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Oregonian Letter to the Editor, 1-31-03

WAREHOUSE TAX INCENTIVE MADE SENSE

Robert Ball

Last Thursday, as I walked through the old campus at Yale University surrounded by exquisite historic buildings, I was impressed. Instead of tearing down Harkness Tower or Sterling Tower, Yale's stewards recognized that the Yale of today is defined by its past.

Maya Lin's "Women's Table" in front of the library gave me a glimpse of how the stewards are carving out a new direction by examining the past.

Then I thought about Steve Duin's arguments in The Oregonian against tax incentives for rehabilitated historic buildings ("Should we preserve historic tax breaks?" Jan. 19). Oregon will grow rich in significance and beauty if we continue to preserve history by saving those buildings. At the same time, we can keep workers employed and shoot steam into our sputtering economy. Tax incentives do both.

The historic Marshall-Wells Warehouse, designed by Daniel Burnham (one of America's most influential architects), is a perfect example. It served as the Western distribution center for the largest hardware company in the country during the early1900s.

Three years ago the Marshall-Wells building, listed on the National Historic Register, had a leaking roof, rotted-out windows and useless electrical, plumbing and heating systems. Next to a noisy freeway, it sits in an undeveloped part of the Pearl District said to be "outside," though it really isn't. There was only one hope for the building: a small property tax incentive.

Because of this incentive, I spent $35 million creating and selling the new living spaces, with $18 million going directly to wages to employ hundreds of people. They paid estimated taxes of $7.5 million. My restoration team spent an additional $4.5 million in taxes, for a total of $12 million. An additional $17 million was put directly into purchasing materials, most of which were bought or produced locally.

Using Duin's formula, there was an actual gain of $5 million in taxes. Further, we'll get a large increase in tax revenue in 131/2 years, when the property is worth $50 million. These taxes are not all property taxes, but split between our federal, state and local governments, it is all for the public benefit.

Most important, no one would have taken the chance on that risky building without the tax incentive to future homeowners. The value of that restoration was like luring a company to locate here because it would pump $35 million into our local economy.

The Marshall-Wells building is a perfect example of what can be done with imagination and creative planning. It was erected as an empty warehouse and today it is a historic treasure.

New life is filling the original structure with people instead of hardware. At the same time, it has provided a spark to our economy. Our state should have more small incentives that bring great gains.

Robert Ball is a historic preservationist and real estate investor active in Portland civic affairs.

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