City Deal to Finance The Purchase of Avel Gordly's Home Raises Questions

BY NIGEL JAQUISS and RACHEL MONAHAN

The city-owned Portland Development Commission will consider a highly unusual transaction at its Wednesday meeting—the purchase of a single family home from two politically connected figures.

The PDC plans to loan two non-profits—Self-Enhancement Inc. and the Portland African American Leadership Forum—$495,000 to purchase the family home of former state Sen. Avel Gordly and her sister, Faye Burch.

Gordly was the first African American woman to serve in the Oregon senate and Burch is a longtime business and civic leader who has served on numerous boards and commissions.

The city agency will also give the two non-profits an $82,000 grant to support the development of the home into a cultural center "that honors, preserves, and celebrates Oregon's African-American heritage and culture."

Gordly and Burch approached Mayor Charlie Hales' office and the PDC in 2015 and asked that the city consider buying the home at 4511 North Williams Ave., according to a PDC report.

"Avel is a substantial figure in Portland's African American community," says Mayor Hales' spokesman Brian Worley. "It's been a work in progress to keep some of that history."

City officials asked the two sisters to find nonprofit partners who might be interested in operating an African American cultural center. That's how SEI, PAALF and the Oregon Historical Society came to be involved.

SEI has run youth programs in North Portland for 31 years. Its executive director, Tony Hopson, is also a leader in PAALF, a group that came to prominence in 2013 when it helped block the siting of a Trader Joe's on a prime piece of land on Northeast Martin Luther King Jr. Boulevard.

Hopson praised the city's efforts to preserve an African American owned home in North Portland but downplayed SEI's involvement.

"We're basically a pass-through; it's only coming to SEI because we have a [official nonprofit] 501(c)3 status," he says, noting that when PAALF officially becomes a nonprofit SEI will relinquish the home. "It is not our intention to hold onto this property."

On June 15, 2016, an appraiser hired by the PDC pegged the value of the 1,400-square-foot home at $434,000. That's significantly higher that the 2015 real market value recorded by the Multnomah County assessor's office of $362,000 and the assessed value of $77,250.

But the North Williams corridor has seen rapid development and sharp price increases in recent years. Gordly and Burch were not satisfied with the city's appraisal.

"The sellers provided the buyers with additional comparable sales supporting a larger valuation; PDC agreed with this estimate, given rapidly escalating market condition," the PDC report says. "Ultimately, the sellers and buyers settled on a purchase price of $495,000."

The PDC staff report prepared for tomorrow's commission meeting notes that the proposed deal includes at least eight exceptions to the guidelines PDC's established for making loans.

*The interest rate (2 percent) is lower than the standard, which is prime rate plus 3 percent.

*All loan, closing, appraisal and inspection fees will be paid by PDC.

*City funds will be used to purchase a single family residence.

*PDC will not receive any interest payments unless the property is sold.

*The nominal buyers, SEI and PAALF, are not providing any performance guarantees.

*The loan amount is more than the property's value.

*The loan term—effectively, as long as the center operates—is longer than 10 years.

*The borrowers are contributing nothing to the project, when PDC guidelines call for 10 percent.

"This is a rare chance in a part of Portland that is rapidly changing," says PDC spokesman Shawn Uhlman, noting PDC's executive director is allowed to make exceptions in cases that "serve the greater good."

The grant of $82,000 will have two purposes, the PDC report explains: $50,000 will go toward converting the 113-year-old home into a cultural center. The rest of the money, $32,000 will pay for "maintenance, taxes, security, utilities, etc." (Property records show that Gordly and Burch owe four years of property taxes, totaling $8,600, on the home.)

The deal came together in private, the PDC report says: "There has been no specific public participation related to this proposed loan and grant."

The PDC report also identifies risks: The non-profits don't yet have a business plan or a conditional use permit; they don't have money to pay for operations; and "the condition of the property and intended use as a cultural center necessitate significant additional investment in improvements that are not currently funded."

Here's the upside the city sees for the community:

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