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HomeMy WebLinkAboutAgenda Item - 2024-10-15 - Number 04.2 - Approval of LORA Meeting Minutes 4.2 o�" F °s� REDEVELOPMENT AGENCY REPORT mooro OREGO\--" Subject: Approval of Lake Oswego Redevelopment Agency (LORA) Board Meeting Minutes Meeting Date: October 15, 2024 Staff Member: Kari Linder, Recording Secretary Report Date: September 9, 2024 Department: City Manager's Office Action Required Advisory Board/Commission Recommendation ❑X Motion ❑ Approval ❑ Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑ Resolution ❑X Not Applicable ❑ Information Only Comments: ❑ Board Direction ❑X Consent Agenda Staff Recommendation: Approve minutes as written. Recommended Language for Motion: Move to approve the LORA meeting minutes as written. Project/ Issue Relates To: Issue before Board (Highlight Policy Question): ❑Council Goals/Priorities ❑Adopted Master Plan(s) ❑X Not Applicable ATTACHMENTS 1. June 18, 2024, Draft Regular LORA Meeting Minutes Respect. Excel'er.re Trust. Se-vim 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY ATTACHMENT 1 O�tiA E O s4_ LAKE OSWEGO REDEVELOPMENT AGENCY MEETING MINUTES V Mira� 0 June 18, 2024 OREGO -\ 15. CALL TO ORDER, REDEVELOPMENT AGENCY (LORA) Chair Buck called the regular Lake Oswego Redevelopment Agency (LORA) meeting to order at 6:40 p.m. on Tuesday, June 18, 2024. The meeting was held both virtually via video conferencing and in-person in the Council Chamber at City Hall, 380 A Avenue. Present: Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, Mboup and Rapf Staff Present: Martha Bennett, Executive Director; Ellen Osoinach, LORA Counsel; Kari Linder, Recording Secretary; Sidaro Sin, Redevelopment Manager Others Present: Eric Cress, Principal and President, Urban Development Partners; Kurtis Fusaro, Senior Development Manager, Urban Development Partners; Lincoln Walker, Senior Director Investor Relations; Bob Naito, Principal with Naito Development 16. BOARD BUSINESS 16.1 Fourth Amendment to the Disposition and Development Agreement for the North Anchor Project. Sidaro Sin, Redevelopment Manager, presented the request for the Board to consider the fourth amendment to the Disposition and Development Agreement (DDA), which would extend critical deadline dates and make minor amendments to the project description. There was a potential opportunity to collaborate with Urban Development Partners (UDP) on early demolition of the North Anchor properties, prior to closing, and there were benefits for both the City and UDP in making the ground more shovel ready in advance. If the Board granted a temporary extension through September 10 to discuss demolition plans, the project team anticipated returning on September 3 for further discussion. Eric Cress, Principal and President, Urban Development Partners (UDP), introduced members of the project team and presented the Council report via PowerPoint, summarizing the current status of the project and highlighting progress made since the November 2023 meeting. Kurtis Fusaro, Senior Development Manager, UDP, continued the report, outlining the reasons for the requested extension to raise the remaining equity for the hotel and the apartments, Redevelopment Agency Meeting Minutes Page 1 of 6 June 18, 2024 complete permitting, execute on construction contracts, and work through the closing process for debt equity and land. The presentation included a summary of requested changes to the DDA, which would extend the closing and construction start date and make small changes to the program outlined to better reflect the current approved program. Chair Buck expressed the City's long-standing commitment to the relationship and noted that UDP had indicated other projects could be done on the sites, but not ones that would meet the community's quality expectations. UDP's project aligned with the East End Redevelopment Plan's goals and objectives and met community expectations for downtown development. The project was worth waiting for and the Board wanted to see it through. He inquired whether the last-minute demolition concept would be triggered by the project reaching a certain state or if it would be set to a specific date. Board Member Afghan noted he had previously called for visible progress to be made to justify granting another extension. Demolishing the building and erecting a fence with advertisements about future buildings would eliminate abandoned buildings downtown and demonstrate progress. The approach would also give UDP a head start when construction began. The Board still needed to consider the implications of demolition, but an extension would allow time to complete those conversations before the original extension deadline. Councilor Wendland reiterated the Mayor's comments that the Board was supportive of the project and understood the market was tenuous and difficult to navigate right now. He asked if UDP would have traction on one project sooner than another. Mr. Cress stated the company was committed and excited to deliver a high-quality project. Currently, UDP was biasing more toward pushing the hotel forward sooner rather than later. There were good indications from Columbia Hospitality and general market studies that the hotel market was strong, which was the reason UDP invited an experienced hospitality company as a joint venture partner to move that project forward. However, the company would start with whatever project was financeable first. Both projects were close to being shovel ready. If it were 2019, the company would have already broken ground. The current time made things more challenging, and the market was more dynamic and fluid