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Also on Tuesday, the council voted in favor of a new contract with the Arts Council of Lake Oswego

COURTESY IMAGE - The council voted 5-2 in favor of moving forward with a new North Anchor development agreement, which includes a $100,000 promissory note that's intended to hold the developers to their word. Acting as the Lake Oswego Redevelopment Agency, the City Council voted 5-2 Tuesday evening to approve an updated development agreement with Sturgeon Development Partners for the North Anchor project which will bring a boutique hotel to downtown Lake Oswego.

The new agreement with local developer Vanessa Sturgeon defines some of the changes the council approved earlier this year. Those changes include dropping the housing portion of the project to focus on a 125-unit hotel, 11,000 square feet of retail along B Avenue, an above ground parking structure with 162 spaces, an adjustment to the project's milestone dates and modification to the conceptual design of the building.

The agreement also increased the land purchase price paid to the LORA board from $2.68 million to $4 million, as well as included a $100,000 promissory note to be submitted by SDP, payable if the agreement is terminated before closing for reasons other than title issues or permit denials.

The original agreement did not include a pre-closing deposit, and it was added in the new agreement so the LORA board could have assurance that SDP will be able to secure financing to not only pay LORA for the property, but also see the project through to completion.

Outgoing City Manager Scott Lazenby in his report to the council said he recognized that the delay in implementing the project has been frustrating for members of the LORA board. But in the end, he believes it will be a better project for it.

"The larger hotel will benefit downtown shops and restaurants, as well as the event center that is being built by the Haladay family (Beacon LO)," Lazenby wrote. "It will generate close to a million dollars a year in property taxes that will help retire the East End district bonds and return tax revenue to the city's general fund. It could also provide the city with as much as $400,000 per year in transient lodging tax revenue."

Both Councilors Theresa Kohlhoff and Daniel Nguyen voted against the agreement for a couple different reasons.

Kohlhoff said expressed concern over the agreement's outlining of the 47 parking spaces within the garage which will be set aside for public use, specifically regarding time limits and who would have authority to set them.

Nguyen suggested waiting until the new city manager — who will replace Lazenby as he departs for retirement on July 1 — comes on board and has the opportunity to familiarize him or herself with the project and new agreement. Nguyen believes the new city manager would be able to bring themselves up to speed, but he added that they would be made to feel more a part of the team should they be allowed to take more ownership of the project.

See also:

Council vote paves way for new hotel in downtown LO (read story)

"At the end of the day, this project isn't going to managed by (Lazenby), it will be managed by the new city manager coming in," Nguyen said. "To make a project successful we have to get buy in, at all levels, and certainly we need buy in at the executive level."

Nguyen also floated the idea of putting the project back out as a request for proposal due to the fact that it's taken three years to get to this point with very little to show for it, and that times have changed and there may be other developers who are now interested in developing at the North Anchor site, and the scope of the project has changed significantly from what was originally proposed by SDP.

Outside of Kohlhoff, who had previously expressed displeasure over the fact that the housing portion was nixed from the project, and Councilor John LaMotte, who seconded Nguyen's motion to postpone the adoption of the agreement, the rest of the council had no appetite for going back out to RFP.

"I'm telling you now, that will kill this project, but let's vote and see," Mayor Kent Studebaker told Nguyen.

Nguyen's motion failed 3-4 and the following motion to approve the agreement passed 5-2, pushing the project forward.

Before the final vote, Nguyen made a statement in an attempt to inform the public of why the project had required a $100,000 promissory note in the first place.

"(My colleagues) have alluded to this, but I'll be more blunt: We do not have faith in the developer in this project. The question was asked, 'Is this a typical process?' I would beg to differ," he said. "The reason we have a promissory note, which was originally supposed to be an earnest money deposit of $100,000, is because there was question to whether the developer had skin in the game, so to demonstrate that we required them to give that earnest money deposit. The developer pushed back and said they'd do a promissory note, which is refundable, under certain conditions.

"So to say this is a typical agreement would be a disservice to the community. We did this because there is real concern that the developer will not follow through with the project. I think that's being glossed over, but for the public to understand, the whole point of this $100,000 is to say there's skin in the game."

Also on Tuesday:

— The council unanimously approved a new agreement between the City and The Arts Council of Lake Oswego to provide administration of the City Public Art Program. The Arts Council asked for an increase from $130,000 to $188,500, annually, in the first years of the agreement and a four percent increase each additional year of the agreement. The largest chunk of that increase represents the hiring of a new, half-time employee focused on diversity, equity and inclusion programs, events and classes, for a total $23,912.

The rest of the increase will go toward the award-winning Gallery Without Walls, both permanent and rotating, procuring a new collections database system and increasing funding for the People's Choice Award.

— The council unanimously approved staff to explore a partnership with Clackamas County to bring the Clackamas Broadband eXchange to Lake Oswego's Mountain Park neighborhood. The service would bring high-speed fiber optic connectivity to Mountain Park for approximately $60-65 a month by using a local improvement district to pay for the installation of the broadband cable.

The Clackamas Broadband eXchange currently serves both urban and rural communities, including the cities of Milwaukie, Oregon City, Gladstone, Damascus, Boring, Sandy, Estacada, Colton, Molalla, and Canby. According to City Manager Lazenby, Mountain Park residents voted in support of the program and asked the City to explore this partnership.


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