The cost of building and leasing a new homeless services center could be more than twice the amount estimated by Portland officials four years ago.

Estimates received by developers interested in building a 200-bed homeless services center and leasing it back to the city estimate the project could cost nearly $20 million, which could require an annual lease payment of about $1.5 million. That’s more than double the $8 million cost estimate in 2017, when the city estimated an annual lease payment of roughly $400,000.

City officials are not commenting on the details in the proposals received from developers and opened last week. But the cost difference is likely attributed to redesign of the shelter to provide additional space needed to provide physical spacing during a pandemic. The city’s 2017 estimates were based on a less than 25,000-square-foot facility, but the proposals received by the city called for a 50,000-square-foot facility.

A city spokesperson says city councilors serving on the Housing and Economic Development Committee are expected to review the proposals on May 18.

“We are pleased to have three proposals to evaluate and are thankful that this step in the process is complete,” City Hall Communications Director Jessica Grondin said. “We look forward to conducting a thorough staff review, and sharing recommendations with the HEDC Committee soon. It is too soon to react to the details provided within the proposals.”

The city has been working on plans to replace the aging and cramped Oxford Street Shelter for the last five years or so – an effort that has stirred controversy at nearly every turn.

The opening of development proposals comes as a group of residents have begun collecting signatures for a citizen initiative that would block the city’s project from moving forward by limiting the size of new emergency shelters to 50 people or less. And city councilors are eying a six-month moratorium on new shelters in Bayside, which has a high concentration of social services, so they can finalize a new licensing program for shelters and a zoning proposal for smaller shelters.

The city is looking for a developer to build a new homeless services center at 654 Riverside St. with an onsite soup kitchen, medical clinic, social services and locker room on city-owned land and then lease it back to the city.

Portland received proposals from two developers – Portland-based Developers Collaborative and the Arlington, Va.-based FD Stonewater – interested in building the facility for the city and a third proposal from a local developer to build housing instead of an emergency shelter.

The projected costs of building a new shelter – $19.23 million and $18.69 million, respectively – are more than double of the city’s $8 million estimate in 2017. However, the city’s estimate was based on a 25,660-square-foot facility, whereas the proposals received are for a 50,000-square-foot facility.

Portland is currently the only municipality in the state that operates a low-barrier emergency shelter.

City officials have been developing a plan to replace the Oxford Street Shelter, which currently serves single adults experiencing homelessness. City officials say the facility, a converted apartment building and auto garage, is unsafe and unsustainable for both staff and clients. Prior to the pandemic, the shelter had a capacity of 154 people who slept on floor mats, and it routinely exceeded its capacity. The pandemic prompted the city to reduce capacity at the shelter and open up temporary shelters, including at hotels, largely using state funding.

The city currently leases the Oxford Street Shelter for $164,000 a year.

As of last week, the city said it was providing emergency shelter to about 300 single adults and 86 families, comprising 260 individuals. As of Wednesday, 45 single adults were staying at the Oxford Street Shelter. And as of Tuesday, 111 single adults were staying in a hotel, at the state’s expense, being used as an emergency shelter, and another 146 single adults were staying at other hotels being funded through the city’s General Assistance program.

The city requested that developers design a facility that could hold 200 people with enough space for social distancing during a pandemic. It called for 144 raised beds for men and 60 raised beds for women, all of which would be spaced 6 feet apart. It called for a multipurpose dayroom/dining room for 200 people and a 200-space locker room. It also called for an attached health clinic with four exam rooms and a lab, plus other features.

The Developers Collaborative’s team includes Cianbro, Winton Scott Architects, Gorrill Palmer Consulting Engineers, Aceto Landscape Architects, Thornton Tomasetti (green building consultant) and Brian Townsend of the mental health nonprofit Amistad.

Their proposal would cost an estimated $19.23 million and would include a bus shelter on Riverside Street, a raised garden and benches, as well as a grassy courtyard with a stage and reading tree. The proposal also includes several other suggestions, among them a possible outdoor sleeping pavilion, and identifies a portion of the property where a future transitional housing project could be built.

Developers Collaborative Principal Kevin Bunker said his team’s proposal sought to show a creative approach to the project and the team’s desire to work collaboratively with the city and the neighborhood. Another example of the team’s creativity, Bunker said, was proposing a tax increment financing agreement to help the city pay for the property taxes on the new shelter. The team estimates a TIF, which would benefit the city and not the developers, would shelter $150,000 in year in revenue that would otherwise be lost in state education aid, revenue-sharing and county taxes.

“We’re not just going to rubber-stamp this thing and crank out a building and collect rent,” he said. “We really can bring a lot of creativity to it and we can throw a lot of interesting ideas out there to maybe help (the city) think about this thing in a lot of different ways as we develop it together.”

Developers Collaborative proposes a 50-year ground lease for the land, with an initial 25-year leaseback period for the city. The city’s lease payment of $1.47 million would not increase during the first 10 years, but would have a one-time cumulative increase for inflation in the 11th year and then rise with inflation each year thereafter. The city would be responsible for all operating costs and would have the option to purchase the building beginning in year 20. If the city leases the building for all 50 years, it would assume ownership at no cost.

FD Stonewater’s proposal would cost an estimated $18.69 million, resulting in a $1.11 million annual lease payment. However, the firm says the annual lease payment could be as low as $967,000 or as high as $1.26 million, depending on the final finishes and whether furniture and fixtures are included.

Principal Claiborne Williams did not respond to an interview request on Thursday. But the company touts its experience working on municipal projects in its proposal.

FD Stonewater’s proposal envisions using tensioned-fabric buildings, which the city said in its request would be acceptable, but not required, whereas the Developers Collaborative proposed a more traditional building structure. FD Stonewater is partnering with Boulos Asset Management, SMRT (architects and engineers), Gorrill Palmer Consulting Engineers, Landry French Construction, Haley Ward, Summit Geotechnical Services and the DLR Group.

The company proposes a 30-year ground lease for the land and a 30-year Leasehold Improvements lease, after which the city would own the building for a $1 purchase price.

A third proposal from Fuego Blue, which is controlled by local developer Ron Gan, meanwhile, doesn’t even mention an emergency shelter, though he said the city could always add emergency shelter beds, since it would control the building. Gan said the city should issue a new request for housing proposals, not a shelter.

“A mega-shelter is just not the appropriate project,” Gan said. “We submitted our plan to be nothing more than a skeleton. We’re saying here’s a different way of doing things. And if you can house people, that’s a better idea than sheltering people.”

Gan believes the city should take the lead on developing housing on several city-owned parcels on Riverside Street. In addition to the proposed shelter location, he envisions the city building housing at the Riverton Trolley Park and at Riverside Golf Course at an old three hole-course and driving range.

Gan said those sites could accommodate at least 400 units of “gap housing” for seniors, transitional housing, workforce, families, subsidized industrial space, teachers and municipal workers. He said about 100 units of housing could be built at the proposed shelter location. 

“This is our idea,” he said. “It doesn’t have to be the idea. But the shelter idea doesn’t work.”

Bunker said he understands that the city’s decision to build a new shelter remains controversial, but he’s eager to move the city’s project forward and be part of addressing homelessness in Portland. His company is currently developing a transitional housing project for homeless women in recovery from opioid addiction on State Street.

“It’s been talked about for a long time. We want to see something get done and this is what the council voted on,” Bunker said of the proposed shelter. “Last winter, people were sleeping outside. The more we talk about it – and the more we don’t do something about it – another winter is going to come and they’re going to be sleeping outside.”

He added, “If 10 years later, nothing’s been done and we’re still talking about, we will have failed as a community.”

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