right now. Chair Buck clarified the proposal before the Board was to take up until September 10 to work through an agreement on the potential demolition of the buildings ahead of UDP taking ownership. Board Member Rapf commented that the proposal made sense, but it was a bit different than what had been discussed over the past week. He understood the Board would discuss a longer extension with no conditions. Chair Buck said he was concerned that the 24-month extension may allow the properties, which were already in disrepair, to deteriorate further, potentially turning the sites into a public safety or nuisance issue. Complications that would arise if the City had to pay for demolition. Working through an agreement with UDP would enable the company to proceed with demolition even before taking ownership of the property. Board Member Rapf believed the demolition proposal was a little problematic, as it seemed the Board was giving UDP a 24-month extension. Chair Buck clarified the City would give the company 24 months to work out parameters for building demolition within that two-year period. Board Member Rapf understood the interim step, but took issue with the communication. Board Member Mboup believed the communication issues were internal and could be solved. Redevelopment Agency Meeting Minutes Page 2 of 6 June 18, 2024 Chair Buck confirmed his explanation aligned with Mr. Cress' understanding of the proposals. Mr. Cress said there were some complications to work out, but UDP would work with the City to be a good partner. The three-month extension would allow the City and UDP to work out the issue. If that helped to support the project and move things forward for the City, UDP was 100 percent on board. The complications were legal unknowns to work out. Executive Director Bennett stated that if UDP, a private party, demolished City-owned properties, it would create complications for the City and the parties would need the full 90-day period to determine whether the proposal was viable. Mr. Cress noted the proposal would extend UDP's period of uncertainty for two or three months. UDP was eager to move forward with financing and its joint venture (JV) partner to proceed with debt and equity raising, but the company could not in good faith take those steps until it had reached an agreement with the City. Board Member Mboup inquired if the 90-day extension would affect the project's viability to investors. Mr. Cress did not believe it would be problematic because the company would simply wait for clarity before proceeding with debt, equity, and partnership agreements. Three months was the maximum timeframe, so clarity could come sooner. Chair Buck asked about the City's approach if the property became a nuisance or unsafe without an agreement. Executive Director Bennett explained the City would demolish the building itself, acknowledging it could not pass on those costs. She expressed concerns about a private party demolishing City-owned property, citing environmental contamination and liability concerns. The proposal's last-minute nature had prevented proper due diligence. Chair Buck acknowledged the risks involved in City demolition. Board Member Rapf stated that the greatest risk was not completing the project, and the City should not add hurdles for UDP. Board Member Verdick expressed concern about a three-month extension adding further project delays. Board Member Wendland inquired about adding a stipulation for UDP to demolish the buildings within 120 days if granted a two-year extension. Ellen Osoinach, LORA Counsel, stated the biggest issue for both parties was the impending expiration of the current agreement. In this moment, the Board could not craft a motion such as the one suggested by Board Member Wendland. The Board had the option to extend the DDA for 90 days to explore demolition negotiations. Staff had explored other demolition options but did not find any of those proposals viable. Voting on the current proposal would preclude further demolition negotiations. If the Board chose a 90-day negotiation period, the proposal might remain unchanged in September due to liability concerns associated with private demolition of City-owned property. Executive Director Bennett advised that the Board should not negotiate on the dais or conduct negotiations in public since it was unfair to UDP and generally a poor practice. If the Board found the current 24-month DDA extension proposal unsatisfactory, it could opt for a shorter extension which would allow Staff to enter into Executive Session with the full Board to receive comprehensive direction. Chair Buck and Board Members agreed to an Executive Session. Chair Buck said the Board should grant an extension to UDP so that an Executive Session could be scheduled. Redevelopment Agency Meeting Minutes Page 3 of 6 June 18, 2024 Executive Director Bennett if the Board wanted to schedule an executive session, a 90-day extension may not be long enough to schedule the session and afford an opportunity to negotiate with UDP. Board Member Mboup asked if the Board could move to grant the two-year extension with the condition that the Board and UDP continue discussion. Executive Director Bennett said the motion could be made, the agreement before the Board had been negotiated by Staff between the parties. The Board could amend the agreement, but that did not mean UDP agreed to it. Chair Buck stated the City was in a unique situation and had been working with UDP for a longer period of time that had been expected. There was an element of a demolition that would show progress, but also a practical element. There were implications to the City holding