Wilsonville may combine land parcels at industrial Coffee Creek area

Published 4:01 pm Wednesday, July 30, 2025

As the city of Wilsonville noted in its City Council staff report, the local government has been assessing ways to spark industrial development in Coffee Creek for more than five years — to no avail. 

With few alternatives, the city has honed in on  a strategy it hopes will work: purchasing parcels of land and combining them. 

“This appears to be an appropriate opportunity for government intervention, where the market and regulation alone are not producing desired community development outcomes,” the city staff report reads. 

Wilsonville Economic Development Manager Matt Lorenzen presented the strategy during the City Council’s July 21 work session. 

The city completed master planning for Coffee Creek in 2007. The area is located near the Coffee Creek Correctional Facility in northwest Wilsonville south of Day Road, west of I-5, north of Ridder Road and east of Grahams Ferry Road. 

The city then established an urban renewal district designed to turn private sector development into public improvements and vice versa in 2016. The city hoped that the industrial area would create 1,800 jobs with a total payroll of $55 million.  

“Coffee Creek is one of Wilsonville’s most promising economic development areas. It has zoning infrastructure plans and an urban renewal district already in place,” said Lorenzen. “However, we still haven’t seen the kind of private investment or job density this area was envisioned to support. So what’s the issue? What’s the hang up?” 

Lorenzen outlined three reasons why hopes for  Coffee Creek have not come to fruition: land parcelization, preexisting contractor establishments and land value discrepancies. 

“The land, as you can see, is chopped up into small, oddly shaped parcels owned by many different parties, each with their own timelines and motivations. And this has been a major obstacle to industrial scale development, which requires sites 10 acres, probably at a minimum,” said Lorenzen.

The “nail in the coffin” third obstacle, land valuation discrepancies, is the reason for the proposed “bridge the gap” strategy, according to Lorenzen. 

The “gap” in question is between two methods of real estate valuation: the income approach and residual land value approach. If the developers don’t believe the potential income generation offsets the price, they won’t consider it a sound investment.  

“That gap is really where the deals fall apart. So what we’re proposing is a proactive, targeted strategy to use urban renewal funds to purchase or option several adjacent parcels from willing sellers,” said Lorenzen. 

The city would buy smaller parcels of land, combine them into a larger offering that would eliminate the differences in valuation methodology, basically making investments in the Coffee Creek industrial land parcels more appealing. 

Without City Council authorization, the economic development department has not yet reached out to prospective sellers to gauge interest. 

“There will likely be a gap between what the city pays to acquire the land and what a developer is willing to pay. But we now have a tool to help cover that gap. It’s called the Regionally Significant Industrial Sites program administered by Oregon,” said Lorenzen. 

He said both the Port of Portland and Hillsboro have used this program to be reimbursed for site preparation costs. 

“So even if we sell the land at a loss on paper, we’re reimbursed once the economic development outcomes are delivered,” said Lorenzen. “This is not without risk, but I believe those risks can be mitigated, and I think they’re manageable. As I noted, the city would only be purchasing from willing sellers, and we would only do that after explicit council authorization at tonight’s meeting and by no means direct staff to really do anything beyond just the administrative groundwork.” 

City councilors were excited by the idea of prospective development in Coffee Creek and Lorenzen said “if there was sufficient infrastructure stubbed at the curb and lots that were of the right size and configuration, this land would’ve been sold 15, 20 years ago.” 

Economic development staff will continue the administrative work to set the stage for an authorized land acquisition.