City Council also gets updates on a proposed replacement for the Tryon Creek Wastewater Plant and Parks & Rec projects

LAZENBYSturgeon Development Partners' plan to build a combination boutique hotel and apartment complex at the City's North Anchor development is no longer financially viable, according to a staff report prepared for the Lake Oswego Redevelopment Agency.

In their role as the LORA board, city councilors were scheduled to get an update on the project Tuesday night. The agenda item ended up being delayed until July 3.

But according to City Manager Scott Lazenby's report, SDP has determined that the proposed apartments would not be able to charge enough in rent to make up for construction costs, due in part to the high cost of underground parking that would be needed in order to fit the project on the site.

The hotel portion of the project is still viable, according to Lazenby's report, and SDP has proposed separating it from the rest of the project in order to keep moving forward while the company figures out a new plan for the remainder of the space.

The North Anchor project site consists of a row of properties along the north side of B Avenue between State Street and the alley between First and Second streets. The City acquired the properties and sought bids from private developers for the project, eventually selecting a proposal from SDP in 2015.

The plan was to sell the B Avenue parcels as a single unit to SDP, which would then develop the project. LORA would also pay a small portion of the project's cost in exchange for the inclusion of public parking spaces and other design elements sought by the City to spur urban renewal.

Acting as the LORA board, city councilors approved a Disposition and Development Agreement with SDP in January. It included a conceptual plan for the site that put the hotel on the corner of State Street and B Avenue, with the apartments split into two buildings on either side of First Street, linked by a skybridge.

SDP was scheduled to submit a project application to the City's Development Review Commission in May, but according to Lazenby, the group asked for more time to evaluate the financial viability of the housing component and eventually concluded that it wouldn't pencil out.

According to Lazenby's report, SDP's new proposal would ditch the skybridge and change the hotel to a standalone structure on the west side of First Street. One possibility for the east-side property would be to use it for a building with ground-floor retail and office space on the levels above, which is seen as more financially viable in today's market.

Lazenby's report outlined three possible courses of action for LORA to consider on July 3. The board could pursue a revised agreement with SDP and continue with a new plan for the project, or abandon the SDP agreement and seek new proposals from other developers. The board could also scale back the SDP agreement to only the hotel site, and find a new developer for the eastern half.

Other items on the council's Tuesday agenda:

• The council received a report from representatives of PERC Water about a proposal to build a replacement for the Tryon Creek Wastewater Treatment Plant instead of a series of needed renovations at the existing facility.

The plant is located in Lake Oswego's Foothills District, but it is owned by the City of Portland and treats wastewater from both municipalities, so any repair or replacement will require an amendment to an existing intergovernmental agreement between the cities.

At an estimated 3.5 acres, the proposed replacement plant would be far smaller than its 15-acre predecessor, freeing up space in the Foothills District for potential redevelopment. A study commissioned by the two cities found that the replacement plant would cost $112 million, compared to $154 million to repair the existing plant.

No decision was made at Tuesday's meeting. According to Lazenby, the next step in the project would be for Lake Oswego to see if Portland is willing to consider amending the intergovernmental agreement to allow for a new plant.

• Scott Bullard and Bill Gordon, co-chairs of the Parks, Recreation and Natural Resources Advisory Board, presented the group's proposed priority list for future Parks projects, including major items such as rebuilding the municipal golf course, building a new home for the Parks & Rec Department and adding new features at the City-owned Luscher Farm.

One of the big question marks for the future of many of the projects is whether the council will seek to renew a trio of Parks bonds that are scheduled to expire in the next few years — and whether Lake Oswego voters would approve the request.

If renewed, the bonds would bring in an estimated $22 million. The Parks board included those dollars as a potential funding source for some of the projects on the list, and it asked the council to support putting the bond renewal on the ballot.

Councilors Joe Buck and Theresa Kohlhoff both said they supported seeking to renew the bonds, and Councilor Jackie Manz said she supported the board's overall priority ranking, subject to possible fine-tuning.

But Councilor Jeff Gudman noted that voters will already be asked to approve several other bonds over the next decade, and Councilor Skip O'Neill told the Parks board not to take the bond dollars for granted. O'Neill also suggested making sure that the priority list really reflected the highest and best use of whatever funding turns out to be available.

"What would your decisions be if there were going to be no more bonds passed?" he asked.

Kohlhoff added that she wanted to avoid the City becoming boxed in to limited plans for some of the projects, and said as one example that the golf course redevelopment should leave opportunities for future councils to develop further amenities.

Councilor John LaMotte asked Bullard and Gordon to work with the Parks board at a future meeting to develop specific action alternatives for each item on the list, so that the council could eventually consider the items individually.

• The council gave final approval to the master plan for the Lake Oswego Veterans Memorial in Foothills Park. Kohlhoff cast the sole no vote, saying she supported the project but had concerns about the design, which she said seemed too imposing and too close to the parking lot.

Contact Lake Oswego Review reporter Anthony Macuk at 503-636-1281 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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