the property for another two years that neither party expected in 2021, and the Board should be open to the conversation about how to deal with the properties, though things could move faster than expected and the buildings may not reach that point. Mr. Cress believed UDP had demonstrated it was operating in good faith over the past year, and was willing to do things outside the agreement. The company wanted to find the most expedient way to move the project forward. Chair Buck believed the Board wanted to show forward progress. Counsel Osoinach explained that State law required the Board to review the DDA text before approval. The Board could authorize the City Manager to enter into the DDA in substantially similar form to what was included in the packet. Additionally, the Board could express an aspirational, non-binding expectation for demolition to occur within a certain timeframe. However, that expectation could not be incorporated into the agreement as an enforceable provision. If the Board desired binding language regarding UDP's demolition schedule, it would need to adopt Resolution 24-02, granting a 90-day extension for further demolition discussions. If negotiations failed due to complications, Staff might return with an identical amendment. Board Members expressed a desire for the aspirational agreement suggested by Counsel Osoinach. Chair Buck moved to authorize the Executive Director to execute the Fourth Amendment to the December 7, 2021, Agreement for the Disposition and Development for the North Anchor Properties and adding that the Council hopes and expects the Executive Director will continue to work with UDP on a demolition plan. Board Member Mboup seconded the motion. A voice vote was held, and the motion passed, with Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, Mboup, and Rapf voting `aye', (7-0). Chair Buck moved to reconsider the vote to allow for discussion. Board Member Mboup seconded the motion. A voice vote was held, and the motion passed, with Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, Mboup, and Rapf voting `aye', (7-0). Board Member Afghan asked if the public aspiration included in the motion meant the City was getting a commitment that an agreement would happen within the next three months or if it meant that within three months, the parties would finalize the negotiations and begin taking down the buildings. Redevelopment Agency Meeting Minutes Page 4 of 6 June 18, 2024 Chair Buck replied it meant that Mr. Cress, his team, and Executive Director Bennett and her team would work together on some form of demolition plan, but the Board understood there were questions the Board did not have answers to at this moment, and the demolition proposal may not move forward. Board Member Afghan commented the City had many tired buildings, and he did not wish to approve a budget of several hundred thousand dollars for demolition because the construction had not yet started. The City was accepting a risk by pushing out the deadline, which he found challenging. Chair Buck noted Board Member Afghan did not have to support the motion. Board Member Rapf added there was also a risk in engaging in poor spirit negotiations, which meant surprising a long-term partner with new terms and risking the ultimate goal of getting the buildings built. Chair Buck moved to authorize the Executive Director to execute the Fourth Amendment to the December 7, 2021 Agreement for the Disposition and Development for the North Anchor Properties, adding that the Council hopes and expects that the Executive Director will continue to work with UDP on a demolition plan. Board Member Mboup seconded the motion. A Roll Call vote was held, and the motion passed, with Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, Mboup, and Rapf voting `aye', (7-0). Mr. Cress introduced UDP's partners from Naito Development Company, noting UDP had been in conversation with Naito about moving the hotel forward. UDP had engaged in partners in most office building projects, and the company realized it would accelerate the North Anchor project if it brought onboard a hospitality-focused JV partner. Naito had an excellent reputation and was a local company. Bob Naito, Principal, Naito Development, noted the company had completed multiple hotel projects and was familiar with trying to get hotels financed. In addition, the company built a hotel in Washington State managed by Columbia Hospitality. Naito looked forward to welcoming the Board to the hotel sooner than later. 16.2 Approval of LORA Meeting Minutes. February 20, 2024, Draft Regular LORA Meeting Minutes Board Member Wendland moved to approve the LORA Meeting Minutes as written. Board Member Verdick seconded the motion. A voice vote was held, and the motion passed, with Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, Mboup, and Rapf voting `aye', (7-0). 16.3 Board Members Only. LORA Resolution 24-01, A Resolution of the Lake Oswego Redevelopment Agency (LORA) Making Appointments to the LORA Budget Committee. Board Member Corrigan moved to approve the LORA Meeting Minutes as written. Board Member Verdick seconded the motion. Redevelopment Agency Meeting Minutes Page 5 of 6 June 18, 2024 A voice vote was held, and the motion passed, with Board Members Corrigan, Afghan, Wendland, Verdick, Mboup, and Rapf voting 'aye' and the Mayor abstained, (6-0-1). 17. ADJOURNMENT, REDVELOPMENT AGENCY (LORA) Chair Buck adjourned the LORA meeting at 7:29 p.m. Respectfully submitted, Kari Linder, Recording Secretary Approved by the LORA Board on {insert approval date]. Joseph M. Buck, Chair Redevelopment Agency Meeting Minutes Page 6 of 6 June 18, 2024