Concerns remain about future needs, zoning change

by: VERN UYETAKE - The Lake Oswego City Council hopes to unload the West End Building, which the city bought in 2006 for $20 million.

The Lake Oswego City Council will take two more weeks to consider selling the West End Building for $16.5 million to a private developer.

The council voted this week to delay making a decision on a proposed agreement with Kensington Investment Group, which is based in the San Francisco area but has an Oregon office in Sherwood. Approval could end years of debate over the future of the property, which plummeted in value soon after the city bought it in 2006.

The city bought the West End Building, or the WEB, from Safeco Insurance for $20 million in hopes of using it for a community center that never came to fruition. On 14 acres at 4101 Kruse Way, the 89,000-square-foot WEB is now largely underused.

“At this point, there’s no clear path for what to do with the property long term or how to pay for it, or how to provide some permanent public facilities on the property,” said Brant Williams, the city’s redevelopment director. “Without this clear path ... around half of the building is left vacant or is significantly underutilized.”

City Manager Scott Lazenby said he thought the city had other options for housing the programs now located at the WEB. Those include the Lake Oswego-Tigard Water Partnership and parks and recreation. Kensington would lease the property to the city while officials determined where to relocate the programs.

“Are we better waiting for the market to improve (to sell)?” Lazenby asked. “That’s a matter of speculation in commercial real estate, and a lot of people have lost money doing that. It’s true the value may be going up, but we have a carrying cost for the building.”

The city still owes $17.6 million on the property and has spent $3.5 million on interest alone during that time. It also spends $1.5 million each year on loan payments, operations and maintenance of the building.

Robert Jensen, a principal at Kensington, approached the city last spring to work out an offer.

On Tuesday, he told the council it was too early in the process to specify how the company might use the property. While demand for office space, weak in recent years, is apparently once again rising, he said, redevelopment remains an option, and developing a mix of multifamily housing and retail development is also on the table.

“We would have to determine what’s best for the community and what makes financial sense,” Jensen said.

The sale would be contingent on the city approving a zone change from office campus and high-density residential use to general commercial use by April 1.

During testimony at a public hearing Tuesday at city hall, the council heard support and opposition to the proposal from dozens of citizens. It also entertained a surprise competing offer for the WEB.

Nick Bunick, who developed the 300-acre area now known as Westlake, said his nonprofit foundation, The Great Tomorrow, had authorized him to make an offer better than Kensington’s, and he was prepared to offer up to $17.5 million — enough to cover almost all of the city’s remaining debt on the site. He said he’d also offer a free, 18-month lease in the building and would help the city develop the land as it sees VERN UYETAKE - It's unclear when, where or how services offered in the West End Building - including the Lake Oswego-Tigard Water Partnership and many parks and recreation activities - will move after the city sells the property.

“I’m making that commitment to you,” he told the council. “Whether you want a city hall there or a library, I’ll give you 100 percent of my support and cooperation.”

Resident Dianne Cassidy urged the council to hold onto the WEB so it can be used to meet long-term facility replacement needs while keeping some city services in a more central location than downtown.

“This property offers an ideal option for long-term, maybe not present, but long-term viable needs of our city,” Cassidy said.

While the property became an “embarrassment” after it was bought at the height of the real estate bubble, resident William Barbat said, “I want to see the city use business sense this time.”

“It’s one of the biggest pieces of land in the whole city,” he said. “That’s one of the reasons the city bought it in the first place — for future development.”

But Yvonne Campbell said the city has spent enough time pondering the property’s future.

“I personally would have supported the idea of city hall moving there, the library, maybe the adult community center,” she said. “But after seven years it’s clear there is no consensus in sight. ... If we cannot relatively quickly make a decision about a pressing need this property can fulfill, then we should save the city some money, cut back on the expenses and dispense with the property.”

Some residents continue to harbor hopes that the WEB will one day become a full-fledged recreation facility.

“This should be some kind of community center for this community,” said Jeff Miller, a teacher who lives in the Westlake area. “For crying out loud, Sellwood has a community center. Lake Oswego should have a community center.”

Mary Olson, a former city councilor, urged the council to disregard appeals drawing on concerns about equity in services on either side of town or between Lake Oswego and Portland.

“As lovely as it would be to keep that property and do something wonderful with it, the citizens have never been willing to put the money up to do that,” Olson said. “This is a fabulous price from a good, solid reputable firm, and I think you would be wise to accept their offer.”

Judie Hammerstad, who was mayor when the city bought the WEB, suggested the council convene a task force to reanalyze some of the work done in recent years, including verifying whether city hall generates much foot traffic to support businesses downtown and whether technological constraints could hinder putting a new 911 facility on the west side of town.

“To pass this resolution today would be a mistake, because we all need more information,” Hammerstad said.

Concerns lingered on the council about the property’s zoning change, which would still need to be approved by the city’s planning commission.

Councilor Jeff Gudman questioned how much of the land could be built on if zoned for general commercial use, which could double how much development is now on the property. The council already voted to initiate that switch.

Councilor Donna Jordan said the WEB is expensive, tapping the city’s general fund each year to cover its costs.

“This is a big decision that has to reflect both the fiscal reality and long-term needs of the community,” Jordan said. “I’m not sure we’re ever going to have the right answer, but I think we can at least take a couple of weeks to think about it.”

The council will continue the discussion Oct. 8.

The blue mark on this Google map shows the location of the city-owned West End Building, at 4101 Kruse Way, which the city council is considering selling for private development.

Background reading:

'Council considers selling West End Building for $16.5 million'

'Readers react to city plans to sell the WEB'

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