated that the program would be offered in the summer/fall of 2005. If the program is endorsed by City Council, staff would have a 60 day period to return to City Council with a detailed program proposal for final Council approval and funding direction. Eligible property owners will then receive notice of their property’s eligibility along with a program description and schedule.

Conceptual Description of Program Details

Notice:

Eligible properties will be mailed notice of their eligibility for the program and given the option to participate in the program. Eligible property owners will have 30 days to decide if they are interested in participating in the program and would like to have an appraisal and inspection conducted for their property.

Due Diligence Agreement:

Inspections, appraisals and other City due diligence actions will be conducted in accordance with a due diligence agreement signed by the City and property owner. Among other things, the agreement will specify the terms and conditions for either party to withdraw from the transaction and the costs, if any, of doing so. It is anticipated that there may be some earnest money required from the property owner to establish their sincere interest in participating in the program before proceeding with the City’s due diligence efforts (e.g. appraisals, inspections and title review).

Appraisal, Inspection and Title Search:

Participating property owners will be given a list of available appraisers and will arrange for the preferred appraiser to complete the appraisal. The appraisal will establish an estimated market value of the property based on the property’s current value without the presence of the Tram or the planned neighborhood improvements. An inspection will also be conducted to identify any deficiencies that could impact the value of the property.

Purchase Offer and Decision Period:

Upon completion of the due diligence process, participating property owners will be sent an offer to purchase the property in the form of a binding and assignable purchase and sale agreement (PSA). The offered amount will consider a variety of factors, including real estate commissions the owner would pay if sold by a broker. It is anticipated that the City will be willing to entertain reasonable requests to reconsider the offered amount, but can withdraw from the transaction in the event that a reasonable purchase price cannot be agreed to in a timely fashion.

Re-Sale of Properties:

At this stage, the program is designed to facilitate the re-sale of the property to a private buyer at or above the binding PSA purchase price. Two options for re-sale have been identified. Which option is pursued will depend on the number and type of properties that participate in the program.

•  Option 1: Sealed Bid Auction

City would advertise for and conduct a sealed bid auction process. This process would involve a home viewing period, bidding period and award to the highest qualified bidder. The difference between the PSA amount and the highest bid would be awarded to the property owner.

•  Option 2: Brokered Sale

The property owner would contract with a real estate brokerage firm to offer the property for sale, with a 90-day listing period. If a private buyer offers more than the City, then the PSA agreement will terminate and the property owner will sell the property to the private buyer.

Under either resale option, if the property cannot be resold for more than the PSA amount then the city will purchase the property and resell it at a later date, or at its discretion pay the difference between the PSA amount and lower offers received from private buyers.

Figure 1: SW Gibbs Street Residential Properties That Appear Owner Occupied

Potentially Eligible Properties (if owner occupied)