Certain utility vaults that are constructed in the right-of-way as a result of new development may require that the owner or tenant enter into a lease with City for this privatization of the public right-of-way.
Why is a lease required?
There is a strong demand for the use of Portland’s rights-of-way which results in competition for a very limited public asset, particularly on and below the street level. Such competing interests include utilities (sewer, water, electric, gas, fiber optics and cable), as well as street features (signal, light and catenary poles, signs, trees, meters, trash receptacles, fire hydrants, parking, planters, storm water facilities, landscaping and public transportation stations). Private use of the public right-of-way for Utility Vault (UV) purposes directly limits, alters, or eliminates these uses.
How does PBOT determine if a lease is required?
As part of the permitting process,PBOT Development Review (DR) Division conducts a preliminary review of the utility plans and adds a vault lease requirement to the permit check sheet. Then, they notify PBOT’s Utility Permitting (UP) Section to confirm the lease requirement. UP provides a conceptual approval of the vault’s location, the type of vault, and dimensions.
What is the process for a lease?
Once you learn your development requires a lease, you should reach out to the PBOT Right of Way Acquisition Section (RWA) at 503.823.1372 or email@example.com. RWA will direct the applicant to fill out the lease application, review the lease template, and pay the associated lease drafting fee (as found on PBOT’s fee schedule https://www.portlandoregon.gov/citycode/article/405864) . When these items are submitted to RWA and any requested revisions to the lease document are approved, the lease will be drafted and sent to the applicant for signature(s). There may be circumstances where additional information is required in order for RWA to complete the final lease document. When RWA receives the signed and notarized lease back from the lessee and verifies signature authority, they will remove this hold on the permit within the City’s AMAMDA permitting system, thus allowing others, such as DR, to verify this completed item. The documents will also then be routed for internal signatures.
How long will the lease process take?
RWA cannot commence work on the lease until the lease application and drafting fee are submitted. An uncomplicated lease with no requested revisions to language has a two-week turnaround time to draft and send. Requested changes by the applicant to the lease language require bureau review and may trigger attorney approvals which will likely result in a lengthier process.
What will the rent be?
Rent is calculated using a consistent formula that includes several factors such as market value and the dimensions of the vault. Market value is determined by RWA using several factors including comparisons of bare land sales, zoning, and Floor to Area Ratio. The lease dimensions are determined by UP and are based on the utility plans. The dimensions include not just the vault, but also the vents, and a 1’ buffer around all sides within the right-of-way. The following algorithm is then applied to determine the rent: square footage x $/square foot x 50% alienation rate x 10% rate of return. Certain affordable housing projects may be eligible for a rental discount, but all leases must at least meet the minimum lease rate as set by City Council and the PBOT Fee Schedule (https://www.portlandoregon.gov/citycode/article/405864).
Lease formulas and methodology are contained in TRN-8.11 (https://www.portlandoregon.gov/citycode/article/736058). Minor modifications to rates may be made by the Bureau of Transportation through authority granted in TRN-3.450 (https://www.portlandoregon.gov/citycode/article/308415) or through adoption of the rate schedule by City Council. For rates currently in effect, consult the Fee Schedule for the Portland Bureau of Transportation.
When and where to pay fees and rent?
Send drafting fee (along with the lease application), made out to the City of Portland, to City of Portland, attn: RWA, 1120 SW 5th Ave, Ste 1331, Portland, OR 97204.
Rent payments made out to the City of Portland are also currently paid by mail and sent to a different address: City of Portland, Attn: General AR, PO Box 5066, Portland, Oregon 97208.
When can construction begin?
Building construction cannot begin until the signed and notarized lease is returned and approved by RWA. After the lease is approved, RWA will remove this hold on the building permit. The Street Opening Permit (SOP) that allows the utility company to install the vault into the right of way will not be issued until the lease is returned to RWA signed and notarized and approved.
When do rent payments start?
Rent commences when the SOP has been issued by PBOT Utility Permitting. If any location and/or dimensional changes were made to the vault, RWA will draft an amendment so that the lease reflects these changes. A change to the dimensions may influence the rental rate.
What are the authorizing codes and charters for UV leases?
International Building Code chapter 32, section 3202.1.2, Vaults and other Enclosed Spaces, states that the construction and utilization of vaults and other enclosed spaces below grade shall be subject to the terms and conditions of the applicable governing authority. Administrative Rule TRN-8.11 provides guidelines for leasing real property and public right-of-way under the existing authority of the Director of the Bureau of Transportation, Title 17, Chapter 17.16.140(E). Under this Administrative Rule, leases are required for UV and other enclosed spaces.