Nike waiting to proceed on World Headquarters project, 18 months after special session

June 14, 2014By Allan Brettman

The Oregon legislature met in a hastily convened special session in December 2012 with a single item on its agenda: Guaranteeing Nike favorable tax treatment in exchange for a promise to expand its headquarters in-state rather than moving jobs elsewhere. In response to the legislature's pledge not to change Nike's tax status for three decades, the company agreed to spend at least $150 million and create 500 or more jobs.

Eighteen months later, very little has visibly changed at the Nike headquarters campus. That leaves critics of corporate tax giveaways wondering what, if anything, Oregon will ever receive in exchange for its largesse.

The casual pace raises questions about the urgency Nike representatives expressed to the Legislature at the end of 2012, said Chuck Sheketoff, executive director of the Oregon Center for Public Policy.

"They said they needed a special session," and could not wait a few months for the convening of the Legislature's regular session, Sheketoff said. "They needed it now because they needed to go ahead and move forward.

"It makes you question their (Nike's) ability to keep track of time if there's not an electric clock maintained by someone else," he said. "'Hurry up and wait,' I guess, should be their slogan."

The most important thing, said Mike Bonetto, chief of staff for Gov. John Kitzhaber, is that Nike has agreed to invest $150 million in Oregon.

"We feel Nike is going to continue to hire and grow. This is about jobs, bottom line. We believe this is a win-win for all of us."

Nike maintains its plans are on track – and that, if anything, the expansion will be bigger and bolder than what it had in mind in December 2012.

The purchase or lease of several Washington County properties near or adjacent to the campus has prompted Nike to create what the company calls a "more cohesive footprint for our expansion." Company spokespersons say executives expect that vision to materialize within the next 2 ½ years.

"Our master planning process is underway and we continue to work closely with the city of Beaverton, Washington County, state officials, and local utility companies...we don't have any additional specifics to share right now," the company said in a statement last week.

The public stake in this project goes beyond zoning, wetlands and land use typical of capital improvement projects.

That's because of the agreement Kitzhaber signed December 2012 with Nike leaders, including chief executive Mark Parker. That pact, approved during the special session, assured the company the state would use the existing taxing method – which Nike says it favors because it provides tax certainty – for the next 30 years.

In return, Nike promised at least 500 new jobs as part of the minimum $150 million expansion.

"Nike is on track to satisfy both of those requirements in a timely manner," Julia Brim-Edwards, Nike senior director of global strategy and operations, wrote in a letter to Kitzhaber in late 2013.

Nike's satisfaction of its deal with the state seemed straightforward enough in the spring of last year.

The company announced it would build two office buildings, expand parking and make road and other campus improvements at its behind-the-berm headquarters complex near Beaverton. The two buildings would add more than 500,000 square feet of office space to a campus that has about 2.2 million square feet now. The only surprise may have been the selection of the ZGF Architects. Robert Thompson of TVA Architects designed the existing World Headquarters buildings as well as the Matthew Knight Arena in Eugene.

Nike's headquarters, Portland architecture critic Brian Libby once said "has this pristine white modernism with a tiny touch of Disneyland to it."

Work on the new additions started last July, creating an entry on the campus' northwest corner and building a construction-grade road. By mid-August, though, the expansion stopped in its tracks.

The company said at the time, and again in response to emailed questions last week from The Oregonian, that the purchase of real estate near the campus and the leasing of other space had prompted a rethinking of the overall plan.

Those acquisitions include the Woodside I and II office parks and the Alliance Packaging Building, both on Nike's west side. The company purchased Woodside I and Woodside II – 13 buildings on 15 acres – for $84.5 million in late May. In June, it bought the nearby Alliance building, separated by a parking lot from an existing Nike parking structure. On the campus' southwest side, Nike already owns 28-acre tract south of Woodside.

And in recent months, Nike has gradually acquired through lease and purchase nearly all of the space of the Beaverton Creek Business Park. That collection of one-story buildings is separated from the headquarters campus by some MAX tracks and Nike's Hollister Woods.

Another important change may have been the addition of Howard Slusher as a consultant on the project. The longtime-confidant and consultant of Nike co-founder Phil Knight played a similar role in the construction of the 145,000-square-foot Oregon Ducks football facility on the UO campus. Matt Swaim also came on board the headquarters project as vice president of construction services, after previously worked as a manager for the project's contractor, Hoffman Construction in Portland.

In February, Nike added the architecture firms Pelli Clarke Pelli of New Haven, Conn., and SRG Partnership of Portland to the design team that already included ZGF.

In March, Washington County commissioners approved an ordinance allowing up to four buildings 160 feet tall on the campus' northeast side. Nike officials said at the time they had no further details to share about the project.

Last year, the Army Corps of Engineers told the company that federally designated wetlands are on part of that 28-acre parcel at Southwest Jay Street and 158th Avenue. And a utility easement runs through the west side of the property where at least one of the structures had been planned, prompting discussions with Northwest Natural and Portland General Electric, among others, about possibly moving utility lines.

"The local utilities have been good partners for us in the planning process and we are moving ahead with our plans," Nike said in its written statement.

Nike, which declined to make either Slusher or Swaim available for an interview, acknowledged in the written statement the end-of-2016 deadline to complete the project. "As the agreement states, Nike has a until January 1, 2017 to reach this milestone. We will notify the state as the agreement requires," the statement says.

Brim-Edwards told the governor in her Dec. 30 letter that the company expected to tell this state in the first three months of this year that 500 new employees requirement had been met. That hasn't happened yet as of mid-June, a governor's spokesperson said, noting at the same time that the agreement does not require notification until the end of 2017.

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