Grandiose membership club on the rocks
Cultural Center buyer asking for help to jump-start development plans
A little-known Las Vegas developer agreed to buy the vacant Northwest Neighborhood Cultural Center for $4.75 million in 2022.
The nonprofit board that owns the 1909 National Register landmark at 1819 NW Everett St. was thrilled with the offer, which was sweetened with nonrefundable $50,000 monthly payments and responsibility for all carrying costs until the deal closed.
But only bad news has followed, and growing signs of neglect on the grounds is evident. While promising Cultural Center members at their past two annual meetings that things are still on course, Founders Developments CEO Tanya Toby has reneged on every important element of the deal.
Despite all this, the plan looks grand on the company’s website, where it proudly features “Sous la Rose hospitality and private member club” as its top venture.
But red ink clouds visions of a luxury social club and hotel the likes of which “Portland has not yet experienced,” as Toby promised.
The 2023 projected closing target has been postponed repeatedly, each time for inability to obtain investors. Meanwhile, the cost of running the Portland development approval gauntlet ballooned, along with the complexity of requirements, not least of which is a $10 million seismic upgrade.
Nevertheless, the $50,000 monthly payments were paid for about three years, amounting to $1.7 million by last year’s annual meeting. Then they were reduced to $25,000 per month and finally to nothing, according to center board member Richard Gronostajski. At each juncture, cultural center board members decided that hanging onto even a semblance of the deal was better than nothing.
Maintenance, repairs and security for the property have also fallen by the wayside. Gronostajski said the board is now covering those bills and even paying the property taxes. When the city recently required installation of a $5,000 sprinkler system, the board kicked in rather than face fines and penalties.
Despite the mishaps, the Cultural Center is still money ahead. Gronostajski said most of the money Founders has paid remains in the organization’s bank account. The board is reluctant to spend it in anticipation of what other shoe might drop.
Now Founders is asking to dip into the funds the center is holding in reserve. Toby has asked for help with a formidable upfront fee before the city Bureau of Development Services will review the application.
According to BDS spokesperson Ken Ray, a fee of $102,000 is imposed for renovating the landmark building based on the applicant’s estimated value of $10 million. Construction of the five-story hotel, valued at $11 million, will entail a $113,000 permit review fee.
Even paying those fees would not be the end of it. To begin construction might cost $1.5 million, Gronostajski said. To reach that threshold, Founders posed another idea: the cultural center could become a partner in the whole venture.
“There’s been a discussion that maybe the NNCC would work with the buyers to finance part of the development from the funds that have already been sent to us from the buyers, to actually do seller-backed financing,” Gronostajski said. “Nobody’s too thrilled about that, but those are all discussions that the board of NNCC is having, and the April meeting will be very interesting when we talk to the membership and see what people think.”
Pinger was more candid. Upon hearing about becoming partners in the redevelopment, “That’s where I said, ‘You’ve got to be kidding.’”
The total cost of constructing the two-building project was estimated at $70 million by Founders’ consultants at the 2024 Cultural Center annual meeting. Recent revelations could drive that figure far higher.
Cultural Center President Ginger Burke told the NW Examiner that no new direction or plans of action will be offered by the board at the next week’s annual meeting, scheduled for Tuesday, April 21 via Zoom. Members must register by April 19 to participate. Visit nnccpdx.com/ for information.
The buyers are not in default, Burke said. “We’re all in agreement” to pause further earnest money payments.
Why such flexibility, and no alternatives to put before members?
“We have to be realistic,” she said, keeping with advice received from a commercial real estate broker.
Sleazy. I thought what happens in Vegas stays in Vegas.
I always thought the building should be torn down and replaced with something more useful. The companies website is interesting, seems a little ....(I'm reluctant to use the word I'm thinking of). Very Shark Tank but not in a good way. Seems out of place for Portland, maybe Portland before the pandemic but does Portland really have enough "founders" who want to socialize with other founders? I don't see how pouring $70M into a private club makes sense.