Can Portland Meadows be Developed?

When was the last time you got your friends or family together on a given free weekend night and proclaimed “Let’s go out to the horsetrack to bet on the ponies!” Like maybe never and many of you might say, “There is horsetrack in Portland?” No doubt about it horseracing from almost every perspective is on decline or disappearing from the entertainment and cultural landscape in the US. It is hard to believe that at one time not too far ago, horse racing was a romantic, much followed and noble sport that rivaled baseball and another declining sport, boxing for people’s attention and hard earned dollars. Horse racing goes back to the founding of America and from the turn of the 20th century into even the 1970’s the sport often got front page sport news and almost every major city and many towns had racetracks that were well attended and betting was commonplace. The underdog nature of the sport, romantic characters, compelling stories, camaraderie, and athletic horses appealed to both the immigrant, blue collar average Joe as well as the bluebloods. Horse racing’s decline cannot be pegged to any one trend or development but rather a compilation of reasons that probably go to double digits. A few or the more salient reasons are: the emergence of a whole host of other easier and more wholesome entertainment options and spectator sports that come to us regularly in HD on our 60” TV screens; well- publicized scandals and reporting about an industry that was rife with drugs, corruption, gangsters and dead horses; that inability of racing to change or develop more modern management and marketing to understand its audience to develop aspects that might be more relevant and to compete for the dollar of a much more educated audience. But probably the largest nail in the coffin has been the emergence of a plethora or other gambling options both in casinos, lotteries and on the internet. Almost every state has gambling options with state run lotteries, Indian owned casinos and huge internet gambling options. “Though Horse Racing due to technology and the internet was doomed to become less popular, the inability for the racing industry to clean up its operations and image and come together to modernize and change to meet society’s faster pace and more educated consumer with many other entertainment options is equally to blame” says a long term racing observer in a recent NY Times article titled “Reasons for decline in Horse Racing”

Portland and it’s racetrack Portland Meadows mirrors this national trend which has seen a decline of over 30% of operating racetracks in the country over the last 25 years. Operated by an 80 year old billionaire, Frank Stronach who made his money from Magna Group, a huge auto parts manufacturer, Portland Meadows is hanging on to its existence by the proverbial thread. Portland Meadows has been around since just after WW II and prospered until the early 80’s where poor management and non-existent marketing, the expansion of more entertainment options and the rise of other gambling outlets starting eroding its base. The uncommon season of Portland Meadows operating through the winter was rare and actually a benefit as there was little other racing options so horse aficionados from out of state came regularly to Portland and usually were heavy bettors. But even with changes oto off track betting and simulcasts, facility upgrades and recently a switch to a summer schedule has increased attendance but wagering, the lifeblood of the industry, still continues to decline to where a decision to continue to operate a losing operation every year is seriously in play. The Stronach Group (SG) which operates numerous other racetracks across the country including stories Santa Anita and Pimlico, has the resournces to continue indefinitely but they are businessmen who understand investing in and operating an asset that may have both short and long term negative prospects, is idiotic. What would be the next step if Stronach threw in the towel at Portland Meadows? Many prominent and historical racetracks around the country like Portland Meadows occupy some incredible real estate and several have been redeveloped into higher use real estate development such as housing, retail and office parks, a couple of which were owned by the Stronach Group and Portland Meadows is no exception. “Portland Meadows like other tracks we own and operate have substantial potential for redevelopment if racing does not become viable but the ownership structure makes redevelopment very difficult in Portland” says Ari Huber, VP of Development of Stronach Group who looks at all the real estate around and under Stronach’s multiple racetracks. What he is referring to is that SG only owns about 20% of the underlying real estate and operates the track through an old somewhat obsolete Operating Agreement with the other real estate owners which are descendants of the several founders who started and built the track in 1946. These owners numbering over 20 individuals have had a rocky relationship with Stornach over the last decade as they receive very little money in lease payments and have had disagreements over taxes and other operating expenses. But as long as Stronach operates the track and provide a certain level of racing they have a large degree of control of the property but if that goes away there could be very difficult to get any sort of consensus and plan together as there is and will be some rather differing opinions and goals

Portland Meadows sits on 111 acres of industrially zoned land right (Both IG2 & EG) along the Interstate Freeway and south of the Hayden Meadows retail complete. It is flat, has significant infrastructure (transportation, utilities) in place or nearby to accommodate redevelopment. It is well known and documented that there is a severe shortage of industrial land in the metro area and more acutely inside the city limits of Portland to accommodate both homegrown companies looking to expand as well as to attract outside industrial investment and with that and most importantly: jobs. A recent industrial lands study by Portland Business Alliance; NAIOP and the Port of Portland reveals a large shortage (with the loss of Port’s proposal for Hayden Island) of close to 1000 acres of shovel ready industrial sites in the region. Additionally with this newest spurt in industrial speculative development occurring, an additional 100 acres will be absorbed which makes any flat, ready to build industrial lands and especially larger parcels like Portland Meadows absolutely crucial to the future economic viability of Portland and the region to maintain, grow and attract new businesses and industrial investment. Additionally and not well known, is that Portland Meadows resides inside the largest and most resource rich Urban Renewal Area (URA) in the city: The Interstate Corridor URA. Let me quote from the objectives of this area from the PDC website: “Create wealth through expansion of existing businesses, fostering a healthy business environment and generating family wage jobs” If you look through some of the investments made over the decade in the Interstate Corridor Urban Renewal Area, it is hard to find a significant investment with these precious public dollars for an industrial or business retention or expansion project. Park improvements, streetscapes, affordable housing, a zoning study, storefront improvement and more are on the list of completed projects but nothing directly tied to assisting helping existing or outside firms to expand or locate in this huge 3000 acre area. On top of that most URAs in the city have very little or no current funds available whereby the Interstate Corridor URA has in excess of $200 million of potential bonding capacity for investments. Are you getting the picture here? Because of the disparate ownership group and the need to invest substantially in master-planning, more infrastructure and needing to anticipate a long development timeframe, this makes it almost necessary for the active participation of a forward thinking and creative public entity with significant resources to move this underutilized property towards redevelopment to create millions of dollars new investment, thousands of jobs and over time increased tax dollars. Cities across the US and Portland (PDC and the Port of Portland) specifically have a long history of investing public prudent public dollars to facilitate much needed business investment and job creation in properties that would be stuck for a variety of reasons undeveloped and underutilized for years and years. Plus the money invested under the right stewardship could be easily recouped through partnerships and/or sales of fully developed sites directly to businesses or developers and in many scenarios could provide a good return.

Most likely Portland Meadows would need some land use help to create multiple types of industrial development focusing on attracting more intensive uses and higher jobs per square foot and hopefully consequent larger investments and higher wages. Some quick napkin arithmetic reveals potentially 90 acres of developable land that could be home to close to 2 million square feet of space of different types of space that could be home to over 5000 jobs and $300 million in investment. Seems like a no brainer. Replace an antiquated and declining use and then take a severely underutilized but excellent piece of property and give it new life with some good potential to create thousands of jobs and tens of millions dollars in investment and significant new tax dollars all while having an excellent chance to receive back with interest the initial investment! Are you listening Portland?